N-CSR

Annual Report | August 31, 2019

Schwab International Equity ETFs

Schwab International Equity ETF	SCHF
Schwab International Small-Cap Equity ETF	SCHC
Schwab Emerging Markets Equity ETF	SCHE

New Notice Regarding Shareholder Report Delivery Options

Beginning on January 1, 2021, paper copies of a fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from your financial intermediary (such as a bank or broker-dealer). Instead, the reports will be made available on a fund’s website www.schwabfunds.com/schwabetfs_prospectus, and you will be notified by mail each time a report is posted and the mailing will provide a website link to access the report. You will continue to receive other fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all fund documents electronically.

If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request:

• If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; or

• If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly.

If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action.

Schwab International Equity ETFs

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.schwabfunds.com/schwabetfs_prospectus.

Total Returns for the 12 Months Ended August 31, 2019
Schwab International Equity ETF (Ticker Symbol: SCHF)
Market Price Return¹	-3.61%
NAV Return¹	-3.79%
FTSE Developed ex US Index (Net)^*	-3.95%
ETF Category: Morningstar Foreign Large Blend²	-4.13%
Performance Details	pages 8-10

Schwab International Small-Cap Equity ETF (Ticker Symbol: SCHC)
Market Price Return¹	-10.42%
NAV Return¹	-10.57%
FTSE Developed Small Cap ex US Liquid Index (Net)^*	-10.71%
ETF Category: Morningstar Foreign Small/Mid Blend²	-9.97%
Performance Details	pages 11-13

Schwab Emerging Markets Equity ETF (Ticker Symbol: SCHE)
Market Price Return¹	-0.95%
NAV Return¹	-0.97%
FTSE Emerging Index (Net)^*	-0.99%
ETF Category: Morningstar Diversified Emerging Markets²	-2.54%
Performance Details	pages 14-16

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.

Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale 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 — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the Schwab International Equity ETFs under license. The Schwab International Equity ETFs are not sponsored, endorsed, sold or promoted by FTSE nor LSEG and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the funds. Fees payable under the license are paid by the investment adviser.

^*	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
¹	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETFs

From the President

Jonathan de St. Paer
President and CEO of
Charles Schwab Investment
Management, Inc. and the
funds covered in this report.

Dear Shareholder,

If there’s a lesson investors may have learned from recent market cycles, it could be that markets are unpredictable. International stock prices were on a steady climb between the late December 2018 sell-off and the end of April 2019, returning more than 12% over that span, as measured by the MSCI EAFE^® Index (Net)*. However, uncertainty around an escalating U.S.-China trade war, geopolitical uncertainty, and global monetary policy in the months that followed contributed to a cycle of unsettling one-day declines followed by recoveries. When all was said and done, international stock prices, represented by the MSCI EAFE^® Index (Net)*, returned -3.3% for the 12-month period ended August 31, 2019.

The ups and downs have understandably put investors on edge, leading many to seek safety in other asset classes such as cash and short-term fixed income. While market fluctuations can be difficult to endure, investors may make matters worse through impulsive reactions to sudden market movements—rather than having a long-term investing plan and sticking to it. In fact, a recent study by the Schwab Center for Financial Research found that those who stayed invested through the last five market corrections—when the S&P 500^® Index fell 20% or more—ended up earning substantially higher returns than those who moved into cash.¹ The study showed that missing out on even the first month of gains after the market had hit bottom led to lower returns over time. This is in large part because some of the biggest gains generally occur in the months right after the market has hit a low and begins to recover.

At Charles Schwab Investment Management, we believe that maintaining exposure to a mix of asset classes that perform differently over time is a better way to weather various market cycles. We designed the Schwab International Equity ETFs with this long-term investing strategy in mind. Offering simple, low-cost access to international small-, mid-, and large-cap stocks within both developed and emerging markets, the Schwab International Equity ETFs can serve as part of the core of a diversified portfolio.

*	The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.
¹	Schwab Center for Financial Research. (2019, May 24). Why Waiting for a Market Rebound Could Cost You.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETFs

The Investment Environment

Over the 12-month reporting period ended August 31, 2019, international equity markets lost ground as economic momentum slowed, dampened by uncertainties from several fronts, including trade, inflation, and geopolitical concerns. After a steep decline in December 2018, international equities recovered through the first four months of 2019, when investor sentiment was buoyed by seemingly constructive trade talks between the U.S. and China, the Federal Reserve (Fed) putting interest rate hikes on hold, and stimulus measures implemented in China to boost growth. In the U.S., stocks followed a similar trajectory, but with a steeper decline in December and a more robust recovery in early 2019. In May, however, trade talks between the U.S. and China stalled, and global markets fell throughout the month. Global markets subsequently regained some upward momentum through August when volatility spiked and there were large daily swings amid ongoing trade skirmishes and other geopolitical uncertainty. Following recent monetary tightening measures after a long period of generally accommodative policies, interest rates were lowered in several key economies, including the United States. Over the period, the U.S. dollar strengthened against a basket of foreign currencies. In this environment, the MSCI EAFE^® Index (Net)*, a broad measure of developed international equity performance, returned -3.26%, while the MSCI Emerging Markets Index (Net)* returned -4.36%. For comparison, the S&P 500^® Index, a bellwether for the overall U.S. stock market, returned 2.92% for the reporting period.

Economic growth around the globe was uneven over the reporting period as uncertainty related to the trade dispute between the U.S. and China created headwinds for equity markets. Despite these escalating trade tensions, the U.S. maintained steady growth in its tenth year of expansion, albeit at a declining pace. U.S. gross domestic product (GDP) grew at an annual rate of 2.0% in the second quarter of 2019, down from 3.1% in the first quarter of 2019. Unemployment remained low, ending the period at 3.7%, up just slightly from its nearly 50-year low of 3.6% in April and May. Consumer confidence, which hit an 18-year high in October 2018, the highest since 2000, fell the subsequent three months before rebounding in February. However, in August, it fell to its lowest level since October 2016.

Asset Class Performance Comparison % returns during the 12 months ended August 31, 2019

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 you cannot invest in them directly. Performance results less than one year are not annualized. Past performance is not a guarantee of future results.

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM

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

Management views may have changed since the report date.

*	The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETFs

The Investment Environment (continued)

Outside the U.S., economic growth generally weakened as trade issues dominated headlines and real and proposed tariffs increasingly impacted businesses and consumers worldwide. In the eurozone, economic growth softened in the second quarter of 2019, down slightly from the first quarter but consistent with the final quarter of 2018. Growth was subdued by higher inflation and tepid wage growth that constrained consumer spending. Germany’s GDP contracted on a slump from exports, and Italy’s economy stagnated due to weak domestic demand. The United Kingdom’s economy contracted in the second quarter of 2019 amid growing Brexit-related economic and political uncertainty that dampened industrial output, construction, and services sectors. Japan’s economy, however, logged steady increases in recent quarters after contracting sharply in the third quarter of 2018. Several Asian economies, including China and India, exhibited signs of slowing, but still outpaced many developed economies.

In response to the economic environment, to bolster growth, and to ensure stability given ongoing trade tensions, a number of central banks reduced their policy rates, including the U.S., while others maintained their generally accommodative stances. In the U.S., after raising rates four times in 2018, the Fed cut its short-term interest rate by 0.25% in July 2019 amid growing signs of global economic weakness that threatened to dampen U.S. economic growth, along with continued low inflation and weakness in manufacturing. Outside the U.S., the European Central Bank held interest rates steady, but in July 2019 signaled that it may launch a stimulus package in coming months that could include interest rate cuts and asset purchases to combat the region’s economic malaise. Also in July 2019, the Bank of Japan announced that it would maintain its short-term interest rate target of –0.1% and increase the size of its asset purchases. Despite ongoing uncertainties over the economy’s wider direction and growing Brexit-related division, in August 2019, the Bank of England maintained its key official bank rate at 0.75%, where it has sat since August 2018. Central banks in key emerging market economies—including India, Thailand, and China—lowered their policy rates in response to inflation and trade-related pressures.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETFs

Fund Management

Christopher Bliss, CFA, Vice President and Head of Passive Equity Strategies, leads the portfolio management team for Schwab’s passive equity mutual funds and ETFs. He also has overall responsibility for all aspects of the management of the funds. Prior to joining CSIM in 2016, Mr. Bliss spent 12 years at BlackRock (formerly Barclays Global Investors) managing and leading institutional index teams, most recently as a managing director and head of the Americas institutional index team. Prior to BlackRock, he worked as an equity analyst and portfolio manager for Harris Bretall and before that, as a research analyst for JP Morgan.

Chuck Craig, CFA, 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 more than 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 spent more than four years at The Bank of New York Mellon Corporation. During that time, Ms. Qin spent more than two years as an associate equity portfolio manager and nearly two years as a performance analyst. She also worked at Wells Fargo Funds Management as a mutual fund analyst and at CIGNA Reinsurance in the risk management group as a risk analyst.

David Rios, Portfolio Manager, is responsible for the day-to-day co-management of the funds. He joined CSIM in 2008 and became a Portfolio Manager in 2014. Prior to this role, Mr. Rios served as an Associate Portfolio Manager on the Schwab Equity Index Strategies team for four years. His first role with CSIM was as a trade operations specialist. He also previously worked as a senior fund accountant at Investors Bank & Trust (subsequently acquired by State Street Corporation).

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETF as of August 31, 2019

The Schwab International Equity ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the FTSE Developed ex US Index (the index). The index is comprised of large- and mid-capitalization companies in developed countries outside the United States, as defined by the index provider. The index defines the large- and mid-capitalization universe as approximately the top 90% of the eligible universe. The fund invests in a representative sample of securities included in the index which, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities included in the index.

Market Highlights. International equity markets lost ground over the 12-month reporting period as economic momentum slowed, dampened by uncertainties from several fronts, including trade, inflation, and geopolitical concerns. Following recent monetary tightening measures after a long period of generally accommodative policies, interest rates were lowered in several key economies, including the United States. Over the period, the U.S. dollar strengthened against a basket of foreign currencies.

Performance. During the 12-month reporting period ended August 31, 2019, the fund generally tracked the index. The fund’s market price return was -3.61% and its NAV return was -3.79%. The index returned -3.95%¹ during the same period.

Contributors and Detractors. Swiss stocks were the largest contributors to the total return of the fund. Stocks from Switzerland represented an average weight of approximately 7% of the fund’s investments and returned approximately 11% in U.S. dollar terms. One example from this market is multinational food and drink processing conglomerate Nestle S.A. The fund’s holdings of Nestle S.A. returned approximately 37% in U.S. dollar terms. Stocks from Canada also contributed to the total return of the fund, representing an average weight of approximately 8% of the fund’s investments and returning approximately 3% in U.S. dollar terms.

Stocks from Japan were the largest detractors from the total return of the fund. Japanese stocks represented an average weight of approximately 22% of the fund’s investments and returned approximately -6% in U.S. dollar terms. One example from this market is bank holding and financial services company Mitsubishi UFJ Financial Group, Inc. The fund’s holdings of Mitsubishi UFJ Financial Group, Inc. returned approximately -18% in U.S. dollar terms. Stocks from Germany also detracted from the total return of the fund, representing an average weight of approximately 8% of the fund’s investments and returning approximately -10% in U.S. dollar terms.

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

¹	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (November 3, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab International Equity ETF (11/3/09)
Market Price Return²	-3.61%	1.78%	4.81%
NAV Return²	-3.79%	1.78%	4.80%
FTSE Developed ex US Index (Net)³	-3.95%	1.70%	4.80%
ETF Category: Morningstar Foreign Large Blend⁴	-4.13%	1.56%	N/A
Fund Expense Ratio⁵: 0.06%

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 fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations.

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab International Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

^*	Inception (11/3/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	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.
⁵	As stated in the prospectus.

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Schwab International Equity ETFs | Annual Report

Schwab International Small-Cap Equity ETF as of August 31, 2019

The Schwab International Small-Cap Equity ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the FTSE Developed Small Cap ex US Liquid Index (the index). The index is comprised of small-capitalization companies in developed countries outside the United States, as defined by the index provider. The index defines the small-capitalization universe as approximately the bottom 10% of the eligible universe with a minimum free float capitalization of $150 million. The fund invests in a representative sample of securities included in the index which, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities included in the index.

Performance. During the 12-month reporting period ended August 31, 2019, the fund generally tracked the index. The fund’s market price return was -10.42% and its NAV return was -10.57%. The index returned -10.71%¹ during the same period.

Contributors and Detractors. Stocks from Sweden were the largest contributors to the total return of the fund. Swedish stocks represented an average weight of approximately 5% of the fund’s investments and returned approximately 4% in U.S. dollar terms. One example from this market is Fabege AB, a real estate company focused on urban development in Stockholm. The fund’s holdings of Fabege AB returned approximately 28% in U.S. dollar terms. Stocks from Singapore also contributed to the total return of the fund, representing an average weight of approximately 2% of the fund’s investments and returning approximately 11% in U.S. dollar terms.

Stocks from Japan were the largest detractors from the total return of the fund. Japanese stocks represented an average weight of 19% of the fund’s investments and returned approximately -12% in U.S. dollar terms. One example from this market is OUTSOURCING, Inc. The fund’s holdings of OUTSOURCING, Inc. returned approximately -51% in U.S. dollar terms. Stocks from South Korea also detracted from the total return of the fund, representing an average weight of approximately 5% of the fund’s investments and returning approximately -31% in U.S. dollar terms.

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

¹	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.

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Schwab International Equity ETFs | Annual Report

Schwab International Small-Cap Equity ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (January 14, 2010 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab International Small-Cap Equity ETF (1/14/10)
Market Price Return²	-10.42%	1.12%	4.93%
NAV Return²	-10.57%	1.18%	4.94%
FTSE Developed Small Cap ex US Liquid Index (Net)³	-10.71%	1.02%	4.98%
ETF Category: Morningstar Foreign Small/Mid Blend⁴	-9.97%	2.20%	N/A
Fund Expense Ratio⁵: 0.12%

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 may be subject to greater volatility than many other asset classes.

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab International Small-Cap Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

^*	Inception (1/14/10) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	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.
⁵	As stated in the prospectus.

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Schwab International Equity ETFs | Annual Report

Schwab Emerging Markets Equity ETF as of August 31, 2019

The Schwab Emerging Markets Equity ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the FTSE Emerging Index (the index). The index is comprised of large- and mid-capitalization companies in emerging market countries, as defined by the index provider. The index defines the large- and mid-capitalization universe as approximately the top 90% of the eligible universe. The fund invests in a representative sample of securities included in the index which, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities included in the index.

Market Highlights. International equity markets lost ground over the 12-month reporting period, particularly in emerging markets, as economic momentum slowed, dampened by uncertainties from several fronts, including trade, inflation, and geopolitical concerns. Following recent monetary tightening measures after a long period of generally accommodative policies, interest rates were lowered in several key developed and emerging market economies, including the United States, India, Thailand, and China. Over the period, the U.S. dollar strengthened against a basket of foreign currencies.

Performance. During the 12-month reporting period ended August 31, 2019, the fund generally tracked the index. The fund’s market price return was -0.95% and its NAV return was -0.97%. The index returned -0.99%¹ during the same period.

Contributors and Detractors. Stocks from Brazil were the largest contributors to the total return of the fund. Brazilian stocks represented an average weight of approximately 9% of the fund’s investments and returned approximately 32% in U.S. dollar terms. One example from this market is Banco Bradesco S.A., a banking and financial services company. The fund’s preferred stock holdings of Banco Bradesco S.A. returned approximately 43% in U.S. dollar terms. Stocks from Russia also contributed to the fund’s total return, representing an average weight of approximately 4% of the fund’s investments and returning approximately 26% in U.S. dollar terms.

Stocks from China were the largest detractors from the total return of the fund. Chinese stocks represented an average weight of approximately 34% of the fund’s investments and returned approximately -5% in U.S. dollar terms. One example from this market is Baidu, Inc. ADR, a multinational technology company. The fund’s Class A holdings of Baidu, Inc. ADR returned approximately -54% in U.S. dollar terms. Stocks from India also detracted from the fund’s total return, representing an average weight of approximately 11% of the fund’s investments and returning approximately -9% in U.S. dollar terms.

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

¹	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.

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Schwab International Equity ETFs | Annual Report

Schwab Emerging Markets Equity ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (January 14, 2010 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab Emerging Markets Equity ETF (1/14/10)
Market Price Return²	-0.95%	0.62%	2.17%
NAV Return²	-0.97%	0.71%	2.18%
FTSE Emerging Index (Net)³	-0.99%	0.83%	2.40%
ETF Category: Morningstar Diversified Emerging Markets⁴	-2.54%	0.02%	N/A
Fund Expense Ratio⁵: 0.13%

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 — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab Emerging Markets Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

^*	Inception (1/14/10) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	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.
⁵	As stated in the prospectus.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETFs

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.

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, 2019 and held through August 31, 2019.

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

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

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

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

	Expense Ratio (Annualized)¹	Beginning Account Value at 3/1/19	Ending Account Value (Net of Expenses) at 8/31/19	Expenses Paid During Period 3/1/19-8/31/19²
Schwab International Equity ETF
Actual Return	0.06%	$1,000.00	$ 999.00	$0.30
Hypothetical 5% Return	0.06%	$1,000.00	$1,024.90	$0.31
Schwab International Small-Cap Equity ETF
Actual Return	0.12%	$1,000.00	$ 966.70	$0.59
Hypothetical 5% Return	0.12%	$1,000.00	$1,024.60	$0.61
Schwab Emerging Markets Equity ETF
Actual Return	0.13%	$1,000.00	$ 975.50	$0.65
Hypothetical 5% Return	0.13%	$1,000.00	$1,024.54	$0.66

¹	Based on the most recent six-month expense ratio.
²	Expenses for each 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 365 days of the fiscal year.

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Schwab International Equity ETFs | Annual Report

Schwab International Equity ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$33.25	$32.51	$28.32	$28.55	$32.37
Income (loss) from investment operations:
Net investment income (loss)¹	1.00	0.98	0.88	0.84	0.87
Net realized and unrealized gains (losses)	(2.30)	0.56	4.02	(0.45)	(3.85)
Total from investment operations	(1.30)	1.54	4.90	0.39	(2.98)
Less distributions:
Distributions from net investment income	(1.13)	(0.80)	(0.71)	(0.62)	(0.84)
Net asset value at end of period	$30.82	$33.25	$32.51	$28.32	$28.55
Total return	(3.79%)	4.70%	17.76%	1.47%	(9.27%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.06%	0.06%	0.06% ²	0.08%	0.08%
Net investment income (loss)	3.22%	2.91%	2.95%	3.06%	2.86%
Portfolio turnover rate³	8%	5%	5%	5%	4%
Net assets, end of period (x 1,000)	$18,138,537	$16,294,052	$11,413,011	$6,168,595	$4,042,603

Calculated based on the average shares outstanding during the period.

Effective October 7, 2016 and March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

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

₁₈

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of August 31, 2019

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 1-877-824-5615. This complete schedule, filed on the fund’s Form N-CSR(S), is also available on the U.S. Securities and Exchange Commission (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. Effective March 31, 2019, Form N-PORT Part F has replaced Form N-Q. The fund’s Form N-Q and Form N-PORT Part F are available on the SEC’s website. The fund also makes available its complete schedule of portfolio holdings on a daily basis on the fund’s website at www.schwabfunds.com/schwabetfs_prospectus.

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 98.8% of net assets

Australia 6.4%
BHP Group Ltd.	3,316,925	0.5	81,100,105
Commonwealth Bank of Australia	1,993,408	0.6	106,168,789
CSL Ltd.	515,171	0.5	83,605,128
Westpac Banking Corp.	3,881,836	0.4	73,806,224
Other Securities		4.4	813,897,710
		6.4	1,158,577,956

Austria 0.2%
Other Securities		0.2	34,970,237

Belgium 0.9%
Anheuser-Busch InBev S.A.	866,107	0.5	82,217,591
Other Securities		0.4	79,602,501
		0.9	161,820,092

Canada 8.0%
Canadian National Railway Co.	813,602	0.4	75,065,928
Enbridge, Inc.	2,222,316	0.4	74,473,007
Royal Bank of Canada	1,638,833	0.7	122,813,810
The Bank of Nova Scotia	1,383,170	0.4	73,696,896
The Toronto-Dominion Bank	2,072,619	0.6	112,615,211
Other Securities		5.5	996,160,060
		8.0	1,454,824,912

Denmark 1.5%
Novo Nordisk A/S, B Shares	1,861,306	0.5	96,850,811
Other Securities		1.0	180,635,550
		1.5	277,486,361

Finland 1.0%
Other Securities		1.0	186,818,270

France 9.3%
Air Liquide S.A.	474,536	0.4	66,185,110
Airbus SE	618,214	0.5	85,332,498
Danone S.A.	669,190	0.3	60,031,581
L'Oreal S.A.	270,229	0.4	73,980,798
LVMH Moet Hennessy Louis Vuitton SE	280,766	0.6	112,051,748
Sanofi	1,219,089	0.6	104,877,803
Total S.A.	2,710,428	0.8	135,482,746
Other Securities		5.7	1,047,982,523
		9.3	1,685,924,807

Security	Number of Shares	% of Net Assets	Value ($)
Germany 7.0%
adidas AG	219,479	0.4	65,186,828
Allianz SE	472,934	0.6	104,424,126
BASF SE	1,028,232	0.4	68,144,252
Bayer AG	1,050,852	0.4	77,929,269
Deutsche Telekom AG	3,617,574	0.3	60,458,960
SAP SE	1,096,823	0.7	131,175,373
Siemens AG	849,294	0.5	85,064,175
Other Securities		3.7	671,420,057
		7.0	1,263,803,040

Hong Kong 3.3%
AIA Group Ltd.	13,628,774	0.7	132,628,921
Other Securities		2.6	474,520,989
		3.3	607,149,910

Ireland 0.2%
Other Securities		0.2	35,514,241

Israel 0.4%
Other Securities		0.4	79,226,093

Italy 2.1%
Enel S.p.A.	8,815,409	0.4	64,014,350
Other Securities		1.7	326,435,355
		2.1	390,449,705

Japan 22.3%
Keyence Corp.	101,041	0.3	59,875,443
Mitsubishi UFJ Financial Group, Inc.	13,975,047	0.4	67,199,246
SoftBank Group Corp.	1,926,923	0.5	87,573,381
Sony Corp.	1,406,635	0.5	80,068,667
Toyota Motor Corp.	2,823,090	1.0	185,111,936
Other Securities		19.6	3,560,092,454
		22.3	4,039,921,127

Netherlands 3.0%
ASML Holding N.V.	442,518	0.5	98,561,069
Unilever N.V.	1,633,012	0.6	101,499,129
Other Securities		1.9	348,871,376
		3.0	548,931,574

New Zealand 0.3%
Other Securities		0.3	48,582,730

₁₉

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Norway 0.6%
Other Securities		0.6	110,247,442

Poland 0.3%
Other Securities		0.3	51,766,256

Portugal 0.1%
Other Securities		0.1	24,290,643

Republic of Korea 3.6%
Samsung Electronics Co., Ltd.	5,289,728	1.1	192,155,238
Other Securities		2.5	455,377,464
		3.6	647,532,702

Singapore 1.2%
Other Securities		1.2	210,625,854

Spain 2.5%
Banco Santander S.A.	18,015,863	0.3	68,249,496
Iberdrola S.A.	7,019,929	0.4	72,297,479
Other Securities		1.8	306,332,801
		2.5	446,879,776

Sweden 2.2%
Other Securities		2.2	400,254,614

Switzerland 8.1%
Nestle S.A.	3,355,283	2.1	376,407,512
Novartis AG	2,464,978	1.2	221,747,124
Roche Holding AG	783,410	1.2	214,251,095
Other Securities		3.6	660,337,220
		8.1	1,472,742,951

United Kingdom 14.3%
AstraZeneca plc	1,477,317	0.7	131,661,864
BP plc	22,377,584	0.8	136,317,239
British American Tobacco plc	2,568,986	0.5	90,104,841
Diageo plc	2,624,340	0.6	111,973,724
GlaxoSmithKline plc	5,514,703	0.6	114,952,469
HSBC Holdings plc	22,775,731	0.9	164,039,163
Rio Tinto plc	1,240,480	0.4	62,687,281
Royal Dutch Shell plc, A Shares	4,948,725	0.8	137,139,973
Royal Dutch Shell plc, B Shares	4,251,034	0.7	117,261,834
Unilever plc	1,225,395	0.4	77,542,383
Other Securities		7.9	1,445,261,966
		14.3	2,588,942,737
Total Common Stock
(Cost $17,366,469,751)			17,927,284,030

Security	Number of Shares	% of Net Assets	Value ($)
Preferred Stock 0.7% of net assets

Germany 0.5%
Other Securities		0.5	79,514,178

Italy 0.0%
Other Securities		0.0	3,593,556

Republic of Korea 0.2%
Other Securities		0.2	36,376,892

Spain 0.0%
Other Securities		0.0	5,617,842
Total Preferred Stock
(Cost $126,758,465)			125,102,468

Other Investment Companies 0.2% of net assets

United States 0.2%
Money Market Fund 0.1%
Other Securities		0.1	16,096,739
Securities Lending Collateral 0.1%
Other Securities		0.1	19,458,984
Total Other Investment Companies
(Cost $35,555,723)			35,555,723

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Depreciation ($)
Futures Contracts
Long
MSCI EAFE Index, expires 09/20/19	894	82,422,330	(63,284)

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $18,723,737.
(b)	Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees.
(c)	The rate shown is the 7-day yield.

REIT —	Real Estate Investment Trust
RSP —	Risparmio (Convertible Savings Shares)

₂₀

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

The following is a summary of the inputs used to value the fund’s investments as of August 31, 2019 and reflects the complete schedule of portfolio holdings (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
Assets
Common Stock¹	$17,295,843,477	$—	$—	$17,295,843,477
Hong Kong	607,149,910	—	— ^*	607,149,910
Portugal	24,290,643	—	— ^*	24,290,643
Preferred Stock¹	125,102,468	—	—	125,102,468
Other Investment Companies¹	35,555,723	—	—	35,555,723
Liabilities
Futures Contracts²	(63,284)	—	—	(63,284)
Total	$18,087,878,937	$—	$—	$18,087,878,937

*	Level 3 amount shown includes securities determined to have no value at August 31, 2019.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are valued at unrealized appreciation or depreciation.

Fund investments in underlying mutual funds are classified as Level 1, without consideration to the classification level of the investments held by the underlying mutual funds, which could be Level 1, Level 2 or Level 3.

₂₁

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in unaffiliated issuers, at value (cost $17,509,324,955) including securities on loan of $18,723,737		$18,068,483,237
Collateral invested for securities on loan, at value (cost $19,458,984)		19,458,984
Deposit with broker for futures contracts		4,108,500
Foreign currency, at value (cost $3,383,949)		3,381,214
Receivables:
Dividends		49,655,286
Foreign tax reclaims		16,037,856
Variation margin on futures contracts		375,480
Income from securities on loan	+	95,888
Total assets		18,161,596,445
Liabilities
Collateral held for securities on loan		19,458,984
Payables:
Investments bought		2,628,207
Management fees	+	972,271
Total liabilities		23,059,462
Net Assets
Total assets		18,161,596,445
Total liabilities	–	23,059,462
Net assets		$18,138,536,983
Net Assets by Source
Capital received from investors		17,957,193,724
Total distributable earnings¹		181,343,259

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$18,138,536,983		588,500,000		$30.82

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₂₂

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Statement of Operations

For the period September 1, 2018 through August 31, 2019

Investment Income
Dividends (net of foreign withholding tax of $53,699,652)		$546,461,757
Securities on loan, net	+	2,769,439
Total investment income		549,231,196
Expenses
Management fees		10,029,402
Professional fees	+	93,919*
Total expenses		10,123,321
Expense reduction by CSIM	–	93,919*
Net expenses	–	10,029,402
Net investment income		539,201,794
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(303,859,334)
Net realized gains on futures contracts		63,224
Net realized losses on foreign currency transactions	+	(1,105,920)
Net realized losses		(304,902,030)
Net change in unrealized appreciation (depreciation) on investments		(816,947,205)
Net change in unrealized appreciation (depreciation) on futures contracts		(321,244)
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(359,001)
Net change in unrealized appreciation (depreciation)	+	(817,627,450)
Net realized and unrealized losses		(1,122,529,480)
Decrease in net assets resulting from operations		($583,327,686)

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₂₃

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$539,201,794	$414,988,466
Net realized losses		(304,902,030)	(59,555,035)
Net change in unrealized appreciation (depreciation)	+	(817,627,450)	141,092,417
Increase (decrease) in net assets resulting from operations		(583,327,686)	496,525,848
Distributions to Shareholders1
Total distributions		($592,259,760)	($308,067,760)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		98,500,000	$3,020,072,181	138,900,000	$4,692,583,434
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		98,500,000	$3,020,072,181	138,900,000	$4,692,583,434
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		490,000,000	$16,294,052,248	351,100,000	$11,413,010,726
Total increase	+	98,500,000	1,844,484,735	138,900,000	4,881,041,522
End of period²		588,500,000	$18,138,536,983	490,000,000	$16,294,052,248

¹	For the period ended August 31, 2018, the fund distributed to shareholders $308,067,760 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $292,309,858 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₂₄

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$35.86	$34.80	$29.96	$29.46	$33.32
Income (loss) from investment operations:
Net investment income (loss)¹	0.82	0.84	0.73	0.67	0.73
Net realized and unrealized gains (losses)	(4.63)	1.22	4.70	0.50	(3.84)
Total from investment operations	(3.81)	2.06	5.43	1.17	(3.11)
Less distributions:
Distributions from net investment income	(0.90)	(1.00)	(0.59)	(0.67)	(0.75)
Net asset value at end of period	$31.15	$35.86	$34.80	$29.96	$29.46
Total return	(10.57%)	5.93%	18.52%	4.12%	(9.29%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.12%	0.12%	0.14% ²	0.17% ³	0.18% ⁴
Net investment income (loss)	2.54%	2.31%	2.31%	2.34%	2.40%
Portfolio turnover rate⁵	20%	16%	12%	23%	23%
Net assets, end of period (x 1,000)	$2,186,842	$2,280,998	$1,538,038	$787,951	$609,773

Calculated based on the average shares outstanding during the period.

Effective March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

Effective March 1, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁴

Effective March 4, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/15 is a blended ratio.

⁵

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

₂₅

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.0% of net assets

Australia 6.4%
Afterpay Touch Group Ltd. *	218,358	0.2	4,557,738
Charter Hall Group	587,909	0.2	5,010,712
Other Securities		6.0	130,451,291
		6.4	140,019,741

Austria 1.0%
Other Securities		1.0	22,164,676

Belgium 2.2%
Argenx SE *	47,559	0.3	6,190,648
Other Securities		1.9	42,166,227
		2.2	48,356,875

Canada 19.5%
Air Canada *	167,895	0.3	5,654,200
Algonquin Power & Utilities Corp.	614,505	0.4	8,046,649
Allied Properties Real Estate Investment Trust	137,790	0.3	5,443,991
AltaGas Ltd.	340,711	0.2	4,635,803
Aurora Cannabis, Inc. *(a)	993,603	0.3	5,488,445
B2Gold Corp. *	1,238,347	0.2	4,454,620
CAE, Inc.	341,355	0.4	8,952,605
Cameco Corp.	494,970	0.2	4,350,730
Canadian Apartment Properties REIT	183,236	0.3	7,384,323
Canopy Growth Corp. *(a)	223,364	0.2	5,288,254
CCL Industries, Inc., Class B	183,363	0.4	8,325,022
Cronos Group, Inc. *(a)	419,976	0.2	4,642,871
Emera, Inc.	293,524	0.6	12,741,168
Empire Co., Ltd., A Shares	215,316	0.3	5,951,653
First Quantum Minerals Ltd.	852,256	0.2	5,233,601
Gildan Activewear, Inc.	258,545	0.4	9,496,976
H&R Real Estate Investment Trust	361,284	0.3	6,152,812
IA Financial Corp., Inc. *	137,430	0.3	5,726,595
Keyera Corp.	264,168	0.3	6,387,506
Kinross Gold Corp. *	1,556,869	0.4	7,756,226
Kirkland Lake Gold Ltd.	233,459	0.5	11,374,274
Onex Corp.	103,173	0.3	6,073,293
Open Text Corp.	325,324	0.6	12,752,955
Pan American Silver Corp.	258,086	0.2	4,766,278
Parkland Fuel Corp.	183,809	0.3	5,743,340
Ritchie Bros. Auctioneers, Inc.	136,740	0.2	5,420,000
TMX Group Ltd.	69,379	0.3	6,020,539
Toromont Industries Ltd.	98,020	0.2	4,704,045

Security	Number of Shares	% of Net Assets	Value ($)
WSP Global, Inc.	129,424	0.3	7,020,531
Other Securities		10.4	229,574,497
		19.5	425,563,802

Denmark 1.4%
Royal Unibrew A/S	62,729	0.3	5,442,208
SimCorp A/S	49,540	0.2	4,620,641
Other Securities		0.9	19,987,995
		1.4	30,050,844

Finland 1.1%
Other Securities		1.1	23,919,817

France 3.0%
Altran Technologies S.A.	290,817	0.2	4,634,195
Euronext N.V.	87,261	0.3	6,856,462
Other Securities		2.5	53,200,259
		3.0	64,690,916

Germany 4.7%
Dialog Semiconductor plc *	95,902	0.2	4,537,095
MorphoSys AG *	39,823	0.2	4,714,421
Other Securities		4.3	92,753,627
		4.7	102,005,143

Hong Kong 1.5%
Other Securities		1.5	32,127,970

Ireland 0.4%
Other Securities		0.4	8,080,396

Israel 0.7%
Other Securities		0.7	14,467,744

Italy 2.7%
Other Securities		2.7	58,817,278

Japan 18.8%
Other Securities		18.8	411,624,440

₂₆

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Netherlands 2.2%
IMCD N.V.	65,928	0.2	4,632,085
Takeaway.com N.V. *	45,605	0.2	4,361,825
Other Securities		1.8	39,427,850
		2.2	48,421,760

New Zealand 1.0%
Other Securities		1.0	23,005,996

Norway 1.8%
Other Securities		1.8	40,210,171

Poland 0.7%
Other Securities		0.7	14,839,992

Portugal 0.4%
Other Securities		0.4	9,292,784

Republic of Korea 4.2%
Other Securities		4.2	92,936,622

Singapore 1.4%
Other Securities		1.4	30,184,815

Spain 1.6%
Other Securities		1.6	36,202,163

Sweden 4.8%
Fabege AB	335,395	0.3	5,613,971
Other Securities		4.5	99,086,516
		4.8	104,700,487

Switzerland 4.1%
Other Securities		4.1	89,460,496

United Kingdom 13.4%
BBA Aviation plc	1,322,232	0.2	5,169,001
Beazley plc	662,400	0.2	4,594,179
Dechra Pharmaceuticals plc	125,105	0.2	4,570,775
HomeServe plc	342,091	0.2	4,782,747
Intermediate Capital Group plc	348,711	0.3	5,673,695
SSP Group plc	549,818	0.2	4,734,044
The Unite Group plc	357,673	0.2	4,560,650
Other Securities		11.9	260,100,528
		13.4	294,185,619
Total Common Stock
(Cost $2,259,590,662)			2,165,330,547

Preferred Stock 0.3% of net assets

Germany 0.2%
Other Securities		0.2	3,784,268

Security	Number of Shares	% of Net Assets	Value ($)
Italy 0.0%
Other Securities		0.0	457,102

Republic of Korea 0.0%
Other Securities		0.0	208,497

Sweden 0.1%
Other Securities		0.1	1,012,759
Total Preferred Stock
(Cost $6,791,000)			5,462,626

Rights 0.0% of net assets

Singapore 0.0%
Other Securities		0.0	2,560
Total Rights
(Cost $—)			2,560

Warrants 0.0% of net assets

Singapore 0.0%
Other Securities		0.0	—
Total Warrants
(Cost $—)			—

Other Investment Companies 3.6% of net assets

Switzerland 0.3%
BB Biotech AG	69,486	0.2	4,438,340
Other Securities		0.1	1,438,860
		0.3	5,877,200

United Kingdom 0.1%
Other Securities		0.1	2,322,963

United States 3.2%
Money Market Fund 0.1%
Other Securities		0.1	2,035,557
Securities Lending Collateral 3.1%
Wells Fargo Government Money Market Fund, Select Class 2.03% (c)		3.1	68,896,383
		3.2	70,931,940
Total Other Investment Companies
(Cost $78,846,277)			79,132,103

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
MSCI EAFE Index, expires 09/20/19	77	7,099,015	139,722

₂₇

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $65,060,287.
(b)	Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees.
(c)	The rate shown is the 7-day yield.

CVA —	Dutch Certificate
REIT —	Real Estate Investment Trust
RSP —	Risparmio (Convertible Savings Shares)

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Assets
Common Stock¹	$1,422,234,796	$—	$—	$1,422,234,796
Australia	139,545,363	—	474,378 ^*	140,019,741
Hong Kong	32,106,862	—	21,108 ^*	32,127,970
Japan	411,333,381	—	291,059	411,624,440
Republic of Korea	92,717,117	—	219,505	92,936,622
Singapore	29,950,236	—	234,579 ^*	30,184,815
Spain	36,202,163	—	— ^*	36,202,163
Preferred Stock¹	5,462,626	—	—	5,462,626
Rights ¹
Singapore	—	—	2,560	2,560
Warrants ¹
Singapore	—	—	— ^*	—
Other Investment Companies¹	79,132,103	—	—	79,132,103
Futures Contracts²	139,722	—	—	139,722
Total	$2,248,824,369	$—	$1,243,189	$2,250,067,558

*	Level 3 amount shown includes securities determined to have no value at August 31, 2019.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are valued at unrealized appreciation or depreciation.

₂₈

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in unaffiliated issuers, at value (cost $2,276,331,556) including securities on loan of $65,060,287		$2,181,031,453
Collateral invested for securities on loan, at value (cost $68,896,383)		68,896,383
Deposit with broker for futures contracts		949,500
Receivables:
Investments sold		4,972,574
Dividends		3,009,977
Foreign tax reclaims		1,131,746
Income from securities on loan		355,123
Variation margin on futures contracts	+	31,238
Total assets		2,260,377,994
Liabilities
Collateral held for securities on loan		68,896,383
Foreign currency		4,227,201
Payables:
Investments bought		44,813
Management fees		235,757
Foreign capital gains tax	+	131,350
Total liabilities		73,535,504
Net Assets
Total assets		2,260,377,994
Total liabilities	–	73,535,504
Net assets		$2,186,842,490
Net Assets by Source
Capital received from investors		2,394,321,502
Total distributable loss¹		(207,479,012)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$2,186,842,490		70,200,000		$31.15

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₂₉

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Operations

For the period September 1, 2018 through August 31, 2019

Investment Income
Dividends (net of foreign withholding tax of $5,739,160)		$53,604,172
Securities on loan, net	+	3,308,332
Total investment income		56,912,504
Expenses
Management fees		2,560,827
Professional fees	+	4,324*
Total expenses		2,565,151
Expense reduction by CSIM	–	4,324*
Net expenses	–	2,560,827
Net investment income		54,351,677
Realized and Unrealized Gains (Losses)
Net realized losses on investments (net of foreign capital gains tax of $9,163)		(56,853,213)
Net realized gains on in-kind redemptions		79,664,619
Net realized losses on futures contracts		(520,182)
Net realized losses on foreign currency transactions	+	(240,107)
Net realized gains		22,051,117
Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gains tax of $106,693)		(312,727,154)
Net change in unrealized appreciation (depreciation) on futures contracts		181,111
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(24,532)
Net change in unrealized appreciation (depreciation)	+	(312,570,575)
Net realized and unrealized losses		(290,519,458)
Decrease in net assets resulting from operations		($236,167,781)

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₃₀

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$54,351,677	$43,918,155
Net realized gains		22,051,117	47,132,418
Net change in unrealized appreciation (depreciation)	+	(312,570,575)	636,039
Increase (decrease) in net assets resulting from operations		(236,167,781)	91,686,612
Distributions to Shareholders1
Total distributions		($59,504,600)	($47,913,600)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		14,200,000	$453,570,587	22,700,000	$818,810,444
Shares redeemed	+	(7,600,000)	(252,053,793)	(3,300,000)	(119,623,285)
Net transactions in fund shares		6,600,000	$201,516,794	19,400,000	$699,187,159
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		63,600,000	$2,280,998,077	44,200,000	$1,538,037,906
Total increase or decrease	+	6,600,000	(94,155,587)	19,400,000	742,960,171
End of period²		70,200,000	$2,186,842,490	63,600,000	$2,280,998,077

¹	For the period ended August 31, 2018, the fund distributed to shareholders $47,913,600 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $13,971,989 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₃₁

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$25.89	$26.99	$22.56	$20.83	$27.34
Income (loss) from investment operations:
Net investment income (loss)¹	0.72	0.68	0.71	0.58	0.66
Net realized and unrealized gains (losses)	(1.00)	(1.13)	4.21	1.64	(6.49)
Total from investment operations	(0.28)	(0.45)	4.92	2.22	(5.83)
Less distributions:
Distributions from net investment income	(0.79)	(0.65)	(0.49)	(0.49)	(0.68)
Net asset value at end of period	$24.82	$25.89	$26.99	$22.56	$20.83
Total return	(0.97%)	(1.79%)	22.40%	11.02%	(21.62%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.13%	0.13%	0.13% ²	0.14%	0.14%
Net investment income (loss)	2.85%	2.48%	2.96%	2.85%	2.66%
Portfolio turnover rate³	13%	18%	7%	10%	8%
Net assets, end of period (x 1,000)	$5,804,446	$4,900,591	$4,248,821	$2,009,874	$1,276,740

Calculated based on the average shares outstanding during the period.

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

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

₃₂

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 97.3% of net assets

Brazil 6.8%
Ambev S.A.	5,419,070	0.4	24,549,874
B3 S.A. - Brasil Bolsa Balcao	2,483,100	0.5	26,920,981
Itau Unibanco Holding S.A. ADR	5,975,747	0.9	49,240,155
Petroleo Brasileiro S.A.	3,657,369	0.4	25,021,495
Vale S.A. *	4,282,656	0.8	47,229,232
Other Securities		3.8	220,462,200
		6.8	393,423,937

Chile 1.0%
Other Securities		1.0	57,448,798

China 33.7%
Alibaba Group Holding Ltd. ADR *	1,508,451	4.6	264,024,179
Baidu, Inc. ADR *	343,445	0.6	35,879,699
Bank of China Ltd., H Shares	96,815,929	0.7	36,945,335
China Construction Bank Corp., H Shares	117,095,771	1.5	86,977,274
China Life Insurance Co., Ltd., H Shares	9,671,287	0.4	22,637,330
China Merchants Bank Co., Ltd., H Shares	4,669,612	0.4	21,276,031
China Mobile Ltd.	6,627,465	1.0	54,937,412
China Petroleum & Chemical Corp., H Shares	31,841,518	0.3	18,652,972
CNOOC Ltd.	19,878,079	0.5	29,682,595
Industrial & Commercial Bank of China Ltd., H Shares	98,780,485	1.1	62,404,794
JD.com, Inc. ADR *	996,731	0.5	30,400,295
Meituan Dianping., B Shares *	4,269,772	0.7	40,516,065
NetEase, Inc. ADR	89,259	0.4	22,761,045
New Oriental Education & Technology Group, Inc. ADR *	171,549	0.3	19,453,657
Ping An Insurance Group Co. of China Ltd., H Shares	6,866,982	1.4	78,789,292
Tencent Holdings Ltd.	7,148,307	5.1	296,319,898
Other Securities		14.2	833,986,589
		33.7	1,955,644,462

Colombia 0.4%
Other Securities		0.4	23,600,346

Czech Republic 0.2%
Other Securities		0.2	11,405,439

Security	Number of Shares	% of Net Assets	Value ($)
Egypt 0.1%
Other Securities		0.1	8,705,395

Greece 0.4%
Other Securities		0.4	21,472,988

Hungary 0.4%
Other Securities		0.4	20,810,056

India 11.0%
Axis Bank Ltd.	2,241,253	0.4	20,837,697
Hindustan Unilever Ltd.	883,783	0.4	23,291,548
Housing Development Finance Corp., Ltd.	2,155,234	1.1	65,388,183
Infosys Ltd.	4,723,356	0.9	53,902,781
Reliance Industries Ltd.	3,884,119	1.2	67,913,269
Tata Consultancy Services Ltd.	1,127,144	0.6	35,667,046
Other Securities		6.4	372,516,110
		11.0	639,516,634

Indonesia 2.4%
PT Bank Central Asia Tbk	12,006,640	0.5	25,816,180
PT Bank Rakyat Indonesia (Persero) Tbk	65,143,668	0.3	19,609,691
PT Telekomunikasi Indonesia (Persero) Tbk	58,147,565	0.3	18,241,570
Other Securities		1.3	74,120,420
		2.4	137,787,861

Kuwait 1.0%
National Bank of Kuwait SAKP	7,603,140	0.4	24,810,246
Other Securities		0.6	31,240,996
		1.0	56,051,242

Malaysia 2.9%
Public Bank Berhad	3,851,354	0.3	18,608,849
Other Securities		2.6	151,215,908
		2.9	169,824,757

Mexico 3.1%
America Movil S.A.B. de C.V., Series L	34,721,407	0.4	25,365,626
Fomento Economico Mexicano S.A.B. de C.V.	2,616,253	0.4	23,862,521

₃₃

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Grupo Financiero Banorte S.A.B. de C.V., O Shares	3,509,617	0.3	18,857,033
Other Securities		2.0	112,123,738
		3.1	180,208,918

Peru 0.1%
Other Securities		0.1	4,129,187

Philippines 1.4%
Other Securities		1.4	82,707,065

Qatar 1.3%
Qatar National Bank QPSC	5,544,004	0.5	29,152,928
Other Securities		0.8	48,431,992
		1.3	77,584,920

Russia 4.4%
Gazprom PJSC *	13,147,549	0.8	45,821,141
LUKOIL PJSC	595,619	0.8	48,101,971
NovaTek PJSC	1,341,631	0.4	25,941,875
Sberbank of Russia PJSC	12,820,940	0.7	43,152,694
Tatneft PJSC	1,908,820	0.4	21,294,363
Other Securities		1.3	72,305,560
		4.4	256,617,604

Saudi Arabia 1.7%
Other Securities		1.7	97,059,871

South Africa 6.8%
Naspers Ltd., N Shares	534,181	2.1	121,508,477
Standard Bank Group Ltd.	1,623,752	0.3	18,956,205
Other Securities		4.4	252,098,776
		6.8	392,563,458

Taiwan 12.6%
Hon Hai Precision Industry Co., Ltd.	14,975,092	0.6	35,375,735
MediaTek, Inc.	1,861,713	0.4	21,782,220
Taiwan Semiconductor Manufacturing Co., Ltd.	30,101,500	4.3	248,210,395
Other Securities		7.3	428,235,047
		12.6	733,603,397

Thailand 3.8%
PTT PCL NVDR	18,024,800	0.5	26,088,720
Other Securities		3.3	192,357,265
		3.8	218,445,985

Turkey 0.7%
Other Securities		0.7	43,123,533

Security	Number of Shares	% of Net Assets	Value ($)
United Arab Emirates 1.1%
First Abu Dhabi Bank PJSC	5,463,365	0.4	22,697,399
Other Securities		0.7	42,530,221
		1.1	65,227,620
Total Common Stock
(Cost $5,315,158,228)			5,646,963,473

Preferred Stock 2.5% of net assets

Brazil 2.1%
Banco Bradesco S.A.	5,034,842	0.7	40,147,632
Petroleo Brasileiro S.A.	4,949,214	0.5	30,541,832
Other Securities		0.9	55,805,870
		2.1	126,495,334

Chile 0.1%
Other Securities		0.1	3,601,836

Colombia 0.1%
Other Securities		0.1	3,412,732

Russia 0.2%
Other Securities		0.2	10,481,006
Total Preferred Stock
(Cost $128,252,311)			143,990,908

Rights 0.0% of net assets

Brazil 0.0%
Other Securities		0.0	62,621

China 0.0%
Other Securities		0.0	—
Total Rights
(Cost $—)			62,621

Warrants 0.0% of net assets

Thailand 0.0%
Other Securities		0.0	—
Total Warrants
(Cost $—)			—

Corporate Bond 0.0% of net assets

India 0.0%
Other Securities		0.0	30,438
Total Corporate Bond
(Cost $29,483)			30,438

₃₄

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Other Investment Companies 0.2% of net assets

United States 0.2%
Money Market Fund 0.1%
Other Securities		0.1	5,028,748
Securities Lending Collateral 0.1%
Other Securities		0.1	5,664,659
Total Other Investment Companies
(Cost $10,693,407)			10,693,407

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
MSCI Emerging Markets Index, expires 09/20/19	253	12,447,600	192,550

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $5,258,438.
(b)	Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees.
(c)	The rate shown is the 7-day yield.

ADR —	American Depositary Receipt
DVR —	Differential Voting Rights
GDR —	Global Depositary Receipt
NVDR —	Non-Voting Depositary Receipt
REIT —	Real Estate Investment Trust

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Assets
Common Stock¹	$3,669,846,023	$—	$—	$3,669,846,023
China	1,953,830,304	—	1,814,158 ^*	1,955,644,462
Greece	21,472,988	—	— ^*	21,472,988
Preferred Stock¹	143,990,908	—	—	143,990,908
Rights ¹	62,621	—	—	62,621
China	—	—	— ^*	—
Warrants ¹
Thailand	—	—	—	—
Corporate Bonds¹	—	30,438	—	30,438
Other Investment Companies¹	10,693,407	—	—	10,693,407
Futures Contracts²	192,550	—	—	192,550
Total	$5,800,088,801	$30,438	$1,814,158	$5,801,933,397

*	Level 3 amount shown includes securities determined to have no value at August 31, 2019.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are valued at unrealized appreciation or depreciation.

₃₅

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in unaffiliated issuers, at value (cost $5,448,468,770) including securities on loan of $5,258,438		$5,796,076,188
Collateral invested for securities on loan, at value (cost $5,664,659)		5,664,659
Deposit with broker for futures contracts		2,410,200
Foreign currency, at value (cost $7,234,716)		7,235,288
Receivables:
Dividends		10,807,817
Variation margin on futures contracts		93,819
Income from securities on loan		34,282
Foreign tax reclaims	+	12,416
Total assets		5,822,334,669
Liabilities
Collateral held for securities on loan		5,664,659
Payables:
Investments bought		5,996,437
Management fees		678,055
Foreign capital gains tax	+	5,549,139
Total liabilities		17,888,290
Net Assets
Total assets		5,822,334,669
Total liabilities	–	17,888,290
Net assets		$5,804,446,379
Net Assets by Source
Capital received from investors		5,842,080,963
Total distributable loss¹		(37,634,584)

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$5,804,446,379		233,900,000		$24.82

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₃₆

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Operations

For the period September 1, 2018 through August 31, 2019

Investment Income
Dividends (net of foreign withholding tax of $17,397,029)		$159,201,753
Securities on loan, net	+	953,639
Total investment income		160,155,392
Expenses
Management fees		6,957,390
Professional fees	+	17,966*
Total expenses		6,975,356
Expense reduction by CSIM	–	17,966*
Net expenses	–	6,957,390
Net investment income		153,198,002
Realized and Unrealized Gains (Losses)
Net realized losses on investments (net of foreign capital gains tax of $439)		(122,528,426)
Net realized gains on in-kind redemptions		23,547,896
Net realized gains on futures contracts		287,138
Net realized losses on foreign currency transactions	+	(1,131,110)
Net realized losses		(99,824,502)
Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gains tax of ($5,127,813))		(98,720,972)
Net change in unrealized appreciation (depreciation) on futures contracts		336,719
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	165,988
Net change in unrealized appreciation (depreciation)	+	(98,218,265)
Net realized and unrealized losses		(198,042,767)
Decrease in net assets resulting from operations		($44,844,765)

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₃₇

Schwab International Equity ETFs | Annual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$153,198,002	$120,916,490
Net realized losses		(99,824,502)	(81,491,649)
Net change in unrealized appreciation (depreciation)	+	(98,218,265)	(193,893,853)
Decrease in net assets resulting from operations		(44,844,765)	(154,469,012)
Distributions to Shareholders1
Total distributions		($160,604,080)	($107,285,800)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		46,300,000	$1,153,254,120	32,900,000	$940,429,372
Shares redeemed	+	(1,700,000)	(43,949,430)	(1,000,000)	(26,904,868)
Net transactions in fund shares		44,600,000	$1,109,304,690	31,900,000	$913,524,504
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		189,300,000	$4,900,590,534	157,400,000	$4,248,820,842
Total increase	+	44,600,000	903,855,845	31,900,000	651,769,692
End of period²		233,900,000	$5,804,446,379	189,300,000	$4,900,590,534

¹	For the period ended August 31, 2018, the fund distributed to shareholders $107,285,800 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $77,987,465 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

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See financial notes

Schwab International Equity ETFs

Financial Notes

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 International Equity ETF	Schwab U.S. REIT ETF
Schwab International Small-Cap Equity ETF	Schwab U.S. TIPS ETF
Schwab Emerging Markets Equity ETF	Schwab Short-Term U.S. Treasury ETF
Schwab U.S. Broad Market ETF	Schwab Intermediate-Term U.S. Treasury ETF
Schwab 1000 Index^® ETF	Schwab U.S. Aggregate Bond ETF
Schwab U.S. Large-Cap ETF	Schwab Fundamental U.S. Broad Market Index ETF
Schwab U.S. Large-Cap Growth ETF	Schwab Fundamental U.S. Large Company Index ETF
Schwab U.S. Large-Cap Value ETF	Schwab Fundamental U.S. Small Company Index ETF
Schwab U.S. Mid-Cap ETF	Schwab Fundamental International Large Company Index ETF
Schwab U.S. Small-Cap ETF	Schwab Fundamental International Small Company Index ETF
Schwab U.S. Dividend Equity ETF	Schwab Fundamental Emerging Markets Large Company Index ETF

The funds issue and redeem shares at their net asset value per share (NAV) only in large blocks of shares, typically 100,000 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 institutional investors who have entered into an authorized participant agreement purchase or redeem Creation Units. Except when aggregated in Creation Units, shares of the funds are not redeemable securities.

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

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

2. Significant Accounting Policies:

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

The funds may 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(S) for this reporting period, 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.

Effective November 5, 2018, the funds adopted SEC Regulation S-X disclosure requirement changes. The adopted changes are reflected throughout this report.

(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:

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Financial Notes (continued)

2. Significant Accounting Policies (continued):

• 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 the mean of 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 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.

• Underlying funds: Mutual funds are valued at their respective NAVs.

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 and futures contracts. Investments in mutual funds are valued daily at their NAVs, 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.

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

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

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Financial Notes (continued)

2. Significant Accounting Policies (continued):

The levels associated with valuing the funds’ investments as of August 31, 2019 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 or the lending agent to terminate any loan at any given time and the securities must be returned within the earlier of the standard trade settlement period or the specified time period under the relevant securities lending agreement. 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. 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. Securities lending fees paid to the unaffiliated lending agent start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%. In this context, the gross lending revenue equals the income received from the investment of cash collateral and fees paid by borrowers less any rebates paid to the borrowers. Any expenses charged by the cash collateral fund are in addition to these fees. All remaining revenue is retained by the fund, as applicable. No portion of lending revenue is paid to or retained by Charles Schwab Investment Management, Inc. (CSIM or the investment adviser) or any affiliate of CSIM.

As of August 31, 2019, the funds had securities on loan, all of which were classified as common stocks. The value of the securities on loan and the related collateral as of August 31, 2019, if any, are disclosed in each fund’s Condensed Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund’s Statement of Assets and Liabilities.

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.

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 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.

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Financial Notes (continued)

2. Significant Accounting Policies (continued):

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.

The funds filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser.

(e) Expenses:

Pursuant to the Amended and Restated Advisory Agreement (Advisory Agreement) between CSIM and the trust, the investment adviser will pay the operating expenses of each fund, excluding taxes, any brokerage expenses, and extraordinary or non-routine expenses. 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:

Effective June 5, 2019, the funds make distributions from net investment income, if any, semiannually. Prior to June 5, 2019, the funds made distributions from net investment income annually. The funds generally make distributions 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 funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. 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.

(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, 2019, if any, are reflected in each fund’s Statement of Assets and Liabilities.

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Financial Notes (continued)

2. Significant Accounting Policies (continued):

(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) Recent Accounting Standards:

In August 2018, the FASB issued Accounting Standards Update “Fair Value Measurement (Topic 820)” (ASU 2018-13) which modifies the disclosure requirements for fair value measurement by removing, modifying, or adding certain disclosures. The amendments are effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The funds are permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The funds have early adopted certain removed or modified disclosures, including the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of transfers between levels upon issuance of ASU 2018-13, and have delayed adoption of the additional disclosures until their effective date. At this time, management is currently evaluating the impact that the adoption of the additional disclosures will have on the funds’ financial statements.

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. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.

Investment Style Risk. The funds are index funds. Therefore, each fund follows the securities included in its respective 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.

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.

Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, a fund’s performance could be impacted.

Large-Cap Company Risk. Certain funds invest in large-cap company stocks. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.

Mid-Cap Company Risk. Certain funds invest in mid-cap company stocks. Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.

Small-Cap Company Risk. Certain funds invest in small-cap company stocks. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.

Foreign Investment Risk. A fund’s investments in securities of foreign issuers involve certain risks that may be 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 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. There is a risk that investments in securities denominated

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Financial Notes (continued)

3. Risk Factors (continued):

in, and/or receiving revenues in, foreign currencies will decline in value relative to the U.S. dollar. 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 large percentage of the fund’s assets, the fund’s performance may be adversely affected by the economic, political, regulatory and social conditions in those countries and the fund’s price may be more volatile than the price of a fund that is geographically diversified.

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. Emerging market 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 developed countries. As a result, there may be an increased risk of illiquidity and 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. Each fund uses statistical sampling techniques, and as a result, a fund may not fully replicate its respective 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 each fund utilizes a sampling approach, it may not track the return of its respective index as well as it would if a fund purchased all of the securities in its index.

Tracking Error Risk. As index funds, each fund seeks to track the performance of its respective 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 invest in derivative instruments. The principal types of derivatives a fund may use are futures contracts. A futures contract is an agreement to buy or sell a financial instrument at a specific price on a specific day. 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 market risk and liquidity risk, are discussed elsewhere in this section. A fund’s use of derivatives is also subject to leverage risk, credit risk, lack of availability risk, valuation risk, correlation risk and tax risk. Leverage risk is the risk that use of derivatives may magnify the effect of any decrease or increase in the value of the fund’s portfolio securities. 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 a fund to realize higher amounts of short-term capital gains. A 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.

Liquidity Risk. A fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.

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, country 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 vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector, country or asset class.

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 a fund will approximate the fund’s NAV, there may be times when the market price and the NAV vary significantly. An investor may pay more than NAV when buying shares of a fund in the secondary market, and an investor may receive less than NAV when selling those shares in the secondary market. The market price of fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or market disruption, or as a result

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Schwab International Equity ETFs

Financial Notes (continued)

3. Risk Factors (continued):

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. (See the unaudited Frequency Distribution of Discounts and Premiums in Other Information for an overview showing the frequency at which the daily closing price was at a discount or a premium to a fund’s daily NAV.)

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:

Investment Adviser

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

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

Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
0.06%	0.12%	0.13%

Investment from Affiliates

Certain funds in the Fund Complex (for definition refer to Trustees and Officers section) may own shares of other funds in the Fund Complex. The table below reflects the percentages of shares of each fund in this report that are owned by other funds in the Fund Complex as of August 31, 2019, as applicable:

	Underlying Funds
	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Schwab VIT Balanced Portfolio	0.0%*	0.1%	0.1%
Schwab VIT Balanced with Growth Portfolio	0.1%	0.2%	0.2%
Schwab VIT Growth Portfolio	0.2%	0.3%	0.2%
Schwab Target 2010 Index Fund	0.0%*	-%	-%
Schwab Target 2015 Index Fund	0.0%*	-%	-%
Schwab Target 2020 Index Fund	0.1%	-%	0.0%*
Schwab Target 2025 Index Fund	0.2%	-%	0.1%
Schwab Target 2030 Index Fund	0.3%	-%	0.1%
Schwab Target 2035 Index Fund	0.2%	-%	0.1%
Schwab Target 2040 Index Fund	0.2%	-%	0.2%
Schwab Target 2045 Index Fund	0.1%	-%	0.1%
Schwab Target 2050 Index Fund	0.2%	-%	0.1%
Schwab Target 2055 Index Fund	0.1%	-%	0.1%
Schwab Target 2060 Index Fund	0.1%	-%	0.1%

*	Less than 0.05%

Other Affiliated Transactions

The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. The investment adviser agreed to pay these professional fees for this reporting period, subject to reimbursement by the funds to the extent the funds are able to successfully recover taxes withheld in the future.

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Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

As of August 31, 2019, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $93,919 for Schwab International Equity ETF, $4,324 for Schwab International Small-Cap Equity ETF and $17,966 for Schwab Emerging Markets Equity ETF.

No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.

Interfund Transactions

The funds may engage in direct transactions with certain other funds in the Fund Complex when permitted by applicable law. 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, 2019, each fund’s total aggregate security transactions with other funds in the Fund Complex as well as any realized gains (losses) were as follows:

	Total Aggregate Transactions	Realized Gains (Losses)
Schwab International Equity ETF	$336,431,996	($65,669,909)
Schwab International Small-Cap Equity ETF	195,960,706	1,869,645
Schwab Emerging Markets Equity ETF	173,550,460	(37,307,307)

Interfund Borrowing and Lending

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. 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. The interfund lending facility is subject to the oversight and periodic review of the Board. The funds had no interfund borrowing or lending activity during the period.

5. Other Service Providers:

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

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

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

6. Board of Trustees:

The Board may include people who are officers and/or directors of CSIM or its 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 does not pay any interested or non-interested trustees (independent trustees). The independent trustees are paid by CSIM. For information regarding the trustees, please refer to the Trustees and Officers table at the end of this report.

7. Borrowing from Banks:

During the period, the funds were participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $605 million line of credit (the Syndicated Credit Facility), which matured on October 4, 2018. On October 4, 2018, the Syndicated Credit Facility was amended to run for a new 364 day period with an increased line of $750 million, maturing on October 3, 2019. Under the terms of the Syndicated Credit Facility, in addition to CSIM paying the interest charged on any borrowings by a fund, CSIM paid a commitment fee of 0.15% per annum on the funds’ proportionate share of the unused portion of the Syndicated Credit Facility.

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Financial Notes (continued)

7. Borrowing from Banks (continued):

During the period, the funds were participants with other U.S. registered investment companies managed by CSIM in a joint, unsecured, uncommitted $500 million line of credit (the Uncommitted Credit Facility), with State Street, which matured on November 30, 2018. On November 30, 2018, the Uncommitted Credit Facility was amended to run for a new 364 day period, maturing on November 29, 2019. Under the terms of the Uncommitted Credit Facility, CSIM pays interest on the amount a fund borrows. There were no borrowings from either line of credit during the period.

The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is paid by CSIM. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

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 current value and variation margin for futures contracts held at August 31, 2019 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’ accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended August 31, 2019, the month-end average notional amounts of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Notional Amounts	Number of Contracts
Schwab International Equity ETF	$72,152,937	775
Schwab International Small-Cap Equity ETF	9,310,506	100
Schwab Emerging Markets Equity ETF	11,470,100	223

9. Purchases and Sales of Investment Securities:

For the period ended August 31, 2019, purchases and sales of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales of Securities
Schwab International Equity ETF	$1,462,596,017	$1,257,086,549
Schwab International Small-Cap Equity ETF	440,369,027	420,483,430
Schwab Emerging Markets Equity ETF	1,476,719,660	694,562,028

10. In-Kind Transactions:

The consideration for the purchase of Creation Units of a fund often 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, 2019, were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab International Equity ETF	$2,775,494,290	$—
Schwab International Small-Cap Equity ETF	417,326,837	229,400,205
Schwab Emerging Markets Equity ETF	352,126,147	41,874,328

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Financial Notes (continued)

10. In-Kind Transactions (continued):

For the period ended August 31, 2019, where applicable, 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, 2019 are disclosed in the funds’ Statements of Operations, if any.

11. Federal Income Taxes

As of August 31, 2019, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation were as follows:

	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Tax cost	$17,664,096,402	$2,381,153,213	$5,593,265,607
Gross unrealized appreciation	$2,148,951,520	$228,028,504	$753,553,661
Gross unrealized depreciation	(1,725,168,985)	(359,114,159)	(544,885,871)
Net unrealized appreciation (depreciation)	$423,782,535	($131,085,655)	$208,667,790

As of August 31, 2019, the components of distributable earnings on a tax basis were as follows:

	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Undistributed ordinary income	$301,381,946	$44,929,402	$99,907,918
Net unrealized appreciation (depreciation) on investments	423,782,535	(131,085,655)	208,667,790
Net other unrealized appreciation (depreciation)	(185,453)	(155,238)	(5,641,310)
Total	$724,979,028	($86,311,491)	$302,934,398

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of August 31, 2019, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:

Expiration Date	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
No expiration	$543,635,769	$121,167,521	$340,568,982
Total	$543,635,769	$121,167,521	$340,568,982

For the year ended August 31, 2019, the funds had capital loss carryforwards utilized as follows:

	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Capital losses expired	$2,345,874	$215,545	$1,091,404

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 August 31, 2019, the funds had no capital or late-year ordinary losses deferred.

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Financial Notes (continued)

11. Federal Income Taxes (continued):

The tax basis components of distributions paid during the current and prior fiscal years were:

	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Current period distributions
Ordinary income	$592,259,760	$59,504,600	$160,604,080
Long-term capital gains	—	—	—
Prior period distributions
Ordinary income	$308,067,760	$47,913,600	$107,285,800
Long-term capital gains	—	—	—

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments have no impact on net assets or the results of operations.

As of August 31, 2019, 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 August 31, 2019, the funds did not incur any interest or penalties.

12. 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.

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Schwab Strategic Trust and Shareholders of Schwab International Equity ETF, Schwab International Small-Cap Equity ETF and Schwab Emerging Markets Equity ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the condensed portfolio holdings, of Schwab International Equity ETF, Schwab International Small-Cap Equity ETF and Schwab Emerging Markets Equity ETF (three of the funds constituting Schwab Strategic Trust, hereafter collectively referred to as the “Funds”) as of August 31, 2019, the related statements of operations for the year ended August 31, 2019, the statements of changes in net assets for each of the two years in the period ended August 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2019 and each of the financial highlights for each of the five years in the period ended August 31, 2019 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP
San Francisco, California
October 17, 2019

We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 1989.

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Other Information (unaudited)

Frequency Distribution of Discounts and Premiums
Market Price vs. NAV as of August 31, 2019

The following charts are provided to show the frequency at which the daily closing market price on the NYSE Arca, Inc. (Exchange), the secondary market for shares of each fund, was at a discount or premium to such fund’s daily NAV. The “Market Price” of each fund generally is determined using the official closing price on the primary stock exchange (generally, 4:00 p.m. Eastern time) on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. The discount or premium is the percentage difference between the NAV and the Market Price of a fund. A discount is the amount that a fund is trading below the reported NAV, expressed as a percentage of NAV. A premium is the amount that a fund is trading above the reported NAV, expressed as a percentage of NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each fund will fluctuate in accordance with changes in its NAV, as well as supply and demand. Shares are bought and sold at market prices, which may be higher or lower than the NAV. The data presented below represents past performance and cannot be used to predict future results. The chart does not include days in which the NAV equals the Market Price.

	Number of Days Market Price Above NAV				Number of Days Market Price Below NAV
	1-49 Basis Points	50-99 Basis Points	100-199 Basis Points	>200 Basis Points	1-49 Basis Points	50-99 Basis Points	100-199 Basis Points	>200 Basis Points
Schwab International Equity ETF
Commencement of trading
11/3/09 through 8/31/19	1,129	653	163	12	332	107	36	4
Schwab International Small-Cap Equity ETF
Commencement of trading
1/14/10 through 8/31/19	979	765	212	3	294	92	38	6
Schwab Emerging Markets Equity ETF
Commencement of trading
1/14/10 through 8/31/19	761	677	314	21	394	145	66	10

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Investment Advisory Agreement Approval

The Investment Company Act of 1940 (the 1940 Act) requires that the continuation of a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.

The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement (the Agreement) between Schwab Strategic Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including Schwab International Equity ETF, Schwab International Small-Cap Equity ETF and Schwab Emerging Markets Equity ETF (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel, business goals and priorities, profitability, third-party oversight, corporate structure and operations. The Board also receives data provided by an independent provider of investment company data. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. The Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.

The Board, including a majority of the Independent Trustees, considered information specifically relating to the continuance of the Agreement with respect to the Funds at meetings held on May 13, 2019 and June 4, 2019, and approved the renewal of the Agreement with respect to the Funds for an additional one-year term at the meeting held on June 4, 2019. The Board’s approval of the continuance of the Agreement with respect to the Funds was based on consideration and

evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:

1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;
2.	each Fund’s investment performance and how it compared to that of certain other comparable exchange-traded funds and benchmark data;
3.	each Fund’s expenses and how those expenses compared to those of certain other similar exchange-traded funds;
4.	the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Funds, including both direct and indirect benefits accruing to CSIM and its affiliates; and
5.	the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors.

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by CSIM relating to services and support provided with respect to the Funds’ portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments CSIM has made in its infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to the Funds and their shareholders. The Trustees also considered Schwab’s reputation in connection with the OneSource exchange-traded fund offering and the firm’s overall financial condition. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.

Fund Performance. The Board considered each Fund’s performance in determining whether to renew the Agreement with respect to the Fund. Specifically, the Trustees considered

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each Fund’s performance relative to a peer category of other exchange-traded funds and applicable indices/benchmarks, in light of total return and market trends, as well as in consideration of each Fund’s investment style and strategy attributes and disclosures. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the independent provider of investment company data who prepared the peer category analysis. In evaluating the performance of the Funds, the Trustees considered the risk profile for each Fund and such Fund’s demonstrated performance in tracking its benchmark index. The Trustees further considered the level of Fund performance in the context of their review of Fund expenses and adviser profitability discussed below and also noted that performance is reviewed throughout the year by a designated committee of the Board and by the Board. Following such evaluation, the Board concluded, within the context of its full deliberations, that the performance of each Fund supported renewal of the Agreement with respect to the Funds.

Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement and each Fund’s operating expense ratio, in each case in comparison to those of other similar exchange-traded funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. CSIM reported to the Board, and the Board took into account, the risk assumed by CSIM in the development of products and provision of services as well as the competitive marketplace for financial products. The Trustees noted that each Fund’s operating expense ratio was below the median operating expense ratio charged by other funds in its peer group. The Trustees also considered fees charged by CSIM to mutual funds that it manages. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of each Fund are reasonable and supported renewal of the Agreement with respect to the Funds.

Profitability. The Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and reviewed profitability on a pre-tax basis, without regard to distribution expenses. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also reviewed profitability of CSIM relating to the Schwab fund complex as a whole, noting the benefit to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across other funds in the complex. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability with respect to the Funds under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to the

Funds by CSIM and its affiliates. The Trustees noted that CSIM continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems to benefit the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.

Economies of Scale. Although the Trustees recognized the difficulty of determining economies of scale with precision, the Trustees considered the potential existence of any economies of scale and whether those are passed along to the Funds’ shareholders by way of the relatively low advisory fee and unitary fee structure of the Funds through (i) the enhancement of services provided to the Funds in return for fees paid, including through investments by CSIM in CSIM’s infrastructure, including modernizing CSIM’s technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence, and information security programs, which are designed to provide enhanced services to the Funds and their shareholders; (ii) graduated investment advisory fee schedules, fee waivers, or expense caps by CSIM and its affiliates for those funds in the Schwab Funds complex with such features; and (iii) pricing a fund to scale and keeping overall expenses down as the fund grows. The Trustees acknowledged that, in addition, CSIM has shared any economies of scale with the Funds by investing in CSIM’s infrastructure, as discussed above, over time and that CSIM’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Funds continues to increase as a result of regulatory or other developments. The Trustees considered that CSIM and its affiliates may employ contractual expense caps to protect shareholders from high fees when Fund assets are relatively small, for example, in the case of newer funds or funds with investment strategies that are from time to time out of favor, because, among other reasons, shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that each Fund obtains reasonable benefits from economies of scale.

In the course of their deliberations, the Trustees may have accorded different weights to various factors and did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.

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Trustees and Officers

The tables below give information about the trustees and officers of 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 and Laudus Trust. The Fund Complex includes 101 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 1-877-824-5615.

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 of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds.	101	None
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University.	101	Director (2005 – present), Gilead Sciences, Inc.
Nancy F. Heller 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services).	101	None
Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting).	101	None

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Independent Trustees (continued)
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
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016)	Private Investor.	101	Director (2003 – present), Symantec Corporation Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – present), Adamas Pharmaceuticals, Inc.
Jane P. Moncreiff 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019)	Chief Investment Officer (2009-2017), CareGroup Healthcare System, Inc. (healthcare).	101	None
Kiran M. Patel 1948 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016)	Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses).	101	Director (2008 – present), KLA-Tencor Corporation
Kimberly S. Patmore 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016)	Consultant (2008 – present), Patmore Management Consulting (management consulting).	101	None
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors).	101	Director (2012 – present), Eaton Corporation plc

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Interested 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
Walter W. Bettinger II² 1960 Chairman and 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 since 2010)	Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (July 2016 – present), Charles Schwab Investment Management, Inc.	101	Director (2008 – present), The Charles Schwab Corporation
Jonathan de St. Paer² 1973 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019)	Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc.	101	None
Joseph R. Martinetto² 1962 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016)	Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.	101	None

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Jonathan de St. Paer 1973 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc.

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Officers of the Trust (continued)
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
Mark Fischer 1970 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013)	Treasurer and Chief Financial Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management.
George Pereira 1964 Senior Vice President and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust since 2006; Schwab Strategic Trust since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present) and Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Operating Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Treasurer and Chief Financial Officer (June 2006 – Dec. 2015), Laudus Funds; Treasurer and Principal Financial Officer (Nov. 2004 – Dec. 2015), Schwab Funds; Treasurer and Principal Financial Officer (Oct. 2009 – Dec. 2015), Schwab ETFs; Director (Apr. 2005 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited.
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management.
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President and Chief Investment Officer – Fixed Income (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm).
David Lekich 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009)	Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary (Oct. 2009 – present), Schwab ETFs.

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 retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first.
²	Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co.
³	The President, Treasurer and Secretary/Clerk 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.

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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 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.

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.

Bloomberg Barclays US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.

Bloomberg Barclays US Treasury Bills 1–3 Month Index An index that includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months but more than 1 month, are rated investment grade and have $300 million or more of outstanding face value. It excludes zero-coupon STRIPS.

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.

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.

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.

FTSE Developed ex US Index (Net) An index that is comprised of large- and mid-capitalization companies in developed countries outside the United States, as defined by the index provider. The index defines the large- and mid-capitalization universe as approximately the top 90% of the eligible universe. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

FTSE Developed Small Cap ex US Liquid Index (Net) An index comprised of small-capitalization companies in developed countries outside the United States, as defined by the index provider. The index defines the small-capitalization universe as approximately the bottom 10% of the eligible universe with a minimum free float capitalization of $150 million. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

FTSE Emerging Index (Net) An index that is comprised of large- and mid-capitalization companies in emerging market countries, as defined by the index provider. The index defines the large- and mid-capitalization universe as approximately the top 90% of the eligible universe. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

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.

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. Free-float market capitalization is a variation of market capitalization that only includes shares generally available to the public, and excludes shares of a company held by entities such as the government. Modified market capitalization weighting represents a mix between conventional market capitalization weighting and equal weighting.

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.

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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 Index (Net) A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets in Europe, Australasia, and the Far East. 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.

MSCI Emerging Markets Index (Net) A free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The 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.

rights and warrants Rights and warrants are types of securities that entitle the holder to purchase a proportionate amount of common stock at a specified price for a specific period of time. Rights allow a shareholder to buy more shares directly from the company, usually at a price somewhat lower than the current market price of the outstanding shares. Warrants are usually issued with bonds and preferred stock. Rights and warrants can trade on the market separately from the company’s stock. The prices of rights and warrants do not necessarily move parallel to the prices of the underlying common stock. Rights usually expire within a few weeks of issuance, while warrants may not expire for several years. If a right or warrant is not exercised within the specified time period, it will become worthless and a fund will lose the purchase price it paid for the right or warrant and the right to purchase the underlying security.

Russell 2000 Index An index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.

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

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

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

stock A share of ownership, or equity, in the issuing company.

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

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

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Schwab ETFs

Schwab ETFs are designed to serve as simple low-cost core investment products for a diversified portfolio. These ETFs seek to provide consistent, repeatable performance through a variety of investment strategies that span the equity and fixed income spectrum. The list below shows all currently available Schwab ETFs.

Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus 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.schwabfunds.com/schwabetfs_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab ETFs at 1-877-824-5615.

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.schwabfunds.com/schwabetfs_prospectus or the SEC’s website at www.sec.gov.

Schwab ETFs

U.S. ETFs

Schwab U.S. Broad Market ETF

Schwab 1000 Index^® 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. TIPS ETF

Schwab Short-Term U.S. Treasury ETF

Schwab Intermediate-Term U.S. Treasury ETF

Schwab Long-Term U.S. Treasury ETF

Schwab U.S. Aggregate Bond ETF

Schwab 1-5 Year Corporate Bond ETF

Schwab 5-10 Year Corporate Bond 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

Investment Adviser

Charles Schwab Investment Management, Inc.

211 Main Street, San Francisco, CA 94105

Schwab ETFs

1-877-824-5615

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

Annual Report | August 31, 2019

Schwab U.S. Equity ETFs

Schwab U.S. Broad Market ETF	SCHB
Schwab 1000 Index^® ETF	SCHK
Schwab U.S. Large-Cap ETF	SCHX
Schwab U.S. Large-Cap Growth ETF	SCHG
Schwab U.S. Large-Cap Value ETF	SCHV
Schwab U.S. Mid-Cap ETF	SCHM
Schwab U.S. Small-Cap ETF	SCHA
Schwab U.S. Dividend Equity ETF	SCHD

New Notice Regarding Shareholder Report Delivery Options

If you would like to receive a fund’s future shareholder reports in paper free of charge after January 1, 2021, you can make that request:

• If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; or

• If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly.

If you already receive shareholder reports and other fund documents electronically, you will not be affected by this change and you need not take any action.

Schwab U.S. Equity ETFs

Performance at a Glance

Total Returns for the 12 Months Ended August 31, 2019
Schwab U.S. Broad Market ETF (Ticker Symbol: SCHB)
Market Price Return¹	1.26%
NAV Return¹	1.35%
Dow Jones U.S. Broad Stock Market Index	1.35%
ETF Category: Morningstar Large Blend²	1.45%
Performance Details	pages 8-10

Schwab 1000 Index ETF (Ticker Symbol: SCHK)
Market Price Return¹	2.35%
NAV Return¹	2.42%
Schwab 1000 Index^®	2.49%
Russell 1000^® Index	2.49%
ETF Category: Morningstar Large Blend²	1.45%
Performance Details	pages 11-13

Schwab U.S. Large-Cap ETF (Ticker Symbol: SCHX)
Market Price Return¹	2.66%
NAV Return¹	2.70%
Dow Jones U.S. Large-Cap Total Stock Market Index	2.71%
ETF Category: Morningstar Large Blend²	1.45%
Performance Details	pages 14-16

Schwab U.S. Large-Cap Growth ETF (Ticker Symbol: SCHG)
Market Price Return¹	4.02%
NAV Return¹	4.09%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	4.10%
ETF Category: Morningstar Large Growth²	2.69%
Performance Details	pages 17-19

Total Returns for the 12 Months Ended August 31, 2019
Schwab U.S. Large-Cap Value ETF (Ticker Symbol: SCHV)
Market Price Return¹	0.65%
NAV Return¹	0.70%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	0.75%
ETF Category: Morningstar Large Value²	-1.41%
Performance Details	pages 20-22

Schwab U.S. Mid-Cap ETF (Ticker Symbol: SCHM)
Market Price Return¹	-3.34%
NAV Return¹	-3.24%
Dow Jones U.S. Mid-Cap Total Stock Market Index	-3.20%
ETF Category: Morningstar Mid-Cap Blend²	-4.57%
Performance Details	pages 23-25

Schwab U.S. Small-Cap ETF (Ticker Symbol: SCHA)
Market Price Return¹	-10.21%
NAV Return¹	-10.26%
Dow Jones U.S. Small-Cap Total Stock Market Index	-10.28%
ETF Category: Morningstar Small Blend²	-12.34%
Performance Details	pages 26-28

Schwab U.S. Dividend Equity ETF (Ticker Symbol: SCHD)
Market Price Return¹	4.09%
NAV Return¹	4.18%
Dow Jones U.S. Dividend 100^TM Index	4.27%
ETF Category: Morningstar Large Value²	-1.41%
Performance Details	pages 29-31

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 or sale 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 Indices are products of S& P Dow Jones Indices LLC and/or its affiliates, and have been licensed for use by CSIM. The Schwab U.S. Equity ETFs, based on their respective Dow Jones Indices, are 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 products.

ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

From the President

Jonathan de St. Paer
President and CEO of
Charles Schwab Investment
Management, Inc. and the
funds covered in this report.

Dear Shareholder,

If there’s a lesson investors may have learned from recent market cycles, it could be that markets are unpredictable. Stock prices were on a steady climb between the late December 2018 sell-off and the end of April 2019, with the S&P 500^® Index returning more than 25% over that span. However, uncertainty around trade and monetary policy in the months that followed contributed to a cycle of unsettling one-day declines followed by recoveries. When all was said and done, U.S. stock prices finished the 12-month period ended August 31, 2019, in positive territory, with the S&P 500^® Index returning 2.9%.

The ups and downs have understandably put investors on edge, leading many to seek safety in other asset classes such as cash and short-term fixed income. While market fluctuations can be difficult to endure, investors may make matters worse through impulsive reactions to sudden market movements—rather than having a long-term investing plan and sticking to it. In fact, a recent study by the Schwab Center for Financial Research found that investors who stayed invested through the last five market corrections—when the S&P 500^® Index fell 20% or more—ended up earning substantially higher returns than those who moved into cash.¹ The study showed that missing out on even the first month of gains after the market had hit bottom led to lower returns over time. This is in large part because some of the biggest gains generally occur in the months right after the market has hit a low and begins to recover.

At Charles Schwab Investment Management, we believe that maintaining exposure to a mix of asset classes that perform differently over time is a better way to weather various market cycles. We designed the Schwab U.S. Equity ETFs with this long-term investing strategy in mind. Offering simple, low-cost access to U.S. small-, mid-, and large-cap stocks, growth, value, and dividend yielding stocks, the Schwab U.S. Equity ETFs can serve as part of the core of a diversified portfolio.

We have taken great care in developing and designing each of our products. We provide straightforward offerings that meet specific investor needs, without unnecessary cost or complexity. While we may not be able to take all of the surprises out of investing, we can remain constant in our commitment to offering products with clear objectives, transparency, and a consistent investing approach.

¹	Schwab Center for Financial Research. (2019, May 24). Why Waiting for a Market Rebound Could Cost You.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

The Investment Environment

For the 12-month reporting period ended August 31, 2019, U.S. equity markets were mixed. Despite major market indices posting record highs in late September and early October 2018, investor anxiety rose over the final three months of 2018 resulting in a steep market sell-off in December driven by concerns about the pace of future interest rate hikes despite low inflation, falling oil prices, slowing international growth, and trade negotiations between the U.S. and China. However, in the first months of 2019, as the Federal Reserve (Fed) put interest rate hikes on hold, major market indices recovered, notching record highs through July (with the exception of a decline in May when trade negotiations between China and the U.S. stalled). Over the final month of the reporting period, as the trade situation darkened and near-term resolution appeared less likely, volatility spiked, with U.S. stocks recording steep daily gains or losses over most of the month. For the reporting period, the S&P 500^® Index, a bellwether for the overall U.S. stock market, returned 2.92%. Mid- and small-cap stocks were weaker, with the Dow Jones U.S. Mid-Cap Total Stock Market Index and the Russell 2000^® Index returning -3.20% and -12.89%, respectively. Markets outside the U.S. lost ground over the reporting period. The MSCI EAFE^® Index (Net)*, a broad measure of developed international equity performance, returned -3.26% and the MSCI Emerging Markets Index (Net)* returned -4.36%.

Now in its tenth year of expansion, the U.S. economy continued to exhibit steady growth for most of the reporting period, albeit at a declining pace. After concerns of weakness intensified in late 2018, the economic outlook brightened considerably in the first six months of 2019, although signs of slowing growth increased as the year progressed. U.S. gross domestic product (GDP) grew at an annual rate of 2.0% in the second quarter of 2019, down from 3.1% in the first quarter of 2019. Nonfarm payrolls were steady, and the unemployment rate remained low, ending the period at 3.7%, up just slightly from its nearly 50-year low of 3.6% in April and May. Consumer confidence, which hit an 18-year high in October 2018, the highest since 2000, fell the subsequent three months before rebounding in February. However, in August, it fell to its lowest level since October 2016. Continuing trade tensions between the U.S. and China weighed on investor sentiment, resulting in a reduction in investments and capital expenditures.

Asset Class Performance Comparison % returns during the 12 months ended August 31, 2019

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 may have changed since the report date.

*	The net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

The Investment Environment (continued)

After raising short-term interest rates four times in 2018, the Fed declared its intent to remain “patient” and held rates unchanged at its meetings in January, March, May, and June 2019. But amid growing signs of global economic weakness that threatened to dampen U.S. economic growth and to ensure stability given ongoing trade tensions with China, along with continued low inflation and weakness in manufacturing, at the end of July 2019 the Fed enacted a 0.25% cut in the federal funds rate, which ended the reporting period in a range of 2.00% to 2.25%. Going forward, the Fed reiterated that it would closely monitor incoming data on the economic outlook and would act appropriately to sustain the economic expansion. The Fed also announced that, in August, it would once again begin to reinvest proceeds from maturing securities held on its balance sheet. This effectively ended the Fed balance sheet reduction program that had been in place since early 2018.

Outside the U.S., conditions continued to soften. Trade issues dominated headlines, particularly in the second half of the reporting period, as trade talks stalled and China and the U.S. continued to implement tariffs. Oil prices, after reaching a nearly three-year high in October, fell precipitously over the three months of 2018 amid concerns of economic slowing and a global oil glut. Prices recovered, along with stocks, in the first four months of 2019 but fell again in May as the trade war between the U.S. and China showed no signs of resolution. In the eurozone, growth softened in the second quarter of 2019, down slightly from the first quarter but consistent with the final quarter of 2018. Growth was subdued by higher inflation and tepid wage growth that constrained consumer spending. The United Kingdom’s economy contracted in the second quarter of 2019 amid growing Brexit-related economic and political uncertainty that dampened industrial output, construction, and services sectors. Japan’s economy, however, logged steady increases in recent quarters after contracting sharply in the third quarter of 2018. Several Asian economies, including China and India, exhibited signs of slowing, but still outpaced many developed economies. In response to the economic environment and to bolster growth, a number of central banks lowered their policy rates, while others maintained their generally accommodative stances.

Over the reporting period, in addition to large-cap stocks significantly outperforming small-caps, growth stocks outperformed value stocks. Among the sectors in the Dow Jones U.S. Broad Market Index, Information Technology, which was the strongest contributor to performance, rose on evidence of ongoing economic strength and continued solid balance sheets. The Consumer Staples sector was also a strong contributor to performance for the period, buoyed by aggressive cost cuts by retailers and ongoing geopolitical tensions. Energy was the largest detractor from performance, down more than 20% on weakness in oil and natural gas prices, ongoing geopolitical tensions, and shifting supply-and-demand dynamics. The Financials sector also detracted, dampened by market volatility, trade concerns, and a flattening, and in some cases inverted, yield curve.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Fund Management

Jeremy Brown, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2017, Mr. Brown spent six years with ALPS Advisors, Inc. in Denver, most recently as a senior analyst on the ETF portfolio management and research team where he performed portfolio management, trading and analytics/research functions for ALPS ETFs and passive funds. Additionally, Mr. Brown led a number of investment research, commentary, industry trend analysis and sales and marketing support initiatives.

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

Sabya Sinha, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2015, Mr. Sinha spent a year at F-Squared Investments on the product development and analytics team. Prior to F-Squared, he worked at IndexIQ Advisors as a senior index portfolio manager for three years and for Bank of America’s Columbia Management subsidiary as a portfolio manager for three years.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Broad Market ETF as of August 31, 2019

The Schwab U.S. Broad Market ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Broad Stock Market Index (the index). The index includes the largest 2,500 publicly traded U.S. companies for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace. The fund invests in a representative sample of securities included in the index that, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities in the index.

Market Highlights. U.S. equity markets were mixed over the 12-month reporting period, with large-cap stocks outperforming small-cap stocks, and growth outperforming value. Despite concerns of weakness in late 2018, the U.S. economic outlook brightened considerably in the first six months of 2019, although signs of slowing growth increased as the year progressed. After raising short-term interest rates four times in 2018, the Federal Reserve put interest rate hikes on hold in the first half of 2019 before enacting a 0.25% rate cut in July of 2019. Within the index, stocks in the Utilities and Real Estate sectors were the top performers, while Energy and Materials stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 1.26% and its NAV return was 1.35%. The index returned 1.35% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 25% of the fund’s investments and returned approximately 6% for the reporting period. One example from this sector is Microsoft Corp. The fund’s holdings of Microsoft Corp. returned approximately 25% for the reporting period. The Consumer Staples sector also contributed to the total return of the fund, representing an average weight of approximately 7% of the fund’s investments and returning approximately 14% for the reporting period.

The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 5% of the fund’s investments and returned approximately -24% for the reporting period. One example from this sector is Schlumberger Ltd., an oilfield services company. The fund’s holdings of Schlumberger Ltd. returned approximately -46% for the reporting period. The Financials sector also detracted from the total return of the fund, representing an average weight of approximately 14% of the fund’s investments and returning -4% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Broad Market ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (November 3, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Broad Market ETF (11/3/09)
Market Price Return²	1.26%	9.54%	13.36%
NAV Return²	1.35%	9.57%	13.37%
Dow Jones U.S. Broad Stock Market Index	1.35%	9.58%	13.39%
ETF Category: Morningstar Large Blend³	1.45%	8.18%	N/A
Fund Expense Ratio⁴: 0.03%

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 — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Broad Stock Market 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. Broad Market 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.

^*	Inception (11/3/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

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Schwab U.S. Equity ETFs | Annual Report

Schwab 1000 Index ETF as of August 31, 2019

The Schwab 1000 Index ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Schwab 1000 Index^® (the index). The index is a float-adjusted market capitalization weighted index that includes the 1,000 largest stocks of publicly traded companies in the United States, with size being determined by market capitalization (total market value of all shares outstanding). The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 2.35% and its NAV return was 2.42%. The index returned 2.49% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 5% of the fund’s investments and retuned approximately -22% for the reporting period. One example from this sector is Schlumberger Ltd., an oilfield services company. The fund’s holdings of Schlumberger Ltd. returned approximately -46% for the reporting period. The Financials sector also detracted from the total return of the fund, representing an average weight of approximately 14% of the fund’s investments and returning approximately -3% for the reporting period.

The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 26% of the fund’s investments and returned approximately 6% for the reporting period. One example from this sector is Microsoft Corp. The fund’s holding of Microsoft Corp. returned approximately 25% for the reporting period. The Consumer Staples sector also contributed to the total return of the fund, representing an average weight of approximately 7% of the fund’s investments and returning approximately 15% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab 1000 Index ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (October 11, 2017 – August 31, 2019)¹

Average Annual Returns¹

Fund and Inception Date	1 Year	Since Inception^*
Fund: Schwab 1000 Index ETF (10/11/17)
Market Price Return²	2.35%	9.38%
NAV Return²	2.42%	9.41%
Schwab 1000 Index^®	2.49%	9.48%
Russell 1000^® Index	2.49%	9.50%
ETF Category: Morningstar Large Blend³	1.45%	N/A
Fund Expense Ratio⁴: 0.05%

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.

^*	Inception (10/11/17) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap ETF as of August 31, 2019

The Schwab U.S. Large-Cap ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Total Stock Market Index (the index). The index includes the large-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1–750 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 2.66% and its NAV return was 2.70%. The index returned 2.71% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 5% of the fund’s investments and returned approximately -21% for the reporting period. One example from this sector is Schlumberger Ltd., an oilfield services company. The fund’s holdings of Schlumberger Ltd. returned approximately -46% for the reporting period. The Financials sector also detracted from the total return of the fund, representing an average weight of approximately 13% of the fund’s investments and returning approximately -2% for the reporting period.

The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 26% of the fund’s investments and returned approximately 6% for the reporting period. One example from this sector is Microsoft Corp. The fund’s holdings of Microsoft Corp. returned approximately 25% for the reporting period. The Consumer Staples sector also contributed to the total return of the fund, representing an average weight of approximately 7% of the fund’s investments and returning approximately 16% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (November 3, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap ETF (11/3/09)
Market Price Return²	2.66%	9.93%	13.37%
NAV Return²	2.70%	9.93%	13.38%
Dow Jones U.S. Large-Cap Total Stock Market Index	2.71%	9.96%	13.45%
ETF Category: Morningstar Large Blend³	1.45%	8.18%	N/A
Fund Expense Ratio⁴: 0.03%

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 — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Large-Cap Total Stock Market 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. Large-Cap 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.

^*	Inception (11/3/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap Growth ETF as of August 31, 2019

The Schwab U.S. Large-Cap Growth ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index (the index). The index includes the large-cap growth portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1-750 by full market capitalization and that are classified as “growth” based on a number of factors. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 4.02% and its NAV return was 4.09%. The index returned 4.10% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 2% of the fund’s investments and returned approximately -41% for the reporting period. One example from this sector is Schlumberger Ltd., an oilfield services company. The fund’s holdings of Schlumberger Ltd. returned approximately -46% for the reporting period. The Health Care sector also detracted from the total return of the fund, representing an average weight of approximately 15% of the fund’s investments and returning approximately -0.5% for the reporting period.

The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 37% of the fund’s investments and returned approximately 6% for the reporting period. One example from this sector is Microsoft Corp. The fund’s holdings of Microsoft Corp. returned approximately 23% for the reporting period. The Real Estate sector also contributed to the fund’s total return, representing an average weight of approximately 4% of the fund’s investments and returning approximately 24% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap Growth ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (December 11, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap Growth ETF (12/11/09)
Market Price Return²	4.02%	12.11%	14.36%
NAV Return²	4.09%	12.12%	14.37%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	4.10%	12.17%	14.46%
ETF Category: Morningstar Large Growth³	2.69%	10.73%	N/A
Fund Expense Ratio⁴: 0.04%

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 — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Large-Cap Growth Total Stock Market 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. Large-Cap Growth 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.

^*	Inception (12/11/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

₁₈

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap Value ETF as of August 31, 2019

The Schwab U.S. Large-Cap Value ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index (the index). The index includes the large-cap value portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1-750 by full market capitalization and that are classified as “value” based on a number of factors. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. U.S. equity markets were mixed over the 12-month reporting period, with large-cap stocks outperforming small-cap stocks, and growth outperforming value. Despite concerns of weakness in late 2018, the U.S. economic outlook brightened considerably in the first six months of 2019, although signs of slowing growth increased as the year progressed. After raising short-term interest rates four times in 2018, the Federal Reserve put interest rate hikes on hold in the first half of 2019 before enacting a 0.25% rate cut in July of 2019. Within the index, stocks in the Utilities and Consumer Staples sectors were the top performers, while Materials and Energy stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 0.65% and its NAV return was 0.70%. The index returned 0.75% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 9% of the fund’s investments and returned approximately -15% for the reporting period. One example from this sector is Exxon Mobil Corp. The fund’s holdings of Exxon Mobil Corp. returned approximately -11% for the reporting period. The Financials sector also detracted from the total return of the fund, representing an average weight of approximately 20% of the fund’s investments and returning approximately -5% for the reporting period.

The Consumer Staples sector contributed the most to the fund’s total return. Consumer Staples stocks represented an average weight of approximately 12% of the fund’s investments and returned approximately 16% for the reporting period. One example from this sector is The Procter & Gamble Co. The fund’s holdings of The Procter & Gamble Co. returned approximately 49% for the reporting period. The Utilities sector also contributed to the fund’s total return, representing an average weight of approximately 6% of the fund’s investments and returning approximately 19% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Large-Cap Value ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (December 11, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap Value ETF (12/11/09)
Market Price Return²	0.65%	7.67%	11.23%
NAV Return²	0.70%	7.68%	11.24%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	0.75%	7.74%	11.37%
ETF Category: Morningstar Large Value³	-1.41%	6.12%	N/A
Fund Expense Ratio⁴: 0.04%

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 — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Large-Cap Value Total Stock Market 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. Large-Cap Value 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.

^*	Inception (12/11/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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.

₂₁

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Mid-Cap ETF as of August 31, 2019

The Schwab U.S. Mid-Cap ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index (the index). The index includes the mid-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 501–1,000 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given security as the index does.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was -3.34% and its NAV return was -3.24%. The index returned -3.20% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately -45% for the reporting period. One example from this sector is Cimarex Energy Co., a company engaged in hydrocarbon exploration. The fund’s holdings of Cimarex Energy Co. returned approximately -53% for the reporting period. The Consumer Discretionary sector also detracted from the total return of the fund, representing an average weight of approximately 15% of the fund’s investments and returning approximately -12% for the reporting period.

The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 18% of the fund’s investments and returned approximately 6% for the reporting period. One example from this sector is Keysight Technologies, Inc., a company that manufactures electronics test and measurement equipment and software. The fund’s holdings in Keysight Technologies, Inc. returned approximately 49% for the reporting period. The Real Estate sector also contributed to the fund’s total return, representing an average weight of approximately 11% of the fund’s investments and returning approximately 10% for the reporting period.

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

₂₃

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Mid-Cap ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (January 13, 2011 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Mid-Cap ETF (1/13/11)
Market Price Return²	-3.34%	8.07%	11.19%
NAV Return²	-3.24%	8.09%	11.20%
Dow Jones U.S. Mid-Cap Total Stock Market Index	-3.20%	8.12%	11.26%
ETF Category: Morningstar Mid-Cap Blend³	-4.57%	5.23%	N/A
Fund Expense Ratio⁴: 0.04%

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 — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Mid-Cap Total Stock Market 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. Mid-Cap 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.

^*	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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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. Effective March 11, 2019, the management fee was reduced to 0.04%. For more information, see financial note 4 or refer to the prospectus supplement dated March 11, 2019.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Small-Cap ETF as of August 31, 2019

The Schwab U.S. Small-Cap ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index (the index). The index includes the small-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 751- 2,500 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. U.S. equity markets were mixed over the 12-month reporting period, with large-cap stocks outperforming small-cap stocks, and growth outperforming value. Despite concerns of weakness in late 2018, the U.S. economic outlook brightened considerably in the first six months of 2019, although signs of slowing growth increased as the year progressed. After raising short-term interest rates four times in 2018, the Federal Reserve put interest rate hikes on hold in the first half of 2019 before enacting a 0.25% rate cut in July of 2019. Within the index, stocks in the Utilities and Information Technology sectors were the top performers, while Energy and Materials stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was -10.21% and its NAV return was -10.26%. The index returned -10.28% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Information Technology sector contributed the most to the fund’s total return. Information Technology stocks represented an average weight of approximately 17% of the fund’s investments and returned approximately 3% for the reporting period. One example from this sector is Okta, Inc., an identity and access management company. The fund’s holdings of Okta, Inc. returned approximately 85% for the reporting period. The Utilities sector also contributed to the total return of the fund, representing an average weight of approximately 3% of the fund’s investments and returning approximately 19% for the reporting period.

The Energy sector was the largest detractor from the fund’s total return. Energy stocks represented an average weight of approximately 4% of the fund’s investments and returned approximately -58% for the reporting period. One example from this sector is Whiting Petroleum Corp. The fund’s holdings of Whiting Petroleum Corp. returned approximately -87% for the reporting period. The Health Care sector also detracted from the fund’s total return, representing an average weight of approximately 14% of the fund’s investments and returning approximately -15% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Small-Cap ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (November 3, 2009 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Small-Cap ETF (11/3/09)
Market Price Return²	-10.21%	6.39%	12.82%
NAV Return²	-10.26%	6.36%	12.82%
Dow Jones U.S. Small-Cap Total Stock Market Index	-10.28%	6.33%	12.85%
ETF Category: Morningstar Small Blend³	-12.34%	5.07%	N/A
Fund Expense Ratio⁴: 0.04%

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 may be subject to greater volatility than many other asset classes.

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Small-Cap Total Stock Market 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. Small-Cap 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.

^*	Inception (11/3/09) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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. Effective March 11, 2019, the management fee was reduced to 0.04%. For more information, see financial note 4 or refer to the prospectus supplement dated March 11, 2019.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Dividend Equity ETF as of August 31, 2019

The Schwab U.S. Dividend Equity ETF (the fund) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100^TM Index (the index). The 100-component index is a subset of the Dow Jones U.S. Broad Market Index, excluding real estate investment trusts (REITs), master limited partnerships, preferred stocks, and convertibles. The index is modified market capitalization weighted. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. U.S. equity markets were mixed over the 12-month reporting period, with large-cap stocks outperforming small-cap stocks, and growth outperforming value. Despite concerns of weakness in late 2018, the U.S. economic outlook brightened considerably in the first six months of 2019, although signs of slowing growth increased as the year progressed. After raising short-term interest rates four times in 2018, the Federal Reserve put interest rate hikes on hold in the first half of 2019 before enacting a 0.25% rate cut in July of 2019. Within the index, stocks in the Consumer Staples and Utilities sectors were the top performers, while Materials and Energy stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2019, the fund closely tracked the index. The fund’s market price return was 4.09% and its NAV return was 4.18%. The index returned 4.27% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The Health Care sector was the largest detractor from the fund’s total return. Health Care stocks represented an average weight of approximately 9% of the fund’s investments and returned approximately -12% for the reporting period. One example from this sector is CVS Health Corp. The fund’s holdings of CVS Health Corp. returned approximately -16% for the reporting period. The Energy sector also detracted from the total return of the fund, representing an average weight of approximately 7% of the fund’s investments and returning approximately -13% for the reporting period.

The Consumer Staples sector contributed the most to the fund’s total return. Consumer Staples stocks represented an average weight of approximately 22% of the fund’s investments and returned approximately 21% for the reporting period. One example from this sector is The Procter & Gamble Co. The fund’s holdings of The Procter & Gamble Co. returned approximately 49% for the reporting period. The Information Technology sector also contributed to the fund’s total return, representing an average weight of approximately 19% of the fund’s investments and returning approximately 10% for the reporting period.

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Dividend Equity ETF

Performance and Fund Facts as of August 31, 2019

Performance of Hypothetical $10,000 Investment (October 20, 2011 – August 31, 2019)¹

Average Annual Total Returns¹

Fund and Inception Date	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Dividend Equity ETF (10/20/11)
Market Price Return²	4.09%	9.61%	13.26%
NAV Return²	4.18%	9.63%	13.27%
Dow Jones U.S. Dividend 100^TM Index	4.27%	9.74%	13.41%
ETF Category: Morningstar Large Value³	-1.41%	6.12%	N/A
Fund Expense Ratio⁴: 0.06%

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.

The fund may underperform other funds that do not limit their investment to dividend paying stocks. Stocks held by the fund may reduce or stop paying dividends, affecting the fund’s ability to generate income. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones U.S. Dividend 100^TM 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. Dividend Equity 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.

^*	Inception (10/20/11) 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 or sale of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share 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 using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. 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. Effective March 11, 2019, the management fee was reduced to 0.06%. For more information, see financial note 4 or refer to the prospectus supplement dated March 11, 2019.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

	Expense Ratio (Annualized)¹	Beginning Account Value at 3/1/19	Ending Account Value (Net of Expenses) at 8/31/19	Expenses Paid During Period 3/1/19-8/31/19²
Schwab U.S. Broad Market ETF
Actual Return	0.03%	$1,000.00	$1,050.40	$0.16
Hypothetical 5% Return	0.03%	$1,000.00	$1,025.05	$0.15
Schwab 1000 Index ETF
Actual Return	0.05%	$1,000.00	$1,057.40	$0.26
Hypothetical 5% Return	0.05%	$1,000.00	$1,024.95	$0.26
Schwab U.S. Large-Cap ETF
Actual Return	0.03%	$1,000.00	$1,058.70	$0.16
Hypothetical 5% Return	0.03%	$1,000.00	$1,025.05	$0.15
Schwab U.S. Large-Cap Growth ETF
Actual Return	0.04%	$1,000.00	$1,087.80	$0.21
Hypothetical 5% Return	0.04%	$1,000.00	$1,025.00	$0.20
Schwab U.S. Large-Cap Value ETF
Actual Return	0.04%	$1,000.00	$1,023.00	$0.20
Hypothetical 5% Return	0.04%	$1,000.00	$1,025.00	$0.20
Schwab U.S. Mid-Cap ETF
Actual Return	0.04%	$1,000.00	$1,010.20	$0.20
Hypothetical 5% Return	0.04%	$1,000.00	$1,025.00	$0.20
Schwab U.S. Small-Cap ETF
Actual Return	0.04%	$1,000.00	$ 975.30	$0.20
Hypothetical 5% Return	0.04%	$1,000.00	$1,025.00	$0.20
Schwab U.S. Dividend Equity ETF
Actual Return	0.06%	$1,000.00	$1,043.80	$0.31
Hypothetical 5% Return	0.06%	$1,000.00	$1,024.90	$0.31

¹	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period.
²	Expenses for each 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 365 days of the fiscal year.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Broad Market ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$70.55	$59.72	$52.42	$48.02	$48.75
Income (loss) from investment operations:
Net investment income (loss)¹	1.43	1.18	1.12	1.03	0.99
Net realized and unrealized gains (losses)	(0.55)	10.77	7.20	4.34	(0.79)
Total from investment operations	0.88	11.95	8.32	5.37	0.20
Less distributions:
Distributions from net investment income	(1.30)	(1.12)	(1.02)	(0.97)	(0.93)
Net asset value at end of period	$70.13	$70.55	$59.72	$52.42	$48.02
Total return	1.35%	20.20%	16.03%	11.35%	0.33%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03%	0.03%	0.03%	0.03% ²	0.04%
Net investment income (loss)	2.12%	1.81%	1.99%	2.09%	1.98%
Portfolio turnover rate³	4%	4%	4%	5%	3%
Net assets, end of period (x 1,000)	$14,877,368	$13,326,391	$10,215,289	$6,858,980	$4,919,185

Calculated based on the average shares outstanding during the period.

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

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

₃₃

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 0.7%
Other Securities		0.7	101,620,337

Banks 5.5%
Bank of America Corp.	4,529,217	0.9	124,598,760
Citigroup, Inc.	1,184,866	0.5	76,246,127
JPMorgan Chase & Co.	1,660,825	1.3	182,458,234
Wells Fargo & Co.	2,071,190	0.7	96,455,318
Other Securities		2.1	338,305,194
		5.5	818,063,633

Capital Goods 6.9%
Honeywell International, Inc.	372,212	0.4	61,273,539
The Boeing Co.	267,831	0.7	97,514,589
Other Securities		5.8	862,871,671
		6.9	1,021,659,799

Commercial & Professional Services 1.2%
Other Securities		1.2	170,201,002

Consumer Durables & Apparel 1.3%
Other Securities		1.3	197,894,577

Consumer Services 2.4%
McDonald's Corp.	390,840	0.6	85,191,395
Starbucks Corp.	620,401	0.4	59,905,921
Other Securities		1.4	214,436,235
		2.4	359,533,551

Diversified Financials 5.0%
Berkshire Hathaway, Inc., Class B *	992,608	1.4	201,906,393
The Charles Schwab Corp. (b)	604,078	0.2	23,118,065
Other Securities		3.4	524,675,686
		5.0	749,700,144

Energy 4.1%
Chevron Corp.	974,561	0.8	114,725,321
Exxon Mobil Corp.	2,167,184	1.0	148,408,760
Other Securities		2.3	344,877,444
		4.1	608,011,525

Security	Number of Shares	% of Net Assets	Value ($)
Food & Staples Retailing 1.4%
Costco Wholesale Corp.	225,187	0.5	66,376,120
Walmart, Inc.	716,158	0.6	81,828,213
Other Securities		0.3	63,768,111
		1.4	211,972,444

Food, Beverage & Tobacco 3.6%
PepsiCo, Inc.	717,459	0.7	98,098,169
Philip Morris International, Inc.	797,091	0.4	57,462,290
The Coca-Cola Co.	1,967,619	0.7	108,297,750
Other Securities		1.8	267,938,849
		3.6	531,797,058

Health Care Equipment & Services 6.2%
Abbott Laboratories	904,161	0.5	77,143,017
Medtronic plc	687,352	0.5	74,158,407
UnitedHealth Group, Inc.	486,986	0.8	113,954,724
Other Securities		4.4	661,527,723
		6.2	926,783,871

Household & Personal Products 1.8%
The Procter & Gamble Co.	1,285,009	1.0	154,496,632
Other Securities		0.8	112,445,778
		1.8	266,942,410

Insurance 2.7%
Other Securities		2.7	406,821,007

Materials 2.9%
Other Securities		2.9	432,939,526

Media & Entertainment 7.6%
Alphabet, Inc., Class A *	153,380	1.2	182,603,491
Alphabet, Inc., Class C *	157,079	1.3	186,625,560
Comcast Corp., Class A	2,318,908	0.7	102,634,868
Facebook, Inc., Class A *	1,230,609	1.6	228,487,173
Netflix, Inc. *	224,079	0.5	65,823,206
The Walt Disney Co.	894,518	0.8	122,781,541
Other Securities		1.5	244,071,712
		7.6	1,133,027,551

Pharmaceuticals, Biotechnology & Life Sciences 7.4%
Amgen, Inc.	312,747	0.5	65,245,279
Johnson & Johnson	1,360,285	1.2	174,606,183
Merck & Co., Inc.	1,319,021	0.8	114,055,746
Pfizer, Inc.	2,844,196	0.7	101,111,168

₃₄

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Thermo Fisher Scientific, Inc.	204,602	0.4	58,733,050
Other Securities		3.8	587,429,619
		7.4	1,101,181,045

Real Estate 4.3%
Other Securities		4.3	634,545,922

Retailing 6.0%
Amazon.com, Inc. *	211,869	2.5	376,340,786
The Home Depot, Inc.	563,464	0.9	128,419,080
Other Securities		2.6	387,817,622
		6.0	892,577,488

Semiconductors & Semiconductor Equipment 3.7%
Broadcom, Inc.	202,811	0.4	57,322,501
Intel Corp.	2,292,366	0.7	108,681,072
Texas Instruments, Inc.	480,571	0.4	59,470,661
Other Securities		2.2	321,239,146
		3.7	546,713,380

Software & Services 12.5%
Accenture plc, Class A	326,196	0.4	64,642,261
Adobe, Inc. *	250,178	0.5	71,178,143
International Business Machines Corp.	454,045	0.4	61,536,719
Mastercard, Inc., Class A	460,094	0.9	129,456,649
Microsoft Corp.	3,924,136	3.7	540,981,389
Oracle Corp.	1,241,462	0.4	64,630,512
PayPal Holdings, Inc. *	601,648	0.5	65,609,714
salesforce.com, Inc. *	437,754	0.5	68,320,267
Visa, Inc., Class A	890,471	1.1	161,014,966
Other Securities		4.1	630,915,488
		12.5	1,858,286,108

Technology Hardware & Equipment 5.3%
Apple, Inc.	2,238,232	3.2	467,208,548
Cisco Systems, Inc.	2,192,351	0.7	102,623,950
Other Securities		1.4	223,264,158
		5.3	793,096,656

Telecommunication Services 2.0%
AT&T, Inc.	3,737,505	0.9	131,784,426
Verizon Communications, Inc.	2,117,734	0.9	123,167,409
Other Securities		0.2	34,904,175
		2.0	289,856,010

Transportation 1.9%
Union Pacific Corp.	362,665	0.4	58,737,223
Other Securities		1.5	227,638,802
		1.9	286,376,025

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 3.4%
Other Securities		3.4	503,332,082
Total Common Stock
(Cost $11,556,565,092)			14,842,933,151

Rights 0.0% of net assets

Materials 0.0%
Other Securities		0.0	6,692

Media 0.0%
Other Securities		0.0	3,585
Total Rights
(Cost $6,692)			10,277

Other Investment Companies 0.2% of net assets

Money Market Fund 0.0%
Other Securities		0.0	4,400,132

Securities Lending Collateral 0.2%
Other Securities		0.2	25,769,726
Total Other Investment Companies
(Cost $30,169,858)			30,169,858

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
S&P 500 Index, e-mini, expires 09/20/19	218	31,880,320	97,136

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $24,663,894.
(b)	Issuer is affiliated with the fund’s investment adviser.
(c)	Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees.
(d)	The rate shown is the 7-day yield.

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

₃₅

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

The fund owns shares of an affiliate, The Charles Schwab Corp., since that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corp. shares owned by the fund during the period ended August 31, 2019:

	Market Value at 8/31/18	Gross Purchases	Gross Sales	Realized Gains(Losses)	Net change in unrealized appreciation (depreciation)	Market Value at 8/31/19	Balance of Shares Held at 8/31/19	Dividends Received
The Charles Schwab Corp.	$27,122,520	$5,892,537	($2,604,396)	$890,891	($8,183,487)	$23,118,065	604,078	$378,329

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Assets
Common Stock¹	$14,842,933,151	$—	$—	$14,842,933,151
Rights ¹
Materials	—	—	6,692	6,692
Media	—	—	3,585	3,585
Other Investment Companies¹	30,169,858	—	—	30,169,858
Futures Contracts²	97,136	—	—	97,136
Total	$14,873,200,145	$—	$10,277	$14,873,210,422

¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are valued at unrealized appreciation or depreciation.

₃₆

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in affiliated issuer, at value (cost $21,752,560)		$23,118,065
Investments in unaffiliated issuers, at value (cost $11,539,219,356) including securities on loan of $24,663,894		14,824,225,495
Collateral invested for securities on loan, at value (cost $25,769,726)		25,769,726
Cash		895,905
Deposit with broker for futures contracts		2,066,400
Receivables:
Investments sold		843,394
Dividends		26,686,086
Income from securities on loan	+	131,150
Total assets		14,903,736,221
Liabilities
Collateral held for securities on loan		25,769,726
Payables:
Investments bought		171,604
Management fees		410,355
Variation margin on futures contracts	+	16,890
Total liabilities		26,368,575
Net Assets
Total assets		14,903,736,221
Total liabilities	–	26,368,575
Net assets		$14,877,367,646
Net Assets by Source
Capital received from investors		11,602,365,487
Total distributable earnings¹		3,275,002,159

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$14,877,367,646		212,150,000		$70.13

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₃₇

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Operations

For the period September 1, 2018 through August 31, 2019

Investment Income
Dividends received from affiliated issuer		$378,329
Dividends received from unaffiliated issuers (net of foreign withholding tax of $16,325)		296,054,880
Securities on loan, net	+	2,517,942
Total investment income		298,951,151
Expenses
Management fees		4,162,548
Total expenses	–	4,162,548
Net investment income		294,788,603
Realized and Unrealized Gains (Losses)
Net realized losses on affiliated issuer		(189,416)
Net realized losses on unaffiliated investments		(35,285,253)
Net realized gains on in-kind redemptions on affiliated issuer		1,080,307
Net realized gains on in-kind redemptions on unaffiliated investments		589,139,071
Net realized losses on futures contracts	+	(89,124)
Net realized gains		554,655,585
Net change in unrealized appreciation (depreciation) on affiliated issuer		(8,183,487)
Net change in unrealized appreciation (depreciation) on unaffiliated investments		(547,161,974)
Net change in unrealized appreciation (depreciation) on futures contracts	+	(102,023)
Net change in unrealized appreciation (depreciation)	+	(555,447,484)
Net realized and unrealized losses		(791,899)
Increase in net assets resulting from operations		$293,996,704

₃₈

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$294,788,603	$211,077,403
Net realized gains		554,655,585	192,178,495
Net change in unrealized appreciation (depreciation)	+	(555,447,484)	1,744,691,993
Increase in net assets resulting from operations		293,996,704	2,147,947,891
Distributions to Shareholders1
Total distributions		($265,289,790)	($199,698,380)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		42,400,000	$2,804,352,289	23,600,000	$1,536,444,895
Shares redeemed	+	(19,150,000)	(1,282,082,268)	(5,750,000)	(373,592,989)
Net transactions in fund shares		23,250,000	$1,522,270,021	17,850,000	$1,162,851,906
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		188,900,000	$13,326,390,711	171,050,000	$10,215,289,294
Total increase	+	23,250,000	1,550,976,935	17,850,000	3,111,101,417
End of period²		212,150,000	$14,877,367,646	188,900,000	$13,326,390,711

¹	For the period ended August 31, 2018, the fund distributed to shareholders $199,698,380 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $44,482,540 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₃₉

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab 1000 Index ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 0.6%
Other Securities		0.6	5,343,607

Banks 5.2%
Bank of America Corp.	271,382	0.9	7,465,719
Citigroup, Inc.	71,011	0.6	4,569,558
JPMorgan Chase & Co.	99,599	1.3	10,941,946
Wells Fargo & Co.	124,135	0.7	5,780,967
Other Securities		1.7	15,144,385
		5.2	43,902,575

Capital Goods 6.7%
Honeywell International, Inc.	22,346	0.5	3,678,598
The Boeing Co.	16,059	0.7	5,846,921
Other Securities		5.5	46,311,697
		6.7	55,837,216

Commercial & Professional Services 1.0%
Other Securities		1.0	7,937,574

Consumer Durables & Apparel 1.2%
Other Securities		1.2	9,839,355

Consumer Services 2.3%
McDonald's Corp.	23,432	0.6	5,107,473
Starbucks Corp.	37,152	0.4	3,587,397
Other Securities		1.3	10,828,050
		2.3	19,522,920

Diversified Financials 5.1%
Berkshire Hathaway, Inc., Class B *	59,476	1.5	12,098,013
The Charles Schwab Corp. (b)	36,255	0.2	1,387,479
Other Securities		3.4	28,991,060
		5.1	42,476,552

Energy 4.1%
Chevron Corp.	58,471	0.8	6,883,206
Exxon Mobil Corp.	129,884	1.1	8,894,456
Other Securities		2.2	18,787,451
		4.1	34,565,113

Security	Number of Shares	% of Net Assets	Value ($)
Food & Staples Retailing 1.5%
Costco Wholesale Corp.	13,497	0.5	3,978,376
Walmart, Inc.	42,919	0.6	4,903,925
Other Securities		0.4	3,589,619
		1.5	12,471,920

Food, Beverage & Tobacco 3.7%
PepsiCo, Inc.	43,015	0.7	5,881,441
Philip Morris International, Inc.	47,740	0.4	3,441,577
The Coca-Cola Co.	117,816	0.8	6,484,593
Other Securities		1.8	15,014,674
		3.7	30,822,285

Health Care Equipment & Services 6.3%
Abbott Laboratories	54,149	0.6	4,619,993
Medtronic plc	41,141	0.5	4,438,703
UnitedHealth Group, Inc.	29,168	0.8	6,825,312
Other Securities		4.4	36,689,903
		6.3	52,573,911

Household & Personal Products 1.9%
The Procter & Gamble Co.	76,978	1.1	9,255,065
Other Securities		0.8	6,263,200
		1.9	15,518,265

Insurance 2.7%
Other Securities		2.7	22,987,060

Materials 2.8%
Other Securities		2.8	23,720,631

Media & Entertainment 7.9%
Alphabet, Inc., Class A *	9,190	1.3	10,940,971
Alphabet, Inc., Class C *	9,406	1.3	11,175,269
Comcast Corp., Class A	138,917	0.7	6,148,466
Facebook, Inc., Class A *	73,734	1.6	13,690,192
Netflix, Inc. *	13,418	0.5	3,941,537
The Walt Disney Co.	53,564	0.9	7,352,195
Other Securities		1.6	13,127,738
		7.9	66,376,368

Pharmaceuticals, Biotechnology & Life Sciences 7.3%
Amgen, Inc.	18,705	0.5	3,902,237
Johnson & Johnson	81,483	1.3	10,459,158
Merck & Co., Inc.	79,021	0.8	6,832,946
Pfizer, Inc.	170,383	0.7	6,057,116

₄₁

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab 1000 Index ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Thermo Fisher Scientific, Inc.	12,269	0.4	3,521,939
Other Securities		3.6	30,368,449
		7.3	61,141,845

Real Estate 4.1%
Other Securities		4.1	33,918,987

Retailing 6.2%
Amazon.com, Inc. *	12,692	2.7	22,544,673
The Home Depot, Inc.	33,767	0.9	7,695,837
Other Securities		2.6	21,346,620
		6.2	51,587,130

Semiconductors & Semiconductor Equipment 3.7%
Broadcom, Inc.	12,148	0.4	3,433,511
Intel Corp.	137,397	0.8	6,513,992
Texas Instruments, Inc.	28,820	0.4	3,566,475
Other Securities		2.1	17,788,303
		3.7	31,302,281

Software & Services 12.8%
Accenture plc, Class A	19,576	0.5	3,879,376
Adobe, Inc. *	14,981	0.5	4,262,244
International Business Machines Corp.	27,213	0.4	3,688,178
Mastercard, Inc., Class A	27,582	0.9	7,760,747
Microsoft Corp.	235,193	3.9	32,423,707
Oracle Corp.	74,492	0.5	3,878,053
PayPal Holdings, Inc. *	36,059	0.5	3,932,234
salesforce.com, Inc. *	26,224	0.5	4,092,780
Visa, Inc., Class A	53,375	1.2	9,651,267
Other Securities		3.9	33,909,445
		12.8	107,478,031

Technology Hardware & Equipment 5.4%
Apple, Inc.	134,150	3.4	28,002,471
Cisco Systems, Inc.	131,376	0.7	6,149,710
Other Securities		1.3	11,262,677
		5.4	45,414,858

Telecommunication Services 2.0%
AT&T, Inc.	223,940	1.0	7,896,124
Verizon Communications, Inc.	126,906	0.9	7,380,853
Other Securities		0.1	1,723,724
		2.0	17,000,701

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 1.9%
Union Pacific Corp.	21,728	0.4	3,519,067
Other Securities		1.5	12,591,920
		1.9	16,110,987

Utilities 3.4%
Other Securities		3.4	28,884,492
Total Common Stock
(Cost $774,069,496)			836,734,664

Other Investment Companies 0.1% of net assets

Money Market Fund 0.1%
Other Securities		0.1	639,417

Securities Lending Collateral 0.0%
Other Securities		0.0	143,525
Total Other Investment Companies
(Cost $782,942)			782,942

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
S&P 500 Index, e-mini, expires 09/20/19	9	1,316,160	14,050

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $139,835.
(b)	Issuer is affiliated with the fund's investment adviser.
(c)	The rate shown is the 7-day yield.

REIT —

Real Estate Investment Trust

	Market Value at 8/31/18	Gross Purchases	Gross Sales	Realized Gains(Losses)	Net change in unrealized appreciation (depreciation)	Market Value at 8/31/19	Balance of Shares Held at 8/31/19	Dividends Received
The Charles Schwab Corp.	$1,058,870	$894,556	($222,333)	($8,017)	($335,597)	$1,387,479	36,255	$20,750

₄₂

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab 1000 Index ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in affiliated issuer, at value (cost $1,707,659)		$1,387,479
Investments in unaffiliated issuers, at value (cost $773,001,254) including securities on loan of $139,835		835,986,602
Collateral invested for securities on loan, at value (cost $143,525)		143,525
Deposit with broker for futures contracts		96,000
Receivables:
Investments sold		39,458
Dividends		1,516,589
Income from securities on loan	+	89
Total assets		839,169,742
Liabilities
Collateral held for securities on loan		143,525
Payables:
Investments bought		774,545
Management fees		37,551
Variation margin on futures contracts	+	681
Total liabilities		956,302
Net Assets
Total assets		839,169,742
Total liabilities	–	956,302
Net assets		$838,213,440
Net Assets by Source
Capital received from investors		775,647,170
Total distributable earnings¹		62,566,270

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$838,213,440		29,100,000		$28.80

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₄₄

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab 1000 Index ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		10/11/17*-8/31/18
Net investment income		$14,379,283	$5,143,368
Net realized gains (losses)		8,715,101	(365,496)
Net change in unrealized appreciation (depreciation)	+	24,311,946	38,367,272
Increase in net assets resulting from operations		47,406,330	43,145,144
Distributions to Shareholders1
Total distributions		($11,758,680)	($3,615,715)

Transactions in Fund Shares
		9/1/18-8/31/19		10/11/17*-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		16,200,000	$422,614,476	17,100,001	$449,565,045
Shares redeemed	+	(4,100,000)	(106,536,181)	(100,001)	(2,606,979)
Net transactions in fund shares		12,100,000	$316,078,295	17,000,000	$446,958,066
Shares Outstanding and Net Assets
		9/1/18-8/31/19		10/11/17*-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		17,000,000	$486,487,495	—	$—
Total increase	+	12,100,000	351,725,945	17,000,000	486,487,495
End of period²		29,100,000	$838,213,440	17,000,000	$486,487,495

*	Commencement of operations.
¹	For the period ended August 31, 2018, the fund distributed to shareholders $3,615,715 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period — Net assets include net investment income not yet distributed of $1,521,163 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₄₆

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$69.53	$59.10	$51.75	$47.30	$47.99
Income (loss) from investment operations:
Net investment income (loss)¹	1.47	1.19	1.15	1.03	1.01
Net realized and unrealized gains (losses)	0.33	10.39	7.24	4.41	(0.77)
Total from investment operations	1.80	11.58	8.39	5.44	0.24
Less distributions:
Distributions from net investment income	(1.33)	(1.15)	(1.04)	(0.99)	(0.93)
Net asset value at end of period	$70.00	$69.53	$59.10	$51.75	$47.30
Total return	2.70%	19.79%	16.39%	11.66%	0.43%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03%	0.03%	0.03%	0.03% ²	0.04%
Net investment income (loss)	2.19%	1.86%	2.07%	2.13%	2.04%
Portfolio turnover rate³	4%	3%	4%	4%	4%
Net assets, end of period (x 1,000)	$17,785,958	$14,989,877	$9,824,643	$6,218,346	$4,329,918

Calculated based on the average shares outstanding during the period.

Effective November 12, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

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

₄₇

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 0.6%
Other Securities		0.6	112,735,683

Banks 5.0%
Bank of America Corp.	5,990,064	0.9	164,786,661
Citigroup, Inc.	1,566,851	0.6	100,826,862
JPMorgan Chase & Co.	2,197,204	1.4	241,384,831
Wells Fargo & Co.	2,740,159	0.7	127,609,205
Other Securities		1.4	259,748,095
		5.0	894,355,654

Capital Goods 6.6%
Honeywell International, Inc.	492,845	0.5	81,132,144
The Boeing Co.	354,375	0.7	129,024,394
Other Securities		5.4	959,942,950
		6.6	1,170,099,488

Commercial & Professional Services 0.9%
Other Securities		0.9	167,632,718

Consumer Durables & Apparel 1.2%
Other Securities		1.2	206,127,720

Consumer Services 2.2%
McDonald's Corp.	517,024	0.6	112,695,721
Starbucks Corp.	820,259	0.5	79,204,209
Other Securities		1.1	207,666,698
		2.2	399,566,628

Diversified Financials 5.1%
Berkshire Hathaway, Inc., Class B *	1,312,085	1.5	266,891,210
The Charles Schwab Corp. (b)	798,679	0.2	30,565,445
Other Securities		3.4	616,052,885
		5.1	913,509,540

Energy 4.3%
Chevron Corp.	1,290,016	0.9	151,860,684
Exxon Mobil Corp.	2,864,851	1.1	196,184,997
Other Securities		2.3	411,286,048
		4.3	759,331,729

Security	Number of Shares	% of Net Assets	Value ($)
Food & Staples Retailing 1.5%
Costco Wholesale Corp.	297,905	0.5	87,810,478
Walmart, Inc.	946,871	0.6	108,189,480
Other Securities		0.4	69,624,344
		1.5	265,624,302

Food, Beverage & Tobacco 3.8%
PepsiCo, Inc.	948,967	0.7	129,752,258
Philip Morris International, Inc.	1,054,111	0.4	75,990,862
The Coca-Cola Co.	2,599,480	0.8	143,075,379
Other Securities		1.9	324,160,061
		3.8	672,978,560

Health Care Equipment & Services 6.2%
Abbott Laboratories	1,194,710	0.6	101,932,657
Medtronic plc	908,049	0.5	97,969,407
UnitedHealth Group, Inc.	643,616	0.8	150,606,144
Other Securities		4.3	751,358,870
		6.2	1,101,867,078

Household & Personal Products 1.9%
The Procter & Gamble Co.	1,698,221	1.1	204,177,111
Other Securities		0.8	136,574,008
		1.9	340,751,119

Insurance 2.7%
Other Securities		2.7	485,792,804

Materials 2.8%
Other Securities		2.8	489,231,742

Media & Entertainment 8.1%
Alphabet, Inc., Class A *	202,763	1.4	241,395,434
Alphabet, Inc., Class C *	207,532	1.4	246,568,769
Comcast Corp., Class A	3,066,835	0.8	135,738,117
Facebook, Inc., Class A *	1,626,970	1.7	302,079,520
Netflix, Inc. *	296,277	0.5	87,031,369
The Walt Disney Co.	1,182,057	0.9	162,249,144
Other Securities		1.4	270,935,104
		8.1	1,445,997,457

Pharmaceuticals, Biotechnology & Life Sciences 7.4%
Amgen, Inc.	412,962	0.5	86,152,132
Johnson & Johnson	1,798,143	1.3	230,809,635
Merck & Co., Inc.	1,743,879	0.9	150,793,217
Pfizer, Inc.	3,760,808	0.8	133,696,724

₄₈

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Thermo Fisher Scientific, Inc.	270,635	0.4	77,688,483
Other Securities		3.5	644,987,808
		7.4	1,324,127,999

Real Estate 3.8%
Other Securities		3.8	667,332,497

Retailing 6.3%
Amazon.com, Inc. *	280,048	2.8	497,446,462
The Home Depot, Inc.	745,073	1.0	169,809,587
Other Securities		2.5	448,643,791
		6.3	1,115,899,840

Semiconductors & Semiconductor Equipment 3.7%
Broadcom, Inc.	268,249	0.4	75,817,897
Intel Corp.	3,032,090	0.8	143,751,387
Texas Instruments, Inc.	635,722	0.4	78,670,598
Other Securities		2.1	361,736,818
		3.7	659,976,700

Software & Services 12.7%
Accenture plc, Class A	432,040	0.5	85,617,367
Adobe, Inc. *	330,255	0.5	93,960,850
International Business Machines Corp.	600,931	0.5	81,444,178
Mastercard, Inc., Class A	608,458	1.0	171,201,827
Microsoft Corp.	5,188,912	4.0	715,343,408
Oracle Corp.	1,644,051	0.5	85,589,295
PayPal Holdings, Inc. *	796,165	0.5	86,821,793
salesforce.com, Inc. *	578,571	0.5	90,297,576
Visa, Inc., Class A	1,177,380	1.2	212,893,852
Other Securities		3.5	635,599,551
		12.7	2,258,769,697

Technology Hardware & Equipment 5.5%
Apple, Inc.	2,960,015	3.5	617,873,531
Cisco Systems, Inc.	2,899,350	0.8	135,718,574
Other Securities		1.2	224,914,108
		5.5	978,506,213

Telecommunication Services 2.1%
AT&T, Inc.	4,940,765	1.0	174,211,374
Verizon Communications, Inc.	2,799,796	0.9	162,836,135
Other Securities		0.2	35,542,426
		2.1	372,589,935

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 2.0%
Union Pacific Corp.	479,495	0.4	77,659,010
Other Securities		1.6	271,093,579
		2.0	348,752,589

Utilities 3.4%
Other Securities		3.4	602,280,251
Total Common Stock
(Cost $14,346,497,413)			17,753,837,943

Other Investment Companies 0.2% of net assets

Money Market Fund 0.1%
Other Securities		0.1	16,952,458

Securities Lending Collateral 0.1%
Other Securities		0.1	7,638,190
Total Other Investment Companies
(Cost $24,590,648)			24,590,648

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
S&P 500 Index, e-mini, expires 09/20/19	199	29,101,760	252,258

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $7,403,893.
(b)	Issuer is affiliated with the fund’s investment adviser.
(c)	The rate shown is the 7-day yield.

	Market Value at 8/31/18	Gross Purchases	Gross Sales	Realized Gains(Losses)	Net change in unrealized appreciation (depreciation)	Market Value at 8/31/19	Balance of Shares Held at 8/31/19	Dividends Received
The Charles Schwab Corp.	$33,997,099	$8,013,357	($2,408,288)	$939,438	($9,976,161)	$30,565,445	798,679	$470,344

₄₉

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in affiliated issuer, at value (cost $30,693,796)		$30,565,445
Investments in unaffiliated issuers, at value (cost $14,332,756,075) including securities on loan of $7,403,893		17,740,224,956
Collateral invested for securities on loan, at value (cost $7,638,190)		7,638,190
Deposit with broker for futures contracts		2,444,400
Receivables:
Investments sold		834,710
Dividends		32,583,966
Income from securities on loan	+	14,046
Total assets		17,814,305,713
Liabilities
Collateral held for securities on loan		7,638,190
Payables:
Investments bought		20,220,964
Management fees		474,184
Variation margin on futures contracts	+	14,737
Total liabilities		28,348,075
Net Assets
Total assets		17,814,305,713
Total liabilities	–	28,348,075
Net assets		$17,785,957,638
Net Assets by Source
Capital received from investors		14,412,155,331
Total distributable earnings¹		3,373,802,307

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$17,785,957,638		254,100,000		$70.00

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₅₁

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Operations

For the period September 1, 2018 through August 31, 2019

Investment Income
Dividends received from affiliated issuer		$470,344
Dividends received from unaffiliated issuers (net of foreign withholding tax of $10,002)		342,417,162
Securities on loan, net	+	2,171,121
Total investment income		345,058,627
Expenses
Management fees		4,641,081
Total expenses	–	4,641,081
Net investment income		340,417,546
Realized and Unrealized Gains (Losses)
Net realized losses on affiliated issuer		(155,456)
Net realized losses on unaffiliated investments		(52,749,272)
Net realized gains on in-kind redemptions on affiliated issuer		1,094,894
Net realized gains on in-kind redemptions on unaffiliated investments		451,919,557
Net realized gains on futures contracts	+	486,889
Net realized gains		400,596,612
Net change in unrealized appreciation (depreciation) on affiliated issuer		(9,976,161)
Net change in unrealized appreciation (depreciation) on unaffiliated investments		(271,697,221)
Net change in unrealized appreciation (depreciation) on futures contracts	+	(327,433)
Net change in unrealized appreciation (depreciation)	+	(282,000,815)
Net realized and unrealized gains		118,595,797
Increase in net assets resulting from operations		$459,013,343

₅₂

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$340,417,546	$223,037,825
Net realized gains		400,596,612	158,977,935
Net change in unrealized appreciation (depreciation)	+	(282,000,815)	1,787,408,701
Increase in net assets resulting from operations		459,013,343	2,169,424,461
Distributions to Shareholders1
Total distributions		($302,865,295)	($208,413,000)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		56,050,000	$3,767,929,713	56,450,000	$3,665,022,620
Shares redeemed	+	(17,550,000)	(1,127,997,534)	(7,100,000)	(460,799,703)
Net transactions in fund shares		38,500,000	$2,639,932,179	49,350,000	$3,204,222,917
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		215,600,000	$14,989,877,411	166,250,000	$9,824,643,033
Total increase	+	38,500,000	2,796,080,227	49,350,000	5,165,234,378
End of period²		254,100,000	$17,785,957,638	215,600,000	$14,989,877,411

¹	For the period ended August 31, 2018, the fund distributed to shareholders $208,413,000 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $50,766,094 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₅₃

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$81.69	$65.55	$55.25	$51.93	$50.11
Income (loss) from investment operations:
Net investment income (loss)¹	0.95	0.68	0.75	0.59	0.66
Net realized and unrealized gains (losses)	2.30	16.17	10.17	3.30	1.79
Total from investment operations	3.25	16.85	10.92	3.89	2.45
Less distributions:
Distributions from net investment income	(0.92)	(0.71)	(0.62)	(0.57)	(0.63)
Net asset value at end of period	$84.02	$81.69	$65.55	$55.25	$51.93
Total return	4.09%	25.88%	19.89%	7.56%	4.87%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.04%	0.04%	0.05% ²	0.07% ³	0.07%
Net investment income (loss)	1.21%	0.93%	1.25%	1.14%	1.25%
Portfolio turnover rate⁴	14%	5%	5%	7%	10%
Net assets, end of period (x 1,000)	$8,107,853	$6,886,721	$4,470,809	$2,980,475	$2,246,101

Calculated based on the average shares outstanding during the period.

Effective December 29, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁴

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

₅₄

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 0.3%
Other Securities		0.3	21,620,535

Banks 0.3%
Other Securities		0.3	22,578,842

Capital Goods 6.6%
3M Co.	314,292	0.6	50,827,302
Lockheed Martin Corp.	134,004	0.6	51,472,276
Northrop Grumman Corp.	92,598	0.4	34,064,026
The Boeing Co.	285,135	1.3	103,814,802
Other Securities		3.7	293,597,448
		6.6	533,775,854

Commercial & Professional Services 1.1%
Other Securities		1.1	91,934,213

Consumer Durables & Apparel 1.5%
NIKE, Inc., Class B	685,253	0.7	57,903,879
Other Securities		0.8	63,270,895
		1.5	121,174,774

Consumer Services 2.0%
Starbucks Corp.	660,150	0.8	63,744,084
Other Securities		1.2	100,259,881
		2.0	164,003,965

Diversified Financials 6.2%
Berkshire Hathaway, Inc., Class B *	1,055,850	2.6	214,770,449
CME Group, Inc.	195,202	0.5	42,415,443
S&P Global, Inc.	133,944	0.4	34,850,889
The Charles Schwab Corp. (b)	645,793	0.3	24,714,498
Other Securities		2.4	190,381,007
		6.2	507,132,286

Energy 1.3%
Other Securities		1.3	104,687,006

Food & Staples Retailing 1.2%
Costco Wholesale Corp.	239,748	0.9	70,668,121
Other Securities		0.3	26,441,361
		1.2	97,109,482

Security	Number of Shares	% of Net Assets	Value ($)
Food, Beverage & Tobacco 1.0%
Other Securities		1.0	83,462,801

Health Care Equipment & Services 8.7%
Anthem, Inc.	140,303	0.4	36,692,041
Becton Dickinson & Co.	146,790	0.4	37,272,917
Danaher Corp.	343,654	0.6	48,829,797
Medtronic plc	730,641	1.0	78,828,857
Stryker Corp.	169,047	0.5	37,301,911
UnitedHealth Group, Inc.	517,957	1.5	121,201,938
Other Securities		4.3	344,885,521
		8.7	705,012,982

Household & Personal Products 0.6%
Other Securities		0.6	48,760,860

Insurance 1.0%
Other Securities		1.0	80,256,636

Materials 2.3%
Linde plc	295,847	0.7	55,888,457
Other Securities		1.6	129,519,108
		2.3	185,407,565

Media & Entertainment 13.7%
Alphabet, Inc., Class A *	163,120	2.4	194,199,254
Alphabet, Inc., Class C *	166,954	2.5	198,358,047
Charter Communications, Inc., Class A *	93,823	0.5	38,428,963
Comcast Corp., Class A	2,468,358	1.4	109,249,525
Facebook, Inc., Class A *	1,308,518	3.0	242,952,537
Netflix, Inc. *	238,183	0.9	69,966,256
The Walt Disney Co.	951,293	1.6	130,574,477
Other Securities		1.4	124,195,790
		13.7	1,107,924,849

Pharmaceuticals, Biotechnology & Life Sciences 5.4%
Amgen, Inc.	332,450	0.9	69,355,719
Celgene Corp. *	384,600	0.5	37,229,280
Thermo Fisher Scientific, Inc.	218,197	0.8	62,635,631
Zoetis, Inc.	261,091	0.4	33,007,124
Other Securities		2.8	238,290,591
		5.4	440,518,345

₅₅

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Real Estate 4.0%
American Tower Corp.	240,958	0.7	55,466,122
Other Securities		3.3	270,632,333
		4.0	326,098,455

Retailing 10.3%
Amazon.com, Inc. *	225,270	4.9	400,144,848
Booking Holdings, Inc. *	23,621	0.6	46,448,571
Lowe's Cos., Inc.	426,874	0.6	47,895,263
The Home Depot, Inc.	599,568	1.7	136,647,543
The TJX Cos., Inc.	661,812	0.4	36,379,806
Other Securities		2.1	167,949,190
		10.3	835,465,221

Semiconductors & Semiconductor Equipment 2.2%
Broadcom, Inc.	215,792	0.8	60,991,451
NVIDIA Corp.	332,052	0.7	55,622,030
Other Securities		0.7	62,754,573
		2.2	179,368,054

Software & Services 20.1%
Accenture plc, Class A	347,558	0.8	68,875,569
Adobe, Inc. *	266,113	0.9	75,711,810
Automatic Data Processing, Inc.	236,867	0.5	40,229,491
Fidelity National Information Services, Inc.	333,508	0.6	45,430,460
Fiserv, Inc. *	310,449	0.4	33,199,416
Intuit, Inc.	141,474	0.5	40,795,443
Mastercard, Inc., Class A	489,700	1.7	137,786,889
Microsoft Corp.	4,174,149	7.1	575,448,181
PayPal Holdings, Inc. *	640,389	0.9	69,834,420
salesforce.com, Inc. *	465,824	0.9	72,701,152
Visa, Inc., Class A	947,356	2.1	171,300,912
Other Securities		3.7	301,227,071
		20.1	1,632,540,814

Technology Hardware & Equipment 6.8%
Apple, Inc.	2,381,016	6.0	497,013,280
Other Securities		0.8	57,176,634
		6.8	554,189,914

Telecommunication Services 0.3%
Other Securities		0.3	22,516,641

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 2.1%
Union Pacific Corp.	385,732	0.8	62,473,155
Other Securities		1.3	107,549,498
		2.1	170,022,653

Utilities 0.8%
NextEra Energy, Inc.	260,717	0.7	57,117,880
Other Securities		0.1	5,016,976
		0.8	62,134,856
Total Common Stock
(Cost $5,989,007,279)			8,097,697,603

Other Investment Companies 0.1% of net assets

Money Market Fund 0.0%
Other Securities		0.0	1,439,573

Securities Lending Collateral 0.1%
Other Securities		0.1	3,400,683
Total Other Investment Companies
(Cost $4,840,256)			4,840,256

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
Russell 1000 Growth Index, e-mini, expires 09/20/19	110	8,838,500	79,012

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $3,303,190.
(b)	Issuer is affiliated with the fund’s investment adviser.
(c)	The rate shown is the 7-day yield.

	Market Value at 8/31/18	Gross Purchases	Gross Sales	Realized Gains(Losses)	Net change in unrealized appreciation (depreciation)	Market Value at 8/31/19	Balance of Shares Held at 8/31/19	Dividends Received
The Charles Schwab Corp.	$31,120,557	$6,635,908	($5,612,804)	$437,877	($7,867,040)	$24,714,498	645,793	$387,572

₅₆

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in affiliated issuer, at value (cost $23,770,538)		$24,714,498
Investments in unaffiliated issuers, at value (cost $5,966,676,314) including securities on loan of $3,303,190		8,074,422,678
Collateral invested for securities on loan, at value (cost $3,400,683)		3,400,683
Deposit with broker for futures contracts		673,200
Receivables:
Investments sold		653,540
Dividends		7,676,511
Income from securities on loan	+	9,584
Total assets		8,111,550,694
Liabilities
Collateral held for securities on loan		3,400,683
Payables:
Management fees		287,331
Variation margin on futures contracts	+	9,216
Total liabilities		3,697,230
Net Assets
Total assets		8,111,550,694
Total liabilities	–	3,697,230
Net assets		$8,107,853,464
Net Assets by Source
Capital received from investors		6,083,005,169
Total distributable earnings¹		2,024,848,295

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$8,107,853,464		96,500,000		$84.02

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₅₈

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$85,077,928	$51,511,997
Net realized gains		243,635,236	70,580,945
Net change in unrealized appreciation (depreciation)	+	(3,749,927)	1,161,185,205
Increase in net assets resulting from operations		324,963,237	1,283,278,147
Distributions to Shareholders1
Total distributions		($80,450,420)	($52,664,675)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		19,500,000	$1,542,423,996	21,550,000	$1,561,031,674
Shares redeemed	+	(7,300,000)	(565,804,444)	(5,450,000)	(375,733,139)
Net transactions in fund shares		12,200,000	$976,619,552	16,100,000	$1,185,298,535
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		84,300,000	$6,886,721,095	68,200,000	$4,470,809,088
Total increase	+	12,200,000	1,221,132,369	16,100,000	2,415,912,007
End of period²		96,500,000	$8,107,853,464	84,300,000	$6,886,721,095

¹	For the period ended August 31, 2018, the fund distributed to shareholders $52,664,675 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $10,314,360 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₆₀

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$56.37	$50.65	$46.01	$40.89	$43.54
Income (loss) from investment operations:
Net investment income (loss)¹	1.84	1.47	1.36	1.29	1.20
Net realized and unrealized gains (losses)	(1.48)	5.63	4.56	5.01	(2.75)
Total from investment operations	0.36	7.10	5.92	6.30	(1.55)
Less distributions:
Distributions from net investment income	(1.59)	(1.38)	(1.28)	(1.18)	(1.10)
Net asset value at end of period	$55.14	$56.37	$50.65	$46.01	$40.89
Total return	0.70%	14.20%	13.01%	15.70%	(3.71%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.04%	0.04%	0.05% ²	0.07% ³	0.07%
Net investment income (loss)	3.38%	2.72%	2.79%	3.00%	2.75%
Portfolio turnover rate⁴	7%	8%	7%	6%	15%
Net assets, end of period (x 1,000)	$5,976,674	$4,692,419	$3,532,689	$2,491,664	$1,435,194

Calculated based on the average shares outstanding during the period.

Effective December 29, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁴

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

₆₁

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 1.1%
Other Securities		1.1	66,548,905

Banks 11.2%
Bank of America Corp.	4,643,781	2.1	127,750,415
Citigroup, Inc.	1,214,451	1.3	78,149,922
JPMorgan Chase & Co.	1,703,602	3.1	187,157,716
The PNC Financial Services Group, Inc.	237,085	0.5	30,567,369
U.S. Bancorp	785,940	0.7	41,411,179
Wells Fargo & Co.	2,124,197	1.7	98,923,854
Other Securities		1.8	107,703,532
		11.2	671,663,987

Capital Goods 6.6%
Caterpillar, Inc.	300,341	0.6	35,740,579
General Dynamics Corp.	142,593	0.5	27,273,763
General Electric Co.	4,579,612	0.6	37,781,799
Honeywell International, Inc.	382,156	1.1	62,910,521
United Technologies Corp.	425,934	0.9	55,473,644
Other Securities		2.9	173,665,634
		6.6	392,845,940

Commercial & Professional Services 0.7%
Other Securities		0.7	41,295,540

Consumer Durables & Apparel 0.7%
Other Securities		0.7	43,068,704

Consumer Services 2.5%
McDonald's Corp.	400,949	1.5	87,394,854
Other Securities		1.0	64,448,308
		2.5	151,843,162

Diversified Financials 3.7%
American Express Co.	359,589	0.7	43,283,728
The Goldman Sachs Group, Inc.	178,656	0.6	36,429,745
Other Securities		2.4	139,892,072
		3.7	219,605,545

Energy 8.2%
Chevron Corp.	1,000,270	2.0	117,751,784
ConocoPhillips	593,507	0.5	30,969,195

Security	Number of Shares	% of Net Assets	Value ($)
Exxon Mobil Corp.	2,221,775	2.5	152,147,152
Other Securities		3.2	186,893,068
		8.2	487,761,199

Food & Staples Retailing 1.9%
Walmart, Inc.	734,552	1.4	83,929,911
Other Securities		0.5	28,486,542
		1.9	112,416,453

Food, Beverage & Tobacco 7.4%
Altria Group, Inc.	982,538	0.7	42,976,212
Mondelez International, Inc., Class A	756,527	0.7	41,775,421
PepsiCo, Inc.	736,107	1.7	100,647,910
Philip Morris International, Inc.	817,010	1.0	58,898,251
The Coca-Cola Co.	2,016,223	1.9	110,972,914
Other Securities		1.4	85,903,690
		7.4	441,174,398

Health Care Equipment & Services 2.9%
Abbott Laboratories	926,262	1.3	79,028,674
CVS Health Corp.	682,103	0.7	41,553,715
Other Securities		0.9	54,047,595
		2.9	174,629,984

Household & Personal Products 3.6%
Colgate-Palmolive Co.	450,842	0.6	33,429,934
The Procter & Gamble Co.	1,317,232	2.6	158,370,804
Other Securities		0.4	25,475,576
		3.6	217,276,314

Insurance 5.0%
Chubb Ltd.	240,460	0.6	37,579,089
Other Securities		4.4	261,743,597
		5.0	299,322,686

Materials 3.4%
Other Securities		3.4	200,703,472

Media & Entertainment 0.9%
Other Securities		0.9	53,428,900

Pharmaceuticals, Biotechnology & Life Sciences 10.1%
AbbVie, Inc.	776,294	0.8	51,033,568
Bristol-Myers Squibb Co.	858,924	0.7	41,288,477
Eli Lilly & Co.	453,675	0.9	51,251,665

₆₂

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Gilead Sciences, Inc.	667,695	0.7	42,425,340
Johnson & Johnson	1,394,246	3.0	178,965,417
Merck & Co., Inc.	1,351,966	2.0	116,904,500
Pfizer, Inc.	2,915,390	1.7	103,642,114
Other Securities		0.3	16,906,751
		10.1	602,417,832

Real Estate 3.4%
Prologis, Inc.	330,700	0.4	27,653,134
Other Securities		3.0	175,561,482
		3.4	203,214,616

Retailing 1.0%
Target Corp.	269,057	0.5	28,799,861
Other Securities		0.5	31,319,588
		1.0	60,119,449

Semiconductors & Semiconductor Equipment 5.7%
Intel Corp.	2,351,000	1.9	111,460,910
QUALCOMM, Inc.	638,383	0.8	49,647,046
Texas Instruments, Inc.	492,648	1.0	60,965,190
Other Securities		2.0	116,847,440
		5.7	338,920,586

Software & Services 3.0%
International Business Machines Corp.	465,580	1.1	63,100,057
Oracle Corp.	1,274,191	1.1	66,334,384
Other Securities		0.8	48,479,377
		3.0	177,913,818

Technology Hardware & Equipment 3.7%
Cisco Systems, Inc.	2,247,994	1.8	105,228,599
Other Securities		1.9	119,348,563
		3.7	224,577,162

Telecommunication Services 4.5%
AT&T, Inc.	3,832,669	2.3	135,139,909
Verizon Communications, Inc.	2,171,881	2.1	126,316,599
Other Securities		0.1	5,728,169
		4.5	267,184,677

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 1.8%
CSX Corp.	403,709	0.5	27,056,577
United Parcel Service, Inc., Class B	366,236	0.7	43,457,564
Other Securities		0.6	36,065,256
		1.8	106,579,397

Utilities 6.8%
Dominion Energy, Inc.	421,330	0.5	32,707,848
Duke Energy Corp.	382,366	0.6	35,460,623
The Southern Co.	546,560	0.5	31,842,586
Other Securities		5.2	307,163,183
		6.8	407,174,240
Total Common Stock
(Cost $5,594,658,106)			5,961,686,966

Other Investment Companies 0.1% of net assets

Money Market Fund 0.1%
Other Securities		0.1	5,488,494

Securities Lending Collateral 0.0%
Other Securities		0.0	2,675,585
Total Other Investment Companies
(Cost $8,164,079)			8,164,079

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
Russell 1000 Value Index, e-mini, expires 09/20/19	228	13,941,060	43,613

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $2,589,308.
(b)	The rate shown is the 7-day yield.

₆₃

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$182,529,712	$112,518,681
Net realized gains		425,954,963	32,484,695
Net change in unrealized appreciation (depreciation)	+	(486,469,154)	395,469,632
Increase in net assets resulting from operations		122,015,521	540,473,008
Distributions to Shareholders1
Total distributions		($153,831,815)	($104,891,835)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		50,100,000	$2,701,585,976	17,450,000	$937,684,002
Shares redeemed	+	(24,950,000)	(1,385,515,156)	(3,950,000)	(213,534,949)
Net transactions in fund shares		25,150,000	$1,316,070,820	13,500,000	$724,149,053
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		83,250,000	$4,692,419,436	69,750,000	$3,532,689,210
Total increase	+	25,150,000	1,284,254,526	13,500,000	1,159,730,226
End of period²		108,400,000	$5,976,673,962	83,250,000	$4,692,419,436

¹	For the period ended August 31, 2018, the fund distributed to shareholders $104,891,835 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $25,500,760 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₆₇

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$58.44	$48.77	$43.67	$40.70	$40.56
Income (loss) from investment operations:
Net investment income (loss)¹	0.84	0.76	0.71	0.74	0.59
Net realized and unrealized gains (losses)	(2.76)	9.59	5.09	2.84	0.12
Total from investment operations	(1.92)	10.35	5.80	3.58	0.71
Less distributions:
Distributions from net investment income	(0.80)	(0.68)	(0.70)	(0.61)	(0.57)
Net asset value at end of period	$55.72	$58.44	$48.77	$43.67	$40.70
Total return	(3.24%)	21.36%	13.38%	8.94%	1.71%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.04% ²	0.05%	0.06% ³	0.07%	0.07%
Net investment income (loss)	1.52%	1.42%	1.54%	1.83%	1.42%
Portfolio turnover rate⁴	19%	13%	17%	21%	12%
Net assets, end of period (x 1,000)	$6,254,639	$5,358,783	$3,555,096	$2,532,590	$1,841,785

Calculated based on the average shares outstanding during the period.

Effective March 11, 2019, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/19 is a blended ratio (see financial note 4).

Effective October 7, 2016 and March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

⁴

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

₆₈

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 1.3%
Other Securities		1.3	83,030,408

Banks 4.0%
Other Securities		4.0	247,514,268

Capital Goods 11.3%
IDEX Corp.	152,677	0.4	25,147,429
Teledyne Technologies, Inc. *	73,082	0.4	22,552,374
Wabtec Corp.	367,095	0.4	25,406,645
Xylem, Inc.	362,867	0.4	27,799,241
Other Securities		9.7	605,859,956
		11.3	706,765,645

Commercial & Professional Services 1.6%
Other Securities		1.6	98,139,948

Consumer Durables & Apparel 3.2%
NVR, Inc. *	6,808	0.4	24,501,992
Other Securities		2.8	175,493,799
		3.2	199,995,791

Consumer Services 3.4%
Other Securities		3.4	214,893,387

Diversified Financials 4.8%
Cboe Global Markets, Inc.	225,292	0.4	26,845,795
MarketAxess Holdings, Inc.	76,029	0.5	30,230,651
Other Securities		3.9	240,975,624
		4.8	298,052,070

Energy 2.2%
Diamondback Energy, Inc.	311,702	0.5	30,571,732
Other Securities		1.7	108,444,760
		2.2	139,016,492

Food & Staples Retailing 0.5%
Other Securities		0.5	30,228,960

Food, Beverage & Tobacco 1.3%
Other Securities		1.3	83,945,006

Security	Number of Shares	% of Net Assets	Value ($)
Health Care Equipment & Services 5.8%
DENTSPLY SIRONA, Inc.	471,880	0.4	24,608,542
DexCom, Inc. *	183,630	0.5	31,512,744
STERIS plc	170,528	0.4	26,329,523
Teleflex, Inc.	93,082	0.5	33,874,401
Veeva Systems, Inc., Class A *	257,773	0.7	41,341,634
Other Securities		3.3	207,706,192
		5.8	365,373,036

Household & Personal Products 0.4%
Other Securities		0.4	22,015,957

Insurance 5.0%
Alleghany Corp. *	29,138	0.4	21,833,395
Arthur J. Gallagher & Co.	373,564	0.5	33,885,990
Other Securities		4.1	260,238,279
		5.0	315,957,664

Materials 6.2%
Amcor plc *	3,273,256	0.5	32,143,374
FMC Corp.	265,661	0.4	22,934,514
International Flavors & Fragrances, Inc.	204,443	0.4	22,437,619
Other Securities		4.9	307,440,869
		6.2	384,956,376

Media & Entertainment 3.1%
Snap, Inc., Class A *	1,524,934	0.4	24,139,705
Other Securities		2.7	170,707,531
		3.1	194,847,236

Pharmaceuticals, Biotechnology & Life Sciences 5.0%
Exact Sciences Corp. *	260,450	0.5	31,050,849
Other Securities		4.5	283,679,326
		5.0	314,730,175

Real Estate 11.6%
Duke Realty Corp.	724,851	0.4	24,115,793
Equity LifeStyle Properties, Inc.	181,372	0.4	24,434,436
Extra Space Storage, Inc.	257,037	0.5	31,337,951
Invitation Homes, Inc.	846,920	0.4	24,357,419
Regency Centers Corp.	337,073	0.3	21,744,579
Sun Communities, Inc.	181,864	0.4	26,879,499
UDR, Inc.	568,267	0.4	27,379,104

₆₉

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
WP Carey, Inc.	343,630	0.5	30,857,974
Other Securities		8.3	513,219,793
		11.6	724,326,548

Retailing 4.0%
Burlington Stores, Inc. *	134,039	0.4	27,141,557
Tractor Supply Co.	243,456	0.4	24,803,297
Other Securities		3.2	195,606,803
		4.0	247,551,657

Semiconductors & Semiconductor Equipment 2.3%
Marvell Technology Group Ltd.	1,196,531	0.5	28,680,848
Other Securities		1.8	114,964,247
		2.3	143,645,095

Software & Services 11.0%
Akamai Technologies, Inc. *	330,927	0.5	29,495,524
Cadence Design Systems, Inc. *	566,697	0.6	38,807,411
Fortinet, Inc. *	292,746	0.4	23,179,628
Gartner, Inc. *	181,676	0.4	24,284,631
GoDaddy, Inc., Class A *	354,180	0.4	22,433,761
Jack Henry & Associates, Inc.	155,693	0.4	22,569,257
Leidos Holdings, Inc.	290,828	0.4	25,406,734
Okta, Inc. *	209,536	0.4	26,506,304
Paycom Software, Inc. *	99,104	0.4	24,787,893
Twilio, Inc., Class A *	236,112	0.5	30,805,533
Other Securities		6.6	422,198,328
		11.0	690,475,004

Technology Hardware & Equipment 4.6%
CDW Corp.	294,492	0.5	34,013,826
Keysight Technologies, Inc. *	379,493	0.6	36,757,692
Zebra Technologies Corp., Class A *	108,874	0.4	22,322,436
Other Securities		3.1	193,308,650
		4.6	286,402,604

Telecommunication Services 0.5%
Other Securities		0.5	30,637,134

Transportation 2.7%
Expeditors International of Washington, Inc.	346,989	0.4	24,670,918
Other Securities		2.3	146,821,363
		2.7	171,492,281

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 4.0%
Alliant Energy Corp.	476,511	0.4	24,993,002
Atmos Energy Corp.	235,911	0.4	26,004,469
NiSource, Inc.	752,343	0.4	22,231,736
Pinnacle West Capital Corp.	226,434	0.3	21,581,425
Other Securities		2.5	155,315,891
		4.0	250,126,523
Total Common Stock
(Cost $5,628,672,804)			6,244,119,265

Other Investment Companies 0.6% of net assets

Money Market Fund 0.1%
Other Securities		0.1	3,495,102

Securities Lending Collateral 0.5%
Wells Fargo Government Money Market Fund, Select Class 2.03% (b)		0.5	33,564,717
Total Other Investment Companies
(Cost $37,059,819)			37,059,819

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
S&P Mid-Cap 400 Index, e-mini, expires 09/20/19	51	9,595,140	12,201

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $32,180,849.
(b)	The rate shown is the 7-day yield.

₇₀

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$85,672,960	$61,992,328
Net realized gains		310,703,125	114,807,880
Net change in unrealized appreciation (depreciation)	+	(548,974,215)	660,791,539
Increase (decrease) in net assets resulting from operations		(152,598,130)	837,591,747
Distributions to Shareholders1
Total distributions		($80,783,475)	($53,918,230)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		39,050,000	$2,178,261,705	24,750,000	$1,321,549,843
Shares redeemed	+	(18,500,000)	(1,049,023,933)	(5,950,000)	(301,536,961)
Net transactions in fund shares		20,550,000	$1,129,237,772	18,800,000	$1,020,012,882
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		91,700,000	$5,358,782,895	72,900,000	$3,555,096,496
Total increase	+	20,550,000	895,856,167	18,800,000	1,803,686,399
End of period²		112,250,000	$6,254,639,062	91,700,000	$5,358,782,895

¹	For the period ended August 31, 2018, the fund distributed to shareholders $53,918,230 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $13,616,626 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₇₄

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Small-Cap ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$78.24	$64.03	$57.42	$53.54	$54.53
Income (loss) from investment operations:
Net investment income (loss)¹	1.04	0.98	0.90	0.93	0.80
Net realized and unrealized gains (losses)	(9.07)	14.10	6.64	3.75	(1.07)
Total from investment operations	(8.03)	15.08	7.54	4.68	(0.27)
Less distributions:
Distributions from net investment income	(1.01)	(0.87)	(0.93)	(0.80)	(0.72)
Net asset value at end of period	$69.20	$78.24	$64.03	$57.42	$53.54
Total return	(10.26%)	23.71%	13.21%	8.89%	(0.54%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.04% ²	0.05%	0.06% ³	0.08% ⁴	0.08%
Net investment income (loss)	1.49%	1.38%	1.46%	1.76%	1.44%
Portfolio turnover rate⁵	11%	9%	11%	11%	9%
Net assets, end of period (x 1,000)	$8,100,071	$8,853,388	$5,490,843	$3,772,207	$2,893,741

Calculated based on the average shares outstanding during the period.

Effective March 11, 2019, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/19 is a blended ratio (see financial note 4).

Effective October 7, 2016 and March 1, 2017, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/17 is a blended ratio.

⁴

Effective May 2, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁵

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

₇₅

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 1.2%
Gentex Corp.	751,722	0.3	19,995,805
Other Securities		0.9	73,994,652
		1.2	93,990,457

Banks 10.0%
TCF Financial Corp.	455,489	0.2	17,563,656
Other Securities		9.8	793,389,328
		10.0	810,952,984

Capital Goods 9.6%
Hexcel Corp.	249,533	0.3	20,998,202
Woodward, Inc.	164,434	0.2	17,734,207
Other Securities		9.1	742,388,736
		9.6	781,121,145

Commercial & Professional Services 3.1%
Other Securities		3.1	248,142,496

Consumer Durables & Apparel 3.0%
Roku, Inc. *	240,998	0.5	36,477,457
Other Securities		2.5	203,376,097
		3.0	239,853,554

Consumer Services 4.0%
Grand Canyon Education, Inc. *	141,931	0.2	17,826,534
Planet Fitness, Inc., Class A *	248,225	0.2	17,527,167
Other Securities		3.6	291,790,853
		4.0	327,144,554

Diversified Financials 4.2%
LPL Financial Holdings, Inc.	245,151	0.2	18,374,067
New Residential Investment Corp.	1,221,370	0.2	17,184,676
Other Securities		3.8	301,791,661
		4.2	337,350,404

Energy 2.4%
Other Securities		2.4	193,066,717

Security	Number of Shares	% of Net Assets	Value ($)
Food & Staples Retailing 0.8%
Casey's General Stores, Inc.	107,696	0.2	18,076,774
Other Securities		0.6	46,244,999
		0.8	64,321,773

Food, Beverage & Tobacco 1.6%
Other Securities		1.6	130,930,376

Health Care Equipment & Services 6.6%
Chemed Corp.	46,831	0.3	20,110,636
Haemonetics Corp. *	150,566	0.3	20,105,078
Hill-Rom Holdings, Inc.	196,329	0.3	21,140,707
Insulet Corp. *	175,378	0.3	27,038,026
Masimo Corp. *	144,274	0.3	22,109,991
Medidata Solutions, Inc. *	183,097	0.2	16,768,023
Other Securities		4.9	405,706,701
		6.6	532,979,162

Household & Personal Products 0.7%
Other Securities		0.7	52,974,641

Insurance 2.7%
First American Financial Corp.	329,494	0.2	19,258,924
Other Securities		2.5	202,119,609
		2.7	221,378,533

Materials 4.4%
Amcor plc *	4,771,775	0.6	46,858,831
AptarGroup, Inc.	185,733	0.3	22,700,287
Other Securities		3.5	290,286,405
		4.4	359,845,523

Media & Entertainment 2.7%
Cable One, Inc.	14,585	0.2	18,925,788
Other Securities		2.5	203,662,525
		2.7	222,588,313

Pharmaceuticals, Biotechnology & Life Sciences 7.0%
Catalent, Inc. *	428,336	0.3	22,590,441
Charles River Laboratories International, Inc. *	143,439	0.2	18,819,197
Exact Sciences Corp. *	379,783	0.6	45,277,729
Other Securities		5.9	483,046,158
		7.0	569,733,525

₇₆

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Real Estate 9.2%
Americold Realty Trust	563,383	0.3	20,518,409
CubeSmart	554,440	0.2	19,898,852
EPR Properties	222,167	0.2	17,384,568
Medical Properties Trust, Inc.	1,290,583	0.3	23,991,938
STORE Capital Corp.	594,337	0.3	22,442,165
Other Securities		7.9	638,576,797
		9.2	742,812,729

Retailing 3.4%
Etsy, Inc. *	353,467	0.2	18,659,523
Five Below, Inc. *	164,543	0.3	20,217,398
Pool Corp.	116,903	0.3	22,957,411
Other Securities		2.6	213,238,603
		3.4	275,072,935

Semiconductors & Semiconductor Equipment 3.3%
Cypress Semiconductor Corp.	1,075,064	0.3	24,737,223
Entegris, Inc.	398,419	0.2	17,064,286
Monolithic Power Systems, Inc.	116,443	0.2	17,531,658
Universal Display Corp.	124,781	0.3	25,638,752
Versum Materials, Inc.	321,370	0.2	16,711,240
Other Securities		2.1	169,224,765
		3.3	270,907,924

Software & Services 10.6%
Alteryx, Inc., Class A *	136,889	0.2	19,499,838
Coupa Software, Inc. *	160,451	0.3	22,291,457
Euronet Worldwide, Inc. *	152,722	0.3	23,387,847
Fair Isaac Corp. *	85,124	0.4	30,024,937
Genpact Ltd.	447,914	0.2	18,346,557
HubSpot, Inc. *	115,091	0.3	22,981,371
Okta, Inc. *	305,390	0.5	38,631,835
Proofpoint, Inc. *	163,608	0.2	18,587,505
RingCentral, Inc., Class A *	206,713	0.4	29,173,406
The Trade Desk, Inc., Class A *	107,560	0.3	26,435,021
Twilio, Inc., Class A *	344,144	0.6	44,900,468
Zendesk, Inc. *	321,942	0.3	25,819,748
Other Securities		6.6	539,027,720
		10.6	859,107,710

Technology Hardware & Equipment 3.7%
Ciena Corp. *	420,793	0.2	17,223,057
Other Securities		3.5	286,569,857
		3.7	303,792,914

Telecommunication Services 0.6%
Other Securities		0.6	45,465,042

Transportation 1.6%
Other Securities		1.6	128,052,025

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 3.4%
Other Securities		3.4	272,397,009
Total Common Stock
(Cost $7,654,651,871)			8,083,982,445

Rights 0.0% of net assets

Materials 0.0%
Other Securities		0.0	35,598

Media 0.0%
Other Securities		0.0	15,132
Total Rights
(Cost $35,598)			50,730

Other Investment Companies 1.5% of net assets

Money Market Fund 0.0%
Other Securities		0.0	2,896,339

Securities Lending Collateral 1.5%
Wells Fargo Government Money Market Fund, Select Class 2.03% (c)		1.5	117,560,977
Total Other Investment Companies
(Cost $120,457,316)			120,457,316

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
Russell 2000 Index, e-mini expires 09/20/19	187	13,970,770	33,945

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $112,803,065.
(b)	Fair-valued by management using significant unobservable inputs in accordance with procedures approved by the fund’s Board of Trustees.
(c)	The rate shown is the 7-day yield.

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

₇₇

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Small-Cap ETF

Statement of Assets and Liabilities

As of August 31, 2019

Assets
Investments in unaffiliated issuers, at value (cost $7,657,583,808) including securities on loan of $112,803,065		$8,086,929,514
Collateral invested for securities on loan, at value (cost $117,560,977)		117,560,977
Cash		6,080,577
Deposit with broker for futures contracts		585,000
Receivables:
Investments sold		362,706
Dividends		7,184,172
Income from securities on loan	+	690,930
Total assets		8,219,393,876
Liabilities
Collateral held for securities on loan		117,560,977
Payables:
Investments bought		1,438,968
Management fees		293,513
Variation margin on futures contracts	+	29,798
Total liabilities		119,323,256
Net Assets
Total assets		8,219,393,876
Total liabilities	–	119,323,256
Net assets		$8,100,070,620
Net Assets by Source
Capital received from investors		7,808,448,316
Total distributable earnings¹		291,622,304

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$8,100,070,620		117,050,000		$69.20

¹	The SEC eliminated the requirement to disclose total distributable earnings (loss) by each of its components as previously disclosed as the previous presentation did not provide insight into the tax implications of distributions (see financial note 11 for additional information).

₇₉

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Small-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$117,973,566	$97,958,435
Net realized gains		378,583,521	201,304,101
Net change in unrealized appreciation (depreciation)	+	(1,409,738,942)	1,205,726,156
Increase (decrease) in net assets resulting from operations		(913,181,855)	1,504,988,692
Distributions to Shareholders1
Total distributions		($113,198,860)	($84,332,535)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		21,350,000	$1,530,345,531	34,350,000	$2,409,489,819
Shares redeemed	+	(17,450,000)	(1,257,281,901)	(6,950,000)	(467,601,727)
Net transactions in fund shares		3,900,000	$273,063,630	27,400,000	$1,941,888,092
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		113,150,000	$8,853,387,705	85,750,000	$5,490,843,456
Total increase or decrease	+	3,900,000	(753,317,085)	27,400,000	3,362,544,249
End of period²		117,050,000	$8,100,070,620	113,150,000	$8,853,387,705

¹	For the period ended August 31, 2018, the fund distributed to shareholders $84,332,535 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $17,859,200 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₈₁

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Financial Statements

Financial Highlights

	9/1/18– 8/31/19	9/1/17– 8/31/18	9/1/16– 8/31/17	9/1/15– 8/31/16	9/1/14– 8/31/15
Per-Share Data
Net asset value at beginning of period	$52.71	$45.83	$42.47	$36.52	$38.90
Income (loss) from investment operations:
Net investment income (loss)¹	1.66	1.49	1.40	1.29	1.19
Net realized and unrealized gains (losses)	0.48	6.75	3.26	5.85	(2.46)
Total from investment operations	2.14	8.24	4.66	7.14	(1.27)
Less distributions:
Distributions from net investment income	(1.55)	(1.36)	(1.30)	(1.19)	(1.11)
Net asset value at end of period	$53.30	$52.71	$45.83	$42.47	$36.52
Total return	4.18%	18.21%	11.12%	19.89%	(3.47%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.06% ²	0.07%	0.07%	0.07%	0.07%
Net investment income (loss)	3.23%	2.99%	3.17%	3.27%	3.03%
Portfolio turnover rate³	24%	23%	15%	22%	19%
Net assets, end of period (x 1,000)	$9,820,959	$8,092,908	$6,040,705	$4,300,443	$2,497,808

Calculated based on the average shares outstanding during the period.

Effective March 11, 2019, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/19 is a blended ratio (see financial note 4).

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

₈₂

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings as of August 31, 2019

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.7% of net assets

Automobiles & Components 0.2%
Other Securities		0.2	25,530,138

Banks 2.7%
Fifth Third Bancorp	2,619,964	0.7	69,298,048
Huntington Bancshares, Inc.	3,564,187	0.5	47,225,478
KeyCorp	3,436,141	0.6	57,039,941
Other Securities		0.9	90,134,815
		2.7	263,698,282

Capital Goods 13.1%
3M Co.	1,960,656	3.2	317,077,288
Cummins, Inc.	492,887	0.7	73,573,243
Eaton Corp. plc	1,442,364	1.2	116,427,622
Emerson Electric Co.	2,092,809	1.3	124,710,488
Fastenal Co.	1,949,476	0.6	59,692,955
Illinois Tool Works, Inc.	1,027,900	1.6	154,041,094
Lockheed Martin Corp.	837,102	3.3	321,539,249
Rockwell Automation, Inc.	407,133	0.6	62,205,851
Other Securities		0.6	56,368,828
		13.1	1,285,636,618

Commercial & Professional Services 0.1%
Other Securities		0.1	6,398,627

Consumer Durables & Apparel 1.1%
Hasbro, Inc.	393,928	0.4	43,517,226
Other Securities		0.7	66,356,734
		1.1	109,873,960

Consumer Services 0.8%
Darden Restaurants, Inc.	420,719	0.5	50,898,585
Other Securities		0.3	27,812,532
		0.8	78,711,117

Diversified Financials 4.3%
Ameriprise Financial, Inc.	461,410	0.6	59,512,662
BlackRock, Inc.	414,298	1.8	175,065,763
T. Rowe Price Group, Inc.	804,401	0.9	88,982,839
Other Securities		1.0	99,003,761
		4.3	422,565,025

Security	Number of Shares	% of Net Assets	Value ($)
Energy 6.2%
Exxon Mobil Corp.	5,864,076	4.1	401,571,924
ONEOK, Inc.	1,401,497	1.0	99,898,706
Valero Energy Corp.	1,421,992	1.1	107,047,558
		6.2	608,518,188

Food, Beverage & Tobacco 14.7%
Altria Group, Inc.	6,382,586	2.8	279,174,312
General Mills, Inc.	2,031,934	1.1	109,318,049
Kellogg Co.	854,761	0.6	53,678,991
PepsiCo, Inc.	3,260,545	4.5	445,814,318
The Coca-Cola Co.	8,406,498	4.7	462,693,650
The Hershey Co.	473,405	0.8	75,025,224
Other Securities		0.2	17,999,540
		14.7	1,443,704,084

Health Care Equipment & Services 3.2%
Cardinal Health, Inc.	1,014,815	0.5	43,768,971
CVS Health Corp.	4,416,595	2.7	269,058,967
Other Securities		0.0	2,652,664
		3.2	315,480,602

Household & Personal Products 7.3%
Kimberly-Clark Corp.	1,172,788	1.7	165,492,115
The Clorox Co.	436,359	0.7	69,014,539
The Procter & Gamble Co.	3,958,067	4.8	475,878,395
Other Securities		0.1	7,629,208
		7.3	718,014,257

Insurance 2.4%
Fidelity National Financial, Inc.	937,733	0.4	41,203,988
Principal Financial Group, Inc.	881,140	0.5	46,894,271
Prudential Financial, Inc.	1,392,607	1.1	111,533,894
Other Securities		0.4	35,590,791
		2.4	235,222,944

Materials 1.8%
International Paper Co.	1,363,390	0.6	53,308,549
Other Securities		1.2	121,811,352
		1.8	175,119,901

Media & Entertainment 0.6%
Omnicom Group, Inc.	761,749	0.6	57,938,629

₈₃

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings as of August 31, 2019 (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 6.4%
Bristol-Myers Squibb Co.	5,559,294	2.7	267,235,263
Pfizer, Inc.	10,076,629	3.7	358,224,161
		6.4	625,459,424

Retailing 8.8%
Best Buy Co., Inc.	796,641	0.5	50,706,200
Genuine Parts Co.	497,314	0.5	44,902,481
Target Corp.	1,776,934	1.9	190,203,015
The Home Depot, Inc.	2,182,178	5.1	497,340,188
Other Securities		0.8	80,819,946
		8.8	863,971,830

Semiconductors & Semiconductor Equipment 13.2%
Intel Corp.	9,371,962	4.5	444,324,718
KLA Corp.	562,482	0.9	83,191,088
Maxim Integrated Products, Inc.	931,229	0.5	50,789,230
QUALCOMM, Inc.	4,121,202	3.3	320,505,880
Texas Instruments, Inc.	3,195,607	4.0	395,456,366
		13.2	1,294,267,282

Software & Services 5.1%
International Business Machines Corp.	3,030,062	4.2	410,664,303
Paychex, Inc.	1,088,143	0.9	88,901,283
		5.1	499,565,586

Technology Hardware & Equipment 0.0%
Other Securities		0.0	2,169,680

Telecommunication Services 4.5%
Verizon Communications, Inc.	7,567,918	4.5	440,150,111

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 3.2%
United Parcel Service, Inc., Class B	2,369,921	2.8	281,214,826
Other Securities		0.4	39,334,319
		3.2	320,549,145
Total Common Stock
(Cost $9,115,761,049)			9,792,545,430

Other Investment Companies 0.2% of net assets

Money Market Fund 0.1%
Other Securities		0.1	5,078,698

Securities Lending Collateral 0.1%
Other Securities		0.1	12,662,275
Total Other Investment Companies
(Cost $17,740,973)			17,740,973

	Number of Contracts	Notional Amount ($)	Current Value/ Unrealized Appreciation ($)
Futures Contracts
Long
S&P 500 Index, e-mini, expires 09/20/19	177	25,884,480	219,191

The following footnotes may not be applicable to the Condensed Portfolio Holdings. Please refer to the complete schedule of portfolio holdings.

(a)	All or a portion of this security is on loan. Securities on loan were valued at $12,089,459.
(b)	The rate shown is the 7-day yield.

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Assets
Common Stock¹	$9,792,545,430	$—	$—	$9,792,545,430
Other Investment Companies¹	17,740,973	—	—	17,740,973
Futures Contracts²	219,191	—	—	219,191
Total	$9,810,505,594	$—	$—	$9,810,505,594

¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are valued at unrealized appreciation or depreciation.

₈₄

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Operations
	9/1/18-8/31/19		9/1/17-8/31/18
Net investment income		$282,628,086	$214,128,766
Net realized gains		260,018,757	664,488,840
Net change in unrealized appreciation (depreciation)	+	(134,725,586)	248,013,420
Increase in net assets resulting from operations		407,921,257	1,126,631,026
Distributions to Shareholders1
Total distributions		($258,520,350)	($202,365,750)

Transactions in Fund Shares
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	VALUE	SHARES	VALUE
Shares sold		67,000,000	$3,443,124,440	85,900,000	$4,318,218,272
Shares redeemed	+	(36,300,000)	(1,864,473,911)	(64,150,000)	(3,190,280,837)
Net transactions in fund shares		30,700,000	$1,578,650,529	21,750,000	$1,127,937,435
Shares Outstanding and Net Assets
		9/1/18-8/31/19		9/1/17-8/31/18
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		153,550,000	$8,092,908,061	131,800,000	$6,040,705,350
Total increase	+	30,700,000	1,728,051,436	21,750,000	2,052,202,711
End of period²		184,250,000	$9,820,959,497	153,550,000	$8,092,908,061

¹	For the period ended August 31, 2018, the fund distributed to shareholders $202,365,750 from net investment income. The SEC eliminated the requirement to disclose distributions to shareholders from net investment income and from net realized gains in 2018 (see financial note 11 for additional information).
²	End of period - Net assets include net investment income not yet distributed of $42,044,359 at August 31, 2018. The SEC eliminated the requirement to disclose undistributed net investment income in 2018.

₈₇

Schwab U.S. Equity ETFs | Annual Report

See financial notes

Schwab U.S. Equity ETFs

Financial Notes

1. Business Structure of the Funds:

SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009)
Schwab U.S. Broad Market ETF	Schwab Emerging Markets Equity ETF
Schwab 1000 Index 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
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

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

2. Significant Accounting Policies:

Effective November 5, 2018, the funds adopted SEC Regulation S-X disclosure requirement changes. The adopted changes are reflected throughout this report.

(a) Security Valuation:

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

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

2. Significant Accounting Policies (continued):

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

• Underlying funds: Mutual funds are valued at their respective NAVs.

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

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

₈₉

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

2. Significant Accounting Policies (continued):

The levels associated with valuing the funds’ investments as of August 31, 2019 are disclosed in the Condensed Portfolio Holdings.

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

(d) Investment Income:

(e) Expenses:

₉₀

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

2. Significant Accounting Policies (continued):

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

(h) Federal Income Taxes:

(i) Indemnification:

(j) Recent Accounting Standards:

3. Risk Factors:

Schwab U.S. Dividend Equity ETF primarily invests in dividend paying stocks. As a result, fund performance will correlate with the performance of the dividend paying stock segment of the stock market, and a fund may underperform funds that do not limit their investments to dividend paying stocks. If stocks held by a fund reduce or stop paying dividends, the fund’s ability to generate income may be affected.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

3. Risk Factors (continued):

Growth Investing Risk. Certain funds invest in growth stocks. Growth stocks can be volatile. Growth companies usually invest a high portion of earnings in their businesses and may lack the dividends of value stocks that can cushion stock prices in a falling market. The prices of growth stocks are based largely on projections of the issuer’s future earnings and revenues. If a company’s earnings or revenues fall short of expectations, its stock price may fall dramatically. Growth stocks may also be more expensive relative to their earnings or assets compared to value or other stocks.

Value Investing Risk. Certain funds emphasize a “value” style of investing, which targets undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” securities may not move in tandem with the returns on other styles of investing or the stock market in general.

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.

Liquidity Risk. A fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.

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 vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.

₉₂

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

3. Risk Factors (continued):

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:

Investment Adviser

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

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

Schwab U.S. Broad Market ETF	Schwab 1000 Index 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
0.03%	0.05%	0.03%	0.04%	0.04%	0.04%*	0.04%*	0.06%*

* Prior to March 11, 2019, the management fees of Schwab U.S. Mid-Cap ETF, Schwab U.S. Small-Cap ETF and Schwab U.S. Dividend Equity ETF were 0.05%, 0.05% and 0.07%, respectively.

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Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

4. Affiliates and Affiliated Transactions (continued):

Investment from Affiliates

	Underlying Funds
	Schwab U.S. Large-Cap ETF	Schwab U.S. Small-Cap ETF
Schwab VIT Balanced Portfolio	0.1%	0.0%*
Schwab VIT Balanced with Growth Portfolio	0.2%	0.1%
Schwab VIT Growth Portfolio	0.2%	0.1%
Schwab Target 2010 Index Fund	0.0%*	0.0%*
Schwab Target 2015 Index Fund	0.1%	0.0%*
Schwab Target 2020 Index Fund	0.2%	0.0%*
Schwab Target 2025 Index Fund	0.4%	0.1%
Schwab Target 2030 Index Fund	0.5%	0.1%
Schwab Target 2035 Index Fund	0.4%	0.1%
Schwab Target 2040 Index Fund	0.5%	0.1%
Schwab Target 2045 Index Fund	0.3%	0.1%
Schwab Target 2050 Index Fund	0.3%	0.1%
Schwab Target 2055 Index Fund	0.2%	0.1%
Schwab Target 2060 Index Fund	0.2%	0.1%

*	Less than 0.05%

Interfund Transactions

	Total Aggregate Transactions	Realized Gains (Losses)
Schwab U.S. Broad Market ETF	$247,631,760	($28,849,642)
Schwab 1000 Index ETF	5,486,623	(414,753)
Schwab U.S. Large-Cap ETF	352,457,265	(25,628,947)
Schwab U.S. Large-Cap Growth ETF	440,084,929	(26,358,963)
Schwab U.S. Large-Cap Value ETF	255,809,407	(5,201,603)
Schwab U.S. Mid-Cap ETF	302,813,600	(46,304,345)
Schwab U.S. Small-Cap ETF	425,913,874	(55,046,270)
Schwab U.S. Dividend Equity ETF	234,880,948	(9,858,920)

Interfund Borrowing and Lending

₉₄

Schwab U.S. Equity ETFs | Annual Report

Schwab U.S. Equity ETFs

Financial Notes (continued)

5. Other Service Providers:

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

6. Board of Trustees:

7. Borrowing from Banks:

8. Derivatives:

	Notional Amounts	Number of Contracts
Schwab U.S. Broad Market ETF	$24,063,492	172
Schwab 1000 Index ETF	1,134,367	8
Schwab U.S. Large-Cap ETF	26,193,905	187
Schwab U.S. Large-Cap Growth ETF	5,885,788	78
Schwab U.S. Large-Cap Value ETF	12,555,272	208
Schwab U.S. Mid-Cap ETF	7,670,014	41
Schwab U.S. Small-Cap ETF	14,056,162	184
Schwab U.S. Dividend Equity ETF	20,837,515	148

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Financial Notes (continued)

9. Purchases and Sales of Investment Securities:

For the period ended August 31, 2019, purchases and sales of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales of Securities
Schwab U.S. Broad Market ETF	$761,074,477	$570,350,331
Schwab 1000 Index ETF	52,438,910	33,501,945
Schwab U.S. Large-Cap ETF	841,894,154	669,378,565
Schwab U.S. Large-Cap Growth ETF	1,055,566,507	983,948,619
Schwab U.S. Large-Cap Value ETF	432,943,250	393,627,302
Schwab U.S. Mid-Cap ETF	1,155,463,824	1,043,898,293
Schwab U.S. Small-Cap ETF	1,197,647,144	870,923,529
Schwab U.S. Dividend Equity ETF	2,144,642,515	2,113,286,016

10. In-Kind Transactions:

The in-kind transactions for the period ended August 31, 2019, were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab U.S. Broad Market ETF	$2,582,392,902	$1,094,882,853
Schwab 1000 Index ETF	382,045,449	76,542,390
Schwab U.S. Large-Cap ETF	3,491,328,222	886,009,507
Schwab U.S. Large-Cap Growth ETF	1,484,519,899	515,068,959
Schwab U.S. Large-Cap Value ETF	2,553,776,616	1,243,373,476
Schwab U.S. Mid-Cap ETF	2,088,690,191	953,743,768
Schwab U.S. Small-Cap ETF	1,461,075,976	1,180,663,465
Schwab U.S. Dividend Equity ETF	3,312,394,673	1,735,617,021

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Financial Notes (continued)

11. Federal Income Taxes

As of August 31, 2019, the tax basis cost of the funds’ investments and gross unrealized appreciation and depreciation were as follows:

	Schwab U.S. Broad Market ETF	Schwab 1000 Index ETF	Schwab U.S. Large-Cap ETF	Schwab U.S. Large-Cap Growth ETF	Schwab U.S. Large-Cap Value ETF
Tax cost	$11,610,121,892	$776,602,976	$14,408,539,427	$6,007,093,780	$5,623,831,103
Gross unrealized appreciation	$3,953,737,918	$102,187,348	$4,093,783,597	$2,304,175,607	$708,100,601
Gross unrealized depreciation	(690,649,388)	(41,258,668)	(723,642,175)	(208,652,516)	(362,037,046)
Net unrealized appreciation (depreciation)	$3,263,088,530	$60,928,680	$3,370,141,422	$2,095,523,091	$346,063,555

	Schwab U.S. Mid-Cap ETF	Schwab U.S. Small-Cap ETF	Schwab U.S. Dividend Equity ETF
Tax cost	$5,684,980,035	$7,821,625,807	$9,152,325,765
Gross unrealized appreciation	$1,117,675,890	$1,537,184,503	$1,146,915,878
Gross unrealized depreciation	(521,464,640)	(1,154,285,874)	(488,736,049)
Net unrealized appreciation (depreciation)	$596,211,250	$382,898,629	$658,179,829

As of August 31, 2019, the components of distributable earnings on a tax basis were as follows:

	Schwab U.S. Broad Market ETF	Schwab 1000 Index 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
Undistributed ordinary income	$74,091,202	$4,140,128	$88,330,408	$14,941,868	$54,191,973	$18,528,610	$22,977,275	$66,132,364
Net unrealized appreciation (depreciation) on investments	3,263,088,530	60,928,680	3,370,141,422	2,095,523,091	346,063,555	596,211,250	382,898,629	658,179,829
Total	$3,337,179,732	$65,068,808	$3,458,471,830	$2,110,464,959	$400,255,528	$614,739,860	$405,875,904	$724,312,193

The primary difference between book basis and tax basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales, realization for tax purposes of unrealized appreciation or depreciation on futures contracts and non-taxable dividends. The tax cost of the funds’ investments, disclosed above, have been adjusted from their book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.

Expiration Date	Schwab U.S. Broad Market ETF	Schwab 1000 Index 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
No expiration	$62,177,573	$2,502,538	$84,669,523	$85,616,664	$46,716,090	$202,458,368	$114,253,600	$223,525,531
Total	$62,177,573	$2,502,538	$84,669,523	$85,616,664	$46,716,090	$202,458,368	$114,253,600	$223,525,531

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Financial Notes (continued)

11. Federal Income Taxes (continued):

For the year ended August 31, 2019, the funds had no capital loss carryforwards utilized and capital losses expired as follows:

	Schwab U.S. Broad Market ETF	Schwab 1000 Index 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
Capital losses expired	$—	$—	$721,062	$631,601	$295,384	$218,695	$927,631	$—

The tax basis components of distributions paid during the current and prior fiscal years were:

	Schwab U.S. Broad Market ETF	Schwab 1000 Index 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
Current period distributions
Ordinary income	$265,289,790	$11,758,680	$302,865,295	$80,450,420	$153,831,815	$80,783,475	$113,198,860	$258,520,350
Long-term capital gains	—	—	—	—	—	—	—	—
Prior period distributions
Ordinary income	$199,698,380	$3,615,715	$208,413,000	$52,664,675	$104,891,835	$53,918,230	$84,332,535	$202,365,750
Long-term capital gains	—	—	—	—	—	—	—	—

Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments have no impact on net assets or the results of operations.

12. Subsequent Events:

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Schwab Strategic Trust and Shareholders of 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 and Schwab 1000 Index ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the condensed portfolio holdings, of 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 and Schwab 1000 Index ETF (eight of the funds constituting Schwab Strategic Trust, hereafter collectively referred to as the “Funds”) as of August 31, 2019, the related statements of operations for the year ended August 31, 2019, the statements of changes in net assets for each of the periods indicated in the table below, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the periods indicated in the table below and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

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 and Schwab U.S. Dividend Equity ETF: statements of changes in net assets for each of the two years in the period ended August 31, 2019.

Schwab 1000 Index ETF: statements of changes in net assets for the period October 11, 2017 (commencement of operations) through August 31, 2018 and for the year ended August 31, 2019.

Basis for Opinions

/s/PricewaterhouseCoopers LLP
San Francisco, California
October 17, 2019

We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 1989.

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Other Information (unaudited)

Frequency Distribution of Discounts and Premiums
Market Price vs. NAV as of August 31, 2019

	Number of Days Market Price Above NAV				Number of Days Market Price Below NAV
	1-49 Basis Points	50-99 Basis Points	100-199 Basis Points	>200 Basis Points	1-49 Basis Points	50-99 Basis Points	100-199 Basis Points	>200 Basis Points
Schwab U.S. Broad Market ETF
Commencement of trading
11/3/09 through 8/31/19	1,593	1	—	—	428	—	—	—
Schwab 1000 Index ETF
Commencement of trading
10/11/17 through 8/31/19	322	—	—	—	67	—	—	—
Schwab U.S. Large-Cap ETF
Commencement of trading
11/3/09 through 8/31/19	1,607	—	—	—	438	—	—	—
Schwab U.S. Large-Cap Growth ETF
Commencement of trading
12/11/09 through 8/31/19	1,383	—	1	—	521	—	—	—
Schwab U.S. Large-Cap Value ETF
Commencement of trading
12/11/09 through 8/31/19	1,536	—	—	—	409	—	—	—
Schwab U.S. Mid-Cap ETF
Commencement of trading
1/13/11 through 8/31/19	1,489	—	—	—	334	—	—	—
Schwab U.S. Small-Cap ETF
Commencement of trading
11/3/09 through 8/31/19	1,514	1	—	—	668	—	—	—
Schwab U.S. Dividend Equity ETF
Commencement of trading
10/20/11 through 8/31/19	984	—	—	—	438	—	—	—

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Investment Advisory Agreement Approval

The Board of Trustees (the Board or the Trustees, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement (the Agreement) between Schwab Strategic Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including 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 and Schwab 1000 Index ETF (the Funds), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel, business goals and priorities, profitability, third-party oversight, corporate structure and operations. The Board also receives data provided by an independent provider of investment company data. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to the Funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. The Independent Trustees receive advice from Independent Trustees’ legal counsel, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.

evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:

1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;
2.	each Fund’s investment performance and how it compared to that of certain other comparable exchange-traded funds and benchmark data;
3.	each Fund’s expenses and how those expenses compared to those of certain other similar exchange-traded funds;
4.	the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Funds, including both direct and indirect benefits accruing to CSIM and its affiliates; and
5.	the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors.

Fund Performance. The Board considered each Fund’s performance in determining whether to renew the Agreement with respect to the Fund. Specifically, the Trustees considered

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Trustees and Officers

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 of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	Retired/Private Investor (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) (investment management firm) and President, PIMCO Funds.	101	None
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Fellow (Oct. 1979 – present), The Hoover Institution at Stanford University (public policy think tank); Senior Fellow (2000 – present), Stanford Institute for Economic Policy Research; Professor of Public Policy (1994 – 2015), Stanford University.	101	Director (2005 – present), Gilead Sciences, Inc.
Nancy F. Heller 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	President and Chairman (2014 – 2016), TIAA Charitable (financial services); Senior Managing Director (2003 – 2016), TIAA (financial services).	101	None
Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	CEO and Owner (May 2012 – present), Kochis Global (wealth management consulting).	101	None

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Independent Trustees (continued)
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
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016)	Private Investor.	101	Director (2003 – present), Symantec Corporation Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – present), Adamas Pharmaceuticals, Inc.
Jane P. Moncreiff 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019)	Chief Investment Officer (2009-2017), CareGroup Healthcare System, Inc. (healthcare).	101	None
Kiran M. Patel 1948 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016)	Retired. Executive Vice President and General Manager of Small Business Group (Dec. 2008 – Sept. 2013), Intuit, Inc. (financial software and services firm for consumers and small businesses).	101	Director (2008 – present), KLA-Tencor Corporation
Kimberly S. Patmore 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016)	Consultant (2008 – present), Patmore Management Consulting (management consulting).	101	None
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Chairman, Chief Executive Officer and Founder (Mar. 1990 – present), Smith Graham & Co. (investment advisors).	101	Director (2012 – present), Eaton Corporation plc

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Interested 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
Walter W. Bettinger II² 1960 Chairman and 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 since 2010)	Director, President and Chief Executive Officer (Oct. 2008 – present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – present) and Director (May 2008 – present), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2008 – present) and President and Chief Executive Officer (Aug. 2017 – present), Schwab Holdings, Inc.; Director (July 2016 – present), Charles Schwab Investment Management, Inc.	101	Director (2008 – present), The Charles Schwab Corporation
Jonathan de St. Paer² 1973 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019)	Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc.	101	None
Joseph R. Martinetto² 1962 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016)	Chief Operating Officer (Feb. 2018 – present) and Senior Executive Vice President (July 2015 – Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015 – present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015 – Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007 – July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007 – present), Charles Schwab & Co., Inc.; Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank; Director (Nov. 2017 – present), Charles Schwab Premier Bank; Director (May 2007 – present), Chief Financial Officer (May 2007 – Aug. 2017), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.	101	None

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Jonathan de St. Paer 1973 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	Director and Chief Executive Officer (Apr. 2019 – present) and President (Oct. 2018 – present), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019 – present) and President (Nov. 2018 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019 – present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), and Vice President (Jan. 2009 – Dec. 2013), Charles Schwab & Co., Inc.

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Officers of the Trust (continued)
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
Mark Fischer 1970 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013)	Treasurer and Chief Financial Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013 – Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013 – Dec. 2015), Schwab ETFs; Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011 – Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005 – Mar. 2011), Massachusetts Financial Service Investment Management.
George Pereira 1964 Senior Vice President and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust since 2006; Schwab Strategic Trust since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present) and Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Operating Officer (Jan. 2016 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Treasurer and Chief Financial Officer (June 2006 – Dec. 2015), Laudus Funds; Treasurer and Principal Financial Officer (Nov. 2004 – Dec. 2015), Schwab Funds; Treasurer and Principal Financial Officer (Oct. 2009 – Dec. 2015), Schwab ETFs; Director (Apr. 2005 – present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited.
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009 – Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004 – Jan. 2009), ING Investment Management.
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President and Chief Investment Officer – Fixed Income (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011 – present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008 – Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006 – Jan. 2008), Loomis, Sayles & Company (investment management firm).
David Lekich 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President (Sept. 2011 – present) and Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present) and Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011 – present), Laudus Funds; Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009)	Vice President (July 2005 – present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005 – present) and Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary (Oct. 2009 – present), Schwab ETFs.

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 retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first.
²	Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc. (CSIM), the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc. (CS&Co), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of CS&Co.
³	The President, Treasurer and Secretary/Clerk 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.

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Glossary

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.

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.

dividend yield A stock’s indicated annual dividend divided by current price. At the portfolio level, it is the value-weighted average of the dividend yield of the securities in the portfolio.

Dow Jones U.S. Broad Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, which includes the largest 2,500 publicly traded U.S. companies and is designed to measure the performance of large- and small-cap U.S. equity securities. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.

Dow Jones U.S. Dividend 100 Index An index that is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The 100-component index is a subset of the Dow Jones U.S. Broad Market Index, which includes the 2,500 largest U.S. stocks based on full market capitalization and excludes real estate investment trusts (REITs). It is modified market capitalization weighted.

Dow Jones U.S. Large-Cap Growth Total Stock Market Index An index, which is a subset of the Dow Jones U.S. Total Stock Market Index, that is designed to measure the performance of large-cap U.S. equity securities that are classified as “growth” based on a multi-factor analysis. The index is a float-adjusted market capitalization weighted index.

Dow Jones U.S. Large-Cap Total Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, and is designed to measure the performance of large-cap U.S. equity securities. The index is a float-adjusted market capitalization weighted index.

Dow Jones U.S. Large-Cap Value Total Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, and is designed to measure the performance of large-cap U.S. equity securities that are classified as “value” based on a multi-factor analysis. The index is a float-adjusted market capitalization weighted index.

Dow Jones U.S. Mid-Cap Total Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, and is designed to measure the performance of mid-cap U.S. equity securities. The index is a float-adjusted market capitalization weighted index.

Dow Jones U.S. Small-Cap Total Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, and is designed to measure the performance of small-cap U.S. equity securities. The index is a float-adjusted market capitalization weighted index.

Dow Jones U.S. Total Stock Market Index An index which includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.

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

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

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

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