Schwab U.S. Large-Cap ETF NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-22311

Schwab Strategic Trust – Fixed Income ETFs

(Exact name of registrant as specified in charter)

211 Main Street, San Francisco, California 94105

(Address of principal executive offices) (Zip code)

Marie Chandoha
Schwab Strategic Trust – Fixed Income ETFs
211 Main Street, San Francisco, California 94105

(Name and address of agent for service)

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

Date of fiscal year end: December 31

Date of reporting period: June 30, 2012

Item 1: Report(s) to Shareholders.

Semiannual report dated June 30, 2012, enclosed.

Schwab Fixed-Income ETFs

Schwab U.S. TIPS ETF^tm

Schwab Short-Term

U.S. Treasury ETF^tm

Schwab Intermediate-Term

U.S. Treasury ETF^tm

Schwab U.S. Aggregate

Bond ETF^tm

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This wrapper is not part of the shareholder report.

Schwab Fixed-Income ETFs

Semiannual Report

June 30, 2012

Schwab U.S. TIPS ETF^tm

Schwab Short-Term

U.S. Treasury ETF^tm

Schwab Intermediate-Term

U.S. Treasury ETF^tm

Schwab U.S. Aggregate

Bond ETF^tm

In This Report


Performance at a Glance		1
From the President		2
Fund Management		4
Performance and Fund Facts
Schwab U.S. TIPS ETF™		5
Schwab Short-Term U.S. Treasury ETF™		6
Schwab Intermediate-Term U.S. Treasury ETF™		7
Schwab U.S. Aggregate Bond ETF™		8
Fund Expenses		9
Financial Statements and Portfolio Holdings
Schwab U.S. TIPS ETF™		10
Schwab Short-Term U.S. Treasury ETF™		15
Schwab Intermediate-Term U.S. Treasury ETF™		20
Schwab U.S. Aggregate Bond ETF™		26
Financial Notes		41
Trustees and Officers		49
Glossary		52

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

Performance at a Glance

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


Total Return for the Report Period


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

NAV Return¹			3.93%
Market Price Return¹			3.82%
Barclays U.S. TIPS Index (Series-L)^SM			4.04%
ETF Category: Morningstar Inflation-Protected Bond²			3.25%

Performance Details			page 5



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

NAV Return¹			0.07%
Market Price Return¹			-0.03%
Barclays U.S. 1-3 Year Treasury Bond Index^SM			0.12%
ETF Category: Morningstar Short Government²			0.13%

Performance Details			page 6



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

NAV Return¹			1.74%
Market Price Return¹			1.59%
Barclays U.S. 3-10 Year Treasury Bond Index^SM			1.82%
ETF Category: Morningstar Intermediate Government²			1.40%

Performance Details			page 7



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

NAV Return¹			2.19%
Market Price Return¹			2.13%
Barclays U.S. Aggregate Bond Index^SM			2.37%
ETF Category: Morningstar Intermediate-Term Bond²			3.17%

Performance Details			page 8

All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.

Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price (not NAV) and are not individually redeemed by the fund. Brokerage commissions will reduce returns.

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

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

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


¹	The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.

²	The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.

Schwab Fixed-Income ETFs 1

From the President

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

Dear Shareholder,

As President and CEO of Charles Schwab Investment Management, Inc., I’d like to thank you for trusting us to help you meet your investment objectives, and for reading this important report concerning the Schwab Fixed-Income ETFs. For the six months ended June 30, 2012, the U.S. fixed-income markets saw a continuation of historically low yields, as the Federal Reserve (Fed) maintained a policy of low interest rates in an effort to stimulate the economy in light of lackluster global economic activity and continued European turmoil.

The euro zone’s ongoing sovereign debt crisis dominated the headlines amid disappointing economic activity around the globe. Greece restructured its debt, giving investor confidence a temporary lift, but subsequent concerns arose regarding debt markets in Italy and Spain. In the U.S., economic data was mixed, with measures such as long-term inflation expectations stable, while the unemployment rate remained stubbornly high, finishing at 8.2% in June.

In this environment, the Fed continued to focus on supporting an economic recovery by holding the federal funds rate at a target of 0-0.25%. In late January, the Fed forecasted that short-term interest rates would remain at present levels through at least late 2014, beyond its earlier forecast of mid-2013. The Fed also extended “Operation Twist”—a policy of exchanging short-term Treasuries for longer-term bonds—in its attempt to hold down long-term interest rates.

Broadly reflecting the performance of U.S. bonds, the Barclays U.S. Aggregate Bond Index returned 2.4% for the six months, with the U.S. Treasury sector of the index returning approximately 1.5%, and the Corporate sector returning

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

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

Data source: Bloomberg L.P.

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

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

2 Schwab Fixed-Income ETFs

From the President continued

For the six months ended June 30, 2012, the U.S. fixed-income markets saw a continuation of historically low yields.

roughly 4.7%. The U.S. TIPS Index returned 4.0%, benefitting from slightly faster inflation that translated into upwardly adjusted principals for TIPS.

Thank you for investing in the Schwab Fixed-Income ETFs. We encourage you to review your investment portfolio regularly to ensure that it meets your current financial plan. For answers to frequently asked questions or for more information about the Schwab Fixed-Income ETFs, please visit www.schwabetfs.com. We are also happy to hear from you at 1-800-435-4000.

Sincerely,

Indices are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. Index return figures assume dividends and distributions were reinvested.

Schwab Fixed-Income ETFs 3

Fund Management



		Matthew Hastings, CFA, a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the co-management of the funds. He joined the firm in 1999 and has worked in fixed-income asset management since 1996.

		Steven Chan, CFA, a portfolio manager of the investment adviser, has day-to-day responsibility for the co-management of the funds. He joined the firm in 1996 and has been performing portfolio analytic and operational support since 2004 prior to moving to his current role in 2007.

		Brandon Matsui, CFA, a portfolio manager of the investment adviser, has day-to-day responsibility for the co-management of the funds. He joined the firm in June 2010. Prior to joining the firm, he was an associate portfolio manager at a large financial services firm for one year. Prior to that, he was a risk analytics manager of institutional investor accounts at a large investment management firm for four years.

		Steven Hung, a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the co-management of the Schwab U.S. Aggregate Bond ETF. He joined CSIM in 1998 and has worked in fixed-income asset management since 1999.

		Alfonso Portillo, Jr., a managing director and portfolio manager of the investment adviser, has day-to-day responsibility for the co-management of the Schwab U.S. Aggregate Bond ETF. He joined CSIM in 2007 and has worked in fixed-income asset management since 1996.

4 Schwab Fixed-Income ETFs

Schwab U.S. TIPS ETF™

Performance and Fund Facts as of 6/30/12

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

Average Annual Total Returns^1,2


Fund and Inception Date	6 Months			1 Year			Since Inception*


Fund: Schwab U.S. TIPS ETF^tm (8/5/10)
NAV Return³		3.93	%		11.50	%		9.83	%
Market Price Return³		3.82	%		11.63	%		9.93	%
Barclays U.S. TIPS Index (Series-L)^SM		4.04	%		11.66	%		10.01	%
ETF Category: Morningstar Inflation-Protected Bond		3.25	%		10.98	%		10.11	%

Fund Expense Ratio⁴: 0.14%

Portfolio Composition % of Investments


By Security Type⁵


U.S. Government Obligations		100.0%



Weighted Average Maturity⁶		9.2 yrs
Weighted Average Effective Duration		8.1 yrs

Portfolio holdings may have changed since the report date.

All total returns on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.

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

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

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


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		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.
³		The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security by the investment adviser.
⁶		Maturity calculations are based on revised methodology adopted as of February 29, 2012. See Glossary for definitions of maturity and duration.

Schwab Fixed-Income ETFs 5

Schwab Short-Term U.S. Treasury ETF™

Performance and Fund Facts as of 6/30/12

Average Annual Total Returns^1,2


Fund and Inception Date	6 Months			1 Year			Since Inception*


Fund: Schwab Short-Term U.S. Treasury ETF^tm (8/5/10)
NAV Return³		0.07	%		0.71	%		0.88	%
Market Price Return³		-0.03	%		0.65	%		0.87	%
Barclays U.S. 1-3 Year Treasury Bond Index^SM		0.12	%		0.81	%		0.99	%
ETF Category: Morningstar Short Government		0.13	%		0.63	%		0.75	%

Fund Expense Ratio⁴: 0.12%

Portfolio Composition % of Investments


By Security Type⁵


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



Weighted Average Maturity⁷		2.0 Yrs
Weighted Average Effective Duration		1.9 Yrs

Portfolio holdings may have changed since the report date.

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


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		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.
³		The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security by the investment adviser.
⁶		Represents the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁷		Maturity calculations are based on revised methodology adopted as of February 29, 2012. See Glossary for definitions of maturity and duration.

6 Schwab Fixed-Income ETFs

Schwab Intermediate-Term U.S. Treasury ETF™

Performance and Fund Facts as of 6/30/12

Average Annual Total Returns^1,2


Fund and Inception Date	6 Months			1 Year			Since Inception*


Fund: Schwab Intermediate-Term U.S. Treasury ETF^tm (8/5/10)
NAV Return³		1.74	%		8.59	%		5.78	%
Market Price Return³		1.59	%		8.71	%		5.83	%
Barclays U.S. 3-10 Year Treasury Bond Index^SM		1.82	%		8.77	%		5.95	%
ETF Category: Morningstar Intermediate Government		1.40	%		6.58	%		4.50	%

Fund Expense Ratio⁴: 0.12%

Portfolio Composition % of Investments


By Security Type⁵


U.S. Government Obligations		100.0%



Weighted Average Maturity⁶		5.8 yrs
Weighted Average Effective Duration		5.3 yrs

Portfolio holdings may have changed since the report date.

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


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		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.
³		The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security by the investment adviser.
⁶		Maturity calculations are based on revised methodology adopted as of February 29, 2012. See Glossary for definitions of maturity and duration.

Schwab Fixed-Income ETFs 7

Schwab U.S. Aggregate Bond ETF™

Performance and Fund Facts as of 6/30/12

Total Returns^1,2


Fund and Inception Date	6 Months			Since Inception*


Fund: Schwab U.S. Aggregate Bond ETF^tm (7/14/11)
NAV Return³		2.19	%		6.02	%
Market Price Return³		2.13	%		6.37	%
Barclays U.S. Aggregate Bond Index^SM		2.37	%		6.29	%
ETF Category: Morningstar Intermediate-Term Bond		3.17	%		5.71	%

Fund Expense Ratio⁴: 0.10%

Portfolio Composition % of Investments


By Security Type⁵


U.S. Government and Government Agencies		39.8%
Mortgage-Backed Securities⁶		29.7%
Corporate Bonds		19.8%
Foreign Securities		4.4%
Short-Term Investments & Other Assets⁷		3.4%
Commercial Mortgage Backed Securities		1.8%
Municipal Bonds		0.9%
Asset-Backed Obligations		0.2%



Weighted Average Maturity⁸		6.2 yrs
Weighted Average Effective Duration		4.3 yrs

Portfolio holdings may have changed since the report date.

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


*		Inception represents the date that the shares began trading in the secondary market.
¹		Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²		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.
³		The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
⁴		As stated in the prospectus.
⁵		This list is not a recommendation of any security by the investment adviser.
⁶		The fund may seek to obtain exposure to U.S. agency mortgage pass-through securities, in part or in full, through the use of “to-be-announced” or “TBA” transactions, which are standardized contracts for future delivery of mortgage pass-through securities in which the exact mortgage pools to be delivered are not specified until a few days prior to settlement. These transactions represented approximately 0.8% of total investments on June 30, 2012.
⁷		Includes the fund’s position in money market mutual funds registered under the Investment Company Act of 1940, as amended.
⁸		Maturity calculations are based on revised methodology adopted as of February 29, 2012. See Glossary for definitions of maturity and duration.

8 Schwab Fixed-Income ETFs

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

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

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning January 1, 2012 and held through June 30, 2012.

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 or share class 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 the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, including any redemption fees or brokerage commissions you may pay when purchasing or redeeming shares of the fund. If these transactional costs were included, your costs would have been higher.


					Ending
			Beginning		Account Value		Expenses Paid
	Expense Ratio¹		Account Value		(Net of Expenses)		During Period²
	(Annualized)		at 1/1/12		at 6/30/12		1/1/12–6/30/12

Schwab U.S. TIPS ETF^tm
Actual Return		0.14%	$	1,000	$	1,039.30	$	0.71
Hypothetical 5% Return		0.14%	$	1,000	$	1,024.17	$	0.70


Schwab Short-Term U.S. Treasury ETF^tm
Actual Return		0.12%	$	1,000	$	1,000.70	$	0.60
Hypothetical 5% Return		0.12%	$	1,000	$	1,024.27	$	0.60


Schwab Intermediate-Term U.S. Treasury ETF^tm
Actual Return		0.12%	$	1,000	$	1,017.40	$	0.60
Hypothetical 5% Return		0.12%	$	1,000	$	1,024.27	$	0.60


Schwab U.S. Aggregate Bond ETF^tm
Actual Return		0.10%	$	1,000	$	1,021.90	$	0.50
Hypothetical 5% Return		0.10%	$	1,000	$	1,024.37	$	0.50


¹		Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights.
²		Expenses for each share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 182 days of the period, and divided by 366 days of the fiscal year.

Schwab Fixed-Income ETFs 9

Schwab U.S. TIPS ETF™

Financial Statements

Financial Highlights


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


Per-Share Data ($)

Net asset value at beginning of period		55.46			50.37			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.73			1.56			0.20
Net realized and unrealized gains (losses)		1.45			5.09			0.37	²

Total from investment operations		2.18			6.65			0.57
Less distributions:
Distributions from net investment income		(0.36	)		(1.56	)		(0.20	)

Net asset value at end of period		57.28			55.46			50.37

Total return (%)		3.93	³		13.38			1.13	³

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.14	⁴		0.14			0.14	⁴
Gross operating expenses		0.14	⁴		0.14			0.14	⁴
Net investment income (loss)		2.92	⁴		3.03			1.27	⁴
Portfolio turnover rate⁵		10	³		26			6	³
Net assets, end of period ($ x 1,000)		446,749			288,373			80,591

* Unaudited.

¹ Commencement of operations.

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

³ Not annualized.

⁴ Annualized.

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

10 See financial notes

Schwab U.S. TIPS ETF

Portfolio Holdings as of June 30, 2012 (Unaudited)

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

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

Cost

Value

Holdings by Category

($)

.1%

U.S. Government Securities

417,213,736

442,680,154

.1%

Total Investments

417,213,736

442,680,154

.9%

Other Assets and
Liabilities, Net

4,068,912

100

.0%

Net Assets

446,749,066


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

U.S. Government Securities 99.1% of net assets

U.S. Treasury Obligations 99.1%


U.S. Treasury Inflation Protected Securities
1.88%, 07/15/13		14,017,837		14,361,695
2.00%, 01/15/14		14,383,191		14,944,999
1.25%, 04/15/14		9,235,977		9,543,350
2.00%, 07/15/14		12,971,499		13,753,810
1.63%, 01/15/15		12,208,839		12,985,199
0.50%, 04/15/15		12,606,251		13,092,726
1.88%, 07/15/15		11,008,176		11,983,390
2.00%, 01/15/16		10,688,459		11,832,445
0.13%, 04/15/16		22,153,360		23,077,599
2.50%, 07/15/16		10,784,787		12,360,336
2.38%, 01/15/17		9,353,720		10,806,446
0.13%, 04/15/17		9,063,527		9,573,351
2.63%, 07/15/17		8,016,935		9,535,182
1.63%, 01/15/18		8,466,025		9,680,392
1.38%, 07/15/18		8,349,590		9,539,407
2.13%, 01/15/19		7,782,923		9,321,295
1.88%, 07/15/19		8,826,873		10,566,032
1.38%, 01/15/20		10,705,858		12,463,974
1.25%, 07/15/20		16,452,892		19,136,687
1.13%, 01/15/21		18,840,244		21,707,541
0.63%, 07/15/21		19,983,263		22,284,535
0.13%, 01/15/22		22,654,762		23,996,378
2.38%, 01/15/25		14,698,347		19,378,889
2.00%, 01/15/26		10,675,710		13,641,529
2.38%, 01/15/27		8,571,201		11,505,466
1.75%, 01/15/28		8,596,694		10,775,440
3.63%, 04/15/28		9,691,384		14,948,960
2.50%, 01/15/29		8,311,142		11,530,379
3.88%, 04/15/29		11,410,017		18,421,815
3.38%, 04/15/32		3,343,647		5,389,023
2.13%, 02/15/40		5,289,609		7,515,371
2.13%, 02/15/41		9,705,066		13,870,674
0.75%, 02/15/42		8,697,813		9,155,839

Total U.S. Government Securities
(Cost $417,213,736)				442,680,154



End of Investments

At 06/30/12, the tax basis cost of the fund’s investments was $417,279,958 and the unrealized appreciation and depreciation were $25,727,352 and ($327,156), respectively, with a net unrealized appreciation of $25,400,196.

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2012 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total*

U.S. Government Securities(a)

$—

$442,680,154

$—

$442,680,154

Total

$—

$442,680,154

$—

$442,680,154


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings.

There were no transfers between Level 1, Level 2 and Level 3 for the period ended June 30, 2012.

See financial notes 11

Schwab U.S. TIPS ETF

Statement of

Assets and Liabilities

As of June 30, 2012; unaudited



Assets

Investments, at value (cost $417,213,736)		$442,680,154
Receivables:
Investments sold		6,092,107
Interest	+	2,466,981

Total assets		451,239,242

Liabilities

Payables:
Investments bought		4,458,464
Investment adviser fees		5,131
Due to custodian	+	26,581

Total liabilities		4,490,176

Net Assets

Total assets		451,239,242
Total liabilities	−	4,490,176

Net assets		$446,749,066

Net Assets by Source
Capital received from investors		418,702,068
Net investment income not yet distributed		2,845,828
Net realized capital losses		(265,248	)
Net unrealized capital gains		25,466,418

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$446,749,066

7,800,001

$57.28

12 See financial notes

Schwab U.S. TIPS ETF

Statement of

Operations

For January 1, 2012 through June 30, 2012; unaudited



Investment Income

Interest		$5,807,666

Expenses

Investment adviser fees		265,804

Total expenses	−	265,804

Net investment income		5,541,862

Realized and Unrealized Gains (Losses)

Net realized gains on investments		21,665
Net unrealized gains on investments	+	8,939,675

Net realized and unrealized gains		8,961,340

Net increase in net assets resulting from operations		$14,503,202

See financial notes 13

Schwab U.S. TIPS ETF

Statements of

Changes in Net Assets

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



Operations


1/1/12-6/30/12				1/1/11-12/31/11
Net investment income		$5,541,862			$5,717,639
Net realized gains		21,665			597,078
Net unrealized gains	+	8,939,675			17,204,187

Net increase in net assets resulting from operations		14,503,202			23,518,904

Distributions to Shareholders

Distributions from net investment income		($2,707,201	)		($5,706,922	)

Transactions in Fund Shares

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

VALUE

SHARES

VALUE

Shares sold

2,600,000

$146,579,578

4,000,000

$210,921,785

Shares redeemed

—

(400,000

)

(20,951,087

)

Net transactions in fund shares

2,600,000

$146,579,578

3,600,000

$189,970,698

Shares Outstanding and Net Assets

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

NET ASSETS

SHARES

NET ASSETS

Beginning of period

5,200,001

$288,373,487

1,600,001

$80,590,807

Total increase

2,600,000

158,375,579

3,600,000

207,782,680

End of period

7,800,001

$446,749,066

5,200,001

$288,373,487

Net investment income not yet distributed

$2,845,828

$11,167

14 See financial notes

Schwab Short-Term U.S. Treasury ETF™

Financial Statements

Financial Highlights


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


Per-Share Data ($)

Net asset value at beginning of period		50.50			49.99			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.07			0.21			0.06
Net realized and unrealized gains (losses)		(0.04	)		0.51			(0.01	)

Total from investment operations		0.03			0.72			0.05
Less distributions:
Distributions from net investment income		(0.06	)		(0.21	)		(0.06	)

Net asset value at end of period		50.47			50.50			49.99

Total return (%)		0.07	²		1.43			0.11	²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.12	³		0.12			0.12	³
Gross operating expenses		0.12	³		0.12			0.12	³
Net investment income (loss)		0.30	³		0.42			0.37	³
Portfolio turnover rate⁴		52	²		74			48	²
Net assets, end of period ($ x 1,000)		249,805			181,805			49,990

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 15

Schwab Short-Term U.S. Treasury ETF

Portfolio Holdings as of June 30, 2012 (Unaudited)

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

Cost

Value

Holdings by Category

($)

.5%

U.S. Government Securities

248,288,266

248,615,386

.1%

Other Investment Company

174,067

.6%

Total Investments

248,462,333

248,789,453

.4%

Other Assets and
Liabilities, Net

1,015,217

100

.0%

Net Assets

249,804,670


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

U.S. Government Securities 99.5% of net assets

U.S. Treasury Obligations 99.5%


U.S. Treasury Notes
1.13%, 06/15/13		98,000		98,827
1.00%, 07/15/13		3,613,000		3,641,088
0.38%, 07/31/13		3,433,000		3,437,693
3.38%, 07/31/13		5,625,000		5,814,186
0.75%, 08/15/13		5,056,000		5,083,848
3.13%, 08/31/13		5,886,000		6,081,662
3.13%, 09/30/13		9,287,000		9,616,401
2.75%, 10/31/13		9,502,000		9,812,677
0.50%, 11/15/13		10,017,000		10,047,131
2.00%, 11/30/13		7,996,000		8,189,343
0.75%, 12/15/13		7,380,000		7,428,723
1.00%, 01/15/14		9,830,000		9,934,827
1.25%, 02/15/14		9,402,000		9,544,130
4.00%, 02/15/14		3,474,000		3,680,675
1.88%, 02/28/14		2,176,000		2,232,187
1.75%, 03/31/14		4,476,000		4,587,202
1.25%, 04/15/14		8,206,000		8,341,276
1.88%, 04/30/14		8,945,000		9,197,974
2.25%, 05/31/14		9,644,000		9,996,614
0.75%, 06/15/14		7,612,000		7,676,230
2.63%, 06/30/14		2,682,000		2,805,206
0.63%, 07/15/14		4,282,000		4,307,093
2.63%, 07/31/14		5,219,000		5,465,681
0.50%, 08/15/14		7,840,000		7,867,565
2.38%, 08/31/14		3,907,000		4,077,931
0.25%, 09/15/14		6,534,000		6,520,729
0.50%, 10/15/14		9,719,000		9,754,688
0.38%, 11/15/14		10,211,000		10,218,178
0.25%, 01/15/15		9,147,000		9,121,992
0.25%, 02/15/15		9,333,000		9,301,650
4.00%, 02/15/15		6,924,000		7,573,665
2.38%, 02/28/15		9,147,000		9,626,504
2.50%, 03/31/15		11,850,000		12,533,224
2.13%, 05/31/15		14,295,000		14,998,586

Total U.S. Government Securities
(Cost $248,288,266)				248,615,386



	Number		Value
Security	of Shares		($)

Other Investment Company 0.1% of net assets

Money Market Fund 0.1%
State Street Institutional U.S. Government Money Market Fund		174,067		174,067

Total Other Investment Company
(Cost $174,067)				174,067



End of Investments

At 06/30/12, the tax basis cost of the fund’s investments was $248,466,231 and the unrealized appreciation and depreciation were $339,918 and ($16,696), respectively, with a net unrealized appreciation of $323,222.

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2012 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total*

U.S. Government Securities(a)

$—

$248,615,386

$—

$248,615,386

Other Investment Company(a)

174,067

—

174,067

Total

$174,067

$248,615,386

$—

$248,789,453


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings.

There were no transfers between Level 1, Level 2 and Level 3 for the period ended June 30, 2012.

16 See financial notes

Schwab Short-Term U.S. Treasury ETF

Statement of

Assets and Liabilities

As of June 30, 2012; unaudited



Assets

Investments, at value (cost $248,462,333)		$248,789,453
Receivables:
Investments sold		12,779,419
Fund shares sold		10,092,932
Interest	+	1,016,896

Total assets		272,678,700

Liabilities

Payables:
Investments bought		12,778,311
Investment adviser fees		2,559
Fund shares redeemed	+	10,093,160

Total liabilities		22,874,030

Net Assets

Total assets		272,678,700
Total liabilities	−	22,874,030

Net assets		$249,804,670

Net Assets by Source
Capital received from investors		249,467,142
Net investment income not yet distributed		52,880
Net realized capital losses		(42,472	)
Net unrealized capital gains		327,120

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$249,804,670

4,950,001

$50.47

See financial notes 17

Schwab Short-Term U.S. Treasury ETF

Statement of

Operations

For January 1, 2012 through June 30, 2012; unaudited



Investment Income

Interest		$406,844

Expenses

Investment adviser fees		116,200

Total expenses	−	116,200

Net investment income		290,644

Realized and Unrealized Gains (Losses)

Net realized losses on investments		(63,636	)
Net realized gains on in-kind redemptions	+	35,227

Net realized losses		(28,409	)
Net unrealized losses on investments	+	(193,448	)

Net realized and unrealized losses		(221,857	)

Net increase in net assets resulting from operations		$68,787

18 See financial notes

Schwab Short-Term U.S. Treasury ETF

Statements of

Changes in Net Assets

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



Operations


1/1/12-6/30/12				1/1/11-12/31/11
Net investment income		$290,644			$543,282
Net realized gains (losses)		(28,409	)		751,518
Net unrealized gains (losses)	+	(193,448	)		597,217

Net increase in net assets resulting from operations		68,787			1,892,017

Distributions to Shareholders

Distributions from net investment income		($237,805	)		($543,241	)

Transactions in Fund Shares

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

VALUE

SHARES

VALUE

Shares sold

1,750,000

$88,373,480

5,300,000

$266,780,358

Shares redeemed

(400,000

)

(20,205,252

)

(2,700,000

)

(136,313,641

)

Net transactions in fund shares

1,350,000

$68,168,228

2,600,000

$130,466,717

Shares Outstanding and Net Assets

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

NET ASSETS

SHARES

NET ASSETS

Beginning of period

3,600,001

$181,805,460

1,000,001

$49,989,967

Total increase

1,350,000

67,999,210

2,600,000

131,815,493

End of period

4,950,001

$249,804,670

3,600,001

$181,805,460

Net investment income not yet distributed

$52,880

$41

See financial notes 19

Schwab Intermediate-Term U.S. Treasury ETF™

Financial Statements

Financial Highlights


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


Per-Share Data ($)

Net asset value at beginning of period		53.39			49.31			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.32			0.82			0.28
Net realized and unrealized gains (losses)		0.61			4.08			(0.69	)

Total from investment operations		0.93			4.90			(0.41	)
Less distributions:
Distributions from net investment income		(0.28	)		(0.82	)		(0.28	)

Net asset value at end of period		54.04			53.39			49.31

Total return (%)		1.74	²		10.02			(0.83	)²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.12	³		0.12			0.12	³
Gross operating expenses		0.12	³		0.12			0.12	³
Net investment income (loss)		1.22	³		1.62			1.58	³
Portfolio turnover rate⁴		33	²		46			20	²
Net assets, end of period ($ x 1,000)		197,243			117,452			34,517

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

20 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF

Portfolio Holdings as of June 30, 2012 (Unaudited)

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

Cost

Value

Holdings by Category

($)

.2%

U.S. Government Securities

191,532,767

195,647,586

.0%

Other Investment Company

13,473

.2%

Total Investments

191,546,240

195,661,059

.8%

Other Assets and
Liabilities, Net

1,581,757

100

.0%

Net Assets

197,242,816


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

U.S. Government Securities 99.2% of net assets

U.S. Treasury Obligations 99.2%


U.S. Treasury Bonds
7.25%, 05/15/16		3,301,000		4,140,177
8.50%, 02/15/20		613,000		939,710
8.75%, 05/15/20		468,000		732,237
8.75%, 08/15/20		1,771,000		2,793,476


U.S. Treasury Notes
4.25%, 08/15/15		2,452,000		2,739,727
1.25%, 08/31/15		4,062,000		4,163,867
1.25%, 09/30/15		750,000		768,633
1.38%, 11/30/15		2,970,000		3,057,942
2.13%, 02/29/16		4,105,000		4,342,002
2.38%, 03/31/16		7,157,000		7,641,779
2.00%, 04/30/16		4,936,000		5,206,710
3.25%, 06/30/16		5,155,000		5,696,677
4.88%, 08/15/16		3,105,000		3,643,038
1.00%, 08/31/16		6,688,000		6,794,072
3.13%, 10/31/16		5,289,000		5,848,063
2.75%, 11/30/16		7,373,000		8,044,061
3.13%, 01/31/17		4,107,000		4,557,168
3.00%, 02/28/17		3,775,000		4,172,851
3.25%, 03/31/17		5,218,000		5,833,155
0.88%, 04/30/17		6,310,000		6,358,808
3.13%, 04/30/17		2,025,000		2,255,028
2.75%, 05/31/17		3,492,000		3,831,381
2.50%, 06/30/17		4,896,000		5,315,984
2.38%, 07/31/17		1,279,000		1,381,320
4.75%, 08/15/17		4,750,000		5,698,889
4.25%, 11/15/17		1,383,000		1,631,291
2.25%, 11/30/17		1,903,000		2,046,022
3.50%, 02/15/18		3,333,000		3,813,942
2.75%, 02/28/18		5,546,000		6,121,830
4.00%, 08/15/18		3,406,000		4,030,790
1.38%, 09/30/18		2,858,000		2,926,323
3.75%, 11/15/18		3,792,000		4,442,271
1.38%, 12/31/18		3,068,000		3,137,030
2.75%, 02/15/19		2,420,000		2,686,011
1.38%, 02/28/19		7,125,000		7,276,406
3.13%, 05/15/19		4,405,000		5,007,247
3.63%, 08/15/19		4,428,000		5,194,252
3.38%, 11/15/19		2,898,000		3,353,305
3.63%, 02/15/20		2,389,000		2,810,623
3.50%, 05/15/20		2,854,000		3,335,167
2.63%, 08/15/20		4,245,000		4,672,484
2.63%, 11/15/20		3,056,000		3,359,452
3.63%, 02/15/21		1,869,000		2,206,880
3.13%, 05/15/21		4,098,000		4,665,958
2.13%, 08/15/21		4,610,000		4,846,263
2.00%, 02/15/22		10,328,000		10,677,376
1.75%, 05/15/22		1,438,000		1,449,908

Total U.S. Government Securities
(Cost $191,532,767)				195,647,586



	Number		Value
Security	of Shares		($)

Other Investment Company 0.0% of net assets

Money Market Fund 0.0%
State Street Institutional U.S. Government Money Market Fund		13,473		13,473

Total Other Investment Company
(Cost $13,473)				13,473



End of Investments

At 06/30/12, the tax basis cost of the fund’s investments was $191,547,573 and the unrealized appreciation and depreciation were $4,126,173 and ($12,687), respectively, with a net unrealized appreciation of $4,113,486.

See financial notes 21

Schwab Intermediate-Term U.S. Treasury ETF

Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2012 (see financial note 2(a) for additional information):

Quoted Prices in

Significant

Active Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

(Level 1)

(Level 2)

(Level 3)

Total*

U.S. Government Securities(a)

$—

$195,647,586

$—

$195,647,586

Other Investment Company(a)

13,473

—

13,473

Total

$13,473

$195,647,586

$—

$195,661,059


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings.

There were no transfers between Level 1, Level 2 and Level 3 for the period ended June 30, 2012.

22 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF

Statement of

Assets and Liabilities

As of June 30, 2012; unaudited



Assets

Investments, at value (cost $191,546,240)		$195,661,059
Receivables:
Investments sold		7,143,629
Fund shares sold		5,407,577
Interest	+	1,424,601

Total assets		209,636,866

Liabilities

Payables:
Investments bought		6,988,123
Investment adviser fees		2,011
Fund shares redeemed	+	5,403,916

Total liabilities		12,394,050

Net Assets

Total assets		209,636,866
Total liabilities	−	12,394,050

Net assets		$197,242,816

Net Assets by Source
Capital received from investors		192,085,726
Net investment income not yet distributed		164,107
Net realized capital gains		878,164
Net unrealized capital gains		4,114,819

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$197,242,816

3,650,001

$54.04

See financial notes 23

Schwab Intermediate-Term U.S. Treasury ETF

Statement of

Operations

For January 1, 2012 through June 30, 2012; unaudited



Investment Income

Interest		$1,008,726
Securities on loan	+	20

Total investment income		1,008,746

Expenses

Investment adviser fees		90,056

Total expenses	−	90,056

Net investment income		918,690

Realized and Unrealized Gains (Losses)

Net realized losses on investments		(110,797	)
Net realized gains on in-kind redemptions	+	1,030,798

Net realized gains		920,001
Net unrealized gains on investments	+	676,725

Net realized and unrealized gains		1,596,726

Net increase in net assets resulting from operations		$2,515,416

24 See financial notes

Schwab Intermediate-Term U.S. Treasury ETF

Statements of

Changes in Net Assets

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



Operations


1/1/12-6/30/12				1/1/11-12/31/11
Net investment income		$918,690			$1,084,928
Net realized gains		920,001			672,965
Net unrealized gains	+	676,725			4,218,815

Net increase in net assets resulting from operations		2,515,416			5,976,708

Distributions to Shareholders

Distributions from net investment income		($755,700	)		($1,083,811	)

Transactions in Fund Shares

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

VALUE

SHARES

VALUE

Shares sold

2,050,000

$109,985,016

1,900,000

$98,621,115

Shares redeemed

(600,000

)

(31,953,654

)

(400,000

)

(20,579,028

)

Net transactions in fund shares

1,450,000

$78,031,362

1,500,000

$78,042,087

Shares Outstanding and Net Assets

1/1/12-6/30/12

1/1/11-12/31/11

SHARES

NET ASSETS

SHARES

NET ASSETS

Beginning of period

2,200,001

$117,451,738

700,001

$34,516,754

Total increase

1,450,000

79,791,078

1,500,000

82,934,984

End of period

3,650,001

$197,242,816

2,200,001

$117,451,738

Net investment income not yet distributed

$164,107

$1,117

See financial notes 25

Schwab U.S. Aggregate Bond ETF™

Financial Statements

Financial Highlights


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


Per-Share Data ($)

Net asset value at beginning of period		51.50			50.00

Income (loss) from investment operations:
Net investment income (loss)		0.42			0.37
Net realized and unrealized gains (losses)		0.70			1.52

Total from investment operations		1.12			1.89
Less distributions:
Distributions from net investment income		(0.43	)		(0.39	)

Net asset value at end of period		52.19			51.50

Total return (%)		2.19	²		3.79	²

Ratios/Supplemental Data (%)

Ratios to average net assets:
Net operating expenses		0.10	³		0.10	³
Gross operating expenses		0.10	³		0.10	³
Net investment income (loss)		1.64	³		1.67	³
Portfolio turnover rate^4,5		92	²		446	²
Net assets, end of period ($ x 1,000)		281,829			164,804

* Unaudited.

¹ Commencement of operations.

² Not annualized.

³ Annualized.

⁴ Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

⁵ Includes to-be-announced (TBA) transactions. See financial note 2.

26 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings as of June 30, 2012 (Unaudited)

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


				Cost		Value
Holdings by Category				($)		($)

	0	.2%	Asset-Backed Obligations		689,551		696,010
	1	.9%	Commercial Mortgage Backed Securities		5,229,769		5,314,373
	20	.4%	Corporate Bonds		56,242,251		57,400,683
	4	.5%	Foreign Securities		12,411,791		12,653,231
	30	.5%	Mortgage-Backed Securities		85,300,654		86,097,652
	0	.9%	Municipal Bonds		2,487,990		2,568,571
	40	.9%	U.S. Government and Government Agencies		112,355,410		115,139,792
	0	.3%	Other Investment Company		765,992		765,992
	3	.2%	Short-Term Investment		8,999,860		8,999,844


	102	.8%	Total Investments		284,483,268		289,636,148
	(2	.8)%	Other Assets and Liabilities, Net				(7,806,762	)


	100	.0%	Net Assets				281,829,386


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

Asset-Backed Obligations 0.2% of net assets


Citibank Credit Card Issuance Trust
Series 2005-A2 Class A2
4.85%, 03/10/17 (b)		100,000		110,945
Series 2003-A7 Class A7
4.15%, 07/07/17 (b)		100,000		109,950
Series 2006-A3 Class A3
5.30%, 03/15/18 (b)		150,000		173,910
Honda Auto Receivables Owner Trust
Series 2011-3 Class A3
0.88%, 09/21/15 (b)		200,000		200,988
Nissan Auto Receivables Owner Trust
Series 2012-A Class A3
0.73%, 05/16/16 (b)		100,000		100,217

Total Asset-Backed Obligations
(Cost $689,551)				696,010




Commercial Mortgage Backed Securities 1.9% of net assets


Banc of America Merrill Lynch Commercial Mortgage, Inc.
Series 2004-6 Class A5
4.81%, 12/10/42 (b)		200,000		212,208
Series 2005-4 Class A5A
4.93%, 07/10/45 (b)		361,000		397,164
Bear Stearns Commercial Mortgage Securities
Series 2005-PW10 Class A4
5.41%, 12/11/40 (b)		500,000		560,515
Series 2005-PWR8 Class A4
4.67%, 06/11/41 (b)		200,000		217,427
Credit Suisse First Boston Mortgage Securities Corp.
Series 2004-C5 Class A4
4.83%, 11/15/37 (b)		200,000		214,626
Series 2005-C1 Class A4
5.01%, 02/15/38 (a)(b)		380,000		412,561
Credit Suisse Mortgage Capital Certificates
Series 2007-C5 Class A3
5.69%, 09/15/40 (a)(b)		200,000		210,449
Greenwich Capital Commercial Funding Corp.
Series 2007-GG9 Class A4
5.44%, 03/10/39 (b)		415,000		462,049
GS Mortgage Securities Corp. II
Series 2007-GG10 Class A4
5.98%, 08/10/45 (a)(b)		200,000		222,770
JP Morgan Chase Commercial Mortgage Securities Corp.
Series 2004-CB8 Class A4
4.40%, 01/12/39 (b)		300,000		312,693
Series 2005-LDP5 Class A4
5.36%, 12/15/44 (a)(b)		200,000		224,256
Series 2007-LD12 Class ASB
5.83%, 02/15/51 (a)(b)		183,561		200,092
LB-UBS Commercial Mortgage Trust
Series 2004-C4 Class A4
5.45%, 06/15/29 (a)(b)		200,000		213,100
Series 2005-C5 Class A4
4.95%, 09/15/30 (b)		300,000		329,892
Series 2005-C7 Class A4
5.20%, 11/15/30 (a)(b)		200,000		221,922
Wachovia Bank Commercial Mortgage Trust
Series 2004-C11 Class A5
5.22%, 01/15/41 (a)(b)		220,000		234,225
Series 2005-C21 Class A4
5.38%, 10/15/44 (a)(b)		200,000		220,652
Series 2006-C23 Class A5
5.42%, 01/15/45 (a)(b)		400,000		447,772

Total Commercial Mortgage Backed Securities
(Cost $5,229,769)				5,314,373




Corporate Bonds 20.4% of net assets

Finance 6.6%


Banking 4.4%
American Express Co.
8.13%, 05/20/19		150,000		200,018
American Express Credit Corp.
2.38%, 03/24/17		200,000		205,215
Bank of America Corp.
5.38%, 06/15/14		200,000		208,745
5.13%, 11/15/14		250,000		260,903
3.63%, 03/17/16		650,000		653,536
5.75%, 08/15/16		100,000		104,083
5.65%, 05/01/18		100,000		107,062
5.88%, 02/07/42		100,000		109,940
Bank of New York Mellon Corp.
2.50%, 01/15/16		250,000		259,205
2.30%, 07/28/16		100,000		103,278
Bank of Tokyo-Mitsubishi UFJ Ltd.
2.35%, 02/23/17		100,000		102,317

See financial notes 27

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Barclays Bank PLC
3.90%, 04/07/15		100,000		103,651
5.00%, 09/22/16		100,000		108,700
BB&T Corp.
3.95%, 03/22/22 (b)		100,000		104,776
Bear Stearns Cos. LLC
5.70%, 11/15/14		250,000		270,673
BNP Paribas S.A.
5.00%, 01/15/21		100,000		102,830
Capital One Financial Corp.
2.15%, 03/23/15		150,000		151,269
Citigroup, Inc.
6.38%, 08/12/14		100,000		107,097
4.75%, 05/19/15		100,000		105,035
3.95%, 06/15/16		550,000		564,074
8.50%, 05/22/19		54,000		66,782
5.38%, 08/09/20		150,000		162,357
5.88%, 05/29/37		200,000		218,659
Credit Suisse USA, Inc.
5.38%, 03/02/16		250,000		277,504
6.00%, 02/15/18		100,000		107,124
Deutsche Bank AG
3.25%, 01/11/16		150,000		154,500
Fifth Third Bancorp
5.45%, 01/15/17		100,000		109,475
Goldman Sachs Group, Inc.
4.75%, 07/15/13		75,000		77,133
3.63%, 02/07/16		475,000		475,449
5.95%, 01/18/18		240,000		257,172
5.25%, 07/27/21		100,000		101,764
5.75%, 01/24/22		100,000		105,755
6.13%, 02/15/33		80,000		82,395
6.75%, 10/01/37		100,000		98,298
6.25%, 02/01/41		75,000		78,472
HSBC Holdings PLC
5.10%, 04/05/21		350,000		391,456
HSBC USA, Inc.
5.00%, 09/27/20		164,000		166,921
JPMorgan Chase & Co.
2.05%, 01/24/14		425,000		429,811
2.60%, 01/15/16		273,000		275,796
6.30%, 04/23/19		450,000		526,671
6.40%, 05/15/38		100,000		120,648
5.40%, 01/06/42		50,000		55,112
JPMorgan Chase Capital XVIII
6.95%, 08/01/66		75,000		75,375
JPMorgan Chase Capital XXV
6.80%, 10/01/37		350,000		350,873
KeyBank NA
5.80%, 07/01/14		250,000		268,123
Morgan Stanley
3.80%, 04/29/16		250,000		242,413
5.45%, 01/09/17		200,000		202,178
6.63%, 04/01/18		200,000		209,362
7.30%, 05/13/19		200,000		216,341
7.25%, 04/01/32		100,000		106,505
PNC Funding Corp.
3.63%, 02/08/15		160,000		170,044
5.63%, 02/01/17		277,000		308,520
Rabobank Nederland Utrecht
3.88%, 02/08/22		200,000		203,853
Royal Bank of Scotland PLC
6.13%, 01/11/21		225,000		250,376
Santander Holdings USA, Inc.
4.63%, 04/19/16		50,000		48,359
UBS AG
5.88%, 12/20/17		100,000		111,832
5.75%, 04/25/18		100,000		110,913
US Bancorp
2.20%, 11/15/16 (b)		100,000		103,241
3.00%, 03/15/22 (b)		100,000		102,651
Wachovia Corp.
5.75%, 06/15/17		150,000		174,847
5.50%, 08/01/35		75,000		79,756
Wells Fargo & Co.
5.63%, 12/11/17		150,000		175,368
4.60%, 04/01/21		175,000		195,592
5.38%, 02/07/35		50,000		57,701
Wells Fargo & Co., Series I
3.75%, 10/01/14		150,000		158,454
Westpac Banking Corp.
4.88%, 11/19/19		100,000		108,457

				12,302,795


Brokerage 0.1%
BlackRock, Inc.
5.00%, 12/10/19		50,000		57,242
Jefferies Group, Inc.
5.88%, 06/08/14		100,000		104,275
5.50%, 03/15/16		100,000		103,000
Nomura Holdings, Inc.
5.00%, 03/04/15		100,000		103,885
6.70%, 03/04/20		15,000		16,645

				385,047


Finance Company 0.6%
General Electric Capital Corp.
5.90%, 05/13/14		230,000		249,948
5.00%, 01/08/16		150,000		165,409
2.95%, 05/09/16		300,000		309,860
6.00%, 08/07/19		100,000		117,180
6.75%, 03/15/32		150,000		186,275
5.88%, 01/14/38		183,000		210,821
6.38%, 11/15/67 (a)(b)		100,000		104,375
HSBC Finance Corp.
5.50%, 01/19/16		100,000		108,382
6.68%, 01/15/21		25,000		27,112
SLM Corp.
5.00%, 04/15/15		250,000		253,548

				1,732,910


Insurance 1.1%
Aetna, Inc.
3.95%, 09/01/20		100,000		108,749
Allstate Corp.
5.00%, 08/15/14		200,000		216,489
American International Group, Inc.
4.88%, 09/15/16		150,000		159,261
5.60%, 10/18/16		75,000		81,628
5.85%, 01/16/18		40,000		44,326
6.40%, 12/15/20		160,000		181,337
Berkshire Hathaway, Inc.
3.20%, 02/11/15		140,000		148,744

28 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Chubb Corp.
6.00%, 05/11/37		250,000		322,100
Cigna Corp.
4.00%, 02/15/22 (b)		200,000		208,981
5.88%, 03/15/41 (b)		50,000		57,109
CNA Financial Corp.
7.35%, 11/15/19		150,000		177,712
Genworth Financial, Inc.
5.75%, 06/15/14		100,000		101,666
Hartford Financial Services Group, Inc.
5.50%, 03/30/20		70,000		73,199
5.95%, 10/15/36		100,000		95,881
MetLife, Inc.
6.82%, 08/15/18		200,000		244,252
Principal Financial Group, Inc.
7.88%, 05/15/14		25,000		27,854
Prudential Financial, Inc.
4.50%, 11/16/21		100,000		103,988
6.63%, 12/01/37		100,000		113,472
5.63%, 05/12/41		75,000		76,870
Travelers Cos., Inc.
5.90%, 06/02/19		160,000		199,184
6.25%, 06/15/37		70,000		90,988
UnitedHealth Group, Inc.
6.00%, 02/15/18		150,000		181,728
WellPoint, Inc.
5.25%, 01/15/16		150,000		167,633

				3,183,151


Other Financial 0.1%
CME Group, Inc.
5.75%, 02/15/14		150,000		161,783

				161,783


Real Estate Investment Trust 0.3%
Digital Realty Trust LP
5.25%, 03/15/21		100,000		106,638
Duke Realty LP
7.38%, 02/15/15		175,000		195,350
ERP Operating LP
5.75%, 06/15/17		150,000		173,253
HCP, Inc.
2.70%, 02/01/14		18,000		18,294
6.70%, 01/30/18		100,000		116,249
5.38%, 02/01/21 (b)		46,000		50,955
ProLogis LP
6.63%, 05/15/18		50,000		57,742
Simon Property Group LP
6.75%, 05/15/14 (b)		25,000		27,110
6.13%, 05/30/18		150,000		177,711
5.65%, 02/01/20 (b)		52,000		60,753

				984,055

				18,749,741

Industrial 11.5%


Basic Industry 1.2%
Alcoa, Inc.
5.55%, 02/01/17		150,000		163,905
5.95%, 02/01/37		50,000		48,357
ArcelorMittal
9.85%, 06/01/19		100,000		119,158
5.25%, 08/05/20		102,000		97,939
7.00%, 10/15/39		100,000		97,354
Barrick North America Finance LLC
5.70%, 05/30/41		60,000		68,063
BHP Billiton Finance USA Ltd.
1.13%, 11/21/14		200,000		201,287
3.25%, 11/21/21		100,000		104,570
CF Industries, Inc.
7.13%, 05/01/20		100,000		122,000
Cliffs Natural Resources, Inc.
4.88%, 04/01/21		150,000		147,580
6.25%, 10/01/40		50,000		49,264
Dow Chemical Co.
2.50%, 02/15/16		200,000		205,785
8.55%, 05/15/19		225,000		299,677
5.25%, 11/15/41 (b)		100,000		110,973
EI du Pont de Nemours & Co.
3.25%, 01/15/15		200,000		212,865
International Paper Co.
7.95%, 06/15/18		100,000		126,168
7.50%, 08/15/21		132,000		168,664
Rio Tinto Finance USA Ltd.
1.88%, 11/02/15		170,000		173,902
6.50%, 07/15/18		100,000		123,412
Rio Tinto Finance USA PLC
3.50%, 03/22/22		100,000		105,609
4.75%, 03/22/42 (b)		100,000		112,363
Teck Resources Ltd.
6.25%, 07/15/41		100,000		112,355
Vale Overseas Ltd.
6.88%, 11/10/39		134,000		157,232
Valspar Corp.
4.20%, 01/15/22 (b)		100,000		105,062

				3,233,544


Capital Goods 1.1%
Boeing Capital Corp.
2.90%, 08/15/18 (b)		100,000		106,871
4.70%, 10/27/19		50,000		58,971
Boeing Co.
6.88%, 03/15/39		90,000		132,168
Caterpillar Financial Services Corp.
1.55%, 12/20/13		100,000		101,405
6.13%, 02/17/14		75,000		81,477
7.15%, 02/15/19		72,000		94,099
Caterpillar, Inc.
5.70%, 08/15/16		100,000		117,926
CRH America, Inc.
6.00%, 09/30/16		100,000		109,567
Deere & Co.
5.38%, 10/16/29		150,000		189,098
General Electric Co.
5.25%, 12/06/17		350,000		409,200
Honeywell International, Inc.
4.25%, 03/01/21		200,000		232,063
John Deere Capital Corp.
5.50%, 04/13/17		200,000		238,170
Lockheed Martin Corp.
4.25%, 11/15/19		36,000		40,275
3.35%, 09/15/21		100,000		103,565
Raytheon Co.
3.13%, 10/15/20		200,000		210,285
Republic Services, Inc.
3.80%, 05/15/18		100,000		107,123

See financial notes 29

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
5.70%, 05/15/41		80,000		92,117
Tyco International Finance S.A.
8.50%, 01/15/19 (b)		100,000		137,125
United Technologies Corp.
5.38%, 12/15/17		100,000		119,688
3.10%, 06/01/22		150,000		157,515
4.50%, 06/01/42		150,000		165,463

				3,004,171


Communications 2.2%
America Movil S.A.B. de C.V.
2.38%, 09/08/16		200,000		206,180
6.38%, 03/01/35		40,000		50,082
AT&T Mobility LLC
7.13%, 12/15/31		50,000		66,403
AT&T, Inc.
5.50%, 02/01/18		130,000		154,662
3.00%, 02/15/22		100,000		101,800
6.80%, 05/15/36		55,000		71,535
6.30%, 01/15/38		120,000		149,994
5.35%, 09/01/40		50,000		57,605
5.55%, 08/15/41		150,000		179,493
BellSouth Corp.
6.88%, 10/15/31		100,000		121,862
6.55%, 06/15/34		150,000		176,707
CBS Corp.
7.88%, 07/30/30		50,000		64,423
5.50%, 05/15/33		150,000		157,997
Cellco Partnership / Verizon Wireless Capital LLC
5.55%, 02/01/14		90,000		96,385
Comcast Corp.
5.30%, 01/15/14		150,000		159,658
5.15%, 03/01/20		250,000		290,689
Deutsche Telekom International Finance BV
8.75%, 06/15/30 (a)		100,000		139,164
DIRECTV Holdings LLC
3.55%, 03/15/15		100,000		105,368
3.50%, 03/01/16		30,000		31,669
5.88%, 10/01/19		25,000		28,723
6.00%, 08/15/40 (b)		75,000		82,018
6.38%, 03/01/41		35,000		40,214
Discovery Communications LLC
5.05%, 06/01/20		150,000		169,747
France Telecom S.A.
2.75%, 09/14/16		150,000		153,006
5.38%, 01/13/42		50,000		53,021
NBCUniversal Media LLC
4.38%, 04/01/21		250,000		275,535
News America, Inc.
5.30%, 12/15/14		54,000		59,220
6.90%, 03/01/19		30,000		36,939
6.15%, 03/01/37		50,000		56,842
6.15%, 02/15/41		150,000		176,041
Qwest Corp.
6.75%, 12/01/21		150,000		169,077
TCI Communications, Inc.
7.13%, 02/15/28		150,000		187,959
Telecom Italia Capital S.A.
5.25%, 11/15/13		300,000		301,500
Telefonica Emisiones S.A.U.
4.95%, 01/15/15		150,000		141,893
6.22%, 07/03/17		150,000		140,966
Time Warner Cable, Inc.
5.85%, 05/01/17		150,000		176,447
6.55%, 05/01/37		200,000		237,950
5.50%, 09/01/41 (b)		100,000		109,220
Verizon Communications, Inc.
5.55%, 02/15/16		150,000		172,324
5.50%, 02/15/18		100,000		118,511
8.75%, 11/01/18		75,000		103,224
3.50%, 11/01/21		100,000		106,679
5.85%, 09/15/35		80,000		99,137
Verizon Global Funding Corp.
7.75%, 12/01/30		100,000		141,448
Vodafone Group PLC
5.00%, 12/16/13		150,000		159,066
5.63%, 02/27/17		50,000		58,566
5.45%, 06/10/19		45,000		54,080
4.38%, 03/16/21		30,000		34,283
6.15%, 02/27/37		50,000		64,131

				6,089,443


Consumer Cyclical 1.4%
CVS Caremark Corp.
4.88%, 09/15/14		75,000		81,170
4.75%, 05/18/20 (b)		108,000		122,901
Daimler Finance North America LLC
6.50%, 11/15/13		30,000		32,169
8.50%, 01/18/31		75,000		115,063
eBay, Inc.
1.63%, 10/15/15		125,000		128,006
Ford Motor Co.
7.45%, 07/16/31		125,000		157,188
Ford Motor Credit Co. LLC
3.88%, 01/15/15		200,000		206,087
6.63%, 08/15/17		150,000		170,809
Home Depot, Inc.
5.40%, 03/01/16		200,000		230,759
Lowe’s Cos., Inc.
3.12%, 04/15/22 (b)		150,000		153,800
Macy’s Retail Holdings, Inc.
5.90%, 12/01/16		150,000		173,069
5.13%, 01/15/42 (b)		100,000		105,677
Marriott International, Inc.
3.00%, 03/01/19 (b)		100,000		101,253
McDonald’s Corp.
5.30%, 03/15/17		86,000		101,632
3.70%, 02/15/42		114,000		113,955
Nordstrom, Inc.
4.00%, 10/15/21 (b)		150,000		164,835
QVC, Inc.
5.13%, 07/02/22		200,000		204,552
Starwood Hotels & Resorts Worldwide, Inc.
6.75%, 05/15/18		100,000		116,299
Target Corp.
5.88%, 07/15/16		100,000		118,779
3.88%, 07/15/20		25,000		27,591
6.35%, 11/01/32		45,000		59,899
Time Warner, Inc.
3.15%, 07/15/15		85,000		89,708
4.75%, 03/29/21		50,000		56,044
7.63%, 04/15/31		100,000		129,521
7.70%, 05/01/32		61,000		79,882
5.38%, 10/15/41		50,000		53,409

30 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Toyota Motor Credit Corp.
4.25%, 01/11/21		80,000		89,799
3.40%, 09/15/21		100,000		105,371
Viacom, Inc.
2.50%, 12/15/16		50,000		51,823
6.88%, 04/30/36		100,000		129,899
Wal-Mart Stores, Inc.
5.25%, 09/01/35		100,000		121,460
6.50%, 08/15/37		200,000		283,099
Walt Disney Co.
1.35%, 08/16/16		150,000		151,710

				4,027,218


Consumer Non-Cyclical 2.8%
Abbott Laboratories
5.88%, 05/15/16		100,000		118,017
Altria Group, Inc.
7.75%, 02/06/14		20,000		22,075
4.75%, 05/05/21		100,000		113,612
10.20%, 02/06/39		37,000		60,375
Amgen, Inc.
3.88%, 11/15/21 (b)		200,000		211,587
5.15%, 11/15/41 (b)		100,000		104,794
Anheuser-Busch Cos., Inc.
6.45%, 09/01/37		60,000		81,741
Anheuser-Busch InBev Worldwide, Inc.
5.38%, 11/15/14		193,000		212,886
6.88%, 11/15/19		100,000		129,206
Archer-Daniels-Midland Co.
5.94%, 10/01/32		100,000		124,558
Aristotle Holding, Inc.
2.75%, 11/21/14 (c)		100,000		102,198
6.13%, 11/15/41 (c)		100,000		121,974
AstraZeneca PLC
5.40%, 06/01/14		75,000		81,821
Baxter International, Inc.
5.90%, 09/01/16		100,000		118,968
Boston Scientific Corp.
6.00%, 01/15/20		150,000		179,172
Cardinal Health, Inc.
4.00%, 06/15/15		100,000		107,387
Coca-Cola Co.
1.50%, 11/15/15		100,000		102,253
3.15%, 11/15/20		150,000		161,004
ConAgra Foods, Inc.
7.00%, 04/15/19		200,000		245,487
Covidien International Finance S.A.
2.80%, 06/15/15		50,000		52,072
Diageo Capital PLC
5.75%, 10/23/17		200,000		240,701
Diageo Investment Corp.
2.88%, 05/11/22		150,000		154,418
Express Scripts, Inc.
3.13%, 05/15/16		130,000		135,475
General Mills, Inc.
3.15%, 12/15/21 (b)		100,000		102,535
GlaxoSmithKline Capital, Inc.
5.65%, 05/15/18		100,000		121,037
2.85%, 05/08/22		150,000		152,908
Johnson & Johnson
1.20%, 05/15/14		100,000		101,405
5.95%, 08/15/37		75,000		105,027
Kellogg Co.
7.45%, 04/01/31		100,000		137,352
Kimberly-Clark Corp.
5.00%, 08/15/13		45,000		47,235
Koninklijke Philips Electronics
5.00%, 03/15/42		100,000		107,933
Kraft Foods, Inc.
4.13%, 02/09/16		250,000		272,456
5.38%, 02/10/20		150,000		177,786
6.50%, 02/09/40		25,000		32,231
Kroger Co.
6.40%, 08/15/17		25,000		29,921
7.50%, 04/01/31		100,000		130,431
McKesson Corp.
3.25%, 03/01/16		50,000		53,718
Medtronic, Inc.
4.45%, 03/15/20		100,000		114,966
Merck & Co., Inc.
5.30%, 12/01/13 (a)		200,000		213,221
2.25%, 01/15/16		90,000		94,062
3.88%, 01/15/21 (b)		200,000		225,338
5.85%, 06/30/39		64,000		87,199
Novartis Capital Corp.
4.40%, 04/24/20		100,000		115,964
PepsiCo, Inc.
3.75%, 03/01/14		50,000		52,471
5.00%, 06/01/18		150,000		175,437
4.88%, 11/01/40		75,000		87,867
Pfizer, Inc.
6.20%, 03/15/19		225,000		282,403
Philip Morris International, Inc.
2.90%, 11/15/21		150,000		154,787
6.38%, 05/16/38		50,000		67,130
Procter & Gamble Co.
1.80%, 11/15/15		375,000		387,423
4.70%, 02/15/19		42,000		49,890
5.55%, 03/05/37		100,000		133,638
Quest Diagnostics, Inc.
3.20%, 04/01/16		200,000		209,367
Reynolds American, Inc.
7.63%, 06/01/16		175,000		211,097
Safeway, Inc.
3.95%, 08/15/20		50,000		48,328
Sanofi
2.63%, 03/29/16		100,000		105,014
Teva Pharmaceutical Finance Co. LLC
6.15%, 02/01/36		125,000		162,988
Thermo Fisher Scientific, Inc.
4.50%, 03/01/21		50,000		57,132
3.60%, 08/15/21 (b)		50,000		53,885
Watson Pharmaceuticals, Inc.
5.00%, 08/15/14		125,000		132,869
6.13%, 08/15/19		100,000		115,137

				7,891,369


Energy 1.5%
Anadarko Petroleum Corp.
5.95%, 09/15/16		225,000		255,565
6.38%, 09/15/17		200,000		232,588
6.45%, 09/15/36		100,000		115,990
Apache Corp.
6.00%, 01/15/37		100,000		126,819

See financial notes 31

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Baker Hughes, Inc.
3.20%, 08/15/21		100,000		104,520
5.13%, 09/15/40		200,000		234,735
BP Capital Markets PLC
3.63%, 05/08/14		120,000		125,843
4.75%, 03/10/19		100,000		113,333
Canadian Natural Resources Ltd.
6.25%, 03/15/38		100,000		122,940
Chevron Corp.
3.95%, 03/03/14		100,000		105,544
4.95%, 03/03/19		100,000		120,699
ConocoPhillips
6.50%, 02/01/39		125,000		173,737
Devon Energy Corp.
5.60%, 07/15/41 (b)		100,000		116,468
Encana Corp.
6.50%, 02/01/38		68,000		74,960
Halliburton Co.
7.45%, 09/15/39		60,000		89,079
Hess Corp.
7.30%, 08/15/31		75,000		94,117
Marathon Petroleum Corp.
5.13%, 03/01/21		125,000		140,198
Occidental Petroleum Corp.
1.75%, 02/15/17		85,000		86,530
4.10%, 02/01/21 (b)		200,000		224,632
3.13%, 02/15/22 (b)		100,000		104,465
Phillips 66
2.95%, 05/01/17 (c)		200,000		205,744
Shell International Finance BV
3.10%, 06/28/15		100,000		106,764
4.30%, 09/22/19		100,000		116,215
6.38%, 12/15/38		45,000		63,917
Suncor Energy, Inc.
6.10%, 06/01/18		100,000		118,586
Talisman Energy, Inc.
3.75%, 02/01/21 (b)		48,000		48,191
Tosco Corp.
7.80%, 01/01/27		150,000		215,015
Total Capital S.A.
3.00%, 06/24/15		100,000		106,203
Transocean, Inc.
5.05%, 12/15/16		100,000		108,573
6.80%, 03/15/38		100,000		112,797
Valero Energy Corp.
6.13%, 02/01/20		150,000		173,451
Weatherford International Ltd.
4.50%, 04/15/22 (b)		100,000		102,688

				4,240,906


Other Industrial 0.0%
Howard Hughes Medical Institute
3.45%, 09/01/14		50,000		53,113

				53,113


Technology 0.9%
Cisco Systems, Inc.
2.90%, 11/17/14		266,000		279,897
5.90%, 02/15/39		50,000		64,668
Hewlett-Packard Co.
1.25%, 09/13/13		150,000		149,927
6.13%, 03/01/14		150,000		161,065
2.60%, 09/15/17		200,000		201,003
6.00%, 09/15/41		200,000		221,234
International Business Machines Corp.
0.55%, 02/06/15		180,000		178,947
1.88%, 05/15/19		100,000		101,225
7.00%, 10/30/25		105,000		145,832
Microsoft Corp.
4.50%, 10/01/40		100,000		115,439
Oracle Corp.
5.75%, 04/15/18		165,000		200,446
3.88%, 07/15/20		180,000		201,864
5.38%, 07/15/40		100,000		123,007
Pitney Bowes, Inc.
4.75%, 01/15/16		100,000		101,536
Xerox Corp.
4.25%, 02/15/15		100,000		106,091
5.63%, 12/15/19		200,000		225,750

				2,577,931


Transportation 0.4%
Burlington Northern Santa Fe LLC
4.70%, 10/01/19		140,000		157,461
5.05%, 03/01/41 (b)		80,000		88,390
CSX Corp.
6.25%, 04/01/15		100,000		114,004
4.25%, 06/01/21 (b)		150,000		164,125
Norfolk Southern Corp.
3.00%, 04/01/22 (b)		150,000		152,044
Southwest Airlines Co.
5.13%, 03/01/17		120,000		131,842
Union Pacific Corp.
4.00%, 02/01/21 (b)		180,000		198,304
United Parcel Service, Inc.
6.20%, 01/15/38		125,000		172,423

				1,178,593

				32,296,288

Utilities 2.3%


Electric 1.5%
Alabama Power Co.
4.10%, 01/15/42		100,000		102,037
Appalachian Power Co.
7.00%, 04/01/38		75,000		100,841
Carolina Power & Light Co.
5.13%, 09/15/13		100,000		105,326
Commonwealth Edison Co.
1.95%, 09/01/16 (b)		50,000		51,216
Consolidated Edison Co. of New York, Inc.
5.85%, 04/01/18		98,000		119,570
Detroit Edison Co.
3.95%, 06/15/42		100,000		102,091
Dominion Resources, Inc.
5.15%, 07/15/15		100,000		111,460
Duke Energy Carolinas LLC
5.30%, 02/15/40		100,000		123,888
Duke Energy Indiana, Inc.
3.75%, 07/15/20		175,000		191,688
Entergy Corp.
3.63%, 09/15/15		75,000		77,156
Exelon Generation Co. LLC
5.20%, 10/01/19		142,000		155,552
4.00%, 10/01/20 (b)		150,000		151,199

32 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
FirstEnergy Corp.
7.38%, 11/15/31		300,000		377,643
Florida Power & Light Co.
5.95%, 02/01/38		50,000		66,669
Florida Power Corp.
6.40%, 06/15/38		91,000		124,560
Georgia Power Co.
4.75%, 09/01/40		150,000		165,334
Midamerican Energy Holdings Co.
5.75%, 04/01/18		100,000		118,765
6.13%, 04/01/36		100,000		125,554
National Rural Utilities Cooperative Finance Corp.
5.45%, 02/01/18		100,000		118,708
NextEra Energy Capital Holdings, Inc.
2.55%, 11/15/13		225,000		228,380
Pacific Gas & Electric Co.
6.05%, 03/01/34		192,000		242,751
PPL Energy Supply LLC
4.60%, 12/15/21 (b)		100,000		102,815
Public Service Electric & Gas Co.
0.85%, 08/15/14		100,000		100,228
3.95%, 05/01/42 (b)		100,000		103,899
San Diego Gas & Electric Co.
4.30%, 04/01/42 (b)		100,000		112,080
SCANA Corp.
4.13%, 02/01/22 (b)		100,000		101,102
Southern California Edison Co.
5.75%, 03/15/14		150,000		162,627
5.50%, 08/15/18		100,000		121,668
Virginia Electric and Power Co.
6.00%, 05/15/37		139,000		181,688
Westar Energy, Inc.
4.13%, 03/01/42 (b)		100,000		105,161
Xcel Energy, Inc.
4.70%, 05/15/20 (b)		100,000		115,726

				4,167,382


Natural Gas 0.7%
Energy Transfer Partners LP
6.70%, 07/01/18		50,000		57,424
4.65%, 06/01/21 (b)		100,000		103,499
7.50%, 07/01/38		100,000		113,123
Enterprise Products Operating LLC
9.75%, 01/31/14		200,000		225,726
6.30%, 09/15/17		100,000		119,497
5.20%, 09/01/20		70,000		80,220
6.45%, 09/01/40		50,000		59,754
Kinder Morgan Energy Partners LP
6.85%, 02/15/20		50,000		60,123
5.80%, 03/15/35		150,000		159,368
6.55%, 09/15/40		50,000		57,220
National Grid PLC
6.30%, 08/01/16		75,000		86,610
Sempra Energy
6.00%, 10/15/39		100,000		124,670
Southern Natural Gas Co. LLC
5.90%, 04/01/17 (c)		250,000		287,451
Southwest Gas Corp.
3.88%, 04/01/22 (b)		100,000		105,611
TransCanada PipeLines Ltd.
3.80%, 10/01/20		56,000		61,762
7.63%, 01/15/39		50,000		75,075
Williams Partners LP
7.25%, 02/01/17		200,000		239,880
6.30%, 04/15/40		50,000		59,426

				2,076,439


Other Utilities 0.1%
Veolia Environnement S.A.
6.00%, 06/01/18		100,000		110,833

				110,833

				6,354,654

Total Corporate Bonds
(Cost $56,242,251)				57,400,683




Foreign Securities 4.5% of net assets

Foreign Agencies 1.4%


Austria 0.1%
Oesterreichische Kontrollbank AG
1.75%, 10/05/15		150,000		152,517

				152,517


Canada 0.1%
Export Development Canada
2.25%, 05/28/15		100,000		105,088
1.25%, 10/27/15		60,000		61,618

				166,706


Cayman Islands 0.1%
Petrobras International Finance Co.
2.88%, 02/06/15		100,000		101,750
6.88%, 01/20/40		180,000		215,914

				317,664


Germany 0.6%
Kreditanstalt fuer Wiederaufbau
2.63%, 02/16/16 (d)		375,000		398,567
4.88%, 01/17/17 (d)		350,000		408,507
1.25%, 02/15/17 (d)		350,000		354,170
4.50%, 07/16/18 (d)		300,000		352,101
4.88%, 06/17/19 (d)		200,000		240,927

				1,754,272


Japan 0.1%
Japan Bank for International Cooperation
2.25%, 07/13/16		200,000		209,643

				209,643


Mexico 0.2%
Pemex Project Funding Master Trust
6.63%, 06/15/35		200,000		239,000
Petroleos Mexicanos
5.50%, 01/21/21		200,000		227,000

				466,000


Norway 0.0%
Statoil A.S.A.
2.90%, 10/15/14		100,000		104,937

				104,937


Republic of Korea 0.2%
Export-Import Bank of Korea
5.88%, 01/14/15		300,000		329,119

See financial notes 33

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
4.38%, 09/15/21		300,000		319,307

				648,426

				3,820,165

Foreign Local Government 0.4%


Canada 0.4%
Hydro Quebec
2.00%, 06/30/16		200,000		207,255
8.05%, 07/07/24		60,000		88,941
Province of British Columbia Canada
2.85%, 06/15/15		250,000		266,024
Province of Ontario
2.95%, 02/05/15		460,000		485,611
4.00%, 10/07/19		75,000		85,381
Province of Quebec
7.50%, 09/15/29		68,000		104,842

				1,238,054

Sovereign 1.2%


Brazil 0.3%
Brazilian Government International Bond
6.00%, 01/17/17		250,000		295,125
4.88%, 01/22/21		100,000		116,150
8.25%, 01/20/34		150,000		236,250
7.13%, 01/20/37		100,000		144,750

				792,275


Canada 0.1%
Canada Government International Bond
2.38%, 09/10/14		200,000		208,838

				208,838


Colombia 0.1%
Colombia Government International Bond
7.38%, 03/18/19		100,000		131,250
7.38%, 09/18/37		100,000		148,450

				279,700


Italy 0.2%
Republic of Italy
3.13%, 01/26/15		300,000		289,927
6.88%, 09/27/23		150,000		154,410

				444,337


Mexico 0.3%
Mexico Government International Bond
5.88%, 02/17/14		84,000		90,216
5.63%, 01/15/17		150,000		175,313
8.00%, 09/24/22		200,000		283,500
6.05%, 01/11/40		150,000		194,250

				743,279


Panama 0.1%
Panama Government International Bond
6.70%, 01/26/36		200,000		271,000

				271,000


Peru 0.1%
Peruvian Government International Bond
7.13%, 03/30/19		250,000		322,500

				322,500


Poland 0.0%
Poland Government International Bond
5.25%, 01/15/14		100,000		105,882

				105,882


South Africa 0.0%
South Africa Government International Bond
4.67%, 01/17/24		100,000		108,750

				108,750

				3,276,561

Supranational 1.5%
Asian Development Bank
2.63%, 02/09/15		400,000		422,205
2.50%, 03/15/16		150,000		159,837
European Bank for Reconstruction & Development
1.63%, 09/03/15		100,000		102,510
European Investment Bank
4.63%, 05/15/14		450,000		482,042
4.63%, 10/20/15		400,000		446,717
2.50%, 05/16/16		325,000		339,907
5.13%, 05/30/17		500,000		585,203
4.00%, 02/16/21		300,000		335,042
Inter-American Development Bank
3.00%, 04/22/14		200,000		209,188
4.50%, 09/15/14		300,000		325,500
5.13%, 09/13/16		100,000		117,867
International Bank for Reconstruction & Development
0.50%, 11/26/13		350,000		350,525
2.13%, 03/15/16		200,000		210,584
1.00%, 09/15/16		125,000		126,083
International Finance Corp.
2.13%, 11/17/17		100,000		105,241

				4,318,451

Total Foreign Securities
(Cost $12,411,791)				12,653,231




Mortgage-Backed Securities 30.5% of net assets

U.S. Government Agency Mortgages 30.5%
Fannie Mae
5.50%, 02/01/17 to 07/01/38 (b)		4,141,522		4,525,499
5.00%, 02/01/18 to 11/01/40 (b)		6,081,060		6,611,279
3.50%, 10/01/18 to 07/01/42 (b)		4,495,145		4,745,900
4.00%, 09/01/20 to 12/01/41 (b)		7,869,833		8,398,720
4.50%, 04/01/23 to 07/01/41 (b)		6,758,968		7,268,368
2.50%, 03/01/27 (b)		97,947		101,143
3.00%, 04/01/27 to 05/01/27 (b)		1,084,468		1,138,457
6.00%, 06/01/37 to 09/01/39 (b)		3,034,332		3,344,860
3.65%, 03/01/40 (a)(b)		559,305		590,455
3.36%, 04/01/40 (a)(b)		195,029		205,121
3.60%, 05/01/40 (a)(b)		168,050		177,261

34 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


Security	Face		Value
Rate, Maturity Date	Amount ($)		($)
Fannie Mae TBA
2.50%, 07/01/27 (b)		300,000		309,188
3.00%, 07/01/27 to 07/01/42 (b)		200,000		207,375
3.50%, 07/01/27 to 07/01/42 (b)		300,000		315,969
4.00%, 07/01/27 (b)		100,000		106,375
4.50%, 07/01/27 to 07/01/42 (b)		400,000		429,000
5.00%, 07/01/27 (b)		200,000		215,594
5.50%, 07/01/27 (b)		100,000		108,535
Freddie Mac
4.50%, 02/01/13 to 09/01/41 (b)		5,938,616		6,336,041
5.00%, 06/01/18 to 09/01/40 (b)		3,274,550		3,525,317
5.50%, 11/01/18 to 02/01/40 (b)		3,215,038		3,499,407
4.00%, 05/01/23 to 10/01/41 (b)		3,861,836		4,110,111
3.50%, 11/01/25 to 04/01/42 (b)		2,532,960		2,663,558
3.00%, 10/01/26 to 05/01/41 (a)(b)		1,270,816		1,332,332
6.00%, 10/01/37 to 04/01/38 (b)		1,706,608		1,873,213
6.50%, 11/01/37 to 09/01/39 (b)		1,420,041		1,594,723
Freddie Mac TBA
3.00%, 07/01/27 (b)		300,000		313,734
3.50%, 07/01/27 (b)		100,000		105,188
4.00%, 07/01/27 (b)		100,000		105,703
Ginnie Mae
4.00%, 04/20/26 to 06/20/42 (b)		3,710,319		4,057,034
5.50%, 04/15/33 to 11/15/38 (b)		2,041,054		2,273,609
5.00%, 10/15/34 to 04/20/40 (b)		3,552,515		3,922,663
6.00%, 02/15/37 to 12/15/38 (b)		1,151,210		1,293,427
3.50%, 08/20/38 to 06/20/42 (a)(b)		2,626,384		2,799,182
4.50%, 04/15/39 to 12/20/41 (b)		5,829,196		6,414,693
3.00%, 10/20/40 to 10/20/41 (a)(b)		1,022,891		1,078,618

Total Mortgage-Backed Securities
(Cost $85,300,654)				86,097,652




Municipal Bonds 0.9% of net assets

Fixed-Rate Obligations 0.9%
Bay Area Toll Authority
RB (Build America Bonds) Series 2010S3
6.91%, 10/01/50		100,000		140,786
California
GO (Build America Bonds) Series 2009
7.55%, 04/01/39		250,000		321,730
Commonwealth of Massachusetts
GO (Build America Bonds) Series 2009
5.46%, 12/01/39		100,000		125,054
Georgia
GA (Build America Bonds) Series H
4.50%, 11/01/25		40,000		45,932
Los Angeles USD
GO (Build America Bonds) Series 2010
6.76%, 07/01/34		200,000		259,264
Metropolitan Government of Nashville & Davidson County
GO (Build America Bonds) Series 2010
5.71%, 07/01/34		20,000		23,895
Metropolitan Transportation Authority
NY (Build America Bonds) Series E
6.81%, 11/15/40		150,000		195,548
New Jersey State Turnpike Authority
RB (Build America Bonds) Series 2010A
7.10%, 01/01/41		100,000		141,087
New York City Municipal Water Finance Authority
Water System RB (Build America Bonds) Series 2009
5.75%, 06/15/41		200,000		255,618
San Francisco CA City & County Public Utilities Commission
Water System RB (Build America Bonds) Series 2010DE
6.00%, 11/01/40		250,000		314,152
State of Connecticut
GO Bonds Series 2008A
5.85%, 03/15/32		200,000		250,752
State of Illinois
GO Bonds (Pension Funding) Series 2003
5.10%, 06/01/33		300,000		283,860
Yale University
Medium-Term Notes Series B
2.90%, 10/15/14		200,000		210,893

Total Municipal Bonds
(Cost $2,487,990)				2,568,571




U.S. Government and Government Agencies 40.9% of net assets

U.S. Government Agency Securities 5.3%
Fannie Mae
1.13%, 06/27/14		780,000		792,198
0.55%, 02/27/15 (b)		2,000,000		2,003,540
1.63%, 10/26/15		2,166,000		2,245,382
7.13%, 01/15/30		295,000		463,699
Federal Farm Credit Bank
4.88%, 12/16/15		341,000		390,431
Federal Home Loan Bank
0.88%, 12/27/13		1,070,000		1,078,888
5.00%, 11/17/17		1,435,000		1,734,845
Freddie Mac
0.38%, 11/27/13		2,476,000		2,478,786
1.00%, 07/30/14		1,226,000		1,241,758
0.60%, 05/22/15 (b)		600,000		600,139
2.38%, 01/13/22		594,000		610,894
6.75%, 03/15/31		280,000		430,976
Tennessee Valley Authority
6.75%, 11/01/25		520,000		761,279

				14,832,815

See financial notes 35

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued


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

U.S. Treasury Obligations 35.6%
U.S. Treasury Bonds
9.13%, 05/15/18		2,255,000		3,318,021
8.00%, 11/15/21		1,784,000		2,800,880
6.00%, 02/15/26		873,000		1,279,900
6.75%, 08/15/26		684,000		1,072,918
5.25%, 02/15/29		308,000		434,521
5.38%, 02/15/31		513,000		747,617
4.38%, 02/15/38		1,988,000		2,638,138
3.50%, 02/15/39		777,000		899,256
4.38%, 11/15/39		856,000		1,140,353
4.63%, 02/15/40		893,000		1,235,410
4.25%, 11/15/40		300,000		392,484
3.75%, 08/15/41		1,576,000		1,900,804
3.13%, 02/15/42		2,534,000		2,722,071
U.S. Treasury Notes
0.38%, 07/31/13		2,147,000		2,149,935
0.75%, 09/15/13		2,009,000		2,020,694
0.25%, 11/30/13		2,444,000		2,442,758
0.13%, 12/31/13		2,080,000		2,074,800
0.25%, 01/31/14		1,040,000		1,039,228
1.75%, 01/31/14		4,143,000		4,237,353
0.25%, 02/28/14		2,717,000		2,714,666
1.25%, 04/15/14		3,805,000		3,867,725
1.00%, 05/15/14		5,200,000		5,265,000
0.25%, 05/31/14		2,320,000		2,317,462
0.38%, 11/15/14		567,000		567,399
2.38%, 02/28/15		938,000		987,172
2.50%, 03/31/15		2,973,000		3,144,411
2.50%, 04/30/15		1,508,000		1,596,477
2.13%, 05/31/15		1,734,000		1,819,346
1.88%, 06/30/15		1,234,000		1,286,831
1.75%, 07/31/15		2,471,000		2,569,262
2.13%, 02/29/16		1,145,000		1,211,107
2.25%, 03/31/16		2,153,000		2,289,918
2.00%, 04/30/16		1,926,000		2,031,630
2.63%, 04/30/16		1,145,000		1,234,632
3.25%, 05/31/16		1,016,000		1,121,251
3.00%, 09/30/16		1,636,000		1,798,322
0.88%, 01/31/17		3,694,000		3,726,611
3.25%, 03/31/17		2,206,000		2,466,068
0.63%, 05/31/17		2,150,000		2,140,426
1.88%, 09/30/17		1,527,000		1,611,104
1.88%, 10/31/17		1,268,000		1,337,938
2.88%, 03/31/18		1,414,000		1,571,528
2.63%, 04/30/18		3,009,000		3,302,612
1.38%, 09/30/18		1,096,000		1,122,201
1.25%, 04/30/19		1,768,000		1,787,890
3.38%, 11/15/19		2,403,000		2,780,535
2.63%, 08/15/20		1,722,000		1,895,411
2.63%, 11/15/20		2,524,000		2,774,626
3.63%, 02/15/21		1,944,000		2,295,438
2.13%, 08/15/21		1,070,000		1,124,837

				100,306,977

Total U.S. Government and Government Agencies
(Cost $112,355,410)				115,139,792



	Number		Value
Security	of Shares		($)

Other Investment Company 0.3% of net assets

Money Market Fund 0.3%
State Street Institutional U.S. Government Money Market Fund		765,992		765,992

Total Other Investment Company
(Cost $765,992)				765,992



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

Short-Term Investments 3.2% of net assets

U.S. Treasury Obligations 3.2%
U.S. Treasury Bills
0.01%, 07/12/12 (e)		3,000,000		2,999,952
0.04%, 07/19/12 (e)		6,000,000		5,999,892

Total Short-Term Investments
(Cost $8,999,860)				8,999,844



End of Investments

At 06/30/12, the tax basis cost of the fund’s investments was $284,493,932 and the unrealized appreciation and depreciation were $5,384,363 and ($242,147), respectively, with a net unrealized appreciation $5,142,216.


(a)		Variable-rate security.
(b)		The effective maturity may be shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or as the result of embedded demand features (puts or calls).
(c)		Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $717,367 or 0.3% of net assets.
(d)		Guaranteed by the Republic of Germany.
(e)		The rate shown is the purchase yield.


GO —		General obligation
RB —		Revenue bond
USD —		Unified school district

36 See financial notes

Schwab U.S. Aggregate Bond ETF

Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of June 30, 2012 (see financial note 2(a) for additional information):


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

Asset-Backed Obligations(a)		$—		$696,010		$—		$696,010
Commercial Mortgage Backed Securities(a)		—		5,314,373		—		5,314,373
Corporate Bonds(a)		—		57,400,683		—		57,400,683
Foreign Securities(a)		—		12,653,231		—		12,653,231
Mortgage-Backed Securities(a)		—		86,097,652		—		86,097,652
Municipal Bonds(a)		—		2,568,571		—		2,568,571
U.S. Government and Government Agencies(a)		—		115,139,792		—		115,139,792
Other Investment Company(a)		765,992		—		—		765,992
Short-Term Investments(a)		—		8,999,844		—		8,999,844

Total		$765,992		$288,870,156		$—		$289,636,148


*		The fund had no Other Financial Instruments.
(a)		As categorized in Portfolio Holdings.

There were no transfers between Level 1, Level 2 and Level 3 for the period ended June 30, 2012.

See financial notes 37

Schwab U.S. Aggregate Bond ETF

Statement of

Assets and Liabilities

As of June 30, 2012; unaudited



Assets

Investments, at value (cost $284,483,268)		$289,636,148
Receivables:
Investments sold		4,891,771
Interest	+	1,750,307

Total assets		296,278,226

Liabilities

Payables:
Investments bought		14,446,462
Investment adviser fees	+	2,378

Total liabilities		14,448,840

Net Assets

Total assets		296,278,226
Total liabilities	−	14,448,840

Net assets		$281,829,386

Net Assets by Source
Capital received from investors		276,495,879
Distributions in excess of net investment income		(54,146	)
Net realized capital gains		234,773
Net unrealized capital gains		5,152,880

Net Asset Value (NAV)

Shares

Net Assets

Outstanding

NAV

$281,829,386

5,400,001

$52.19

38 See financial notes

Schwab U.S. Aggregate Bond ETF

Statement of

Operations

For January 1, 2012 through June 30, 2012; unaudited



Investment Income

Interest		$1,940,449

Expenses

Investment adviser fees		111,252
Interest expense	+	502

Total expenses	−	111,754

Net investment income		1,828,695

Realized and Unrealized Gains (Losses)

Net realized gains on investments		323,042
Net unrealized gains on investments	+	2,616,624

Net realized and unrealized gains		2,939,666

Net increase in net assets resulting from operations		$4,768,361

See financial notes 39

Schwab U.S. Aggregate Bond ETF

Statements of

Changes in Net Assets

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



Operations


1/1/12-6/30/12				*7/13/11-12/31/11**
Net investment income		$1,828,695			$828,728
Net realized gains (losses)		323,042			(17,818	)
Net unrealized gains	+	2,616,624			2,536,256

Net increase in net assets resulting from operations		4,768,361			3,347,166

Distributions to Shareholders

Distributions from net investment income		($1,889,640	)		($892,380	)

Transactions in Fund Shares

1/1/12-6/30/12

7/13/11*-12/31/11

SHARES

VALUE

SHARES

VALUE

Shares sold

2,200,000

$114,146,371

3,200,001

$162,349,508

Shares redeemed

—

Net transactions in fund shares

2,200,000

$114,146,371

3,200,001

$162,349,508

Shares Outstanding and Net Assets

1/1/12-6/30/12

7/13/11*-12/31/11

SHARES

NET ASSETS

SHARES

NET ASSETS

Beginning of period

3,200,001

$164,804,294

—

$—

Total increase

2,200,000

117,025,092

3,200,001

164,804,294

End of period

5,400,001

$281,829,386

3,200,001

$164,804,294

(Distributions in excess of net investment income)/
Net investment income not yet distributed

($54,146

)

$6,799


*		Commencement of operations.

40 See financial notes

Schwab Fixed-Income ETFs

Financial Notes, unaudited

1. Business Structure of the Funds

Each of the funds discussed 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 funds in the trust as of the end of the period, including the funds discussed in this report, which are highlighted:



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

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

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

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

2. Significant Accounting Policies:

The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

(a) Security Valuation:

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

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


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

	•	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 activity, 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. The Board convenes on a regular basis to review fair value determinations made by the fund pursuant to the procedures.

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

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):


	•	Underlying funds: valued at their respective net asset values.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). If 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. The funds do not adjust the quoted prices for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price.

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

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

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

The funds’ policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year.

The levels associated with valuing the funds’ investments for the period ended June 30, 2012 are disclosed in the Portfolio Holdings.

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

Securities Lending: Under the Securities Lending Program, a fund (the “lender”) may make short-term loans of its securities to another party (the “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 government, or letters of credit issued by a bank. Collateral at the individual loan level is required to have a value of at least 102% of the current market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities and is marked to market daily. The cash collateral of securities loaned is invested in money market portfolios registered under Rule 2a-7 of the 1940 Act. Securities lending income, as disclosed in a fund’s Statement of Operations, if applicable, represents the income earned from the

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent which are subject to adjustments pursuant to the securities lending agreement.

If applicable, the value of the securities on loan as of June 30, 2012 and the value of the related collateral are disclosed in the Portfolio Holdings and the Statement of Assets and Liabilities.

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

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

(c) Security Transactions:

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

(d) Investment Income:

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

(e) Expenses:

Expenses that are specific to a fund are charged directly to the fund. The investment adviser will pay the operating expenses of the funds, excluding interest expenses, taxes, any brokerage expenses, and extraordinary or non-routine expenses.

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. 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. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(i) 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

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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 to be remote.

3. Risk Factors:

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

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

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

Interest rates will rise and fall over time. During periods when interest rates are low, the funds’ yields and total returns also may be low. The longer a fund’s duration, the more sensitive to interest rate movements its share price is likely to be.

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

The value of inflation-protected securities, including TIPS, generally will fluctuate in response to changes in “real” interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall. In addition, interest payments on inflation-indexed securities will generally vary up or down along with the rate of inflation.

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

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

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

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

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

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.

Schwab U.S. Aggregate Bond ETF may invest in U.S.-registered, dollar-denominated bonds of non-U.S. corporations, governments, agencies and supra-national entities to the extent such bonds are included in the fund’s index. The fund’s investments in bonds of non-U.S. issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions;

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with bonds issued by non-U.S. corporations and entities in emerging markets.

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

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

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

4. Affiliates and Affiliated Transactions:

Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser pursuant to an Investment Advisory Agreement (“Advisory Agreement”) between CSIM and the trust.

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

Schwab

Short-Term

Intermediate-Term

U.S. Aggregate

U.S. TIPS ETF

U.S. Treasury ETF

Bond ETF

0.14%

0.12%

0.10%

The investment adviser will pay the operating expenses of the funds, excluding interest expenses, taxes, any brokerage expenses, and extraordinary or non-routine expenses.

The funds may engage in direct transactions with certain other Schwab ETFs when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and/or officers. For the period ended June 30, 2012, the funds had no direct security transactions with other Schwab ETFs.

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

5. Other Service Providers:

SEI Investments Distribution Co. (the “Distributor”) 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.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

5. Other Service Providers (continued):

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

6. Board of Trustees:

Trustees may include people who are officers and/or directors of the investment adviser or its affiliate. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these interested persons for their services as trustees.

7. Borrowing from Banks:

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

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

8. Purchases and Sales/Maturities of Investment Securities:

For the period ended June 30, 2012, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:


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

Schwab U.S. TIPS ETF		$39,553,572		$—		$39,553,572
Schwab Short-Term U.S. Treasury ETF		120,741,681		—		120,741,681
Schwab Intermediate-Term U.S. Treasury ETF		57,471,477		—		57,471,477
Schwab U.S. Aggregate Bond ETF		247,706,400		46,926,604		294,633,004


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

Schwab U.S. TIPS ETF		$41,242,545		$—		$41,242,545
Schwab Short-Term U.S. Treasury ETF		101,071,945		—		101,071,945
Schwab Intermediate-Term U.S. Treasury ETF		49,147,904		—		49,147,904
Schwab U.S. Aggregate Bond ETF		191,532,556		13,273,113		204,805,669

9. In-Kind Transactions:

The consideration for the purchase of Creation Units of a fund generally consists of the in-kind deposit of a designated portfolio of 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 may pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

9. In-Kind Transactions (continued):

The in-kind transactions for the period ended June 30, 2012 were as follows:


	In-kind Purchases of Securities		In-kind Sales of Securities

Schwab U.S. TIPS ETF		$145,682,675		$—
Schwab Short-Term U.S. Treasury ETF		68,835,634		19,617,824
Schwab Intermediate-Term U.S. Treasury ETF		97,679,190		27,150,177
Schwab U.S. Aggregate Bond ETF		24,949,080		—

For the period ended June 30, 2012, certain funds realized net capital gains or losses resulting from in-kind redemptions of large blocks of shares or multiples thereof (“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 paid-in-capital at the end of the funds’ tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the period ended June 30, 2012 are disclosed in the funds’ Statements of Operations.

10. Federal Income Taxes

For tax purposes, realized net capital losses incurred after October 31 may be deferred and treated as occurring on the first day of the following year. For the year ended December 31, 2011, the funds had no capital losses deferred and no capital losses utilized.

Capital loss carryforwards may be used to offset future realized capital gains, for federal income tax purposes. As of December 31, 2011, the following funds had capital loss carryforwards available to offset future net capital gains before the expiration date as follows:

Schwab

Short-Term

Intermediate-Term

U.S. Aggregate

Expiration Date

U.S. TIPS ETF

U.S. Treasury ETF

Bond ETF

December 31, 2018

$39

$366

$2,072

$—

No expiration

219,200

13,697

38,432

78,939

Total

$219,239

$14,063

$40,504

$78,939

As of December 31, 2011, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2011, the funds did not incur any interest or penalties.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (“the Act”) was signed by the President. The Act is the first major piece of legislation affecting Regulated Investment Companies (“RICs”) since 1986 and it modernizes several of the federal income and excise tax provisions related to RICs.

Certain of the enacted provisions include:

Post-enactment capital losses may now be carried forward indefinitely, but must retain the character of the original loss. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital, irrespective of the character of the original loss. The Act contains simplification provisions, which are aimed at preventing disqualification of a RIC for “inadvertent” failures of the asset diversification and/or qualifying income tests. Additionally, the Act exempts RICs from the preferential dividend rule, and repeals the 60-day designation requirement for certain types of pay-through income and gains.

Finally, the Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions.

Except for the simplification provisions related to RIC qualification, the Act is effective for taxable years beginning after December 22, 2010. The provisions related to RIC qualification are effective for taxable years for which the extended due date of

Schwab Fixed-Income ETFs

Financial Notes, unaudited (continued)

10. Federal Income Taxes (continued):

the tax return is after December 22, 2010. The funds have adopted the noted provisions of the Act for the period ending June 30, 2012.

11. Subsequent Events:

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

Trustees and Officers

The tables below give information about the trustees and officers for the Schwab Strategic Trust which includes the funds covered in this report. The “Fund Complex” includes the Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 92 funds.

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

Independent Trustees


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

Robert W. Burns 1959 Trustee (Trustee of Schwab Strategic Trust since 2009.)	Retired (January 2009 – present). Consulting Managing Director, PIMCO (investment adviser) (January 2003 – December 2008); Managing Director, PIMCO (February 1999 – December 2002); President and Trustee, PIMCO Funds and PIMCO Variable Insurance Trust (investments) (February 1994 – May 2005).	17	Director, PS Business Parks, Inc. (2005 – present). Trustee, PIMCO Funds (investment company consisting of 84 portfolios) (1997 – 2008). Trustee, PIMCO Variable Insurance Trust (investment company consisting of 16 portfolios) (1997 – 2008). Director and Chairman, PIMCO Strategic Global Government Fund (investment company consisting of one portfolio) (1997 – 2008). Director, PCM Fund, Inc. (investment company consisting of one portfolio) (1997 – 2008).


Mark A. Goldfarb 1952 Trustee (Trustee of Schwab Strategic Trust since 2009.)	Founder and Managing Director, SS&G, Inc. (certified public accountants and advisers) (May 1987 – present).	17	None


Charles A. Ruffel 1956 Trustee (Trustee of Schwab Strategic Trust since 2009.)	Advisor (January 2008 – present) and Chief Executive Officer (January 1998 – January 2008), Asset International, Inc. (publisher of financial services information); Managing Partner and Co-Founder, Kudu Advisors, LLC (financial services) (June 2008 – present).	17	None

Interested Trustees


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

Walter W. Bettinger II²1960 Trustee (Trustee of Schwab Strategic Trust since 2009.)	As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation.	92	None

Officers of the Trust


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

Marie Chandoha 1961 President and Chief Executive Officer (Officer of Schwab Strategic Trust since 2010.)		Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007).


George Pereira 1964 Treasurer and Principal Financial Officer (Officer of Schwab Strategic Trust since 2009.)		Senior Vice President and Chief Financial Officer (Nov. 2004 – present); Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds Inc., Excelsior Tax-Exempt Funds, Inc., and Excelsior Funds Trust (June 2006 – June 2007).


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


Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of Schwab Strategic Trust since 2011.)		Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds and Laudus Funds (June 2011 – present); Senior Managing Director, Global Head of Active Fixed Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies, Loomis, Sayles & Company (April 2006 – Jan. 2008); Managing Director, Head of Market-Based Strategies State Street Research (August 2003 – Jan. 2005).

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

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


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


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

Glossary

ask See “offer.”

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

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

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

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

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

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

Barclays U.S. Treasury 1 − 3yr Index An index that measures the performance of short term government bonds issued by the US Treasury.

Barclays U.S. Treasury 7 − 10yr Index An index that measures the performance of U.S. Treasury securities that have a remaining maturity of between 7 and 10 years.

Barclays U.S. Treasury Long Index An index that measures the performance of U.S. Treasury securities that have a remaining maturity of 10 or more years.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MSCI EAFE (Europe, Australasia, Far East) Index A free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.

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

maturity The maturity of a bond will generally be determined using a portfolio security’s final maturity date (date on which the final principal payment of a bond is scheduled to be paid);

however, for securitized products, such as mortgage-backed securities and certain other asset-backed securities, maturity will be determined on an average life basis (weighted average time to receipt of all principal payments) by the investment adviser. Because pre-payment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted precisely. For securities with embedded demand features, such as puts or calls, either the demand date or the final maturity date will be used depending on interest rates, yields and other market conditions. The average portfolio maturity of a fund is dollar-weighted based upon the market value of a fund’s securities at the time of the calculation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes

Schwab ETFs^tmare designed to be low-cost, diversified investments. Each fund follows broad market indices and provides exposure to specific segments of the market, making each a solid investment option for the core portions of an investor portfolio. The list to the right shows all currently available Schwab ETFs.

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

Proxy Voting Policies, Procedures and Results

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

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

Schwab ETFs

U.S. ETFs

Schwab U.S. Broad Market ETF^tm

Schwab U.S. Large-Cap ETF^tm

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

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

Schwab U.S. Mid-Cap ETF^tm

Schwab U.S. Small-Cap ETF^tm

Schwab U.S. Dividend Equity ETF^tm

Schwab U.S. REIT ETF^tm

International ETFs

Schwab International Equity ETF^tm

Schwab International Small-Cap Equity ETF^tm

Schwab Emerging Markets Equity ETF^tm

Fixed Income ETFs

Schwab U.S. Aggregate Bond ETF^tm

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

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

Schwab U.S. TIPS ETF^tm

Investment Adviser

Charles Schwab Investment Management, Inc.

211 Main Street, San Francisco, CA 94105

Schwab ETFs^tm

1-800-435-4000

This report is not authorized for distribution to prospective investors

unless preceded or accompanied by a current prospectus.

Printed on recycled paper.

MFR62961-01

Item 2: Code of Ethics.

Not applicable to this semi-annual report.

Item 3: Audit Committee Financial Expert.

Not applicable to this semi-annual report.

Item 4: Principal Accountant Fees and Services.

Not applicable to this semi-annual report.

Item 5: Audit Committee of Listed Registrants.

Not applicable to this semi-annual report.

Item 6: Schedule of Investments.

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

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

Not applicable.

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

Not applicable.

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

Not applicable.

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

Not applicable.

Item 11: Controls and Procedures.

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

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

Item 12: Exhibits.

(a)

(1)

Code of ethics – not applicable to this semi-annual report.

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

	(3)		Not applicable.

(b)

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

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

(Registrant ) Schwab Strategic Trust- Fixed Income ETFs


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

Date: August 10, 2012

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


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

Date: August 10, 2012


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

Date: August 10, 2012

Schwab U.S. Large-Cap ETF (SCHX) N-CSRSCertified semi-annual shareholder report (management investment company)