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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-22311

Schwab Strategic Trust

(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

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: August 31

Date of reporting period: February 28, 2015

Item 1:

Report(s) to Shareholders.

Semiannual report dated February 28, 2015, enclosed.

Schwab International Equity ETFs

Schwab International
Equity ETF™

Schwab International Small-Cap
Equity ETF™

Schwab Emerging Markets
Equity ETF™

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This wrapper is not part of the shareholder report.

Schwab International Equity ETFs

Semiannual Report

February 28, 2015

Schwab International
Equity ETF™

Schwab International Small-Cap
Equity ETF™

Schwab Emerging Markets
Equity ETF™

This page is intentionally left blank.

In This Report

Performance at a Glance	2
From the President	3
Fund Management	5
Performance and Fund Facts	6
Schwab International Equity ETF^™	6
Schwab International Small-Cap Equity ETF^™	8
Schwab Emerging Markets Equity ETF^™	10
Fund Expenses	12
Financial Statements and Portfolio Holdings	13
Schwab International Equity ETF^™	13
Schwab International Small-Cap Equity ETF™	21
Schwab Emerging Markets Equity ETF™	29
Financial Notes	37
Investment Advisory Agreement Approval	46
Trustees and Officers	48
Glossary	50

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).

Distributor: SEI Investments Distribution Co. (SIDCO)

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co, Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

Table of Contents

Performance at a Glance

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

Total Returns for the 6 Months Ended February 28, 2015
Schwab International Equity ETF^TM (Ticker Symbol: SCHF)
Market Price Return¹	-2.79%
NAV Return¹	-2.60% *
FTSE Developed ex US Index (Net)**	-2.59%
ETF Category: Morningstar Foreign Large Blend²	-1.67%
Performance Details	pages 6-7

Schwab International Small-Cap Equity ETF^TM (Ticker Symbol: SCHC)
Market Price Return¹	-6.48%
NAV Return¹	-6.15%
FTSE Developed Small Cap ex US Liquid Index (Net)**	-6.44%
ETF Category: Morningstar Foreign Small/Mid Blend²	-3.31%
Performance Details	pages 8-9

Schwab Emerging Markets Equity ETF^TM (Ticker Symbol: SCHE)
Market Price Return¹	-6.61%
NAV Return¹	-6.86%
FTSE Emerging Index (Net)**	-6.77%
ETF Category: Morningstar Diversified Emerging Markets²	-9.60%
Performance Details	pages 10-11

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

For index definitions, please see the Glossary.

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

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

Index ownership — “FTSE” is a trademark of the London Stock Exchange Group companies (“LSEG”) and is used by the Schwab International Equity ETFs under license. The Schwab International Equity ETFs are not sponsored, endorsed, sold or promoted by LSEG and LSEG does not make any representation regarding the advisability of investing in shares of the funds. Fees payable under the license are paid by the Adviser.

*	Total return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the Financial Highlights section of the report is calculated in the same manner, but also takes into account certain adjustments that are necessary under generally accepted accounting principles required in the annual and semi-annual reports.
**	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
¹	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
²	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.

2Schwab International Equity ETFs

Table of Contents

From the President

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

Dear Shareholder,

At Charles Schwab Investment Management, we provide funds that are designed to be part of the foundation of a diversified portfolio. The Schwab International Equity ETFs represent an important part of our product line-up, and are discussed in this semiannual report. The funds track international stock indices constructed by industry-leading index providers, and offer the benefits of ETF investing, including transparency, intraday trading, and potential tax efficiency, at some of the lowest operating expense ratios in the industry.

For the six-month reporting period ended February 28, 2015, although they produced negative returns, the funds closely tracked their respective indices. The depreciation of many international currencies versus the U.S. dollar contributed to these results, with the U.S. dollar’s strength reflecting signs of decoupling between central bank policies in the U.S. and other countries. Lackluster economic growth was another factor that reduced the performance of stocks in developed international markets.

Stocks in emerging markets produced negative overall returns in U.S. dollar terms as well. A strong performance by the U.S. dollar, and falling oil and commodity prices in general, were some of the factors that reduced the relative performance of these securities. Political unrest between Russia and Ukraine also negatively affected performance, driving up market volatility, increasing risk,¹ and reducing returns. Reflecting these conditions, the FTSE Developed ex-U.S. Index returned -2.6% and the FTSE Emerging Index returned -6.8%.²

Asset Class Performance Comparison % returns during the six months ended 2/28/2015

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

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

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

Schwab International Equity ETFs3

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From the President continued

For the six-month reporting period ended February 28, 2015, the funds closely tracked their respective indices, although they produced negative returns.

For more information about the performance, holdings, and portfolio characteristics of the Schwab International Equity ETFs, please continue reading this report. In addition, you can find further details about these ETFs by visiting our new website at www.csimfunds.com, which provides improved functionality, enhanced design, and access to industry insights. We are also happy to hear from you at 1-800-435-4000.

Sincerely,

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

¹	To find out more information, please read “Investments in Russian Securities” in the “Insights” tab on CSIMFunds.com.
²	The total returns cited are for the FTSE Developed ex-U.S. Index (Net) and the FTSE Emerging Index (Net), which are calculated net of foreign withholding taxes.

4Schwab International Equity ETFs

Table of Contents

Fund Management

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

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

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

Schwab International Equity ETFs5

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Schwab International Equity ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab International Equity ETF^TM (11/3/09)
Market Price Return²	-2.79%	-0.08%	7.20%	6.69%
NAV Return²	-2.60%**	0.06%	7.32%	6.71%
FTSE Developed ex US Index (Net)³	-2.59%	-0.06%	7.43%	6.80%
ETF Category: Morningstar Foreign Large Blend⁴	-1.67%	2.55%	7.38%	6.84%

Fund Expense Ratio⁵: 0.08%

For index definitions, please see the Glossary.

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

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

Index ownership — “FTSE” is a trademark of the London Stock Exchange Group companies (“LSEG”) and is used by the fund under license. The Schwab International Equity ETF is not sponsored, endorsed, sold or promoted by LSEG and LSEG does not make any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the Adviser.

*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
**	Total return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the Financial Highlights section of the report is calculated in the same manner, but also takes into account certain adjustments that are necessary under generally accepted accounting principles required in the annual and semi-annual reports.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁵	As stated in the prospectus.

6Schwab International Equity ETFs

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Schwab International Equity ETF

Performance and Fund Facts as of 02/28/15 continued

Statistics
Number of Holdings	1,213
Weighted Average Market Cap (millions)	$58,525
Price/Earnings Ratio (P/E)	19.7
Price/Book Ratio (P/B)	1.7
Portfolio Turnover Rate^1,2	3%

Sector Weightings % of Investments
Financials	25.7%
Industrials	12.8%
Consumer Discretionary	12.7%
Consumer Staples	10.4%
Health Care	10.3%
Materials	8.2%
Energy	6.4%
Information Technology	5.7%
Telecommunication Services	4.2%
Utilities	3.3%
Other	0.3%
Total	100.0%

Top Equity Holdings % of Net Assets³
Nestle S.A. – Reg'd	1.6%
Novartis AG – Reg'd	1.5%
Roche Hoding AG	1.2%
Toyota Motor Corp.	1.2%
HSBC Holdings plc	1.1%
Samsung Electronics Co., Ltd. GDR	0.9%
Royal Dutch Shell plc, A Shares	0.8%
BP plc	0.8%
Bayer AG – Reg'd	0.8%
Commonwealth Bank of Australia	0.7%
Total	10.6%

Country Weightings % of Investments

Japan	20.4%
United Kingdom	18.1%
France	8.0%
Switzerland	7.9%
Germany	7.8%
Canada	7.6%

Australia	6.6%
Republc of Korea	3.6%
Hong Kong	3.2%
Spain	2.8%
Other Countries	14.0%
Total	100.0%

Portfolio holdings may have changed since the report date.

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

Source of Sector Classification: S&P and MSCI.

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

Schwab International Equity ETFs7

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Schwab International Small-Cap Equity ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab International Small-Cap Equity ETF^TM (1/14/10)
Market Price Return²	-6.48%	-5.15%	8.46%	6.88%
NAV Return²	-6.15%	-5.55%	8.65%	6.89%
FTSE Developed Small Cap ex US Liquid Index (Net)³	-6.44%	-5.87%	8.86%	7.06%
ETF Category: Morningstar Foreign Small/Mid Blend⁴	-3.31%	-2.20%	9.41%	7.78%

Fund Expense Ratio⁵: 0.19%

For index definitions, please see the Glossary.

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

Investments in smaller companies typically exhibit higher volatility.

Index ownership — “FTSE” is a trademark of the London Stock Exchange Group companies (“LSEG”) and is used by the fund under license. The Schwab International Small-Cap Equity ETF is not sponsored, endorsed, sold or promoted by LSEG and LSEG does not make any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the Adviser.

*	Inception (1/14/10) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁵	As stated in the prospectus dated December 29, 2014. Effective March 4, 2015, the management fee was reduced to 0.18%. For more information, see financial note 4 or refer to the prospectus supplement dated March 4, 2015.

8Schwab International Equity ETFs

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Schwab International Small-Cap Equity ETF

Performance and Fund Facts as of 02/28/15 continued

Statistics
Number of Holdings	1,519
Weighted Average Market Cap (millions)	$2,277
Price/Earnings Ratio (P/E)	22.3
Price/Book Ratio (P/B)	1.6
Portfolio Turnover Rate^1,2	13%

Sector Weightings % of Investments
Financials	22.2%
Industrials	21.0%
Consumer Discretionary	16.6%
Materials	9.5%
Information Technology	9.1%
Energy	5.8%
Health Care	5.8%
Consumer Staples	5.2%
Utilities	2.3%
Telecommunication Services	1.5%
Other	1.0%
Total	100.0%

Top Equity Holdings % of Net Assets³
Deutsche Annington Immobilien SE	0.7%
Gildan Activewear, Inc.	0.5%
Open Text Corp.	0.4%
Dixons Carphone plc	0.4%
Keyera Corp.	0.3%
Dollarama, Inc.	0.3%
DS Smith plc	0.3%
Inchcape plc	0.3%
Penn Group plc	0.3%
Methanex Corp.	0.3%
Total	3.8%

Country Weightings % of Investments

United Kingdom	20.9%
Japan	17.3%
Canada	15.4%
Germany	5.2%
Australia	4.7%
Republc of Korea	4.5%

France	3.6%
Italy	3.5%
Switzerland	3.4%
Sweden	3.3%
Other Countries	18.2%
Total	100.0%

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

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

Schwab International Equity ETFs9

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Schwab Emerging Markets Equity ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab Emerging Markets Equity ETF^TM (1/14/10)
Market Price Return²	-6.61%	10.50%	3.51%	2.11%
NAV Return²	-6.86%	9.19%	3.61%	1.99%
FTSE Emerging Index (Net)³	-6.77%	9.42%	3.94%	2.31%
ETF Category: Morningstar Diversified Emerging Markets⁴	-9.60%	2.73%	2.00%	0.37%

Fund Expense Ratio⁵: 0.14%

For index definitions, please see the Glossary.

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

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

Index ownership — “FTSE” is a trademark of the London Stock Exchange Group companies (“LSEG”) and is used by the fund under license. The Schwab Emerging Markets Equity ETF is not sponsored, endorsed, sold or promoted by LSEG and LSEG does do not make any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the Adviser.

*	Inception (1/14/10) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁵	As stated in the prospectus.

10Schwab International Equity ETFs

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Schwab Emerging Markets Equity ETF

Performance and Fund Facts as of 02/28/15 continued

Statistics
Number of Holdings	680
Weighted Average Market Cap (millions)	$45,403
Price/Earnings Ratio (P/E)	13.6
Price/Book Ratio (P/B)	1.7
Portfolio Turnover Rate^1,2	5%

Sector Weightings % of Investments
Financials	30.7%
Information Technology	13.7%
Energy	9.2%
Telecommunication Services	8.2%
Consumer Staples	8.2%
Materials	7.8%
Consumer Discretionary	7.7%
Industrials	6.7%
Utilities	3.7%
Health Care	2.5%
Other	1.6%
Total	100.0%

Top Equity Holdings % of Net Assets³
Taiwan Semiconductor Manufacturing Co., Ltd. ADR	3.3%
Tencent Holdings Ltd.	2.4%
China Mobile Ltd.	2.1%
China Construction Bank Corp., H Shares	1.7%
Naspers Ltd., N Shares	1.5%
Industrial & Commercial Bank of China Ltd., H Shares	1.5%
Bank of China Ltd., H Shares	1.3%
Itau Unibanco Holding S.A. ADR	1.1%
Infosys Ltd.	1.0%
Hon Hai Precision Industry, Co., Ltd.	1.0%
Total	16.9%

Country Weightings % of Investments

China	24.4%
Taiwan	14.2%
India	12.2%
Brazil	9.6%
South Africa	9.5%
Mexico	5.3%

Malaysia	4.3%
Russia	3.8%
Thailand	3.0%
Indonesia	2.8%
Other Countries	10.9%
Total	100.0%

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

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

Schwab International Equity ETFs11

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Fund Expenses (Unaudited)

Examples for a $1,000 Investment

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

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning September 1, 2014 and held through February 28, 2015.

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

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

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

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

	Expense Ratio¹ (Annualized)	Beginning Account Value at 9/1/14	Ending Account Value (Net of Expenses) at 2/28/15	Expenses Paid During Period² 9/1/14–2/28/15
Schwab International Equity ETF^TM
Actual Return	0.08%	$1,000.00	$ 973.70	$0.39
Hypothetical 5% Return	0.08%	$1,000.00	$1,024.40	$0.40
Schwab International Small-Cap Equity ETF^TM
Actual Return	0.19%	$1,000.00	$ 938.50	$ 0.91
Hypothetical 5% Return	0.19%	$1,000.00	$1,023.86	$ 0.95
Schwab Emerging Markets Equity ETF^TM
Actual Return	0.14%	$1,000.00	$ 931.40	$ 0.67
Hypothetical 5% Return	0.14%	$1,000.00	$ 1,024.11	$ 0.70

¹	Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights which covers a 12-month period.
²	Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 days of the period, and divided by 365 days of the fiscal year.

12Schwab International Equity ETFs

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Schwab International Equity ETF^™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	10/30/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	32.37	28.32	24.96	25.99	23.82	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.27 ²	0.88	0.66	0.76	0.68	0.38
Net realized and unrealized gains (losses)	(1.16)	3.87	3.42	(1.04)	1.96 ³	(1.52)
Total from investment operations	(0.89)	4.75	4.08	(0.28)	2.64	(1.14)
Less distributions:
Distributions from net investment income	(0.84)	(0.70)	(0.72)	(0.75)	(0.47)	(0.04)
Net asset value at end of period	30.64	32.37	28.32	24.96	25.99	23.82
Total return (%)	(2.63) ⁴	16.90	16.55	(0.75)	11.04	(4.57) ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.08 ⁵	0.09 ⁶	0.09	0.13	0.13	0.14 ^5,7
Net investment income (loss)	1.79 ⁵	3.44	3.03	3.40	3.10	2.94 ⁵
Portfolio turnover rate⁸	3 ⁴	7	9	8	6	6 ⁴
Net assets, end of period ($ x 1,000)	3,238,776	2,654,016	1,464,105	768,666	634,208	285,869

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
⁴	Not annualized.
⁵	Annualized.
⁶	Effective April 18, 2014, the annual operating expense ratio was reduced to 0.08%. The ratio presented for period ended 8/31/14 is a blended ratio.
⁷	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁸	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 13

Table of Contents

Schwab International Equity ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

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

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

Holdings by Category		Cost ($)	Value ($)
99.2%	Common Stock	2,959,974,669	3,211,337,760
0.5%	Preferred Stock	11,819,889	14,761,832
0.0%	Rights	—	6,105
0.2%	Other Investment Companies	7,530,650	7,530,650
0.0%	Short-Term Investments	507,994	507,997
99.9%	Total Investments	2,979,833,202	3,234,144,344
0.1%	Other Assets and Liabilities, Net		4,631,619
100.0%	Net Assets		3,238,775,963

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.2% of net assets
Australia 6.6%
Australia & New Zealand Banking Group Ltd.	577,122	0.5	15,964,572
BHP Billiton Ltd.	660,625	0.5	17,400,558
Commonwealth Bank of Australia	336,560	0.7	24,215,622
National Australia Bank Ltd.	481,992	0.4	14,298,885
Westpac Banking Corp.	645,130	0.6	19,189,071
Other Securities		3.9	121,991,013
		6.6	213,059,721
Austria 0.2%
Other Securities		0.2	5,869,197
Belgium 1.1%
Anheuser-Busch InBev N.V.	163,021	0.6	20,790,323
Other Securities		0.5	15,727,379
		1.1	36,517,702
Canada 7.6%
Royal Bank of Canada	294,582	0.6	18,474,926
The Bank of Nova Scotia	256,851	0.4	13,743,015
The Toronto-Dominion Bank	381,300	0.5	16,734,265

Security	Number of Shares	% of Net Assets	Value ($)
Valeant Pharmaceuticals International, Inc. *	65,031	0.4	12,826,000
Other Securities		5.7	184,345,869
		7.6	246,124,075
Denmark 1.4%
Novo Nordisk A/S, B Shares	412,255	0.6	19,810,449
Other Securities		0.8	26,228,921
		1.4	46,039,370
Finland 0.8%
Other Securities		0.8	25,092,822
France 8.0%
BNP Paribas S.A.	199,550	0.4	11,659,054
Sanofi	235,431	0.7	23,159,035
Total S.A.	418,086	0.7	22,619,611
Other Securities		6.2	200,507,919
		8.0	257,945,619
Germany 7.3%
Allianz SE - Reg'd	95,130	0.5	15,962,698
BASF SE	190,554	0.6	18,306,388
Bayer AG - Reg'd	170,021	0.8	25,182,462
Daimler AG - Reg'd	197,183	0.6	19,133,437
Deutsche Telekom AG - Reg'd	644,339	0.4	12,047,786
SAP SE	189,417	0.4	13,350,956
Siemens AG - Reg'd	164,892	0.6	18,461,814
Other Securities		3.4	114,601,507
		7.3	237,047,048
Greece 0.1%
Other Securities		0.1	1,684,744
Hong Kong 3.2%
AIA Group Ltd.	2,562,081	0.5	15,080,878
Other Securities		2.7	88,534,805
		3.2	103,615,683
Ireland 0.2%
Other Securities		0.2	7,779,996
Israel 0.6%
Other Securities		0.6	18,040,605
Italy 2.1%
Other Securities		2.1	66,689,468
Japan 20.3%
Honda Motor Co., Ltd.	359,880	0.4	11,889,632
Mitsubishi UFJ Financial Group, Inc.	3,074,176	0.6	19,999,052
SoftBank Corp.	183,431	0.3	11,303,996
Toyota Motor Corp.	556,692	1.2	37,547,431
Other Securities		17.8	578,072,457
		20.3	658,812,568

14 See financial notes

Table of Contents

Schwab International Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Netherlands 2.5%
ING Groep N.V. CVA *	768,439	0.4	11,510,933
Unilever N.V. CVA	321,132	0.4	14,011,686
Other Securities		1.7	54,448,559
		2.5	79,971,178
New Zealand 0.2%
Other Securities		0.2	5,243,574
Norway 0.6%
Other Securities		0.6	19,212,995
Portugal 0.1%
Other Securities		0.1	4,210,443
Republic of Korea 3.6%
Samsung Electronics Co., Ltd. GDR	44,996	0.9	27,942,516
Other Securities		2.7	88,659,839
		3.6	116,602,355
Singapore 1.2%
Other Securities		1.2	39,750,519
Spain 2.8%
Banco Bilbao Vizcaya Argentaria S.A.	1,195,467	0.4	12,041,238
Banco Santander S.A.	2,737,784	0.6	20,061,761
Telefonica S.A.	847,871	0.4	13,214,342
Other Securities		1.4	46,948,277
		2.8	92,265,618
Sweden 2.7%
Other Securities		2.7	87,763,261
Switzerland 7.9%
Nestle S.A. - Reg'd	649,605	1.6	50,981,658
Novartis AG - Reg'd	480,980	1.5	49,442,512
Roche Holding AG	144,060	1.2	39,327,772
UBS Group AG *	777,555	0.4	13,738,445
Other Securities		3.2	102,893,973
		7.9	256,384,360
United Kingdom 18.1%
AstraZeneca plc	265,452	0.6	18,335,199
Barclays plc	3,296,129	0.4	13,086,062
BP plc	3,729,145	0.8	25,821,201
British American Tobacco plc	380,602	0.7	22,245,044
Diageo plc	528,500	0.5	15,808,070
GlaxoSmithKline plc	984,458	0.7	23,452,082
HSBC Holdings plc	3,888,531	1.1	34,691,878
Lloyds Banking Group plc *	11,407,144	0.4	13,926,587
Prudential plc	544,465	0.4	13,710,870
Reckitt Benckiser Group plc	134,292	0.4	12,161,536
Rio Tinto plc	259,709	0.4	12,811,222
Royal Dutch Shell plc, A Shares	795,007	0.8	26,021,815

Security	Number of Shares	% of Net Assets	Value ($)
Royal Dutch Shell plc, B Shares	521,211	0.5	17,764,841
Vodafone Group plc	5,471,110	0.6	18,973,130
Other Securities		9.8	316,805,302
		18.1	585,614,839
Total Common Stock
(Cost $2,959,974,669)			3,211,337,760

Preferred Stock 0.5% of net assets
Germany 0.5%
Other Securities		0.5	14,761,832
Total Preferred Stock
(Cost $11,819,889)			14,761,832

Rights 0.0% of net assets
Australia 0.0%
Other Securities		0.0	—
Republic of Korea 0.0%
Other Securities		0.0	6,105
Total Rights
(Cost $—)			6,105

Other Investment Companies 0.2% of net assets
United States 0.2%
Money Market Fund 0.1%
Other Securities		0.1	1,950,720
Securities Lending Collateral 0.1%
Other Securities		0.1	5,579,930
Total Other Investment Companies
(Cost $7,530,650)			7,530,650
Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investments 0.0% of net assets
U.S. Treasury Obligations 0.0%
Other Securities		0.0	507,997
Total Short-Term Investment
(Cost $507,994)			507,997

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $2,980,733,655 and the unrealized appreciation and depreciation were $404,406,040 and ($150,995,351), respectively, with a net unrealized appreciation of $253,410,689.

See financial notes 15

Table of Contents

Schwab International Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $5,295,981. Non-Cash Collateral pledged to the fund for securities on loan amounted to $23,985.
(b)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(c)	Illiquid security. At the period end, the value of these amounted to $1,346,390 or 0.0% of net assets.
(d)	The rate shown is the 7-day yield.
(e)	The rate shown is the purchase yield.
(f)	All or a portion of this security is held as collateral for open futures contracts.
(g)	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 $351,460 or 0.0% of net assets.

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

In addition to the above, the fund held the following at 02/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 03/20/15	47	4,406,955	62,302

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$3,211,337,760	$—	$—	$3,211,337,760
Preferred Stock¹	14,761,832	—	—	14,761,832
Rights ¹
Republic of Korea¹	—	—	6,105	6,105
Other Investment Companies¹	7,530,650	—	—	7,530,650
Short-Term Investments¹	—	507,997	—	507,997
Total	$3,233,630,242	$507,997	$6,105	$3,234,144,344
Other Financial Instruments
Futures Contracts²	$62,302	$—	$—	$62,302

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

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

Investments in Securities	Balance as of August 31, 2014	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of February 28, 2015
Common Stock
Hong Kong	$331,291	$10,065	($10,519)	$—	($217,284)	$—	($113,553)	$—
Australia	—	(55,236)	55,236	—	—	—	—	—
Rights
Republic of Korea	—	—	6,105	—	—	—	—	6,105
Singapore	85,210	—	(85,210)	—	—	—	—	—
Total	$416,501	($45,171)	($34,388)	$—	($217,284)	$—	($113,553)	$6,105

16 See financial notes

Table of Contents

Schwab International Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

All net realized and change in unrealized gains (losses) in the tables above are reflected on the accompanying Statement of Operations. The change in net unrealized appreciation (depreciation) for Level 3 investments held by the fund at February 28, 2015 was $6,105.

The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were transfers out of Level 3 to Level 1. Transfers from Level 3 to Level 1 were the result of the availability of current and reliable market-based data provided by third-party pricing services or other valuation techniques, which utilize significant observable inputs. There were no transfers between any other Levels for the period ended February 28, 2015.

See financial notes 17

Table of Contents

Schwab International Equity ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $2,974,253,272) including securities on loan of $5,295,981		$3,228,564,414
Collateral invested for securities on loan, at value (cost $5,579,930)	+	5,579,930
Total investments, at value (cost $2,979,833,202)		3,234,144,344
Foreign currency, at value (cost $1,249,135)		1,248,657
Receivables:
Investments sold		98,448
Fund shares sold		67,268,707
Dividends		5,442,263
Foreign tax reclaims		1,422,662
Income from securities on loan	+	22,915
Total assets		3,309,647,996
Liabilities
Collateral held for securities on loan		5,579,930
Payables:
Investments bought		65,247,139
Investment adviser fees		41,439
Variation margin on futures contracts	+	3,525
Total liabilities		70,872,033
Net Assets
Total assets		3,309,647,996
Total liabilities	–	70,872,033
Net assets		$3,238,775,963
Net Assets by Source
Capital received from investors		3,046,286,888
Net investment income not yet distributed		712,141
Net realized capital losses		(62,476,705)
Net unrealized capital appreciation		254,253,639

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$3,238,775,963		105,700,000		$30.64

18 See financial notes

Table of Contents

Schwab International Equity ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $1,978,282)		$25,529,944
Interest		347
Securities on loan	+	59,155
Total investment income		25,589,446
Expenses
Investment adviser fees		1,095,293
Total expenses	–	1,095,293
Net investment income		24,494,153
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(13,103,838)
Net realized losses on futures contracts		(283,435)
Net realized losses on foreign currency transactions	+	(1,094,970)
Net realized losses		(14,482,243)
Net change in unrealized appreciation (depreciation) on investments		(53,200,909)
Net change in unrealized appreciation (depreciation) on futures contracts		16,638
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(72,862)
Net change in unrealized appreciation (depreciation)	+	(53,257,133)
Net realized and unrealized losses		(67,739,376)
Decrease in net assets resulting from operations		($43,245,223)

See financial notes 19

Table of Contents

Schwab International Equity ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$24,494,153	$71,574,846
Net realized losses		(14,482,243)	(9,108,631)
Net change in unrealized appreciation (depreciation)	+	(53,257,133)	217,599,236
Increase (Decrease) in net assets resulting from operations		(43,245,223)	280,065,451
Distributions to Shareholders
Distributions from net investment income		($79,192,160)	($41,541,200)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		23,700,000	$707,197,354	30,300,000	$951,386,985
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		23,700,000	$707,197,354	30,300,000	$951,386,985
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		82,000,000	$2,654,015,992	51,700,000	$1,464,104,756
Total increase	+	23,700,000	584,759,971	30,300,000	1,189,911,236
End of period		105,700,000	$3,238,775,963	82,000,000	$2,654,015,992
Net investment income not yet distributed			$712,141		$55,410,148

20 See financial notes

Table of Contents

Schwab International Small-Cap Equity ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	1/13/10 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	33.32	28.61	24.94	27.48	23.54	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.25 ²	0.71	0.76	0.67	0.72	0.21
Net realized and unrealized gains (losses)	(2.34)	4.90	3.72	(2.39)	3.88	(1.67)
Total from investment operations	(2.09)	5.61	4.48	(1.72)	4.60	(1.46)
Less distributions:
Distributions from net investment income	(0.75)	(0.90)	(0.81)	(0.82)	(0.66)	–
Net asset value at end of period	30.48	33.32	28.61	24.94	27.48	23.54
Total return (%)	(6.15) ³	19.84	18.23	(5.91)	19.52	(5.84) ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.19 ⁴	0.19	0.21 ⁵	0.35	0.35	0.35 ⁴
Net investment income (loss)	1.72 ⁴	2.21	2.86	2.65	2.46	2.18 ⁴
Portfolio turnover rate⁶	13 ³	16	20	25	18	7 ³
Net assets, end of period ($ x 1,000)	429,740	403,229	280,422	159,610	162,139	58,848

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	Not annualized.
⁴	Annualized.
⁵	Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/13 is a blended ratio.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 21

Table of Contents

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.1%	Common Stock	386,988,557	425,833,169
0.3%	Preferred Stock	1,107,757	1,390,803
0.0%	Rights	—	26,734
1.2%	Other Investment Companies	4,278,392	4,951,585
100.6%	Total Investments	392,374,706	432,202,291
(0.6)%	Other Assets and Liabilities, Net		(2,461,973)
100.0%	Net Assets		429,740,318

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.1% of net assets
Australia 4.7%
Other Securities		4.7	20,333,320
Austria 0.8%
Other Securities		0.8	3,614,632
Belgium 1.7%
Other Securities		1.7	7,364,393
Canada 15.5%
AltaGas Ltd.	34,514	0.3	1,243,571
CCL Industries, Inc., Class B	8,434	0.2	934,282
Constellation Software, Inc.	3,956	0.3	1,333,821
Dollarama, Inc.	30,008	0.3	1,502,503
Empire Co., Ltd., A Shares	13,179	0.2	974,612
Gildan Activewear, Inc.	32,233	0.5	1,962,660
H&R Real Estate Investment Trust	65,403	0.3	1,266,524
Industrial Alliance Insurance & Financial Services, Inc.	27,706	0.2	941,913
Keyera Corp.	22,429	0.3	1,504,008
Methanex Corp.	24,930	0.3	1,357,459
Onex Corp.	22,996	0.3	1,299,666
Open Text Corp.	31,912	0.4	1,861,076
Peyto Exploration & Development Corp.	34,514	0.2	966,331
Progressive Waste Solutions Ltd.	31,833	0.2	890,248
Vermilion Energy, Inc.	26,014	0.3	1,171,271

Security	Number of Shares	% of Net Assets	Value ($)
West Fraser Timber Co., Ltd.	16,283	0.2	887,535
Other Securities		11.0	46,571,756
		15.5	66,669,236
Denmark 1.4%
GN Store Nord A/S	41,533	0.2	967,009
Other Securities		1.2	5,035,526
		1.4	6,002,535
Finland 1.8%
Elisa Oyj	42,214	0.3	1,151,062
Other Securities		1.5	6,562,638
		1.8	7,713,700
France 3.6%
Ingenico	11,172	0.3	1,247,217
Teleperformance	15,989	0.3	1,237,988
Other Securities		3.0	13,025,128
		3.6	15,510,333
Germany 5.0%
Deutsche Annington Immobilien SE	77,650	0.7	3,002,638
LEG Immobilien AG *	12,838	0.2	1,058,237
Other Securities		4.1	17,341,873
		5.0	21,402,748
Greece 0.4%
Other Securities		0.4	1,899,758
Hong Kong 2.0%
Other Securities		2.0	8,577,985
Ireland 0.7%
Other Securities		0.7	3,014,926
Israel 0.4%
Other Securities		0.4	1,567,767
Italy 3.4%
Banca Popolare dell'Emilia Romagna SC *	114,591	0.2	947,273
Banca Popolare di Milano Scarl *	1,199,980	0.3	1,129,258
Other Securities		2.9	12,517,194
		3.4	14,593,725
Japan 17.4%
Other Securities		17.4	74,709,847
Netherlands 1.7%
Other Securities		1.7	7,411,710
New Zealand 0.8%
Other Securities		0.8	3,240,393
Norway 1.1%
Other Securities		1.1	4,839,158

22 See financial notes

Table of Contents

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Portugal 0.4%
Other Securities		0.4	1,877,405
Republic of Korea 4.6%
Other Securities		4.6	19,603,473
Singapore 2.0%
Other Securities		2.0	8,585,764
Spain 2.2%
Other Securities		2.2	9,351,079
Sweden 3.3%
NCC AB, B Shares	25,547	0.2	895,290
Other Securities		3.1	13,263,798
		3.3	14,159,088
Switzerland 3.3%
Other Securities		3.3	14,003,451
United Kingdom 20.9%
Amlin plc	138,623	0.3	1,134,337
Bellway plc	34,233	0.2	1,053,312
Booker Group plc	368,818	0.2	915,373
BTG plc *	94,542	0.3	1,108,207
Capital & Counties Properties plc	201,938	0.3	1,262,343
Catlin Group Ltd.	95,627	0.2	1,011,567
Close Brothers Group plc	45,094	0.3	1,143,584
Derwent London plc	22,619	0.3	1,171,005
Dixons Carphone plc	236,720	0.4	1,611,833
DS Smith plc	249,238	0.3	1,414,352
Essentra plc	71,032	0.3	1,117,487
Great Portland Estates plc	91,266	0.3	1,129,044
Halma plc	94,972	0.2	1,045,734
Henderson Group plc	237,215	0.2	959,371
Hiscox Ltd.	88,513	0.3	1,081,992
Howden Joinery Group plc	163,640	0.3	1,173,153
IG Group Holdings plc	101,395	0.3	1,145,446
Inchcape plc	121,590	0.3	1,382,982
Man Group plc	404,213	0.3	1,196,869
Pennon Group plc	103,353	0.3	1,358,432
Rightmove plc	24,961	0.3	1,168,428
Spectris plc	27,976	0.2	941,206
Spirax-Sarco Engineering plc	19,888	0.2	987,205
UBM plc	108,758	0.2	911,805
Other Securities		14.4	62,361,676
		20.9	89,786,743
Total Common Stock
(Cost $386,988,557)			425,833,169

Preferred Stock 0.3% of net assets
Germany 0.2%
Other Securities		0.2	988,723
Italy 0.1%
Other Securities		0.1	358,348

Security	Number of Shares	% of Net Assets	Value ($)
Republic of Korea 0.0%
Other Securities		0.0	43,732
Total Preferred Stock
(Cost $1,107,757)			1,390,803

Rights 0.0% of net assets
Australia 0.0%
Other Securities		0.0	14,397
Finland 0.0%
Other Securities		0.0	10,989
New Zealand 0.0%
Other Securities		0.0	747
United Kingdom 0.0%
Other Securities		0.0	601
Total Rights
(Cost $—)			26,734

Other Investment Companies 1.2% of net assets
Australia 0.0%
Other Securities		0.0	89,613
Switzerland 0.2%
BB Biotech AG - Reg'd *	2,987	0.2	897,991
United Kingdom 0.1%
Other Securities		0.1	348,729
United States 0.9%
Equity Fund 0.1%
Other Securities		0.1	250,500
Money Market Fund 0.0%
Other Securities		0.0	29,114
Securities Lending Collateral 0.8%
Other Securities		0.8	3,335,638
		0.9	3,615,252
Total Other Investment Companies
(Cost $4,278,392)			4,951,585

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $392,464,841 and the unrealized appreciation and depreciation were $74,430,946 and ($34,693,496), respectively, with a net unrealized appreciation of $39,737,450.

See financial notes 23

Table of Contents

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

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

*	Non-income producing security.
(a)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(b)	Illiquid security. At the period end, the value of these amounted to $376,225 or 0.1% of net assets.
(c)	All or a portion of this security is on loan. Securities on loan were valued at $3,325,874. Non-Cash Collateral pledged to the fund for securities on loan amounted to $220,914.
(d)	The rate shown is the 7-day yield.
(e)	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 $1,549,493 or 0.4% of net assets.
(f)	Securities are traded on separate exchanges for the same entity.

ETF –	Exchange Traded Fund
Reg'd –	Registered
REIT –	Real Estate Investment Trust

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$322,212,017	$—	$—	$322,212,017
Australia	20,332,099	—	1,221	20,333,320
Hong Kong	8,289,165	—	288,820	8,577,985
Japan	74,490,033	—	219,814	74,709,847
Preferred Stock¹	1,390,803	—	—	1,390,803
Rights ¹	—	—	26,734	26,734
Other Investment Companies¹	4,951,585	—	—	4,951,585
Total	$431,665,702	$—	$536,589	$432,202,291

¹	As categorized in the complete schedule of portfolio holdings.

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

Investments in Securities	Balance as of August 31, 2014	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of February 28, 2015
Common Stock
Australia	$93,288	($82,313)	$8,539	$11,240	($29,533)	$—	$—	$1,221
Hong Kong	107,869	—	(28,135)	316,955	—	—	(107,869)	288,820
Japan	—	—	(1,680)	77,223	—	144,271	—	219,814
Spain	27,964	—	(27,964)	—	—	—	—	—
Rights
Australia	—	—	14,397	—	—	—	—	14,397
Finland	—	—	10,989	—	—	—	—	10,989
New Zealand	—	—	747	—	—	—	—	747
United Kingdom	—	—	601	—	—	—	—	601
Total	$229,121	($82,313)	($22,506)	$405,418	($29,533)	$144,271	($107,869)	$536,589

24 See financial notes

Table of Contents

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

All net realized and change in unrealized gains (losses) in the table above are reflected on the accompanying Statement of Operations. The change in net unrealized appreciation (depreciation) for Level 3 Investments held by the fund at February 28, 2015 was ($31,385).

The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were transfers between Level 1 and Level 3 for the period ended February 28, 2015. Transfers from Level 1 to Level 3 were the result of fair valued securities for which no quoted value was available. Transfers from Level 3 to Level 1 were the result of the availability of current and reliable market-based data provided by third-party pricing services or other valuation techniques which utilize significant observable inputs. There were no transfers between any other Levels for the period ended February 28, 2015.

See financial notes 25

Table of Contents

Schwab International Small-Cap Equity ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $389,039,068) including securities on loan of $3,325,874		$428,866,653
Collateral invested for securities on loan, at value (cost $3,335,638)	+	3,335,638
Total investments, at value (cost $392,374,706)		432,202,291
Foreign currency, at value (cost $278,338)		278,619
Receivables:
Investments sold		900,496
Dividends		485,492
Foreign tax reclaims		74,176
Income from securities on loan	+	8,641
Total assets		433,949,715
Liabilities
Collateral held for securities on loan		3,335,638
Payables:
Investments bought		860,452
Investment adviser fees	+	13,307
Total liabilities		4,209,397
Net Assets
Total assets		433,949,715
Total liabilities	–	4,209,397
Net assets		$429,740,318
Net Assets by Source
Capital received from investors		422,311,294
Distributions in excess of net investment income		(4,676,969)
Net realized capital losses		(27,713,083)
Net unrealized capital appreciation		39,819,076

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$429,740,318		14,100,000		$30.48

26 See financial notes

Table of Contents

Schwab International Small-Cap Equity ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $309,593)		$3,601,120
Securities on loan	+	41,950
Total investment income		3,643,070
Expenses
Investment adviser fees		362,984
Total expenses	–	362,984
Net investment income		3,280,086
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(9,914,300)
Net realized gains on in-kind redemptions		5,271,166
Net realized gains on futures contracts		12,107
Net realized losses on foreign currency transactions	+	(122,010)
Net realized losses		(4,753,037)
Net change in unrealized appreciation (depreciation) on investments		(21,519,288)
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(3,447)
Net change in unrealized appreciation (depreciation)	+	(21,522,735)
Net realized and unrealized losses		(26,275,772)
Decrease in net assets resulting from operations		($22,995,686)

See financial notes 27

Table of Contents

Schwab International Small-Cap Equity ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$3,280,086	$7,886,966
Net realized gains (losses)		(4,753,037)	8,930,216
Net change in unrealized appreciation (depreciation)	+	(21,522,735)	41,051,758
Increase (Decrease) in net assets resulting from operations		(22,995,686)	57,868,940
Distributions to Shareholders
Distributions from net investment income		($9,800,112)	($9,580,780)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		2,600,000	$78,613,457	3,400,000	$110,086,847
Shares redeemed	+	(600,000)	(19,306,797)	(1,100,000)	(35,567,269)
Net transactions in fund shares		2,000,000	$59,306,660	2,300,000	$74,519,578
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		12,100,000	$403,229,456	9,800,000	$280,421,718
Total increase	+	2,000,000	26,510,862	2,300,000	122,807,738
End of period		14,100,000	$429,740,318	12,100,000	$403,229,456
Distributions in excess of net investment income/ Net investment income not yet distributed			($4,676,969)		$1,843,057

28 See financial notes

Table of Contents

Schwab Emerging Markets Equity ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	1/13/10 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	27.34	22.94	23.65	26.10	24.30	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.16 ²	0.63	0.50	0.63	0.62	0.27
Net realized and unrealized gains (losses)	(2.07)	4.40	(0.65)	(2.51)	1.41 ³	(0.97)
Total from investment operations	(1.91)	5.03	(0.15)	(1.88)	2.03	(0.70)
Less distributions:
Distributions from net investment income	(0.68)	(0.63)	(0.56)	(0.57)	(0.23)	–
Net asset value at end of period	24.75	27.34	22.94	23.65	26.10	24.30
Total return (%)	(6.86) ⁴	22.31	(0.89)	(7.04)	8.31	(2.80) ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.14 ⁵	0.14	0.15	0.25	0.25	0.30 ^5,6
Net investment income (loss)	1.31 ⁵	2.89	2.63	2.96	2.78	2.94 ⁵
Portfolio turnover rate⁷	5 ⁴	9	15	9	9	23 ⁴
Net assets, end of period ($ x 1,000)	1,232,345	1,273,840	811,915	515,595	396,661	148,222

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
⁴	Not annualized.
⁵	Annualized.
⁶	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁷	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 29

Table of Contents

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
97.3%	Common Stock	1,141,480,135	1,199,239,163
2.5%	Preferred Stock	44,834,495	31,100,824
0.0%	Rights	—	25,486
1.6%	Other Investment Companies	19,685,305	19,685,305
0.0%	Short-Term Investment	99,999	100,000
101.4%	Total Investments	1,206,099,934	1,250,150,778
(1.4)%	Other Assets and Liabilities, Net		(17,805,606)
100.0%	Net Assets		1,232,345,172

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 97.3% of net assets
Brazil 7.3%
Ambev S.A. ADR	1,701,582	0.9	10,975,204
BRF S.A. ADR	320,214	0.6	7,268,858
Itau Unibanco Holding S.A. ADR	1,014,924	1.1	12,970,729
Vale S.A. ADR	741,522	0.4	4,797,648
Other Securities		4.3	54,371,345
		7.3	90,383,784
Chile 1.5%
Other Securities		1.5	17,924,295
China 24.8%
Bank of China Ltd., H Shares	26,892,000	1.3	15,465,037
China Construction Bank Corp., H Shares	25,589,128	1.7	21,281,792
China Life Insurance Co., Ltd., H Shares	2,791,680	1.0	11,968,791
China Mobile Ltd.	1,859,228	2.1	25,267,732
China Overseas Land & Investment Ltd.	1,475,392	0.4	4,499,161
China Petroleum & Chemical Corp., H Shares	9,034,256	0.6	7,571,793

Security	Number of Shares	% of Net Assets	Value ($)
China Telecom Corp., Ltd., H Shares	6,972,000	0.4	4,512,883
CNOOC Ltd.	5,976,000	0.7	8,583,982
Industrial & Commercial Bank of China Ltd., H Shares	25,856,040	1.5	18,869,980
PetroChina Co., Ltd., H Shares	7,253,024	0.7	8,416,947
Ping An Insurance Group Co. of China Ltd., H Shares	823,448	0.7	9,157,739
Tencent Holdings Ltd.	1,674,808	2.4	29,347,930
Other Securities		11.3	140,448,150
		24.8	305,391,917
Colombia 0.6%
Other Securities		0.6	7,711,546
Czech Republic 0.3%
Other Securities		0.3	3,144,486
Egypt 0.3%
Other Securities		0.3	3,633,629
Hungary 0.2%
Other Securities		0.2	3,016,868
India 12.3%
Axis Bank Ltd.	486,375	0.4	4,463,192
HDFC Bank Ltd.	368,004	0.5	6,275,806
Housing Development Finance Corp., Ltd.	556,944	1.0	12,141,839
ICICI Bank Ltd.	1,015,920	0.4	5,510,674
Infosys Ltd.	341,145	1.0	12,506,258
Reliance Industries Ltd.	577,078	0.6	7,988,336
Tata Consultancy Services Ltd.	155,376	0.5	6,693,072
Other Securities		7.9	96,507,075
		12.3	152,086,252
Indonesia 2.8%
PT Bank Central Asia Tbk	4,731,000	0.4	5,161,091
PT Telekomunikasi Indonesia (Persero) Tbk	20,467,800	0.4	4,647,814
Other Securities		2.0	25,336,143
		2.8	35,145,048
Malaysia 4.4%
Public Bank Berhad	1,035,654	0.4	5,264,479
Other Securities		4.0	48,469,302
		4.4	53,733,781
Mexico 5.4%
America Movil S.A.B. de C.V., Series L	10,787,060	0.9	11,543,135
Fomento Economico Mexicano S.A.B. de C.V. *	772,300	0.6	7,372,283
Grupo Financiero Banorte S.A.B. de C.V., O Shares	857,952	0.4	4,658,716

30 See financial notes

Table of Contents

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Grupo Televisa S.A.B., Series CPO *	971,616	0.5	6,602,856
Wal-Mart de Mexico S.A.B. de C.V., Series V	2,191,200	0.4	5,362,226
Other Securities		2.6	30,936,056
		5.4	66,475,272
Pakistan 0.0%
Other Securities		0.0	219,648
Peru 0.3%
Other Securities		0.3	3,760,525
Philippines 1.9%
Other Securities		1.9	23,174,179
Poland 1.7%
Other Securities		1.7	20,734,035
Russia 3.8%
Gazprom OAO ADR	2,114,116	0.9	10,549,439
Lukoil OAO ADR	185,256	0.7	8,966,390
Magnit PJSC GDR - Reg'd	110,952	0.4	5,289,082
Other Securities		1.8	21,680,741
		3.8	46,485,652
South Africa 9.6%
FirstRand Ltd.	1,072,284	0.4	4,922,955
MTN Group Ltd.	646,404	0.9	11,462,535
Naspers Ltd., N Shares	129,399	1.5	19,013,425
Sasol Ltd.	191,782	0.6	6,973,472
Standard Bank Group Ltd.	447,204	0.5	5,852,835
Steinhoff International Holdings Ltd.	862,189	0.4	4,977,212
Other Securities		5.3	65,618,816
		9.6	118,821,250
Taiwan 14.4%
Delta Electronics, Inc.	704,700	0.4	4,555,138
Formosa Plastics Corp.	2,045,560	0.4	5,047,951
Fubon Financial Holding Co., Ltd.	2,616,114	0.4	4,664,938
Hon Hai Precision Industry Co., Ltd.	4,453,304	1.0	12,350,988
MediaTek, Inc.	527,713	0.6	7,948,042
Nan Ya Plastics Corp.	2,205,816	0.4	4,790,213
Taiwan Semiconductor Manufacturing Co., Ltd. ADR	1,672,403	3.3	41,024,046
Other Securities		7.9	96,832,503
		14.4	177,213,819
Thailand 3.0%
Other Securities		3.0	37,045,226
Turkey 1.7%
Other Securities		1.7	21,279,228

Security	Number of Shares	% of Net Assets	Value ($)
United Arab Emirates 1.0%
Other Securities		1.0	11,858,723
Total Common Stock
(Cost $1,141,480,135)			1,199,239,163

Preferred Stock 2.5% of net assets
Brazil 2.4%
Banco Bradesco S.A.	764,233	0.8	10,049,543
Petroleo Brasileiro S.A.	1,546,046	0.4	5,174,484
Other Securities		1.2	14,449,542
		2.4	29,673,569
Colombia 0.1%
Other Securities		0.1	869,131
Russia 0.0%
Other Securities		0.0	558,124
Total Preferred Stock
(Cost $44,834,495)			31,100,824

Rights 0.0% of net assets
Malaysia 0.0%
Other Securities		0.0	25,486
Total Rights
(Cost $—)			25,486

Other Investment Companies 1.6% of net assets
United States 1.6%
Money Market Fund 0.4%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (e)	4,643,977	0.4	4,643,977
Securities Lending Collateral 1.2%
Other Securities		1.2	15,041,328
Total Other Investment Companies
(Cost $19,685,305)			19,685,305

See financial notes 31

Table of Contents

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investment 0.0% of net assets
U.S. Treasury Obligation 0.0%
Other Securities		0.0	100,000
Total Short-Term Investment
(Cost $99,999)			100,000

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $1,214,045,167 and the unrealized appreciation and depreciation were $182,230,174 and ($146,124,563), respectively, with a net unrealized appreciation of $36,105,611.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $14,541,654. Non-Cash Collateral pledged to the fund for securities on loan amounted to $644,595.
(b)	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 $141,372 or 0.0% of net assets.
(c)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(d)	Illiquid security. At the period end, the value of these amounted to $1,372,463 or 0.1% of net assets.
(e)	The rate shown is the 7-day yield.
(f)	All or a portion of this security is held as collateral for open futures contracts.
(g)	The rate shown is the purchase yield.
(h)	Securities are traded on separate exchanges for the same entity.

ADR –	American Depositary Receipt
GDR –	Global Depositary Receipt
NVDR –	Non-Voting Depositary Receipt
Reg'd –	Registered

In addition to the above, the fund held the following at 2/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 03/20/15	20	991,900	33,772

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$893,627,598	$—	$—	$893,627,598
China	304,380,474	—	1,011,443	305,391,917
Pakistan	—	—	219,648	219,648
Preferred Stock¹	31,100,824	—	—	31,100,824
Rights ¹	25,486	—	—	25,486
Other Investment Companies¹	19,685,305	—	—	19,685,305
Short-Term Investment¹	—	100,000	—	100,000
Total	$1,248,819,687	$100,000	$1,231,091	$1,250,150,778
Other Financial Instruments
Futures Contracts²	$33,772	$—	$—	$33,772

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

32 See financial notes

Table of Contents

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

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

Investments in Securities	Balance as of August 31, 2014	Realized Gains (Losses)	Change in Unrealized Appreciation (Depreciation)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of February 28, 2015
Common Stock
China	$—	$3,508	$361,386	$112,725	($12,030)	$545,854	$—	$1,011,443
Pakistan	239,616	—	(19,968)	—	—	—	—	219,648
Warrants
Thailand	—	7,413	—	—	(7,413)	—	—	—
Total	$239,616	$10,921	$341,418	$112,725	($19,443)	$545,854	$—	$1,231,091

The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were transfers out of Level 1 to Level 3 due to the result of fair valued securities for which no quoted value was available. There were no transfers between any other Levels for the period ended February 28, 2015.

See financial notes 33

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Schwab Emerging Markets Equity ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $1,191,058,606) including securities on loan of $14,541,654		$1,235,109,450
Collateral invested for securities on loan, at value (cost $15,041,328)	+	15,041,328
Total investments, at value (cost $1,206,099,934)		1,250,150,778
Cash		14,506
Foreign currency, at value (cost $3,100,443)		3,099,041
Receivables:
Investments sold		419
Fund shares sold		15,029,474
Dividends		1,042,029
Income from securities on loan		40,800
Foreign tax reclaims	+	17,268
Total assets		1,269,394,315
Liabilities
Collateral held for securities on loan		15,041,328
Payables:
Investments bought		20,185,685
Investment adviser fees		27,805
Foreign capital gains tax		1,793,425
Variation margin on futures contracts	+	900
Total liabilities		37,049,143
Net Assets
Total assets		1,269,394,315
Total liabilities	–	37,049,143
Net assets		$1,232,345,172
Net Assets by Source
Capital received from investors		1,286,929,386
Distributions in excess of net investment income		(2,852,370)
Net realized capital losses		(94,002,245)
Net unrealized capital appreciation		42,270,401

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$1,232,345,172		49,800,000		$24.75

34 See financial notes

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Schwab Emerging Markets Equity ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $836,178)		$8,412,993
Interest		7
Securities on loan	+	198,882
Total investment income		8,611,882
Expenses
Investment adviser fees		828,718
Total expenses	–	828,718
Net investment income		7,783,164
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(17,604,574)
Net realized gains on in-kind redemptions		3,243,692
Net realized losses on futures contracts		(108,129)
Net realized losses on foreign currency transactions	+	(449,995)
Net realized losses		(14,919,006)
Net change in unrealized appreciation (depreciation) on investments (net of foreign capital gains tax of ($1,040,265))		(82,544,573)
Net change in unrealized appreciation (depreciation) on futures contracts		35,401
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	(21,480)
Net change in unrealized appreciation (depreciation)	+	(82,530,652)
Net realized and unrealized losses		(97,449,658)
Decrease in net assets resulting from operations		($89,666,494)

See financial notes 35

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Schwab Emerging Markets Equity ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$7,783,164	$28,297,970
Net realized losses		(14,919,006)	(22,626,739)
Net change in unrealized appreciation (depreciation)	+	(82,530,652)	194,891,120
Increase (Decrease) in net assets resulting from operations		(89,666,494)	200,562,351
Distributions to Shareholders
Distributions from net investment income		($32,001,840)	($23,217,480)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		4,100,000	$101,864,142	11,200,000	$284,579,691
Shares redeemed	+	(900,000)	(21,690,338)	—	—
Net transactions in fund shares		3,200,000	$80,173,804	11,200,000	$284,579,691
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		46,600,000	$1,273,839,702	35,400,000	$811,915,140
Total increase or decrease	+	3,200,000	(41,494,530)	11,200,000	461,924,562
End of period		49,800,000	$1,232,345,172	46,600,000	$1,273,839,702
Distributions in excess of net investment income/ Net investment income not yet distributed			($2,852,370)		$21,366,306

36 See financial notes

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Schwab International Equity ETFs

Financial Notes, unaudited

1. Business Structure of the Funds:

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

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

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

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

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

2. Significant Accounting Policies:

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

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

(a) Security Valuation:

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

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

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

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

• Securities for which no quoted value is available: The Board has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, a fund may fair value a security when it is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Pricing Committee considers a number of factors, including unobservable market inputs when arriving at fair value. The Pricing Committee may employ techniques such as the review of related or comparable assets or liabilities, related market activities, recent transactions, market multiples, book values, transactional back-testing, disposition analysis and other relevant information. The Pricing Committee regularly reviews these inputs and assumptions to calibrate the valuations. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board convenes on a regular basis to review fair value determinations made by the funds pursuant to the valuation procedures.

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

• Futures contracts (“futures”): Futures are valued at their settlement prices as of the close of their exchanges.

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

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

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

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

• Level 1—quoted prices in active markets for identical securities—Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities, ETFs and futures contracts. Investments in mutual funds are valued daily at their NAVs, and investments in ETFs are valued daily at the last reported sale price or the official closing price, which are classified as Level 1 prices, without consideration to the classification level of the specific investments held by an underlying fund.

• Level 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

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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 levels associated with valuing the funds' investments as of February 28, 2015 are disclosed in the Portfolio Holdings.

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

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

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

The value of the securities on loan and the related collateral as of February 28, 2015, if any, are disclosed in each fund's Portfolio Holdings. The value of the securities on loan and the investments of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.

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

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

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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

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

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

(d) Investment Income:

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

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

(e) Expenses:

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

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

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

(h) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies. 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) Foreign Taxes:

The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of February 28, 2015, if any, are reflected in each fund's Statement of Assets and Liabilities.

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(j) Indemnification:

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

(k) New Accounting Pronouncements:

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

3. Risk Factors:

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

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

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

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

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

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

Foreign Investment Risk. A fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may negatively impact the value or liquidity of a fund's investments, and could impair the fund's ability to meet its investment objective or invest in accordance with its investment strategy. These risks may be heightened in connection with investments in emerging markets. Foreign securities also include ADRs, GDRs, and EDRs, which are receipts issued by U.S. and foreign banks that represent shares of foreign-based corporations. Investment in ADRs, GDRs and EDRs may be less liquid than the underlying shares in their primary trading market and GDRs, many of which are

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

issued by companies in emerging markets, may be more volatile. To the extent a fund's investments in a single country or a limited number of countries represent a larger percentage of the fund's assets, the fund's performance may be adversely affected by the economic, political and social conditions in those countries and the fund may be subject to increased price volatility.

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

Sampling Index Tracking Risk. Each fund uses statistical sampling techniques, and as a result, a fund may not fully replicate the index and may hold securities not included in the index. As a result, a fund will be 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. Because each fund uses a sampling approach, it may not track the return of the index as well as it would if a fund purchased all of the securities in its benchmark index.

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

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

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

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

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

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

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

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

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions:

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

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

Schwab International Equity ETF		Schwab International Small-Cap Equity ETF		Schwab Emerging Markets Equity ETF
0.08%		0.19%*		0.14%

*	Effective March 4, 2015, the advisory fee has been reduced to 0.18%.

Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab funds as of February 28, 2015, as applicable:

	Underlying Funds
	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Schwab VIT Balanced Portfolio	0.2%	0.2%	0.2%
Schwab VIT Balanced with Growth Portfolio	0.5%	0.7%	0.5%
Schwab VIT Growth Portfolio	0.7%	1.3%	0.7%

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

5. Other Service Providers:

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

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

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

6. Board of Trustees:

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

7. Borrowing from Banks:

The 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 in the funds' Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

8. Derivatives:

Certain funds entered into equity index futures contracts during the report period. The funds invested in futures to equitize available cash. The fair value and variation margin for futures contracts held at February 28, 2015 are presented on the Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds’ accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Contract Values	Number of Contracts
Schwab International Equity ETF	$3,907,694	43
Schwab International Small-Cap Equity ETF	964,988*	10*
Schwab Emerging Markets Equity ETF	1,398,888	28

*	During the period, the fund did not hold futures contracts at any month-end. The average value and number of contracts were calculated by aggregating the highest daily values held each month during the period.

9. Purchases and Sales/Maturities of Investment Securities:

For the period ended February 28, 2015, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales/Maturities of Securities
Schwab International Equity ETF	$115,530,808	$76,245,947
Schwab International Small-Cap Equity ETF	57,874,450	51,420,234
Schwab Emerging Markets Equity ETF	63,617,112	54,846,021

10. In-Kind Transactions:

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

The in-kind transactions for the period ended February 28, 2015 were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab International Equity ETF	$611,423,469	$—
Schwab International Small-Cap Equity ETF	65,167,047	19,037,251
Schwab Emerging Markets Equity ETF	59,761,541	12,579,607

For the period ended February 28, 2015, the funds realized net capital gains or losses resulting from in-kind redemptions of Creation Units. Because such gains or losses are not taxable to the funds and are not distributed to existing fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to capital received from investors at the end of the funds' tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the period ended February 28, 2015 are disclosed in the funds' Statements of Operations.

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Schwab International Equity ETFs

Financial Notes, unaudited (continued)

11. Federal Income Taxes

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of August 31, 2014, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:

Expiration Date	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
August 31, 2019	$2,345,874	$215,545	$1,091,404
No expiration*	35,975,895	17,727,427	51,588,021
Total	$38,321,769	$17,942,972	$52,679,425

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

For tax purposes, realized net capital losses and late-year ordinary losses incurred after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended August 31, 2014, the funds had capital losses deferred as follows:

	Schwab International Equity ETF		Schwab International Small-Cap Equity ETF		Schwab Emerging Markets Equity ETF
Deferred capital losses	$8,731,491		$4,981,697		$20,785,006

As of August 31, 2014, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds' financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended August 31, 2014, the funds did not incur any interest or penalties.

12. Other:

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

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

13. Subsequent Events:

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

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Investment Advisory Agreement Approval

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

The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds a meeting each year that is dedicated, in part, to considering whether to renew the investment advisory agreement between Schwab Strategic Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab International Equity ETF, Schwab International Small-Cap Equity ETF and Schwab Emerging Markets Equity ETF (the “Funds’’), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting, the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.

The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at a meeting held on September 3, 2014 and approved the renewal of the Agreement with respect to the Funds for an additional one year term. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at this meeting and at prior meetings, including:

1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;

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

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered Schwab’s wide range of products, services, and channel alternatives such as free advice, investment research tools and Internet access and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.

Fund Performance. The Board considered each Fund’s performance in determining whether to renew the Agreement with respect to the Fund. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other exchange-traded funds and appropriate indices/benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full

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deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.

Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s operating expense ratio, in comparison to those of other comparable exchange-traded funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees also considered fees charged by CSIM to mutual funds that it manages. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.

Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability with respect to the Funds under the Agreement and other service agreements were

reasonable and justified in light of the quality of all services rendered to the Funds by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.

Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to the Funds’ shareholders by way of the relatively low advisory fee and unitary fee structure of the Funds. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.

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

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Trustees and Officers

The tables below give information about the trustees and officers for the Schwab Strategic Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 95 funds.

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

Independent Trustees
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee since 2009)	Retired/Private Investor (January 2009 – present); Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds.	21	Director, PS Business Parks, Inc. (2005 – 2012).
Stephen Timothy Kochis 1946 Trustee (Trustee since 2012)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (January 2008 – April 2012).	21	None
Charles A. Ruffel 1956 Trustee (Trustee since 2009)	Managing Partner and Co-Founder, Kudu Advisors, LLC (financial services) (May 2009 – present); Director, Asset International, Inc. (publisher of financial services information) (Jan. 2009 – Nov. 2014).	95	None

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

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Marie Chandoha 1961 President and Chief Executive Officer (Officer since 2010)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (January 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010)..

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Officers of the Trust (continued)
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
George Pereira 1964 Treasurer and Principal Financial Officer (Officer since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer since 2011)	Senior Vice President and Chief Investment Officer – Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer since 2011)	Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008).
David Lekich 1964 Chief Legal Officer and Secretary (Officer since 2011)	Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer since 2009)	Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (March 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).

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

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Glossary

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

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

ask See “offer.”

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

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

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

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

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

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

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

cap, capitalization See “market cap.”

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

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

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

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

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

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

FTSE Developed ex-US Index An index comprised of approximately 85% large-cap stocks and 15% mid-cap stocks from more than 20 developed markets, excluding the US. This index defines the large- and mid-cap stocks as approximately the top 90% of the eligible universe. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes.

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

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

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

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

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

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

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

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

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

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and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.

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

MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

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

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

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

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

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

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

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

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

Russell 2000 Index An index that measures the performance of the small-cap segment of the U.S. equity universe. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

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 benchmark index and may hold securities not included in the index. A fund that utilizes a sampling approach may not track the return of the index.

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

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

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

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

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

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Notes

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

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

Proxy Voting Policies, Procedures and Results

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

Schwab ETFs™

U.S. ETFs

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

International ETFs

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

Fixed Income ETFs

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

Fundamental Index* ETFs

Schwab Fundamental U.S. Broad Market Index ETF
Schwab Fundamental U.S. Large Company Index ETF
Schwab Fundamental U.S. Small Company Index ETF
Schwab Fundamental International Large Company Index ETF
Schwab Fundamental International Small Company Index ETF
Schwab Fundamental Emerging Markets Large Company Index ETF

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

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Investment Adviser

Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105

Schwab ETFs™

1-800-435-4000

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
© 2015 Charles Schwab Investment Management, Inc. All rights reserved.
Printed on recycled paper.

MFR54790-05
00137724

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Semiannual report dated February 28, 2015, enclosed.

Schwab U.S. Equity ETFs

Schwab U.S. Broad Market ETF™

Schwab U.S. Large-Cap ETF™

Schwab U.S. Large-Cap
Growth ETF™

Schwab U.S. Large-Cap
Value ETF™

Schwab U.S. Mid-Cap ETF™

Schwab U.S. Small-Cap ETF™

Schwab U.S. Dividend
Equity ETF™

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February 28, 2015

Schwab U.S. Broad Market ETF™

Schwab U.S. Large-Cap ETF™

Schwab U.S. Large-Cap
Growth ETF™

Schwab U.S. Large-Cap
Value ETF™

Schwab U.S. Mid-Cap ETF™

Schwab U.S. Small-Cap ETF™

Schwab U.S. Dividend
Equity ETF™

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In This Report

Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).

Distributor: SEI Investments Distribution Co. (SIDCO)

The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.

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Performance at a Glance

Total Returns for the 6 Months Ended February 28, 2015
Schwab U.S. Broad Market ETF^TM (Ticker Symbol: SCHB)
Market Price Return¹	5.97%
NAV Return¹	6.01%
Dow Jones U.S. Broad Stock Market Index	5.96%
ETF Category: Morningstar Large Blend²	4.99%
Performance Details	page 6

Schwab U.S. Large-Cap ETF^TM (Ticker Symbol: SCHX)
Market Price Return¹	6.00%
NAV Return¹	6.06%
Dow Jones U.S. Large-Cap Total Stock Market Index	6.06%
ETF Category: Morningstar Large Blend²	4.99%
Performance Details	page 7

Schwab U.S. Large-Cap Growth ETF^TM (Ticker Symbol: SCHG)
Market Price Return¹	9.26%
NAV Return¹	9.24%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	9.28%
ETF Category: Morningstar Large Growth²	8.83%
Performance Details	page 8

Schwab U.S. Large-Cap Value ETF^TM (Ticker Symbol: SCHV)
Market Price Return¹	3.17%
NAV Return¹	3.08%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	3.11%
ETF Category: Morningstar Large Value²	4.63%
Performance Details	page 9

Total Returns for the 6 Months Ended February 28, 2015
Schwab U.S. Mid-Cap ETF^TM (Ticker Symbol: SCHM)
Market Price Return¹	6.25%
NAV Return¹	6.23%
Dow Jones U.S. Mid-Cap Total Stock Market Index	6.22%
ETF Category: Morningstar Mid-Cap Blend²	4.58%
Performance Details	page 10

Schwab U.S. Small-Cap ETF^TM (Ticker Symbol: SCHA)
Market Price Return¹	5.39%
NAV Return¹	5.24%
Dow Jones U.S. Small-Cap Total Stock Market Index	5.18%
ETF Category: Morningstar Small Blend²	4.89%
Performance Details	page 11

Schwab U.S. Dividend Equity ETF^TM (Ticker Symbol: SCHD)
Market Price Return¹	5.85%
NAV Return¹	5.80%
Dow Jones U.S. Dividend 100^TM Index	5.85%
ETF Category: Morningstar Large Value²	4.63%
Performance Details	page 12

For index definitions, please see the Glossary.

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

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

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

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

Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.

2Schwab U.S. Equity ETFs

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From the President

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

Dear Shareholder,

At Charles Schwab Investment Management, we provide funds that are designed to be part of the foundation of a diversified portfolio. The Schwab U.S. Equity ETFs represent an important part of our product line-up, and are discussed in this semiannual report. The funds track U.S. stock indices constructed by industry-leading index providers, and offer the benefits of ETF investing, including transparency, intraday trading, and potential tax efficiency, at some of the lowest operating expense ratios in the industry.

For the six-month reporting period ended February 28, 2015, the funds generated positive returns that closely tracked their respective indices. Stable economic conditions in the U.S. compared with overseas, favorable earnings reports by select companies, and signs of a decoupling of interest rate policies between the Federal Reserve and other central banks supported the U.S. stock market’s performance. This paved the way for many U.S. stock indices to repeatedly reach record highs, as equities overcame increased market volatility, lackluster global growth, and geopolitical turmoil.

The Dow Jones U.S. Broad Stock Market Index returned approximately 6.0% for the reporting period. Large-cap stocks generally outperformed small-cap stocks, and growth stocks generally outperformed value stocks. In addition, individual sectors of the market had divergent performance. For example, the Health Care and Consumer Staples sectors performed well, while the Materials sector underperformed by comparison. In addition, the Energy sector generated losses as crude oil prices, and commodity prices in general, fell sharply, adding to market volatility.

Asset Class Performance Comparison % returns during the six months ended 2/28/2015

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

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

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

Schwab U.S. Equity ETFs3

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From the President continued

For the six-month reporting period ended February 28, 2015, the funds generated positive returns that closely tracked their respective indices.

For more information about the performance, holdings, and portfolio characteristics of the Schwab U.S. Equity ETFs, please continue reading this report. In addition, you can find further details about these ETFs by visiting our new website at www.csimfunds.com, which provides improved functionality, enhanced design, and access to industry insights. We are also happy to hear from you at 1-800-435-4000.

Sincerely,

4Schwab U.S. Equity ETFs

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Fund Management

Schwab U.S. Equity ETFs5

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Schwab U.S. Broad Market ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab U.S. Broad Market ETF^TM (11/3/09)
Market Price Return²	5.97%	14.23%	16.38%	16.97%
NAV Return²	6.01%	14.28%	16.40%	16.98%
Dow Jones U.S. Broad Stock Market Index	5.96%	14.13%	16.40%	17.00%
ETF Category: Morningstar Large Blend³	4.99%	13.11%	15.29%	15.83%

Fund Expense Ratio⁴: 0.04%

Statistics
Number of Holdings	2,000
Weighted Average Market Cap (millions)	$112,787
Price/Earnings Ratio (P/E)	22.6
Price/Book Ratio (P/B)	2.8
Portfolio Turnover Rate^5,6	2%

Sector Weightings % of Investments
Information Technology	19.2%
Financials	17.2%
Health Care	14.1%
Comsumer Discretionary	13.2%
Industrials	11.1%
Comsumer Staples	8.5%
Energy	7.4%
Materials	3.6%
Utilities	3.0%
Telecommunication Services	2.1%
Other	0.6%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Apple, Inc.	3.3%
Exxon Mobil Corp.	1.6%
Microsoft Corp.	1.6%
Johnson & Johnson	1.2%
Berkshire Hathaway, Inc., Class B	1.2%
General Electric Co.	1.1%
Wells Fargo & Co.	1.1%
The Procter & Gamble Co.	1.0%
JPMorgan Chase & Co.	1.0%
Pfizer, Inc.	0.9%
Total	14.0%

For index definitions, please see the Glossary.

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

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

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

6Schwab U.S. Equity ETFs

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Schwab U.S. Large-Cap ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab U.S. Large-Cap ETF^TM (11/3/09)
Market Price Return²	6.00%	15.02%	16.13%	16.62%
NAV Return²	6.06%	15.11%	16.18%	16.64%
Dow Jones U.S. Large-Cap Total Stock Market Index	6.06%	15.12%	16.28%	16.74%
ETF Category: Morningstar Large Blend³	4.99%	13.11%	15.29%	15.83%

Fund Expense Ratio⁴: 0.04%

Statistics
Number of Holdings	750
Weighted Average Market Cap (millions)	$127,176
Price/Earnings Ratio (P/E)	21.4
Price/Book Ratio (P/B)	2.8
Portfolio Turnover Rate^5,6	2%

Sector Weightings % of Investments
Information Technology	19.6%
Financials	16.4%
Health Care	14.4%
Comsumer Discretionary	13.1%
Industrials	10.6%
Comsumer Staples	9.2%
Energy	7.8%
Materials	3.4%
Utilities	3.1%
Telecommunication Services	2.3%
Other	0.1%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Apple, Inc.	3.7%
Exxon Mobil Corp.	1.8%
Microsoft Corp.	1.8%
Johnson & Johnson	1.4%
Berkshire Hathaway, Inc., Class B	1.3%
General Electric Co.	1.3%
Wells Fargo & Co.	1.3%
The Procter & Gamble Co.	1.1%
JPMorgan Chase & Co.	1.1%
Pfizer, Inc.	1.1%
Total	15.9%

For index definitions, please see the Glossary.

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

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Large-Cap Total Stock Market Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Large-Cap ETF is not sponsored, endorsed, soldor promoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs7

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Schwab U.S. Large-Cap Growth ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab U.S. Large-Cap Growth ETF^TM (12/11/09)
Market Price Return²	9.26%	18.68%	17.37%	17.06%
NAV Return²	9.24%	18.69%	17.38%	17.05%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	9.28%	18.76%	17.52%	17.19%
ETF Category: Morningstar Large Growth³	8.83%	16.21%	17.97%	17.50%

Fund Expense Ratio⁴: 0.07%

Statistics
Number of Holdings	402
Weighted Average Market Cap (millions)	$134,028
Price/Earnings Ratio (P/E)	25.4
Price/Book Ratio (P/B)	4.1
Portfolio Turnover Rate^5,6	9%

Sector Weightings % of Investments
Information Technology	26.4%
Consumer Discretionary	18.6%
Health Care	16.6%
Industrials	12.0%
Financials	10.7%
Consumer Staples	6.2%
Energy	5.5%
Materials	3.3%
Telecommunication Services	0.4%
Utilities	0.1%
Other	0.2%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Apple, Inc.	7.5%
Berkshire Hathaway, Inc., Class B	2.7%
Facebook, Inc., Class A	1.6%
The Walt Disney Co.	1.6%
Google, Inc., Class A	1.6%
Google, Inc., Class C	1.6%
Gilead Sciences, Inc.	1.5%
Comcast Corp., Class A	1.5%
The Home Depot, Inc.	1.5%
PepsiCo, Inc.	1.5%
Total	22.6%

For index definitions, please see the Glossary.

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

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Large-Cap Growth Total Stock Market Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Large-Cap Growth ETF is not sponsored, endorsed,sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (12/11/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

8Schwab U.S. Equity ETFs

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Schwab U.S. Large-Cap Value ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab U.S. Large-Cap Value ETF^TM (12/11/09)
Market Price Return²	3.17%	11.74%	14.84%	14.28%
NAV Return²	3.08%	11.70%	14.89%	14.27%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	3.11%	11.78%	15.07%	14.45%
ETF Category: Morningstar Large Value³	4.63%	14.42%	15.47%	15.00%

Fund Expense Ratio⁴: 0.07%

Statistics
Number of Holdings	350
Weighted Average Market Cap (millions)	$120,383
Price/Earnings Ratio (P/E)	18.6
Price/Book Ratio (P/B)	2.2
Portfolio Turnover Rate^5,6	14%

Sector Weightings % of Investments
Financials	21.9%
Information Technology	12.9%
Health Care	12.3%
Consumer Staples	12.0%
Energy	10.1%
Industrials	9.3%
Consumer Discretionary	7.7%
Utilities	5.9%
Telecommunication Services	4.1%
Materials	3.5%
Other	0.3%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Exxon Mobil Corp.	3.6%
Microsoft Corp.	3.5%
Johnson & Johnson	2.8%
General Electric Co.	2.5%
Wells Fargo & Co.	2.5%
The Procter & Gamble Co.	2.2%
JPMorgan Chase & Co.	2.2%
Pfizer, Inc.	2.1%
Verizon Communications, Inc.	2.0%
Chevron Corp.	1.9%
Total	25.3%

For index definitions, please see the Glossary.

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

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Large-Cap Value Total Stock Market Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Large-Cap Value ETF is not sponsored, endorsed, sold orpromoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (12/11/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs9

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Schwab U.S. Mid-Cap ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	3 Years	Since Inception*
Fund: Schwab U.S. Mid-Cap ETF^TM (1/13/11)
Market Price Return²	6.25%	11.82%	18.57%	15.32%
NAV Return²	6.23%	11.83%	18.56%	15.31%
Dow Jones U.S. Mid-Cap Total Stock Market Index	6.22%	11.80%	18.61%	15.39%
ETF Category: Morningstar Mid-Cap Blend³	4.58%	10.84%	17.79%	14.52%

Fund Expense Ratio⁴: 0.07%

Statistics
Number of Holdings	496
Weighted Average Market Cap (millions)	$7,100
Price/Earnings Ratio (P/E)	25.3
Price/Book Ratio (P/B)	2.6
Portfolio Turnover Rate^5,6	9%

Sector Weightings % of Investments
Financials	22.1%
Industrials	16.8%
Consumer Discretionary	15.5%
Information Technology	13.5%
Health Care	10.4%
Materials	7.3%
Utilities	5.0%
Energy	4.4%
Consumer Staples	2.5%
Telecommunication Services	1.2%
Other	1.3%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Skyworks Solutions, Inc.	0.6%
BioMarin Pharmaceutical, Inc.	0.6%
Level 3 Communications, Inc.	0.6%
Hospira, Inc.	0.6%
Endo International plc	0.5%
Pharmacyclics, Inc.	0.5%
Incyte Corp.	0.5%
Hanesbrands, Inc.	0.5%
SL Green Realty Corp.	0.5%
Akamai Technologies, Inc.	0.5%
Total	5.4%

For index definitions, please see the Glossary.

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

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Mid-Cap Total Stock Market Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Mid-Cap ETF is not sponsored, endorsed, sold orpromoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (1/13/11) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

10Schwab U.S. Equity ETFs

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Schwab U.S. Small-Cap ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception*
Fund: Schwab U.S. Small-Cap ETF^TM (11/3/09)
Market Price Return²	5.39%	7.15%	17.40%	19.05%
NAV Return²	5.24%	7.07%	17.39%	19.05%
Dow Jones U.S. Small-Cap Total Stock Market Index	5.18%	6.92%	17.42%	19.12%
ETF Category: Morningstar Small Blend³	4.89%	6.95%	16.36%	17.79%

Fund Expense Ratio⁴: 0.08%

Statistics
Number of Holdings	1,744
Weighted Average Market Cap (millions)	$3,042
Price/Earnings Ratio (P/E)	38.9
Price/Book Ratio (P/B)	2.2
Portfolio Turnover Rate^5,6	7%

Sector Weightings % of Investments
Financials	23.4%
Information Technology	16.7%
Industrials	14.7%
Consumer Discretionary	13.7%
Health Care	12.2%
Materials	5.1%
Energy	4.0%
Consumer Staples	3.1%
Utilities	3.0%
Telecommunication Services	0.5%
Other	3.6%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Alkermes plc	0.4%
Qorvo, Inc.	0.4%
Palo Alto Networks, Inc.	0.4%
Alaska Air Group, Inc.	0.3%
Isis Pharmaceuticals, Inc.	0.3%
Splunk, Inc.	0.3%
E*TRADE Financial Corp.	0.3%
Centene Corp.	0.3%
United Therapeutics Corp.	0.3%
Alnylam Pharmaceuticals, Inc.	0.3%
Total	3.3%

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

For index definitions, please see the Glossary.

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

Investments in smaller companies typically exhibit higher volatility.

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Small-Cap Total Stock Market Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Small-Cap ETF is not sponsored, endorsed, sold orpromoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs11

Table of Contents

Schwab U.S. Dividend Equity ETF^™

Performance and Fund Facts as of 02/28/15

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	3 Years	Since Inception*
Fund: Schwab U.S. Dividend Equity ETF^TM (10/20/11)
Market Price Return²	5.85%	14.72%	17.26%	18.74%
NAV Return²	5.80%	14.66%	17.26%	18.73%
Dow Jones U.S. Dividend 100 Index	5.85%	14.80%	17.41%	18.91%
ETF Category: Morningstar Large Value³	4.63%	14.42%	16.60%	18.81%

Fund Expense Ratio⁴: 0.07%

Statistics
Number of Holdings	102
Weighted Average Market Cap (millions)	$147,645
Price/Earnings Ratio (P/E)	19.5
Price/Book Ratio (P/B)	3.8
Portfolio Turnover Rate^5,6	4%

Sector Weightings % of Investments
Consumer Staples	22.4%
Industrials	17.1%
Information Technology	12.4%
Energy	11.7%
Health Care	11.6%
Consumer Discretionary	9.4%
Telecommunication Services	8.7%
Materials	4.3%
Financials	1.8%
Utilities	0.5%
Total	0.1%
Total	100.0%

Top Equity Holdings % of Net Assets⁷
Pfizer, Inc.	4.7%
Verizon Communications, Inc.	4.6%
Chevron Corp.	4.4%
Exxon Mobil Corp.	4.3%
Johnson & Johnson	4.2%
The Procter & Gamble Co.	4.1%
Microsoft Corp.	4.1%
AT&T, Inc.	4.1%
The Coca-Cola Co.	3.9%
Intel Corp.	3.7%
Total	42.1%

For index definitions, please see the Glossary.

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

Index ownership — Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The Dow Jones U.S. Dividend 100 Index is a product of S&P Dow Jones Indices LLC and/or its affiliates, and has been licensed for use by Charles Schwab Investment Management, Inc. The Schwab U.S. Dividend Equity ETF is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates make any representation regarding the advisability of investing in such product.

Portfolio holdings may have changed since the report date.

Source of Sector Classification: S&P and MSCI.

*	Inception (10/20/11) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share net asset value (“NAV”) is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus.
⁵	Not annualized.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
⁷	This list is not a recommendation of any security by the investment adviser.

12Schwab U.S. Equity ETFs

Table of Contents

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

	Expense Ratio¹ (Annualized)	Beginning Account Value at 9/1/14	Ending Account Value (Net of Expenses) at 2/28/15	Expenses Paid During Period² 9/1/14–2/28/15
Schwab U.S. Broad Market ETF^TM
Actual Return	0.04%	$1,000.00	$ 1,060.10	$ 0.20
Hypothetical 5% Return	0.04%	$1,000.00	$ 1,024.60	$ 0.20
Schwab U.S. Large-Cap ETF^TM
Actual Return	0.04%	$1,000.00	$1,060.60	$ 0.20
Hypothetical 5% Return	0.04%	$1,000.00	$ 1,024.60	$ 0.20
Schwab U.S. Large-Cap Growth ETF^TM
Actual Return	0.07%	$1,000.00	$ 1,092.40	$0.36
Hypothetical 5% Return	0.07%	$1,000.00	$ 1,024.45	$ 0.35
Schwab U.S. Large-Cap Value ETF^TM
Actual Return	0.07%	$1,000.00	$ 1,030.80	$ 0.35
Hypothetical 5% Return	0.07%	$1,000.00	$ 1,024.45	$ 0.35
Schwab U.S. Mid-Cap ETF^TM
Actual Return	0.07%	$1,000.00	$ 1,062.30	$0.36
Hypothetical 5% Return	0.07%	$1,000.00	$ 1,024.45	$ 0.35
Schwab U.S. Small-Cap ETF^TM
Actual Return	0.08%	$1,000.00	$ 1,052.40	$ 0.41
Hypothetical 5% Return	0.08%	$1,000.00	$ 1,024.40	$0.40
Schwab U.S. Dividend Equity ETF^TM
Actual Return	0.07%	$1,000.00	$ 1,058.00	$0.36
Hypothetical 5% Return	0.07%	$1,000.00	$ 1,024.45	$ 0.35

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

Schwab U.S. Equity ETFs13

Table of Contents

Schwab U.S. Broad Market ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	10/30/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	48.75	39.79	33.84	29.47	25.11	25.00
Income (loss) from investment operations:
Net investment income (loss)²	0.53	0.85	0.80	0.65	0.56	0.42
Net realized and unrealized gains (losses)	2.38	8.93	5.92	4.32	4.32	(0.05)
Total from investment operations	2.91	9.78	6.72	4.97	4.88	0.37
Less distributions:
Distributions from net investment income	(0.43)	(0.82)	(0.77)	(0.60)	(0.52)	(0.26)
Net asset value at end of period	51.23	48.75	39.79	33.84	29.47	25.11
Total return (%)	6.01 ³	24.77	20.12	17.07	19.41	1.42 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.04 ⁴	0.04	0.04	0.06	0.06	0.07 ^4,5
Net investment income (loss)	2.19 ⁴	1.90	2.15	2.06	1.83	1.92 ⁴
Portfolio turnover rate⁶	2 ³	4	4	5	3	2 ³
Net assets, end of period ($ x 1,000)	4,889,455	3,654,037	2,182,671	1,072,825	742,651	272,490

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	Not annualized.
⁴	Annualized.
⁵	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

14 See financial notes

Table of Contents

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.8%	Common Stock	3,830,817,561	4,879,176,093
0.0%	Rights	21,491	21,491
0.6%	Other Investment Companies	29,642,715	29,642,715
0.0%	Short-Term Investments	384,998	384,998
100.4%	Total Investments	3,860,866,765	4,909,225,297
(0.4)%	Other Assets and Liabilities, Net		(19,769,825)
100.0%	Net Assets		4,889,455,472

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets
Automobiles & Components 1.2%
Other Securities		1.2	60,915,176
Banks 5.7%
Bank of America Corp.	2,218,376	0.7	35,072,525
Citigroup, Inc.	636,381	0.7	33,359,092
JPMorgan Chase & Co.	789,545	1.0	48,383,318
Wells Fargo & Co.	993,046	1.1	54,408,990
Other Securities		2.2	106,101,211
		5.7	277,325,136
Capital Goods 7.7%
3M Co.	135,855	0.5	22,911,946
General Electric Co.	2,116,143	1.1	54,998,557
The Boeing Co.	141,266	0.4	21,309,976
United Technologies Corp.	177,861	0.4	21,683,035
Other Securities		5.3	257,013,207
		7.7	377,916,721
Commercial & Professional Services 1.1%
Other Securities		1.1	52,051,387
Consumer Durables & Apparel 1.6%
Other Securities		1.6	78,877,256

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 2.2%
McDonald's Corp.	204,922	0.4	20,266,786
Other Securities		1.8	86,152,393
		2.2	106,419,179
Diversified Financials 4.7%
Berkshire Hathaway, Inc., Class B *	384,647	1.2	56,700,814
The Charles Schwab Corp. (b)	244,999	0.1	7,188,271
Other Securities		3.4	164,020,997
		4.7	227,910,082
Energy 7.4%
Chevron Corp.	399,485	0.9	42,617,060
Exxon Mobil Corp.	892,843	1.6	79,052,319
Schlumberger Ltd.	273,233	0.5	22,995,289
Other Securities		4.4	216,998,782
		7.4	361,663,450
Food & Staples Retailing 2.1%
CVS Health Corp.	242,773	0.5	25,216,832
Wal-Mart Stores, Inc.	334,188	0.6	28,048,399
Other Securities		1.0	51,452,289
		2.1	104,717,520
Food, Beverage & Tobacco 4.6%
Altria Group, Inc.	417,527	0.5	23,502,595
PepsiCo, Inc.	314,568	0.6	31,135,941
Philip Morris International, Inc.	327,950	0.6	27,206,732
The Coca-Cola Co.	832,824	0.7	36,061,279
Other Securities		2.2	107,406,366
		4.6	225,312,913
Health Care Equipment & Services 5.0%
Medtronic plc	295,904	0.5	22,959,191
UnitedHealth Group, Inc.	203,554	0.5	23,129,841
Other Securities		4.0	198,346,426
		5.0	244,435,458
Household & Personal Products 1.7%
The Procter & Gamble Co.	568,650	1.0	48,409,175
Other Securities		0.7	36,539,271
		1.7	84,948,446
Insurance 3.0%
Other Securities		3.0	144,612,465
Materials 3.6%
Other Securities		3.6	177,192,055
Media 3.5%
Comcast Corp., Class A	548,152	0.7	32,549,266
The Walt Disney Co.	327,285	0.7	34,063,823
Other Securities		2.1	105,964,970
		3.5	172,578,059

See financial notes 15

Table of Contents

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 9.2%
AbbVie, Inc.	336,693	0.4	20,369,927
Amgen, Inc.	161,498	0.5	25,471,465
Biogen Idec, Inc. *	49,707	0.4	20,359,490
Bristol-Myers Squibb Co.	348,759	0.4	21,246,398
Celgene Corp. *	168,202	0.4	20,441,589
Gilead Sciences, Inc. *	317,309	0.7	32,851,001
Johnson & Johnson	590,264	1.2	60,507,963
Merck & Co., Inc.	601,698	0.7	35,223,401
Pfizer, Inc.	1,330,835	0.9	45,674,257
Other Securities		3.6	167,314,920
		9.2	449,460,411
Real Estate 4.0%
Other Securities		4.0	194,966,204
Retailing 4.6%
Amazon.com, Inc. *	80,058	0.6	30,434,849
The Home Depot, Inc.	277,698	0.7	31,865,845
Other Securities		3.3	164,374,695
		4.6	226,675,389
Semiconductors & Semiconductor Equipment 2.5%
Intel Corp.	1,018,569	0.7	33,867,419
Other Securities		1.8	88,019,146
		2.5	121,886,565
Software & Services 10.2%
Facebook, Inc., Class A *	442,174	0.7	34,918,481
Google, Inc., Class A *	60,051	0.7	33,786,494
Google, Inc., Class C *	60,051	0.7	33,532,478
International Business Machines Corp.	193,325	0.6	31,307,050
MasterCard, Inc., Class A	206,671	0.4	18,627,257
Microsoft Corp.	1,745,615	1.6	76,545,218
Oracle Corp.	682,525	0.6	29,908,245
Visa, Inc., Class A	103,268	0.6	28,017,641
Other Securities		4.3	213,829,373
		10.2	500,472,237
Technology Hardware & Equipment 6.6%
Apple, Inc.	1,237,846	3.3	159,013,697
Cisco Systems, Inc.	1,079,478	0.7	31,855,396
QUALCOMM, Inc.	353,897	0.5	25,661,071
Other Securities		2.1	105,722,078
		6.6	322,252,242
Telecommunication Services 2.1%
AT&T, Inc.	1,085,340	0.8	37,509,350
Verizon Communications, Inc.	873,653	0.9	43,202,141
Other Securities		0.4	20,948,586
		2.1	101,660,077
Transportation 2.4%
Union Pacific Corp.	188,300	0.5	22,644,958
Other Securities		1.9	93,360,292
		2.4	116,005,250

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 3.1%
Other Securities		3.1	148,922,415
Total Common Stock
(Cost $3,830,817,561)			4,879,176,093

Rights 0.0% of net assets
Telecommunication Services 0.0%
Other Securities		0.0	21,491
Total Rights
(Cost $21,491)			21,491

Other Investment Companies 0.6% of net assets
Money Market Fund 0.1%
Other Securities		0.1	7,190,678
Securities Lending Collateral 0.5%
Other Securities		0.5	22,452,037
Total Other Investment Companies
(Cost $29,642,715)			29,642,715
Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investments 0.0% of net assets
U.S. Treasury Obligations 0.0%
Other Securities		0.0	384,998
Total Short-Term Investment
(Cost $384,998)			384,998

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $3,861,841,038 and the unrealized appreciation and depreciation were $1,098,371,730 and ($50,987,471), respectively, with a net unrealized appreciation of $1,047,384,259.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $21,936,773. Non-Cash Collateral pledged to the fund for securities on loan amounted to $427,976.
(b)	Issuer is affiliated with the fund's adviser.
(c)	Illiquid security. At the period end, the value of these amounted to $21,491 or 0.0% of net assets.
(d)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(e)	The rate shown is the 7-day yield.
(f)	All or a portion of this security is held as collateral for open futures contracts.
(g)	The rate shown is the purchase yield.

16 See financial notes

Table of Contents

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings (Unaudited) continued

CVR –	Contingent Value Rights
REIT –	Real Estate Investment Trust

In addition to the above, the fund held the following at 02/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/20/15	10	1,051,400	6

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$4,879,176,093	$—	$—	$4,879,176,093
Rights ¹	—	—	21,491	21,491
Other Investment Companies¹	29,642,715	—	—	29,642,715
Short-Term Investments¹	—	384,998	—	384,998
Total	$4,908,818,808	$384,998	$21,491	$4,909,225,297
Other Financial Instruments
Futures Contracts²	$6	$—	$—	$6

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

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

Investments in Securities	Balance as of August 31, 2014	Realized Gains (Losses)	Change in Unrealized Gains (Losses)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of February 28, 2015
Rights	$21,491	$—	$—	$—	$—	$—	$—	$21,491
Total	$21,491	$—	$—	$—	$—	$—	$—	$21,491

The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended February 28, 2015.

See financial notes 17

Table of Contents

Schwab U.S. Broad Market ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments in affiliated issuers, at value (cost $5,364,634)		$7,188,271
Investments in unaffiliated issuers, at value (cost $3,833,050,094) including securities on loan of $21,936,773		4,879,584,989
Collateral invested for securities on loan, at value (cost $22,452,037)	+	22,452,037
Total investments, at value (cost $3,860,866,765)		4,909,225,297
Cash		101,448
Receivables:
Investments sold		1,064,846
Fund shares sold		10,278,241
Dividends		9,172,811
Income from securities on loan		83,288
Foreign tax reclaims	+	10,803
Total assets		4,929,936,734
Liabilities
Collateral held for securities on loan		22,452,037
Payables:
Investments bought		17,993,425
Investment adviser fees		32,250
Variation margin on futures contracts	+	3,550
Total liabilities		40,481,262
Net Assets
Total assets		4,929,936,734
Total liabilities	–	40,481,262
Net assets		$4,889,455,472
Net Assets by Source
Capital received from investors		3,796,339,100
Net investment income not yet distributed		19,403,550
Net realized capital gains		25,354,284
Net unrealized capital appreciation		1,048,358,538

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$4,889,455,472		95,450,000		$51.23

18 See financial notes

Table of Contents

Schwab U.S. Broad Market ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends received from affiliated issuer		$27,234
Dividends received from unaffiliated issuers (net of foreign withholding tax of $6,280)		45,800,784
Interest		18
Securities on loan	+	415,540
Total investment income		46,243,576
Expenses
Investment adviser fees		830,012
Total expenses	–	830,012
Net investment income		45,413,564
Realized and Unrealized Gains (Losses)
Net realized gains on affiliated issuer		49,061
Net realized gains on unaffiliated investments		4,150,484
Net realized gains on in-kind redemptions		26,237,646
Net realized gains on futures contracts	+	198,490
Net realized gains		30,635,681
Net change in unrealized appreciation (depreciation) on affiliated issuer		142,433
Net change in unrealized appreciation (depreciation) on unaffiliated investments		192,543,949
Net change in unrealized appreciation (depreciation) on futures contracts	+	(19,752)
Net change in unrealized appreciation (depreciation)	+	192,666,630
Net realized and unrealized gains		223,302,311
Increase in net assets resulting from operations		$268,715,875

See financial notes 19

Table of Contents

Schwab U.S. Broad Market ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$45,413,564	$56,700,065
Net realized gains		30,635,681	44,443,785
Net change in unrealized appreciation (depreciation)	+	192,666,630	525,734,296
Increase in net assets resulting from operations		268,715,875	626,878,146
Distributions to Shareholders
Distributions from net investment income		($35,617,320)	($53,302,780)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		21,950,000	$1,073,339,355	22,550,000	$1,006,196,263
Shares redeemed	+	(1,450,000)	(71,019,236)	(2,450,000)	(108,405,676)
Net transactions in fund shares		20,500,000	$1,002,320,119	20,100,000	$897,790,587
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		74,950,000	$3,654,036,798	54,850,000	$2,182,670,845
Total increase	+	20,500,000	1,235,418,674	20,100,000	1,471,365,953
End of period		95,450,000	$4,889,455,472	74,950,000	$3,654,036,798
Net investment income not yet distributed			$19,403,550		$9,607,306

20 See financial notes

Table of Contents

Schwab U.S. Large-Cap ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	10/30/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	47.99	39.06	33.49	29.11	24.98	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.53 ²	0.83	0.77	0.64	0.53	0.34
Net realized and unrealized gains (losses)	2.36	8.92	5.56	4.35	4.13	(0.12)
Total from investment operations	2.89	9.75	6.33	4.99	4.66	0.22
Less distributions:
Distributions from net investment income	(0.44)	(0.82)	(0.76)	(0.61)	(0.53)	(0.24)
Net asset value at end of period	50.44	47.99	39.06	33.49	29.11	24.98
Total return (%)	6.06 ³	25.16	19.17	17.36	18.66	0.83 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.04 ⁴	0.04	0.04	0.08	0.08	0.08 ⁴
Net investment income (loss)	2.23 ⁴	1.95	2.18	2.10	1.88	2.01 ⁴
Portfolio turnover rate⁵	2 ³	5	5	4	5	3 ³
Net assets, end of period ($ x 1,000)	4,143,341	3,191,644	1,781,282	890,808	615,781	273,503

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	Not annualized.
⁴	Annualized.
⁵	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 21

Table of Contents

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.8%	Common Stock	3,276,386,665	4,132,164,077
0.1%	Other Investment Companies	5,390,818	5,390,818
0.0%	Short-Term Investment	459,995	459,997
99.9%	Total Investments	3,282,237,478	4,138,014,892
0.1%	Other Assets and Liabilities, Net		5,325,641
100.0%	Net Assets		4,143,340,533

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets
Automobiles & Components 1.2%
Other Securities		1.2	51,390,536
Banks 5.4%
Bank of America Corp.	2,119,272	0.8	33,505,690
Citigroup, Inc.	610,270	0.8	31,990,353
JPMorgan Chase & Co.	753,672	1.1	46,185,020
Wells Fargo & Co.	958,815	1.3	52,533,474
Other Securities		1.4	59,081,037
		5.4	223,295,574
Capital Goods 7.5%
3M Co.	129,009	0.5	21,757,368
General Electric Co.	2,036,516	1.3	52,929,051
The Boeing Co.	134,625	0.5	20,308,181
United Technologies Corp.	169,928	0.5	20,715,922
Other Securities		4.7	194,009,904
		7.5	309,720,426
Commercial & Professional Services 0.8%
Other Securities		0.8	32,851,971
Consumer Durables & Apparel 1.5%
Other Securities		1.5	62,592,706

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 1.9%
McDonald's Corp.	196,591	0.5	19,442,850
Other Securities		1.4	59,312,169
		1.9	78,755,019
Diversified Financials 4.9%
Berkshire Hathaway, Inc., Class B *	368,144	1.3	54,268,107
The Charles Schwab Corp. (b)	232,787	0.2	6,829,971
Other Securities		3.4	142,414,759
		4.9	203,512,837
Energy 7.8%
Chevron Corp.	384,377	1.0	41,005,338
Exxon Mobil Corp.	856,683	1.8	75,850,713
Schlumberger Ltd.	262,218	0.5	22,068,267
Other Securities		4.5	185,274,161
		7.8	324,198,479
Food & Staples Retailing 2.3%
CVS Health Corp.	233,314	0.6	24,234,325
Wal-Mart Stores, Inc.	318,586	0.6	26,738,923
Other Securities		1.1	44,376,471
		2.3	95,349,719
Food, Beverage & Tobacco 5.0%
Altria Group, Inc.	399,294	0.5	22,476,259
PepsiCo, Inc.	301,914	0.7	29,883,448
Philip Morris International, Inc.	314,865	0.6	26,121,200
The Coca-Cola Co.	797,657	0.8	34,538,548
Other Securities		2.4	92,899,106
		5.0	205,918,561
Health Care Equipment & Services 4.8%
Medtronic plc	286,004	0.5	22,191,050
UnitedHealth Group, Inc.	194,389	0.5	22,088,422
Other Securities		3.8	156,140,171
		4.8	200,419,643
Household & Personal Products 1.9%
The Procter & Gamble Co.	545,015	1.1	46,397,127
Other Securities		0.8	32,467,369
		1.9	78,864,496
Insurance 2.9%
Other Securities		2.9	121,629,237
Materials 3.4%
Other Securities		3.4	141,047,154
Media 3.7%
Comcast Corp., Class A	523,347	0.8	31,076,345
The Walt Disney Co.	316,479	0.8	32,939,134
Other Securities		2.1	91,093,438
		3.7	155,108,917

22 See financial notes

Table of Contents

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 9.6%
AbbVie, Inc.	320,453	0.5	19,387,406
Amgen, Inc.	153,575	0.6	24,221,849
Biogen Idec, Inc. *	47,773	0.5	19,567,343
Bristol-Myers Squibb Co.	334,304	0.5	20,365,800
Celgene Corp. *	161,171	0.5	19,587,112
Gilead Sciences, Inc. *	304,818	0.8	31,557,807
Johnson & Johnson	566,099	1.4	58,030,808
Merck & Co., Inc.	577,478	0.8	33,805,562
Pfizer, Inc.	1,270,125	1.1	43,590,690
Other Securities		2.9	125,555,504
		9.6	395,669,881
Real Estate 3.1%
Other Securities		3.1	130,146,368
Retailing 4.7%
Amazon.com, Inc. *	77,005	0.7	29,274,221
The Home Depot, Inc.	265,803	0.7	30,500,894
Other Securities		3.3	133,815,756
		4.7	193,590,871
Semiconductors & Semiconductor Equipment 2.4%
Intel Corp.	978,603	0.8	32,538,550
Other Securities		1.6	65,983,929
		2.4	98,522,479
Software & Services 10.4%
Facebook, Inc., Class A *	423,755	0.8	33,463,932
Google, Inc., Class A *	57,831	0.8	32,537,456
Google, Inc., Class C *	57,652	0.8	32,192,877
International Business Machines Corp.	185,966	0.7	30,115,334
MasterCard, Inc., Class A	197,284	0.4	17,781,207
Microsoft Corp.	1,668,300	1.8	73,154,955
Oracle Corp.	658,678	0.7	28,863,270
Visa, Inc., Class A	98,723	0.6	26,784,537
Other Securities		3.8	156,454,048
		10.4	431,347,616
Technology Hardware & Equipment 6.8%
Apple, Inc.	1,186,547	3.7	152,423,827
Cisco Systems, Inc.	1,040,329	0.7	30,700,109
QUALCOMM, Inc.	335,549	0.6	24,330,658
Other Securities		1.8	72,858,171
		6.8	280,312,765
Telecommunication Services 2.3%
AT&T, Inc.	1,043,978	0.9	36,079,880
Verizon Communications, Inc.	840,757	1.0	41,575,434
Other Securities		0.4	16,012,806
		2.3	93,668,120
Transportation 2.4%
Union Pacific Corp.	179,826	0.5	21,625,875
Other Securities		1.9	76,197,531
		2.4	97,823,406

Security	Number of Shares	% of Net Assets	Value ($)
Utilities 3.1%
Other Securities		3.1	126,427,296
Total Common Stock
(Cost $3,276,386,665)			4,132,164,077

Other Investment Companies 0.1% of net assets
Money Market Fund 0.0%
Other Securities		0.0	2,188,048
Securities Lending Collateral 0.1%
Other Securities		0.1	3,202,770
Total Other Investment Companies
(Cost $5,390,818)			5,390,818
Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investment 0.0% of net assets
U.S. Treasury Obligation 0.0%
U.S. Treasury Bill 0.02%	460,000	0.0	459,997
Total Short-Term Investment
(Cost $459,995)			459,997

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $3,282,957,855 and the unrealized appreciation and depreciation were $895,432,503 and ($40,375,466), respectively, with a net unrealized appreciation of $855,057,037.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $3,777,024. Non-Cash Collateral pledged to the fund for securities on loan amounted to $665,328.
(b)	Issuer is affiliated with the fund's adviser.
(c)	The rate shown is the 7-day yield.
(d)	The rate shown is the purchase yield.
(e)	All or a portion of this security is held as collateral for open futures contracts.

REIT –

Real Estate Investment Trust

In addition to the above, the fund held the following at 02/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/20/15	35	3,679,900	14,708

See financial notes 23

Table of Contents

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$4,132,164,077	$—	$—	$4,132,164,077
Other Investment Companies¹	5,390,818	—	—	5,390,818
Short-Term Investment¹	—	459,997	—	459,997
Total	$4,137,554,895	$459,997	$—	$4,138,014,892
Other Financial Instruments
Futures Contracts²	$14,708	$—	$—	$14,708

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

24 See financial notes

Table of Contents

Schwab U.S. Large-Cap ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments in affiliated issuers, at value (cost $5,165,884)		$6,829,971
Investments in unaffiliated issuers, at value (cost $3,273,868,824) including securities on loan of $3,777,024		4,127,982,151
Collateral invested for securities on loan, at value (cost $3,202,770)	+	3,202,770
Total investments, at value (cost $3,282,237,478)		4,138,014,892
Receivables:
Fund shares sold		25,306,436
Dividends		8,247,664
Income from securities on loan		20,375
Foreign tax reclaims	+	10,017
Total assets		4,171,599,384
Liabilities
Collateral held for securities on loan		3,202,770
Payables:
Investments bought		25,016,385
Investment adviser fees		27,187
Variation margin on futures contracts		12,425
Due to custodian	+	84
Total liabilities		28,258,851
Net Assets
Total assets		4,171,599,384
Total liabilities	–	28,258,851
Net assets		$4,143,340,533
Net Assets by Source
Capital received from investors		3,230,107,489
Net investment income not yet distributed		17,059,011
Net realized capital gains		40,381,911
Net unrealized capital appreciation		855,792,122

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$4,143,340,533		82,150,000		$50.44

See financial notes 25

Table of Contents

Schwab U.S. Large-Cap ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends received from affiliated issuer		$25,572
Dividends received from unaffiliated issuers (net of foreign withholding tax of $5,095)		40,211,724
Interest		32
Securities on loan	+	108,632
Total investment income		40,345,960
Expenses
Investment adviser fees		710,931
Total expenses	–	710,931
Net investment income		39,635,029
Realized and Unrealized Gains (Losses)
Net realized gains on affiliated issuer		94,586
Net realized gains on unaffiliated investments		4,578,920
Net realized gains on in-kind redemptions		40,947,476
Net realized gains on futures contracts	+	138,415
Net realized gains		45,759,397
Net change in unrealized appreciation (depreciation) on affiliated issuer		100,519
Net change in unrealized appreciation (depreciation) on unaffiliated investments		140,594,766
Net change in unrealized appreciation (depreciation) on futures contracts	+	8,846
Net change in unrealized appreciation (depreciation)	+	140,704,131
Net realized and unrealized gains		186,463,528
Increase in net assets resulting from operations		$226,098,557

26 See financial notes

Table of Contents

Schwab U.S. Large-Cap ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$39,635,029	$48,304,376
Net realized gains		45,759,397	25,664,180
Net change in unrealized appreciation (depreciation)	+	140,704,131	451,922,393
Increase in net assets resulting from operations		226,098,557	525,890,949
Distributions to Shareholders
Distributions from net investment income		($31,828,260)	($44,577,680)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		17,900,000	$863,088,160	22,650,000	$1,002,867,160
Shares redeemed	+	(2,250,000)	(105,662,402)	(1,750,000)	(73,817,744)
Net transactions in fund shares		15,650,000	$757,425,758	20,900,000	$929,049,416
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		66,500,000	$3,191,644,478	45,600,000	$1,781,281,793
Total increase	+	15,650,000	951,696,055	20,900,000	1,410,362,685
End of period		82,150,000	$4,143,340,533	66,500,000	$3,191,644,478
Net investment income not yet distributed			$17,059,011		$9,252,242

See financial notes 27

Table of Contents

Schwab U.S. Large-Cap Growth ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	12/9/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	50.11	39.60	34.05	29.44	24.21	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.38 ²	0.56	0.55	0.36	0.27	0.15
Net realized and unrealized gains (losses)	4.23	10.50	5.52	4.59	5.20	(0.83)
Total from investment operations	4.61	11.06	6.07	4.95	5.47	(0.68)
Less distributions:
Distributions from net investment income	(0.28)	(0.55)	(0.52)	(0.34)	(0.24)	(0.11)
Net asset value at end of period	54.44	50.11	39.60	34.05	29.44	24.21
Total return (%)	9.24 ³	28.11	18.02	16.96	22.57	(2.75) ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.07 ⁴	0.07	0.07	0.13	0.13	0.14 ^4,5
Net investment income (loss)	1.49 ⁴	1.29	1.55	1.17	0.93	0.86 ⁴
Portfolio turnover rate⁶	9 ³	7	11	8	10	6 ³
Net assets, end of period ($ x 1,000)	1,973,600	1,485,805	827,613	475,062	309,155	108,946

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	Not annualized.
⁴	Annualized.
⁵	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

28 See financial notes

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.8%	Common Stock	1,486,692,058	1,970,395,589
0.3%	Other Investment Companies	5,261,980	5,318,593
100.1%	Total Investments	1,491,954,038	1,975,714,182
(0.1)%	Other Assets and Liabilities, Net		(2,113,863)
100.0%	Net Assets		1,973,600,319

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets
Automobiles & Components 0.5%
Other Securities		0.5	9,646,498
Banks 0.1%
Other Securities		0.1	2,702,701
Capital Goods 7.0%
3M Co.	124,932	1.1	21,069,782
Caterpillar, Inc.	117,943	0.5	9,777,475
Danaher Corp.	119,182	0.5	10,402,205
The Boeing Co.	129,475	1.0	19,531,304
Other Securities		3.9	77,322,687
		7.0	138,103,453
Commercial & Professional Services 1.0%
Other Securities		1.0	19,036,562
Consumer Durables & Apparel 2.3%
NIKE, Inc., Class B	135,871	0.7	13,195,792
Other Securities		1.6	32,853,033
		2.3	46,048,825
Consumer Services 2.3%
Starbucks Corp.	146,263	0.7	13,673,396
Other Securities		1.6	30,965,146
		2.3	44,638,542

Security	Number of Shares	% of Net Assets	Value ($)
Diversified Financials 6.7%
American Express Co.	174,383	0.7	14,227,909
Berkshire Hathaway, Inc., Class B *	355,620	2.7	52,421,944
BlackRock, Inc.	24,819	0.5	9,218,273
Morgan Stanley	298,324	0.5	10,677,016
The Charles Schwab Corp. (b)	224,768	0.3	6,594,693
Other Securities		2.0	39,010,093
		6.7	132,149,928
Energy 5.5%
EOG Resources, Inc.	107,096	0.5	9,608,653
Schlumberger Ltd.	250,789	1.1	21,106,402
Other Securities		3.9	77,295,428
		5.5	108,010,483
Food & Staples Retailing 2.7%
Costco Wholesale Corp.	85,259	0.6	12,529,663
CVS Health Corp.	223,366	1.2	23,201,026
Walgreens Boots Alliance, Inc.	170,160	0.7	14,136,893
Other Securities		0.2	3,943,623
		2.7	53,811,205
Food, Beverage & Tobacco 2.5%
PepsiCo, Inc.	292,286	1.5	28,930,468
Other Securities		1.0	20,652,977
		2.5	49,583,445
Health Care Equipment & Services 7.0%
Express Scripts Holding Co. *	142,882	0.6	12,114,965
McKesson Corp.	45,206	0.5	10,338,612
Medtronic plc	276,078	1.1	21,420,892
UnitedHealth Group, Inc.	188,262	1.1	21,392,211
Other Securities		3.7	72,198,694
		7.0	137,465,374
Household & Personal Products 1.0%
Colgate-Palmolive Co.	167,143	0.6	11,837,067
Other Securities		0.4	7,816,798
		1.0	19,653,865
Insurance 0.5%
Other Securities		0.5	9,863,537
Materials 3.3%
Monsanto Co.	94,524	0.6	11,383,525
Other Securities		2.7	53,069,046
		3.3	64,452,571
Media 5.5%
Comcast Corp., Class A	503,168	1.5	29,878,116
The Walt Disney Co.	304,918	1.6	31,735,865
Other Securities		2.4	46,916,672
		5.5	108,530,653
Pharmaceuticals, Biotechnology & Life Sciences 9.7%
Actavis plc *	51,650	0.8	15,048,744
Allergan, Inc.	58,229	0.7	13,552,218

See financial notes 29

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Amgen, Inc.	148,138	1.2	23,364,325
Biogen Idec, Inc. *	46,163	1.0	18,907,903
Celgene Corp. *	156,375	1.0	19,004,254
Gilead Sciences, Inc. *	294,404	1.5	30,479,646
Thermo Fisher Scientific, Inc.	77,998	0.5	10,139,740
Other Securities		3.0	60,211,182
		9.7	190,708,012
Real Estate 3.4%
Simon Property Group, Inc.	61,304	0.6	11,669,829
Other Securities		2.8	55,742,302
		3.4	67,412,131
Retailing 8.0%
Amazon.com, Inc. *	74,183	1.4	28,201,409
Lowe's Cos., Inc.	189,425	0.7	14,034,498
The Home Depot, Inc.	258,245	1.5	29,633,614
The Priceline Group, Inc. *	10,255	0.6	12,690,357
The TJX Cos., Inc.	133,827	0.5	9,185,885
Other Securities		3.3	64,195,304
		8.0	157,941,067
Semiconductors & Semiconductor Equipment 1.6%
Other Securities		1.6	32,384,967
Software & Services 14.6%
Accenture plc, Class A	121,961	0.6	10,980,149
eBay, Inc. *	220,065	0.6	12,743,964
Facebook, Inc., Class A *	408,147	1.6	32,231,369
Google, Inc., Class A *	55,590	1.6	31,276,602
Google, Inc., Class C *	55,519	1.6	31,001,810
MasterCard, Inc., Class A	191,215	0.9	17,234,208
Oracle Corp.	631,288	1.4	27,663,040
Visa, Inc., Class A	95,416	1.3	25,887,315
Other Securities		5.0	100,043,925
		14.6	289,062,382
Technology Hardware & Equipment 10.1%
Apple, Inc.	1,144,622	7.5	147,038,142
EMC Corp.	395,459	0.6	11,444,583
QUALCOMM, Inc.	325,318	1.2	23,588,808
Other Securities		0.8	17,405,178
		10.1	199,476,711
Telecommunication Services 0.4%
Other Securities		0.4	7,711,716

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 4.0%
Union Pacific Corp.	173,223	1.1	20,831,798
United Parcel Service, Inc., Class B	135,849	0.7	13,819,919
Other Securities		2.2	44,727,946
		4.0	79,379,663
Utilities 0.1%
Other Securities		0.1	2,621,298
Total Common Stock
(Cost $1,486,692,058)			1,970,395,589

Other Investment Companies 0.3% of net assets
Equity Fund 0.1%
Other Securities		0.1	1,305,460
Money Market Fund 0.0%
Other Securities		0.0	317,776
Securities Lending Collateral 0.2%
Other Securities		0.2	3,695,357
Total Other Investment Companies
(Cost $5,261,980)			5,318,593

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $1,492,225,246 and the unrealized appreciation and depreciation were $498,668,390 and ($15,179,454), respectively, with a net unrealized appreciation of $483,488,936.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $3,770,017. Non-Cash Collateral pledged to the fund for securities on loan amounted to $197,537.
(b)	Issuer is affiliated with the fund's adviser.
(c)	The rate shown is the 7-day yield.

ETF –

Exchange Traded Fund

30 See financial notes

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$1,970,395,589	$—	$—	$1,970,395,589
Other Investment Companies¹	5,318,593	—	—	5,318,593
Total	$1,975,714,182	$—	$—	$1,975,714,182

¹	As categorized in the complete schedule of portfolio holdings.

See financial notes 31

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments in affiliated issuers, at value (cost $4,929,556)		$6,594,693
Investments in unaffiliated issuers, at value (cost $1,483,329,125) including securities on loan of $3,770,017		1,965,424,132
Collateral invested for securities on loan, at value (cost $3,695,357)	+	3,695,357
Total investments, at value (cost $1,491,954,038)		1,975,714,182
Receivables:
Fund shares sold		10,937,964
Dividends		1,508,342
Income from securities on loan	+	6,064
Total assets		1,988,166,552
Liabilities
Collateral held for securities on loan		3,695,357
Payables:
Investments bought		10,848,168
Investment adviser fees	+	22,708
Total liabilities		14,566,233
Net Assets
Total assets		1,988,166,552
Total liabilities	–	14,566,233
Net assets		$1,973,600,319
Net Assets by Source
Capital received from investors		1,438,527,721
Net investment income not yet distributed		6,425,551
Net realized capital gains		44,886,903
Net unrealized capital appreciation		483,760,144

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$1,973,600,319		36,250,000		$54.44

32 See financial notes

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends received from affiliated issuer		$24,981
Dividends received from unaffiliated issuers		12,938,880
Securities on loan	+	47,959
Total investment income		13,011,820
Expenses
Investment adviser fees		583,350
Total expenses	–	583,350
Net investment income		12,428,470
Realized and Unrealized Gains (Losses)
Net realized gains on affiliated issuer		57,144
Net realized losses on unaffiliated investments		(1,225,056)
Net realized gains on in-kind redemptions		54,365,559
Net realized gains on futures contracts	+	83,723
Net realized gains		53,281,370
Net change in unrealized appreciation (depreciation) on affiliated issuer		128,774
Net change in unrealized appreciation (depreciation) on unaffiliated investments	+	94,524,146
Net change in unrealized appreciation (depreciation)	+	94,652,920
Net realized and unrealized gains		147,934,290
Increase in net assets resulting from operations		$160,362,760

See financial notes 33

Table of Contents

Schwab U.S. Large-Cap Growth ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$12,428,470	$14,972,635
Net realized gains		53,281,370	11,034,748
Net change in unrealized appreciation (depreciation)	+	94,652,920	248,390,394
Increase in net assets resulting from operations		160,362,760	274,397,777
Distributions to Shareholders
Distributions from net investment income		($8,971,695)	($13,914,310)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		10,950,000	$555,274,985	9,250,000	$420,385,407
Shares redeemed	+	(4,350,000)	(218,870,354)	(500,000)	(22,677,152)
Net transactions in fund shares		6,600,000	$336,404,631	8,750,000	$397,708,255
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		29,650,000	$1,485,804,623	20,900,000	$827,612,901
Total increase	+	6,600,000	487,795,696	8,750,000	658,191,722
End of period		36,250,000	$1,973,600,319	29,650,000	$1,485,804,623
Net investment income not yet distributed			$6,425,551		$2,968,776

34 See financial notes

Table of Contents

Schwab U.S. Large-Cap Value ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	12/9/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	43.54	36.49	31.24	27.34	24.36	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.62 ²	1.00	0.93	0.82	0.70	0.47
Net realized and unrealized gains (losses)	0.71	7.03	5.24	3.89	2.99	(0.78)
Total from investment operations	1.33	8.03	6.17	4.71	3.69	(0.31)
Less distributions:
Distributions from net investment income	(0.54)	(0.98)	(0.92)	(0.81)	(0.71)	(0.33)
Net asset value at end of period	44.33	43.54	36.49	31.24	27.34	24.36
Total return (%)	3.08 ³	22.25	20.06	17.53	15.12	(1.29) ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.07 ⁴	0.07	0.07	0.13	0.13	0.14 ^4,5
Net investment income (loss)	2.86 ⁴	2.54	2.73	2.89	2.68	2.98 ⁴
Portfolio turnover rate⁶	14 ³	9	9	8	7	5 ³
Net assets, end of period ($ x 1,000)	1,303,356	1,162,576	700,693	385,791	241,994	84,052

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	Not annualized.
⁴	Annualized.
⁵	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁶	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 35

Table of Contents

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.5%	Common Stock	1,111,733,474	1,297,442,210
0.3%	Other Investment Companies	3,896,911	3,949,855
99.8%	Total Investments	1,115,630,385	1,301,392,065
0.2%	Other Assets and Liabilities, Net		1,964,148
100.0%	Net Assets		1,303,356,213

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.5% of net assets
Automobiles & Components 2.0%
Ford Motor Co.	484,186	0.6	7,911,599
General Motors Co.	170,223	0.5	6,351,020
Other Securities		0.9	11,619,756
		2.0	25,882,375
Banks 10.5%
Bank of America Corp.	1,318,450	1.6	20,844,694
Citigroup, Inc.	380,092	1.5	19,924,423
JPMorgan Chase & Co.	468,768	2.2	28,726,103
The PNC Financial Services Group, Inc.	65,779	0.5	6,049,037
U.S. Bancorp	223,351	0.8	9,963,688
Wells Fargo & Co.	591,676	2.5	32,417,928
Other Securities		1.4	19,080,688
		10.5	137,006,561
Capital Goods 7.9%
General Electric Co.	1,259,949	2.5	32,746,075
Honeywell International, Inc.	98,568	0.8	10,130,819
Lockheed Martin Corp.	33,589	0.5	6,719,479
United Technologies Corp.	106,505	1.0	12,984,025
Other Securities		3.1	40,695,151
		7.9	103,275,549
Commercial & Professional Services 0.6%
Other Securities		0.6	8,285,147

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Durables & Apparel 0.7%
Other Securities		0.7	9,341,553
Consumer Services 1.6%
McDonald's Corp.	122,290	0.9	12,094,481
Other Securities		0.7	8,137,889
		1.6	20,232,370
Diversified Financials 3.2%
Capital One Financial Corp.	70,831	0.4	5,575,108
The Goldman Sachs Group, Inc.	51,384	0.7	9,752,169
Other Securities		2.1	25,894,369
		3.2	41,221,646
Energy 10.1%
Chevron Corp.	236,980	1.9	25,281,026
ConocoPhillips	154,918	0.8	10,100,654
Exxon Mobil Corp.	531,481	3.6	47,057,328
Kinder Morgan, Inc.	213,042	0.7	8,736,852
Occidental Petroleum Corp.	97,227	0.6	7,572,039
Other Securities		2.5	32,930,450
		10.1	131,678,349
Food & Staples Retailing 1.9%
Wal-Mart Stores, Inc.	197,815	1.3	16,602,613
Other Securities		0.6	7,822,190
		1.9	24,424,803
Food, Beverage & Tobacco 7.3%
Altria Group, Inc.	248,357	1.1	13,980,016
Mondelez International, Inc., Class A	210,341	0.6	7,768,945
Philip Morris International, Inc.	194,867	1.2	16,166,166
The Coca-Cola Co.	495,248	1.6	21,444,238
Other Securities		2.8	36,394,001
		7.3	95,753,366
Health Care Equipment & Services 2.8%
Abbott Laboratories	189,535	0.7	8,978,273
Other Securities		2.1	27,163,539
		2.8	36,141,812
Household & Personal Products 2.8%
The Procter & Gamble Co.	339,965	2.2	28,941,220
Other Securities		0.6	7,498,719
		2.8	36,439,939
Insurance 5.3%
American International Group, Inc.	174,933	0.7	9,679,043
MetLife, Inc.	143,858	0.6	7,312,302
Other Securities		4.0	51,899,895
		5.3	68,891,240

36 See financial notes

Table of Contents

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Materials 3.5%
E.I. du Pont de Nemours & Co.	114,320	0.7	8,899,812
The Dow Chemical Co.	138,527	0.5	6,821,069
Other Securities		2.3	30,039,935
		3.5	45,760,816
Media 2.0%
Time Warner, Inc.	104,816	0.7	8,580,238
Twenty-First Century Fox, Inc., Class A	231,834	0.6	8,114,190
Other Securities		0.7	9,730,825
		2.0	26,425,253
Pharmaceuticals, Biotechnology & Life Sciences 9.4%
AbbVie, Inc.	199,591	0.9	12,075,255
Bristol-Myers Squibb Co.	207,797	1.0	12,658,993
Eli Lilly & Co.	122,569	0.7	8,600,667
Johnson & Johnson	351,837	2.8	36,066,811
Merck & Co., Inc.	357,268	1.6	20,914,469
Pfizer, Inc.	789,572	2.1	27,098,111
Other Securities		0.3	5,776,364
		9.4	123,190,670
Real Estate 2.9%
Other Securities		2.9	37,705,529
Retailing 1.4%
Target Corp.	80,193	0.5	6,161,228
Other Securities		0.9	12,591,483
		1.4	18,752,711
Semiconductors & Semiconductor Equipment 3.1%
Intel Corp.	606,518	1.5	20,166,723
Texas Instruments, Inc.	132,062	0.6	7,765,246
Other Securities		1.0	12,287,493
		3.1	40,219,462
Software & Services 6.3%
International Business Machines Corp.	115,407	1.4	18,689,010
Microsoft Corp.	1,035,073	3.5	45,387,951
Other Securities		1.4	17,806,621
		6.3	81,883,582
Technology Hardware & Equipment 3.5%
Cisco Systems, Inc.	641,426	1.5	18,928,481
Hewlett-Packard Co.	234,512	0.6	8,170,398
Other Securities		1.4	18,560,699
		3.5	45,659,578

Security	Number of Shares	% of Net Assets	Value ($)
Telecommunication Services 4.1%
AT&T, Inc.	649,981	1.7	22,463,343
Verizon Communications, Inc.	520,444	2.0	25,735,956
Other Securities		0.4	4,845,781
		4.1	53,045,080
Transportation 0.7%
Other Securities		0.7	9,670,901
Utilities 5.9%
Duke Energy Corp.	89,442	0.5	7,025,669
NextEra Energy, Inc.	54,408	0.4	5,629,052
Other Securities		5.0	63,899,197
		5.9	76,553,918
Total Common Stock
(Cost $1,111,733,474)			1,297,442,210

Other Investment Companies 0.3% of net assets
Equity Fund 0.2%
Other Securities		0.2	2,416,380
Money Market Fund 0.0%
Other Securities		0.0	557,883
Securities Lending Collateral 0.1%
Other Securities		0.1	975,592
Total Other Investment Companies
(Cost $3,896,911)			3,949,855

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $1,116,251,229 and the unrealized appreciation and depreciation were $207,069,878 and ($21,929,042), respectively, with a net unrealized appreciation $185,140,836.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $1,352,636. Non-Cash Collateral pledged to the fund for securities on loan amounted to $392,816.
(b)	The rate shown is the 7-day yield.

ETF –	Exchange Traded Fund
REIT –	Real Estate Investment Trust

See financial notes 37

Table of Contents

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings (Unaudited) continued

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$1,297,442,210	$—	$—	$1,297,442,210
Other Investment Companies¹	3,949,855	—	—	3,949,855
Total	$1,301,392,065	$—	$—	$1,301,392,065

¹	As categorized in the complete schedule of portfolio holdings.

38 See financial notes

Table of Contents

Schwab U.S. Large-Cap Value ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $1,114,654,793) including securities on loan of $1,352,636		$1,300,416,473
Collateral invested for securities on loan, at value (cost $975,592)	+	975,592
Total investments, at value (cost $1,115,630,385)		1,301,392,065
Receivables:
Fund shares sold		13,342,396
Dividends		4,195,210
Income from securities on loan		12,504
Foreign tax reclaims	+	6,722
Total assets		1,318,948,897
Liabilities
Collateral held for securities on loan		975,592
Payables:
Investments bought		14,602,037
Investment adviser fees		15,004
Due to custodian	+	51
Total liabilities		15,592,684
Net Assets
Total assets		1,318,948,897
Total liabilities	–	15,592,684
Net assets		$1,303,356,213
Net Assets by Source
Capital received from investors		1,058,839,242
Net investment income not yet distributed		6,402,578
Net realized capital gains		52,352,713
Net unrealized capital appreciation		185,761,680

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$1,303,356,213		29,400,000		$44.33

See financial notes 39

Table of Contents

Schwab U.S. Large-Cap Value ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $5,042)		$17,911,278
Interest		4
Securities on loan	+	37,644
Total investment income		17,948,926
Expenses
Investment adviser fees		428,594
Total expenses	–	428,594
Net investment income		17,520,332
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(2,626,698)
Net realized gains on in-kind redemptions		58,133,215
Net realized gains on futures contracts	+	55,118
Net realized gains		55,561,635
Net change in unrealized appreciation (depreciation) on investments	+	(33,443,777)
Net realized and unrealized gains		22,117,858
Increase in net assets resulting from operations		$39,638,190

40 See financial notes

Table of Contents

Schwab U.S. Large-Cap Value ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$17,520,332	$22,801,496
Net realized gains		55,561,635	15,739,141
Net change in unrealized appreciation (depreciation)	+	(33,443,777)	135,710,697
Increase in net assets resulting from operations		39,638,190	174,251,334
Distributions to Shareholders
Distributions from net investment income		($15,312,525)	($21,232,840)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		6,950,000	$301,145,916	8,900,000	$364,173,324
Shares redeemed	+	(4,250,000)	(184,691,520)	(1,400,000)	(55,308,685)
Net transactions in fund shares		2,700,000	$116,454,396	7,500,000	$308,864,639
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		26,700,000	$1,162,576,152	19,200,000	$700,693,019
Total increase	+	2,700,000	140,780,061	7,500,000	461,883,133
End of period		29,400,000	$1,303,356,213	26,700,000	$1,162,576,152
Net investment income not yet distributed			$6,402,578		$4,194,771

See financial notes 41

Table of Contents

Schwab U.S. Mid-Cap ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	1/12/11 ¹– 8/31/11
Per-Share Data ($)
Net asset value at beginning of period	40.56	32.94	26.56	23.75	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.34 ²	0.56	0.51	0.37	0.18
Net realized and unrealized gains (losses)	2.17	7.62	6.40	2.77	(1.29)
Total from investment operations	2.51	8.18	6.91	3.14	(1.11)
Less distributions:
Distributions from net investment income	(0.28)	(0.56)	(0.53)	(0.33)	(0.14)
Net asset value at end of period	42.79	40.56	32.94	26.56	23.75
Total return (%)	6.23 ³	24.97	26.27	13.32	(4.49) ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.07 ⁴	0.07	0.07	0.13	0.13 ⁴
Net investment income (loss)	1.72 ⁴	1.53	1.70	1.53	1.18 ⁴
Portfolio turnover rate⁵	9 ³	9	25	19	9 ³
Net assets, end of period ($ x 1,000)	1,619,705	1,190,517	611,081	205,840	79,550

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

42 See financial notes

Table of Contents

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.9%	Common Stock	1,364,949,965	1,617,855,348
1.3%	Other Investment Companies	21,721,092	21,721,092
0.0%	Short-Term Investment	249,997	249,999
101.2%	Total Investments	1,386,921,054	1,639,826,439
(1.2)%	Other Assets and Liabilities, Net		(20,121,142)
100.0%	Net Assets		1,619,705,297

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.9% of net assets
Automobiles & Components 1.1%
Other Securities		1.1	18,077,561
Banks 3.3%
Other Securities		3.3	53,877,704
Capital Goods 11.7%
Masco Corp.	219,817	0.4	5,757,007
Pall Corp.	65,659	0.4	6,619,084
TransDigm Group, Inc.	30,281	0.4	6,566,738
United Rentals, Inc. *	61,726	0.4	5,744,222
Wabtec Corp.	59,414	0.3	5,637,794
Other Securities		9.8	159,669,364
		11.7	189,994,209
Commercial & Professional Services 3.1%
Equifax, Inc.	74,044	0.4	6,913,488
Towers Watson & Co., Class A	43,459	0.4	5,714,859
Other Securities		2.3	36,872,266
		3.1	49,500,613
Consumer Durables & Apparel 5.3%
D.R. Horton, Inc.	204,958	0.3	5,597,403
Hanesbrands, Inc.	61,323	0.5	7,821,135

Security	Number of Shares	% of Net Assets	Value ($)
Harman International Industries, Inc.	42,489	0.4	5,863,057
Jarden Corp. *	110,681	0.4	5,873,841
Mohawk Industries, Inc. *	38,460	0.4	7,090,101
Newell Rubbermaid, Inc.	167,766	0.4	6,591,526
Polaris Industries, Inc.	37,717	0.4	5,783,148
Other Securities		2.5	40,553,469
		5.3	85,173,680
Consumer Services 2.5%
H&R Block, Inc.	171,270	0.4	5,848,870
Other Securities		2.1	33,960,563
		2.5	39,809,433
Diversified Financials 3.0%
Other Securities		3.0	48,564,521
Energy 4.5%
Tesoro Corp.	77,816	0.4	7,146,621
Other Securities		4.1	65,712,818
		4.5	72,859,439
Food & Staples Retailing 0.6%
Other Securities		0.6	9,895,610
Food, Beverage & Tobacco 1.1%
Other Securities		1.1	18,215,015
Health Care Equipment & Services 4.5%
Other Securities		4.5	72,562,456
Household & Personal Products 0.8%
Other Securities		0.8	13,028,451
Insurance 5.7%
FNF Group	171,956	0.4	6,314,224
Markel Corp. *	8,636	0.4	6,437,620
Other Securities		4.9	80,247,558
		5.7	92,999,402
Materials 7.4%
International Flavors & Fragrances, Inc.	49,968	0.4	6,092,598
Rock-Tenn Co., Class A	86,774	0.4	5,956,167
Sealed Air Corp.	131,734	0.4	6,208,623
Vulcan Materials Co.	80,744	0.4	6,701,752
Other Securities		5.8	95,216,766
		7.4	120,175,906
Media 1.9%
The Interpublic Group of Cos., Inc.	260,478	0.4	5,808,659
Other Securities		1.5	24,765,841
		1.9	30,574,500

See financial notes 43

Table of Contents

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 6.0%
Alkermes plc *	89,545	0.4	6,290,536
BioMarin Pharmaceutical, Inc. *	96,208	0.6	10,300,991
Endo International plc *	102,049	0.5	8,735,394
Hospira, Inc. *	104,833	0.6	9,177,081
Incyte Corp. *	94,451	0.5	8,108,618
Jazz Pharmaceuticals plc *	37,491	0.4	6,376,844
Medivation, Inc. *	48,090	0.3	5,652,018
Pharmacyclics, Inc. *	37,871	0.5	8,177,485
Salix Pharmaceuticals Ltd. *	39,472	0.4	6,204,998
Other Securities		1.8	28,382,566
		6.0	97,406,531
Real Estate 10.3%
CBRE Group, Inc., Class A *	173,494	0.4	5,943,904
Federal Realty Investment Trust	42,213	0.4	5,995,512
Realty Income Corp.	136,843	0.4	6,850,361
SL Green Realty Corp.	59,939	0.5	7,608,057
Other Securities		8.6	141,061,070
		10.3	167,458,904
Retailing 5.0%
Advance Auto Parts, Inc.	45,063	0.4	6,981,611
Signet Jewelers Ltd.	49,420	0.4	5,924,470
Staples, Inc.	395,037	0.4	6,622,795
Tractor Supply Co.	83,861	0.5	7,389,831
Ulta Salon, Cosmetics & Fragrance, Inc. *	39,927	0.3	5,620,125
Other Securities		3.0	47,614,741
		5.0	80,153,573
Semiconductors & Semiconductor Equipment 2.1%
Skyworks Solutions, Inc.	117,531	0.6	10,313,345
Other Securities		1.5	23,685,938
		2.1	33,999,283
Software & Services 8.1%
Akamai Technologies, Inc. *	109,357	0.5	7,601,405
Computer Sciences Corp.	87,069	0.4	6,174,933
ServiceNow, Inc. *	81,222	0.4	6,193,990
Other Securities		6.8	110,552,671
		8.1	130,522,999
Technology Hardware & Equipment 3.5%
Palo Alto Networks, Inc. *	41,093	0.4	5,844,247
Other Securities		3.1	51,174,101
		3.5	57,018,348
Telecommunication Services 1.2%
Level 3 Communications, Inc. *	172,576	0.6	9,294,944
Other Securities		0.6	10,239,568
		1.2	19,534,512

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 2.2%
Expeditors International of Washington, Inc.	118,292	0.4	5,713,504
Other Securities		1.8	29,630,407
		2.2	35,343,911
Utilities 5.0%
American Water Works Co., Inc.	110,349	0.4	5,967,674
CMS Energy Corp.	169,570	0.4	5,956,994
Other Securities		4.2	69,184,119
		5.0	81,108,787
Total Common Stock
(Cost $1,364,949,965)			1,617,855,348

Other Investment Companies 1.3% of net assets
Money Market Fund 0.0%
Other Securities		0.0	704,110
Securities Lending Collateral 1.3%
Other Securities		1.3	21,016,982
Total Other Investment Companies
(Cost $21,721,092)			21,721,092
Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investment 0.0% of net assets
U.S. Treasury Obligation 0.0%
Other Securities		0.0	249,999
Total Short-Term Investment
(Cost $249,997)			249,999

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $1,388,018,909 and the unrealized appreciation and depreciation were $290,471,122 and ($38,663,592), respectively, with a net unrealized appreciation of $251,807,530.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $21,251,294. Non-Cash Collateral pledged to the fund for securities on loan amounted to $1,067,811.
(b)	The rate shown is the 7-day yield.
(c)	The rate shown is the purchase yield.
(d)	All or a portion of this security is held as collateral for open futures contracts.

44 See financial notes

Table of Contents

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

In addition to the above, the fund held the following at 02/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/20/15	9	946,260	4,105

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$1,617,855,348	$—	$—	$1,617,855,348
Other Investment Companies¹	21,721,092	—	—	21,721,092
Short-Term Investment¹	—	249,999	—	249,999
Total	$1,639,576,440	$249,999	$—	$1,639,826,439
Other Financial Instruments
Futures Contracts²	$4,105	$—	$—	$4,105

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

See financial notes 45

Table of Contents

Schwab U.S. Mid-Cap ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $1,365,904,072) including securities on loan of $21,251,294		$1,618,809,457
Collateral invested for securities on loan, at value (cost $21,016,982)	+	21,016,982
Total investments, at value (cost $1,386,921,054)		1,639,826,439
Receivables:
Investments sold		166,861
Fund shares sold		12,923,159
Dividends		1,442,420
Income from securities on loan	+	74,642
Total assets		1,654,433,521
Liabilities
Collateral held for securities on loan		21,016,982
Payables:
Investments bought		13,689,456
Investment adviser fees		18,591
Variation margin on futures contracts	+	3,195
Total liabilities		34,728,224
Net Assets
Total assets		1,654,433,521
Total liabilities	–	34,728,224
Net assets		$1,619,705,297
Net Assets by Source
Capital received from investors		1,340,905,761
Net investment income not yet distributed		3,466,424
Net realized capital gains		22,423,622
Net unrealized capital appreciation		252,909,490

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$1,619,705,297		37,850,000		$42.79

46 See financial notes

Table of Contents

Schwab U.S. Mid-Cap ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $5,934)		$11,163,471
Interest		13
Securities on loan	+	367,079
Total investment income		11,530,563
Expenses
Investment adviser fees		450,071
Total expenses	–	450,071
Net investment income		11,080,492
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(1,902,237)
Net realized gains on in-kind redemptions		32,135,102
Net realized losses on futures contracts	+	(65,342)
Net realized gains		30,167,523
Net change in unrealized appreciation (depreciation) on investments		49,144,194
Net change in unrealized appreciation (depreciation) on futures contracts	+	4,105
Net change in unrealized appreciation (depreciation)	+	49,148,299
Net realized and unrealized gains		79,315,822
Increase in net assets resulting from operations		$90,396,314

See financial notes 47

Table of Contents

Schwab U.S. Mid-Cap ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$11,080,492	$14,575,387
Net realized gains		30,167,523	33,308,554
Net change in unrealized appreciation (depreciation)	+	49,148,299	142,865,701
Increase in net assets resulting from operations		90,396,314	190,749,642
Distributions to Shareholders
Distributions from net investment income		($8,640,620)	($14,140,400)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		11,000,000	$445,754,122	13,850,000	$515,129,958
Shares redeemed	+	(2,500,000)	(98,321,441)	(3,050,000)	(112,303,454)
Net transactions in fund shares		8,500,000	$347,432,681	10,800,000	$402,826,504
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		29,350,000	$1,190,516,922	18,550,000	$611,081,176
Total increase	+	8,500,000	429,188,375	10,800,000	579,435,746
End of period		37,850,000	$1,619,705,297	29,350,000	$1,190,516,922
Net investment income not yet distributed			$3,466,424		$1,026,552

48 See financial notes

Table of Contents

Schwab U.S. Small-Cap ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12	9/1/10– 8/31/11	10/30/09 ¹– 8/31/10
Per-Share Data ($)
Net asset value at beginning of period	54.53	45.71	36.55	32.34	26.48	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.48 ²	0.73	0.74	0.49	0.39	0.23
Net realized and unrealized gains (losses)	2.35	8.84	9.18	4.16	5.86	1.45 ³
Total from investment operations	2.83	9.57	9.92	4.65	6.25	1.68
Less distributions:
Distributions from net investment income	(0.37)	(0.75)	(0.76)	(0.44)	(0.39)	(0.20)
Net asset value at end of period	56.99	54.53	45.71	36.55	32.34	26.48
Total return (%)	5.24 ⁴	21.01	27.47	14.52	23.55	6.67 ⁴
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.08 ⁵	0.08	0.09 ⁶	0.13	0.13	0.14 ^5,7
Net investment income (loss)	1.81 ⁵	1.41	1.74	1.44	1.17	1.05 ⁵
Portfolio turnover rate⁸	7 ⁴	13	22	12	11	8 ⁴
Net assets, end of period ($ x 1,000)	2,610,222	2,104,717	1,446,857	641,516	462,523	193,310

*	Unaudited.
¹	Commencement of operations.
²	Calculated based on the average shares outstanding during the period.
³	The per share amount does not accord with the change in aggregate gains and losses in securities during the period because of the timing of sales and repurchases of fund shares in relation to fluctuating market values.
⁴	Not annualized.
⁵	Annualized.
⁶	Effective September 20, 2012, the annual operating expense ratio was reduced to 0.10%. On March 11, 2013, the rate was further reduced to 0.08%. The ratio presented for the period ended 8/31/13 is a blended ratio.
⁷	Effective June 14, 2010, the annual operating expense ratio was reduced. The ratio presented for period ended 8/31/10 is a blended ratio.
⁸	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

See financial notes 49

Table of Contents

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.6%	Common Stock	2,135,145,714	2,598,343,126
0.0%	Rights	115,418	115,419
0.0%	Warrants	—	—
3.7%	Other Investment Companies	97,139,458	97,139,458
0.0%	Short-Term Investments	414,999	414,998
103.3%	Total Investments	2,232,815,589	2,696,013,001
(3.3)%	Other Assets and Liabilities, Net		(85,791,202)
100.0%	Net Assets		2,610,221,799

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.6% of net assets
Automobiles & Components 1.2%
Gentex Corp.	290,496	0.2	5,118,540
Other Securities		1.0	27,075,412
		1.2	32,193,952
Banks 7.7%
East West Bancorp, Inc.	144,914	0.2	5,789,314
Signature Bank *	49,977	0.2	6,164,663
SVB Financial Group *	50,617	0.2	6,220,829
Other Securities		7.1	182,704,872
		7.7	200,879,678
Capital Goods 9.7%
Acuity Brands, Inc.	43,653	0.3	6,918,127
Allegion plc	93,674	0.2	5,407,800
Huntington Ingalls Industries, Inc.	47,026	0.3	6,646,185
Spirit AeroSystems Holdings, Inc., Class A *	128,257	0.2	6,311,527
The Middleby Corp. *	56,643	0.2	6,038,710
Other Securities		8.5	220,965,427
		9.7	252,287,776

Security	Number of Shares	% of Net Assets	Value ($)
Commercial & Professional Services 3.1%
KAR Auction Services, Inc.	139,665	0.2	5,093,583
Other Securities		2.9	75,747,415
		3.1	80,840,998
Consumer Durables & Apparel 2.5%
Brunswick Corp.	92,775	0.2	5,032,116
Other Securities		2.3	58,912,170
		2.5	63,944,286
Consumer Services 4.3%
Domino's Pizza, Inc.	54,562	0.2	5,539,680
Service Corp. International	204,983	0.2	5,093,828
Other Securities		3.9	102,104,801
		4.3	112,738,309
Diversified Financials 2.8%
CBOE Holdings, Inc.	83,069	0.2	4,986,632
ETRADE Financial Corp.	285,930	0.3	7,444,188
Other Securities		2.3	61,289,682
		2.8	73,720,502
Energy 4.1%
Other Securities		4.1	107,410,975
Food & Staples Retailing 1.0%
Rite Aid Corp. *	886,700	0.3	7,075,866
Other Securities		0.7	18,186,877
		1.0	25,262,743
Food, Beverage & Tobacco 1.8%
The Hain Celestial Group, Inc. *	97,752	0.2	6,112,433
The WhiteWave Foods Co. *	169,137	0.3	6,926,160
Other Securities		1.3	34,781,261
		1.8	47,819,854
Health Care Equipment & Services 6.2%
athenahealth, Inc. *	37,505	0.2	4,765,760
Brookdale Senior Living, Inc. *	180,333	0.3	6,764,291
Centene Corp. *	117,768	0.3	7,238,021
Teleflex, Inc.	41,068	0.2	4,997,565
Other Securities		5.2	137,765,907
		6.2	161,531,544
Household & Personal Products 0.4%
Other Securities		0.4	10,182,347
Insurance 3.2%
Other Securities		3.2	83,401,781
Materials 5.3%
Bemis Co., Inc.	97,247	0.2	4,745,654
Graphic Packaging Holding Co. *	319,503	0.2	4,821,300
NewMarket Corp.	10,516	0.2	4,954,088

50 See financial notes

Table of Contents

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Sonoco Products Co.	100,360	0.2	4,699,859
Other Securities		4.5	119,243,645
		5.3	138,464,546
Media 1.8%
Other Securities		1.8	47,332,400
Pharmaceuticals, Biotechnology & Life Sciences 6.4%
Alkermes plc *	143,393	0.4	10,073,358
Alnylam Pharmaceuticals, Inc. *	70,397	0.3	7,147,407
Isis Pharmaceuticals, Inc. *	115,989	0.3	7,952,206
United Therapeutics Corp. *	46,600	0.3	7,225,330
Other Securities		5.1	133,838,915
		6.4	166,237,216
Real Estate 10.5%
Mid-America Apartment Communities, Inc.	72,957	0.2	5,287,194
Omega Healthcare Investors, Inc.	133,340	0.2	5,341,600
Spirit Realty Capital, Inc.	390,034	0.2	4,777,917
Starwood Property Trust, Inc.	222,461	0.2	5,428,048
The Howard Hughes Corp. *	35,045	0.2	5,249,391
Other Securities		9.5	247,606,400
		10.5	273,690,550
Retailing 4.3%
Liberty Ventures, Series A *	133,104	0.2	5,348,119
Other Securities		4.1	106,728,291
		4.3	112,076,410
Semiconductors & Semiconductor Equipment 3.4%
ON Semiconductor Corp. *	428,389	0.2	5,461,960
Qorvo, Inc. *	142,421	0.4	9,884,017
SunEdison, Inc. *	248,401	0.2	5,499,598
Other Securities		2.6	68,044,146
		3.4	88,889,721
Software & Services 8.6%
Broadridge Financial Solutions, Inc.	119,423	0.2	6,356,886
CoStar Group, Inc. *	32,095	0.2	6,392,040
Splunk, Inc. *	116,452	0.3	7,831,397
Other Securities		7.9	204,620,149
		8.6	225,200,472
Technology Hardware & Equipment 5.2%
Brocade Communications Systems, Inc.	429,289	0.2	5,318,891
Palo Alto Networks, Inc. *	65,723	0.4	9,347,125
Other Securities		4.6	122,174,746
		5.2	136,840,762
Telecommunication Services 0.5%
Other Securities		0.5	13,705,554

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 2.5%
Alaska Air Group, Inc.	129,609	0.3	8,249,613
Old Dominion Freight Line, Inc. *	67,446	0.2	5,268,882
Ryder System, Inc.	52,702	0.2	4,953,461
Spirit Airlines, Inc. *	71,495	0.2	5,560,881
Other Securities		1.6	40,147,664
		2.5	64,180,501
Utilities 3.1%
Atmos Energy Corp.	99,782	0.2	5,292,437
Other Securities		2.9	74,217,812
		3.1	79,510,249
Total Common Stock
(Cost $2,135,145,714)			2,598,343,126

Rights 0.0% of net assets
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Other Securities		0.0	—
Telecommunication Services 0.0%
Other Securities		0.0	115,419
Total Rights
(Cost $115,418)			115,419

Warrants 0.0% of net assets
Energy 0.0%
Other Securities		0.0	—
Total Warrants
(Cost $—)			—

Other Investment Companies 3.7% of net assets
Money Market Fund 0.2%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.00% (d)	4,939,225	0.2	4,939,225
Securities Lending Collateral 3.5%
Other Securities		3.5	92,200,233
Total Other Investment Companies
(Cost $97,139,458)			97,139,458

See financial notes 51

Table of Contents

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

Security Rate, Maturity Date	Face Amount ($)	% of Net Assets	Value ($)
Short-Term Investments 0.0% of net assets
U.S. Treasury Obligations 0.0%
Other Securities		0.0	414,998
Total Short-Term Investment
(Cost $414,999)			414,998

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $2,234,792,818 and the unrealized appreciation and depreciation were $568,535,723 and ($107,315,540), respectively, with a net unrealized appreciation of $461,220,183.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $88,289,290. Non-Cash Collateral pledged to the fund for securities on loan amounted to $533,022.
(b)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(c)	Illiquid security. At the period end, the value of these amounted to $115,419 or 0.0% of net assets.
(d)	The rate shown is the 7-day yield.
(e)	The rate shown is the purchase yield.
(f)	All or a portion of this security is held as collateral for open futures contracts.

CVR –	Contingent Value Rights
REIT –	Real Estate Investment Trust

In addition to the above, the fund held the following at 2/28/15:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
Russell 2000 Index, e-mini, Long, expires 03/20/15	75	9,237,000	31,631

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$2,598,343,126	$—	$—	$2,598,343,126
Rights ¹	—	—	115,419	115,419
Warrants ¹	—	—	—	—
Other Investment Companies¹	97,139,458	—	—	97,139,458
Short-Term Investments¹	—	414,998	—	414,998
Total	$2,695,482,584	$414,998	$115,419	$2,696,013,001
Other Financial Instruments
Futures Contracts²	$31,631	$—	$—	$31,631

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

52 See financial notes

Table of Contents

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings (Unaudited) continued

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

Investments in Securities	Balance as of August 31, 2014	Realized Gains (Losses)	Change in Unrealized Gains (Losses)	Gross Purchases	Gross Sales	Gross Transfers in	Gross Transfers out	Balance as of February 28, 2015
Rights	$115,419	$—	$—	$—	$—	$—	$—	$115,419
Total	$115,419	$—	$—	$—	$—	$—	$—	$115,419

See financial notes 53

Table of Contents

Schwab U.S. Small-Cap ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $2,140,615,356) including securities on loan of $88,289,290		$2,603,812,768
Collateral invested for securities on loan, at value (cost $92,200,233)	+	92,200,233
Total investments, at value (cost $2,232,815,589)		2,696,013,001
Cash		145,418
Receivables:
Investments sold		4,453,409
Dividends		2,229,381
Income from securities on loan	+	321,054
Total assets		2,703,162,263
Liabilities
Collateral held for securities on loan		92,200,233
Payables:
Investments bought		657,294
Investment adviser fees		34,327
Variation margin on futures contracts	+	48,610
Total liabilities		92,940,464
Net Assets
Total assets		2,703,162,263
Total liabilities	–	92,940,464
Net assets		$2,610,221,799
Net Assets by Source
Capital received from investors		2,108,133,337
Net investment income not yet distributed		5,365,471
Net realized capital gains		33,493,948
Net unrealized capital appreciation		463,229,043

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$2,610,221,799		45,800,000		$56.99

54 See financial notes

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Schwab U.S. Small-Cap ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends (net of foreign withholding tax of $3,160)		$19,108,951
Interest		23
Securities on loan	+	1,776,902
Total investment income		20,885,876
Expenses
Investment adviser fees		885,037
Total expenses	–	885,037
Net investment income		20,000,839
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(3,896,109)
Net realized gains on in-kind redemptions		54,305,201
Net realized gains on futures contracts	+	85,313
Net realized gains		50,494,405
Net change in unrealized appreciation (depreciation) on investments		59,153,542
Net change in unrealized appreciation (depreciation) on futures contracts	+	10,241
Net change in unrealized appreciation (depreciation)	+	59,163,783
Net realized and unrealized gains		109,658,188
Increase in net assets resulting from operations		$129,659,027

See financial notes 55

Table of Contents

Schwab U.S. Small-Cap ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$20,000,839	$26,692,311
Net realized gains		50,494,405	76,440,009
Net change in unrealized appreciation (depreciation)	+	59,163,783	218,372,146
Increase in net assets resulting from operations		129,659,027	321,504,466
Distributions to Shareholders
Distributions from net investment income		($15,063,975)	($27,201,420)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		10,050,000	$542,327,317	10,900,000	$564,215,091
Shares redeemed	+	(2,850,000)	(151,417,237)	(3,950,000)	(200,658,054)
Net transactions in fund shares		7,200,000	$390,910,080	6,950,000	$363,557,037
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		38,600,000	$2,104,716,667	31,650,000	$1,446,856,584
Total increase	+	7,200,000	505,505,132	6,950,000	657,860,083
End of period		45,800,000	$2,610,221,799	38,600,000	$2,104,716,667
Net investment income not yet distributed			$5,365,471		$428,607

56 See financial notes

Table of Contents

Schwab U.S. Dividend Equity ETF™

Financial Statements

Financial Highlights

	9/1/14– 2/28/15*	9/1/13– 8/31/14	9/1/12– 8/31/13	10/19/11 ¹– 8/31/12
Per-Share Data ($)
Net asset value at beginning of period	38.90	33.00	28.58	25.00
Income (loss) from investment operations:
Net investment income (loss)	0.58 ²	1.04	0.91	0.62
Net realized and unrealized gains (losses)	1.66	5.86	4.40	3.43
Total from investment operations	2.24	6.90	5.31	4.05
Less distributions:
Distributions from net investment income	(0.53)	(1.00)	(0.89)	(0.47)
Net asset value at end of period	40.61	38.90	33.00	28.58
Total return (%)	5.80 ³	21.15	18.93	16.31 ³
Ratios/Supplemental Data (%)
Ratios to average net assets:
Total expenses	0.07 ⁴	0.07	0.07	0.17 ⁴
Net investment income (loss)	2.98 ⁴	3.01	3.09	3.19 ⁴
Portfolio turnover rate⁵	4 ³	26	13	17 ³
Net assets, end of period ($ x 1,000)	2,826,376	2,075,331	1,141,690	504,464

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

See financial notes 57

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Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings as of February 28, 2015 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.7%	Common Stock	2,552,651,633	2,817,710,952
0.0%	Other Investment Companies	1,112,210	1,161,996
99.7%	Total Investments	2,553,763,843	2,818,872,948
0.3%	Other Assets and Liabilities, Net		7,503,302
100.0%	Net Assets		2,826,376,250

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.7% of net assets
Banks 0.1%
Other Securities		0.1	3,059,471
Capital Goods 13.6%
3M Co.	414,107	2.5	69,839,146
Eaton Corp. plc	302,936	0.8	21,511,485
Emerson Electric Co.	446,806	0.9	25,879,004
General Dynamics Corp.	203,300	1.0	28,213,974
Illinois Tool Works, Inc.	232,263	0.8	22,961,520
Lockheed Martin Corp.	172,384	1.2	34,485,419
Northrop Grumman Corp.	133,104	0.8	22,056,664
Raytheon Co.	197,773	0.8	21,511,769
The Boeing Co.	428,271	2.3	64,604,680
United Technologies Corp.	543,501	2.3	66,258,207
Other Securities		0.2	7,231,902
		13.6	384,553,770
Commercial & Professional Services 0.1%
Other Securities		0.1	2,398,014
Consumer Durables & Apparel 0.7%
Other Securities		0.7	20,325,377
Consumer Services 2.8%
McDonald's Corp.	627,539	2.2	62,063,607
Other Securities		0.6	16,543,740
		2.8	78,607,347

Security	Number of Shares	% of Net Assets	Value ($)
Diversified Financials 0.7%
T. Rowe Price Group, Inc.	167,624	0.5	13,845,743
Other Securities		0.2	4,663,571
		0.7	18,509,314
Energy 11.7%
Chevron Corp.	1,173,560	4.4	125,195,381
ConocoPhillips	785,303	1.8	51,201,756
Exxon Mobil Corp.	1,387,490	4.3	122,848,365
The Williams Cos., Inc.	428,586	0.7	21,017,857
Other Securities		0.5	10,623,063
		11.7	330,886,422
Food & Staples Retailing 3.5%
Sysco Corp.	373,961	0.5	14,580,739
Wal-Mart Stores, Inc.	1,008,358	3.0	84,631,487
		3.5	99,212,226
Food, Beverage & Tobacco 12.1%
Altria Group, Inc.	1,266,152	2.5	71,271,696
General Mills, Inc.	392,232	0.7	21,098,159
Kellogg Co.	163,001	0.4	10,510,305
PepsiCo, Inc.	962,548	3.4	95,273,001
Reynolds American, Inc.	197,483	0.5	14,933,665
The Coca-Cola Co.	2,520,653	3.9	109,144,275
Other Securities		0.7	18,950,798
		12.1	341,181,899
Health Care Equipment & Services 1.2%
Baxter International, Inc.	346,816	0.8	23,982,326
Other Securities		0.4	8,755,017
		1.2	32,737,343
Household & Personal Products 6.7%
Colgate-Palmolive Co.	548,481	1.4	38,843,424
Kimberly-Clark Corp.	238,135	0.9	26,113,884
The Procter & Gamble Co.	1,366,750	4.1	116,351,427
Other Securities		0.3	8,872,412
		6.7	190,181,147
Insurance 1.0%
Aflac, Inc.	287,899	0.6	17,921,713
Other Securities		0.4	10,165,733
		1.0	28,087,446
Materials 4.3%
Air Products & Chemicals, Inc.	122,854	0.7	19,182,424
E.I. du Pont de Nemours & Co.	584,036	1.6	45,467,203
International Paper Co.	272,080	0.5	15,348,033
The Dow Chemical Co.	717,227	1.2	35,316,257
Other Securities		0.3	5,973,607
		4.3	121,287,524
Media 0.7%
Omnicom Group, Inc.	159,806	0.4	12,710,969
Other Securities		0.3	6,315,602
		0.7	19,026,571

58 See financial notes

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Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings (Unaudited) continued

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 10.4%
Eli Lilly & Co.	627,606	1.5	44,039,113
Johnson & Johnson	1,157,614	4.2	118,667,011
Pfizer, Inc.	3,859,952	4.7	132,473,553
		10.4	295,179,677
Retailing 5.2%
Target Corp.	404,983	1.1	31,114,844
The Home Depot, Inc.	859,502	3.5	98,627,854
Other Securities		0.6	17,897,735
		5.2	147,640,433
Semiconductors & Semiconductor Equipment 6.5%
Analog Devices, Inc.	200,555	0.4	11,740,490
Intel Corp.	3,162,689	3.7	105,159,409
Texas Instruments, Inc.	681,890	1.4	40,095,132
Other Securities		1.0	27,370,549
		6.5	184,365,580
Software & Services 5.6%
Automatic Data Processing, Inc.	307,844	1.0	27,348,861
Microsoft Corp.	2,622,868	4.1	115,012,762
Paychex, Inc.	208,300	0.4	10,380,631
Other Securities		0.1	6,589,885
		5.6	159,332,139
Technology Hardware & Equipment 0.2%
Other Securities		0.2	5,193,219
Telecommunication Services 8.7%
AT&T, Inc.	3,311,109	4.1	114,431,927
Verizon Communications, Inc.	2,646,884	4.6	130,888,414
		8.7	245,320,341
Transportation 3.4%
CSX Corp.	640,000	0.8	21,958,400
Norfolk Southern Corp.	198,223	0.8	21,638,023

Security	Number of Shares	% of Net Assets	Value ($)
United Parcel Service, Inc., Class B	449,034	1.6	45,680,229
Other Securities		0.2	6,943,929
		3.4	96,220,581
Utilities 0.5%
Other Securities		0.5	14,405,111
Total Common Stock
(Cost $2,552,651,633)			2,817,710,952

Other Investment Companies 0.0% of net assets
Equity Fund 0.0%
Other Securities		0.0	414,000
Money Market Fund 0.0%
Other Securities		0.0	747,996
Total Other Investment Companies
(Cost $1,112,210)			1,161,996

End of Investments.

At 02/28/15, the tax basis cost of the fund's investments was $2,554,092,929 and the unrealized appreciation and depreciation were $292,369,686 and ($27,589,667), respectively, with a net unrealized appreciation of $264,780,019.

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

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

ETF –

Exchange Traded Fund

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2015 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$2,817,710,952	$—	$—	$2,817,710,952
Other Investment Companies¹	1,161,996	—	—	1,161,996
Total	$2,818,872,948	$—	$—	$2,818,872,948

¹	As categorized in the complete schedule of portfolio holdings.

See financial notes 59

Table of Contents

Schwab U.S. Dividend Equity ETF

Statement of

Assets and Liabilities

As of February 28, 2015; unaudited

Assets
Investments, at value (cost $2,553,763,843)		$2,818,872,948
Receivables:
Investments sold		1,243,105
Dividends		10,641,028
Fund shares sold	+	6,113,355
Total assets		2,836,870,436
Liabilities
Payables:
Investments bought		10,461,653
Investment adviser fees	+	32,533
Total liabilities		10,494,186
Net Assets
Total assets		2,836,870,436
Total liabilities	–	10,494,186
Net assets		$2,826,376,250
Net Assets by Source
Capital received from investors		2,420,579,478
Net investment income not yet distributed		15,603,015
Net realized capital gains		125,084,652
Net unrealized capital appreciation		265,109,105

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$2,826,376,250		69,600,001		$40.61

60 See financial notes

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Schwab U.S. Dividend Equity ETF

Statement of

Operations

For the period September 1, 2014 through February 28, 2015; unaudited

Investment Income
Dividends		$37,834,118
Interest	+	3
Total investment income		37,834,121
Expenses
Investment adviser fees		869,543
Total expenses	–	869,543
Net investment income		36,964,578
Realized and Unrealized Gains (Losses)
Net realized gains on investments		211,307
Net realized gains on in-kind redemptions		134,773,922
Net realized gains on futures contracts	+	71,707
Net realized gains		135,056,936
Net change in unrealized appreciation (depreciation) on investments	+	(24,842,386)
Net realized and unrealized gains		110,214,550
Increase in net assets resulting from operations		$147,179,128

See financial notes 61

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Schwab U.S. Dividend Equity ETF

Statement of

Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/14-2/28/15		9/1/13-8/31/14
Net investment income		$36,964,578	$48,439,591
Net realized gains		135,056,936	51,936,047
Net change in unrealized appreciation (depreciation)	+	(24,842,386)	188,477,636
Increase in net assets resulting from operations		147,179,128	288,853,274
Distributions to Shareholders
Distributions from net investment income		($32,555,941)	($42,886,221)

Transactions in Fund Shares
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	VALUE	SHARES	VALUE
Shares sold		30,350,000	$1,194,081,531	27,100,000	$991,701,989
Shares redeemed	+	(14,100,000)	(557,659,540)	(8,350,000)	(304,028,292)
Net transactions in fund shares		16,250,000	$636,421,991	18,750,000	$687,673,697
Shares Outstanding and Net Assets
		9/1/14-2/28/15		9/1/13-8/31/14
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		53,350,001	$2,075,331,072	34,600,001	$1,141,690,322
Total increase	+	16,250,000	751,045,178	18,750,000	933,640,750
End of period		69,600,001	$2,826,376,250	53,350,001	$2,075,331,072
Net investment income not yet distributed			$15,603,015		$11,194,378

62 See financial notes

Table of Contents

Schwab U.S. Equity ETFs

Financial Notes, unaudited

1. Business Structure of the Funds:

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

2. Significant Accounting Policies:

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

(a) Security Valuation:

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

• Futures contracts (“futures”): Futures are valued at their settlement prices as of the close of their exchanges.

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

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations.

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

The levels associated with valuing the funds' investments as of February 28, 2015 are disclosed in the Portfolio Holdings.

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

(d) Investment Income:

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(e) Expenses:

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

(h) Federal Income Taxes:

(i) Indemnification:

(j) New Accounting Pronouncements:

3. Risk Factors:

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

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

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

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

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

Sampling Index Tracking Risk. Certain funds may not fully replicate the index and may hold securities not included in the index. As a result, a fund will be 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. Because certain funds utilize a sampling approach they may not track the return of their respective index as well as they would if the funds purchased all of the securities in their respective benchmark index.

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

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

4. Affiliates and Affiliated Transactions:

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

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

Schwab U.S. Broad Market ETF		Schwab U.S. Large-Cap ETF		Schwab U.S. Large-Cap Growth ETF		Schwab U.S. Large-Cap Value ETF		Schwab U.S. Mid-Cap ETF		Schwab U.S. Small-Cap ETF		Schwab U.S. Dividend Equity ETF
0.04%		0.04%		0.07%		0.07%		0.07%		0.08%		0.07%

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

Fund	Balance of Shares Held at 08/31/14	Gross Purchases	Gross Sales	Balance of Shares Held at 2/28/15	Market Value at 2/28/15	Realized Gains (Losses) 9/1/14 to 2/28/15	Dividends Received 9/1/14 to 2/28/15
Schwab U.S. Broad Market ETF	192,519	55,424	(2,944)	244,999	$7,188,271	$49,061	$27,234
Schwab U.S. Large-Cap ETF	191,618	54,944	(13,775)	232,787	6,829,971	94,586	25,572
Schwab U.S. Large-Cap Growth ETF	175,888	68,680	(19,800)	224,768	6,594,693	57,144	24,981

	Underlying Funds
	Schwab U.S. Large-Cap ETF	Schwab U.S. Small-Cap ETF
Schwab VIT Balanced Portfolio	0.2%	0.1%
Schwab VIT Balanced with Growth Portfolio	0.5%	0.2%
Schwab VIT Growth Portfolio	0.8%	0.3%

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

5. Other Service Providers:

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

6. Board of Trustees:

7. Borrowing from Banks:

8. Derivatives:

Certain funds entered into equity index futures contracts during the report period. The fund invested in futures to equitize available cash. The fair value and variation margin for futures contracts held at February 28, 2015 are presented on the Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the fund’s accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Contract Values	Number of Contracts
Schwab U.S. Broad Market ETF	$3,287,821	33
Schwab U.S. Large-Cap ETF	3,415,283	34
Schwab U.S. Large-Cap Growth ETF	3,925,675*	39*
Schwab U.S. Large-Cap Value ETF	1,847,925*	18*
Schwab U.S. Mid-Cap ETF	1,064,477	11
Schwab U.S. Small-Cap ETF	3,538,772	30
Schwab U.S. Dividend Equity ETF	1,201,608*	12*

*	During the period, the fund did not hold futures contracts at any month-end. The average value and number of contracts were calculated by aggregating the highest daily values held each month during the period.

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

9. Purchases and Sales/Maturities of Investment Securities:

For the period ended February 28, 2015, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales/Maturities of Securities
Schwab U.S. Broad Market ETF	$100,329,813	$66,395,354
Schwab U.S. Large-Cap ETF	98,620,136	83,513,764
Schwab U.S. Large-Cap Growth ETF	184,476,987	153,206,939
Schwab U.S. Large-Cap Value ETF	180,267,939	171,078,233
Schwab U.S. Mid-Cap ETF	141,034,284	121,737,556
Schwab U.S. Small-Cap ETF	182,703,829	149,788,577
Schwab U.S. Dividend Equity ETF	101,795,608	96,044,036

10. In-Kind Transactions:

The in-kind transactions for the period ended February 28, 2015 were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab U.S. Broad Market ETF	$1,043,834,678	$55,949,210
Schwab U.S. Large-Cap ETF	837,335,231	88,656,060
Schwab U.S. Large-Cap Growth ETF	522,504,759	212,138,912
Schwab U.S. Large-Cap Value ETF	291,105,311	182,161,257
Schwab U.S. Mid-Cap ETF	438,083,932	96,495,784
Schwab U.S. Small-Cap ETF	525,560,241	142,241,924
Schwab U.S. Dividend Equity ETF	1,167,625,096	534,926,557

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

11. Federal Income Taxes

Expiration Date	Schwab U.S. Broad Market ETF	Schwab U.S. Large-Cap ETF	Schwab U.S. Large-Cap Growth ETF	Schwab U.S. Large-Cap Value ETF	Schwab U.S. Mid-Cap ETF	Schwab U.S. Small-Cap ETF	Schwab U.S. Dividend Equity ETF
August 31, 2019	$—	$721,062	$691,441	$295,384	$218,695	$927,631	$—
No expiration*	4,860,368	4,392,658	7,594,027	2,451,027	7,195,556	14,608,766	3,568,931
Total	$4,860,368	$5,113,720	$8,285,468	$2,746,411	$7,414,251	$15,536,397	$3,568,931

	Schwab U.S. Broad Market ETF	Schwab U.S. Large-Cap ETF	Schwab U.S. Large-Cap Growth ETF	Schwab U.S. Large-Cap Value ETF	Schwab U.S. Mid-Cap ETF	Schwab U.S. Small-Cap ETF	Schwab U.S. Dividend Equity ETF
Deferred capital losses	$49,227	$—	$—	$—	$—	$—	$6,505,541
Capital loss carryforwards utilized	—	1,136,819	—	—	—	—	—

12. Subsequent Events:

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Investment Advisory Agreement Approval

The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds a meeting each year that is dedicated, in part, to considering whether to renew the investment advisory agreement between Schwab Strategic Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab U.S. Broad Market ETF, Schwab U.S. Large-Cap ETF, Schwab U.S. Large-Cap Growth ETF, Schwab U.S. Large-Cap Value ETF, Schwab U.S. Mid-Cap ETF, Schwab U.S. Small-Cap ETF and Schwab U.S. Dividend Equity ETF (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting, the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. In addition, the Independent Trustees meet in executive session outside the presence of fund management and participate in question and answer sessions with representatives of CSIM.

The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at a meeting held on September 3, 2014, and approved the renewal of the Agreement with respect to the Funds for an additional one year term. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at this meeting and at prior meetings, including:

1.	the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds;

2. each Fund’s investment performance and how it compared to that of certain other comparable exchange-traded funds;

3. each Fund’s expenses and how those expenses compared to those of certain other comparable exchange-traded funds;

4.	the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to the Funds, including both direct and indirect benefits accruing to CSIM and its affiliates; and

5. the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors.

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this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.

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Trustees and Officers

Independent Trustees
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee since 2009)	Retired/Private Investor (January 2009 – present); Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds.	21	Director, PS Business Parks, Inc. (2005 – 2012).
Stephen Timothy Kochis 1946 Trustee (Trustee since 2012)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (January 2008 – April 2012).	21	None
Charles A. Ruffel 1956 Trustee (Trustee since 2009)	Managing Partner and Co-Founder, Kudu Advisors, LLC (financial services) (May 2009 – present); Director, Asset International, Inc. (publisher of financial services information) (Jan. 2009 – Nov. 2014).	95	None

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

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Marie Chandoha 1961 President and Chief Executive Officer (Officer since 2010)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (January 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010)..

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Officers of the Trust (continued)
Name, Year of Birth, and Position(s) with the trust; (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
George Pereira 1964 Treasurer and Principal Financial Officer (Officer since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer since 2011)	Senior Vice President and Chief Investment Officer – Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer since 2011)	Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – Jan. 2008).
David Lekich 1964 Chief Legal Officer and Secretary (Officer since 2011)	Senior Vice President (Sept. 2011 – present), Vice President (March 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer since 2009)	Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (March 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).

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

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Glossary

ask See “offer.”

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

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

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

cap, capitalization See “market cap.”

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

dividend yield A stock’s indicated annual dividend divided by current price. At the portfolio level, it is the value-weighted average of the dividend yield of the securities in the portfolio.

Dow Jones U.S. Broad Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, which measures all U.S. equity securities with readily available prices. The index includes approximately 2,500 stocks and is float-adjusted market cap weighted.

Dow Jones U.S. Dividend 100 Index An index that is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The 100-component index is a subset of the Dow Jones U.S. Broad Market Index, excluding REITs, master limited partnerships, preferred stocks and convertibles. All index eligible stocks must have sustained at least 10 consecutive years of dividend payments, have a minimum float-adjusted market capitalization of $500 million and meet minimum liquidity criteria. The index is modified market capitalization weighted.

Dow Jones U.S. Large-Cap Growth Total Stock Market Index An index that includes the large-cap growth portion of the Dow Jones U.S. Total Stock Market Index. The index is float-adjusted market capitalization weighted and includes components ranked 1-750 by full market capitalization and that are classified as “growth” based on a number of factors.

Dow Jones U.S. Large-Cap Total Stock Market Index An index that is a subset of the Dow Jones U.S. Total Stock Market Index, which measures all U.S. equity securities with readily available prices. The index represents the largest 750 stocks and is float-adjusted market cap weighted.

Dow Jones U.S. Large-Cap Value Total Stock Market Index An index that includes the large-cap value portion of the Dow Jones U.S. Total Stock Market Index. The index is float-adjusted market capitalization weighted and includes the components ranked 1-750 by full market capitalization and that are classified as “value” based on a number of factors.

Dow Jones U.S. Mid-Cap Total Stock Market Index is a subset of the Dow Jones U.S. Total Stock Market Index, which measures all U.S. equity securities with readily available prices. The index includes the components ranked 501-1000 by full market capitalization and is float-adjusted market cap weighted.

Dow Jones U.S. Small-Cap Total Stock Market Index is a subset of the Dow Jones U.S. Total Stock Market Index, which measures all U.S. equity securities with readily available prices. The index includes components ranked 751-2500 by full market capitalization and is float-adjusted market cap weighted.

Dow Jones U.S. Total Stock Market Index An index that measures all U.S. equity securities with readily available prices.

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

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

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

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

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

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