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 – Schwab U.S. REIT ETF
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
Jonathan de. St. Paer
Schwab Strategic Trust - Schwab U.S. REIT ETF
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: February 28
Date of reporting period: August 31, 2022
Item 1: Report(s) to Shareholders.
Total Returns for the 6 Months Ended August 31, 2022 | |
Schwab U.S. REIT ETF (Ticker Symbol: SCHH) | |
Market Price Return1 | -6.74% |
NAV Return1 | -6.81% |
Dow Jones Equity All REIT Capped Index | -6.78% |
ETF Category: Morningstar Real Estate2 | -8.83% |
Performance Details | pages 6-7 |
1 | ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively. |
2 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date. |
* | The net version of the index reflects reinvested dividends net of withholding taxes but reflects no deductions for expenses or other taxes. |
Christopher Bliss, CFA, Managing Director and Head of Passive Equity Strategies for Schwab Asset Management, is responsible for overseeing the investment process and portfolio management of investment strategies for passive equity Schwab Funds and Schwab ETFs. Before joining Schwab in 2016, Mr. Bliss spent 12 years at BlackRock (formerly Barclays Global Investors) managing and leading institutional index teams, most recently as a managing director and the head of the Americas institutional index team. In this role, Mr. Bliss was responsible for overseeing a team of portfolio managers managing domestic, developed international and emerging markets index strategies. Prior to BlackRock, he worked as an equity analyst and portfolio manager for Harris Bretall and before that, as a research analyst for JP Morgan. |
Jeremy Brown, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining Schwab in 2017, Mr. Brown spent six years with ALPS Advisors, Inc. in Denver, most recently as a senior analyst on the ETF portfolio management and research team where he performed portfolio management, trading, and analytics/research functions for ALPS ETFs and passive funds. Additionally, Mr. Brown led a number of investment research, commentary, industry trend analysis, and sales and marketing support initiatives. |
Ferian Juwono, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining Schwab in 2010, Mr. Juwono worked at BlackRock (formerly Barclays Global Investors) where he spent more than three years as a portfolio manager, managing equity index funds for institutional clients, and two years as a senior business analyst. Prior to that, Mr. Juwono worked for more than four years as a senior financial analyst with Union Bank of California. |
Sabya Sinha, Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to joining Schwab in 2015, Mr. Sinha spent a year at F-Squared Investments on the product development and analytics team. Prior to F-Squared, he worked at IndexIQ Advisors as a senior index portfolio manager for three years and for Bank of America’s Columbia Management subsidiary as a portfolio manager for three years. Mr. Sinha also spent time as a software consultant at DPM Mellon, LLC and an equity trader at Jane Street Capital. |
Fund and Inception Date | 6 Months | 1 Year | 5 Years | 10 Years |
Fund: Schwab U.S. REIT ETF (1/13/11) | ||||
Market Price Return2 | -6.74% | -9.97% | 3.59% | 6.03% |
NAV Return2 | -6.81% | -10.01% | 3.59% | 6.03% |
Dow Jones Equity All REIT Capped Index3 | -6.78% | -9.95% | N/A | N/A |
REIT Spliced Index | -6.78% | -9.95% | 3.61% | 6.11% |
ETF Category: Morningstar Real Estate4 | -8.83% | -11.53% | 5.28% | 6.93% |
Fund Expense Ratio5: 0.07% |
1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. |
2 | ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively. |
3 | The inception date of the Dow Jones Equity All REIT Capped Index is April 13, 2020. The fund began tracking the index on June 22, 2020. |
4 | Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date. |
5 | As stated in the prospectus. |
Number of Holdings | 135 |
Weighted Average Market Cap (millions) | $39,379 |
Price/Earnings Ratio (P/E) | 30.5 |
Price/Book Ratio (P/B) | 2.3 |
Portfolio Turnover Rate | 3% 2,3 |
1 | Excludes derivatives. |
2 | Not annualized. |
3 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
4 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
5 | This list is not a recommendation of any security by the investment adviser. |
EXPENSE RATIO (ANNUALIZED) 1 | BEGINNING ACCOUNT VALUE AT 3/1/22 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 8/31/22 | EXPENSES PAID DURING PERIOD 3/1/22-8/31/22 2 | |
Schwab U.S. REIT ETF | ||||
Actual Return | 0.07% | $1,000.00 | $ 931.90 | $0.34 |
Hypothetical 5% Return | 0.07% | $1,000.00 | $1,024.85 | $0.36 |
1 | Based on the most recent six-month expense ratio. |
2 | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 184 days of the period, and divided by 365 days of the fiscal year. |
3/1/22– 8/31/221 | 3/1/21– 2/28/221 | 3/1/20– 2/28/211 | 3/1/19– 2/29/201 | 3/1/18– 2/28/191 | 3/1/17– 2/28/181 | |
Per-Share Data | ||||||
Net asset value at beginning of period | $23.30 | $19.48 | $21.15 | $21.65 | $18.54 | $21.04 |
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.28 | 0.43 | 0.42 | 0.66 | 0.65 | 0.60 |
Net realized and unrealized gains (losses) | (1.87) | 3.79 | (1.54) | (0.50) | 3.17 | (2.64) |
Total from investment operations | (1.59) | 4.22 | (1.12) | 0.16 | 3.82 | (2.04) |
Less distributions: | ||||||
Distributions from net investment income | (0.18) | (0.40) | (0.55) | (0.66) | (0.71) | (0.46) |
Net asset value at end of period | $21.53 | $23.30 | $19.48 | $21.15 | $21.65 | $18.54 |
Total return | (6.81%) 3 | 21.56% | (4.98%) | 0.59% | 20.85% | (9.91%) |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.07% 4,5 | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% |
Net investment income (loss) | 2.45% 4 | 1.81% | 2.33% | 2.88% | 3.17% | 2.93% |
Portfolio turnover rate6 | 3% 3 | 5% | 59% | 6% | 7% | 8% |
Net assets, end of period (x 1,000,000) | $5,934 | $6,648 | $4,892 | $5,717 | $5,127 | $3,691 |
1 | Per-Share Data has been retroactively adjusted to reflect a 2-for-1 share split effective after market close on March 10, 2022 (see financial note 12 for additional information). |
2 | Calculated based on the average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized (except for proxy expenses). |
5 | Ratio includes less than 0.005% of non-routine proxy expenses. |
6 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
COMMON STOCKS 99.9% OF NET ASSETS | ||
Diversified REITs 2.8% | ||
Alexander & Baldwin, Inc. | 327,816 | 6,139,994 |
American Assets Trust, Inc. | 237,499 | 6,592,972 |
Armada Hoffler Properties, Inc. | 305,366 | 4,009,456 |
Broadstone Net Lease, Inc. | 764,576 | 14,633,985 |
Empire State Realty Trust, Inc., Class A | 616,075 | 4,294,043 |
Essential Properties Realty Trust, Inc. | 626,643 | 14,187,197 |
Global Net Lease, Inc. | 467,430 | 6,436,511 |
iStar, Inc. | 373,691 | 5,145,725 |
STORE Capital Corp. | 1,139,974 | 30,756,498 |
WP Carey, Inc. | 870,900 | 73,181,727 |
165,378,108 | ||
Health Care REITs 8.3% | ||
CareTrust REIT, Inc. | 438,517 | 9,445,656 |
Community Healthcare Trust, Inc. | 106,300 | 3,921,407 |
Diversified Healthcare Trust | 1,074,540 | 1,568,828 |
Global Medical REIT, Inc. | 277,791 | 3,011,255 |
Healthcare Realty Trust, Inc., Class A | 1,718,673 | 41,798,127 |
Healthpeak Properties, Inc. | 2,435,886 | 63,942,008 |
LTC Properties, Inc. | 177,997 | 7,990,285 |
Medical Properties Trust, Inc. | 2,709,163 | 39,580,871 |
National Health Investors, Inc. | 207,095 | 13,566,794 |
Omega Healthcare Investors, Inc. | 1,061,930 | 34,682,634 |
Physicians Realty Trust | 1,017,307 | 16,948,335 |
Sabra Health Care REIT, Inc. | 1,042,960 | 15,613,111 |
Ventas, Inc. | 1,804,540 | 86,365,284 |
Welltower, Inc. | 2,049,569 | 157,099,464 |
495,534,059 | ||
Hotel & Resort REITs 2.8% | ||
Apple Hospitality REIT, Inc. | 961,271 | 15,293,822 |
Ashford Hospitality Trust, Inc. * | 155,515 | 1,427,628 |
Chatham Lodging Trust * | 220,686 | 2,683,542 |
DiamondRock Hospitality Co. * | 951,107 | 8,303,164 |
Host Hotels & Resorts, Inc. | 3,226,944 | 57,342,795 |
Park Hotels & Resorts, Inc. | 1,053,910 | 14,754,740 |
Pebblebrook Hotel Trust | 593,447 | 10,456,536 |
RLJ Lodging Trust | 753,996 | 9,093,192 |
Ryman Hospitality Properties, Inc. * | 248,959 | 20,469,409 |
Service Properties Trust | 744,655 | 5,093,440 |
Summit Hotel Properties, Inc. | 482,893 | 3,795,539 |
Sunstone Hotel Investors, Inc. * | 972,304 | 10,588,390 |
Xenia Hotels & Resorts, Inc. * | 516,870 | 8,197,558 |
167,499,755 | ||
Industrial REITs 12.4% | ||
Americold Realty Trust, Inc. | 1,215,702 | 35,765,953 |
Duke Realty Corp. | 1,735,719 | 102,147,063 |
EastGroup Properties, Inc. | 188,166 | 31,053,035 |
First Industrial Realty Trust, Inc. | 595,958 | 30,203,151 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Industrial Logistics Properties Trust | 295,019 | 2,209,692 |
Innovative Industrial Properties, Inc. | 126,353 | 11,589,097 |
LXP Industrial Trust | 1,294,727 | 13,024,954 |
Plymouth Industrial REIT, Inc. | 180,943 | 3,667,715 |
Prologis, Inc. | 3,342,108 | 416,125,867 |
Rexford Industrial Realty, Inc. | 744,995 | 46,346,139 |
STAG Industrial, Inc. | 809,039 | 24,918,401 |
Terreno Realty Corp. | 341,006 | 20,797,956 |
737,849,023 | ||
Office REITs 5.8% | ||
Alexandria Real Estate Equities, Inc. | 670,540 | 102,860,836 |
Boston Properties, Inc. | 643,810 | 51,137,828 |
Brandywine Realty Trust | 773,064 | 6,207,704 |
City Office REIT, Inc. | 197,010 | 2,275,466 |
Corporate Office Properties Trust | 507,756 | 13,120,415 |
Cousins Properties, Inc. | 671,663 | 18,034,152 |
Douglas Emmett, Inc. | 793,800 | 15,494,976 |
Easterly Government Properties, Inc. | 409,474 | 7,350,058 |
Equity Commonwealth * | 508,888 | 13,388,843 |
Highwoods Properties, Inc. | 474,888 | 14,441,344 |
Hudson Pacific Properties, Inc. | 653,683 | 8,635,152 |
JBG SMITH Properties | 491,196 | 10,791,576 |
Kilroy Realty Corp. | 474,214 | 23,127,417 |
Office Properties Income Trust | 218,426 | 3,837,745 |
Orion Office REIT, Inc. | 255,914 | 2,525,871 |
Paramount Group, Inc. | 741,075 | 5,135,650 |
Piedmont Office Realty Trust, Inc., Class A | 556,297 | 6,553,179 |
SL Green Realty Corp. | 289,637 | 12,793,266 |
Veris Residential, Inc. * | 361,309 | 4,855,993 |
Vornado Realty Trust | 718,525 | 18,839,725 |
341,407,196 | ||
Residential REITs 15.1% | ||
American Homes 4 Rent, Class A | 1,334,138 | 47,441,947 |
Apartment Income REIT Corp. | 709,275 | 28,973,884 |
Apartment Investment & Management Co., Class A * | 688,665 | 6,087,799 |
AvalonBay Communities, Inc. | 631,239 | 126,822,227 |
Bluerock Residential Growth REIT, Inc., Class A | 126,608 | 3,374,103 |
Camden Property Trust | 480,917 | 61,802,644 |
Centerspace | 69,302 | 5,223,985 |
Equity LifeStyle Properties, Inc. | 781,006 | 54,748,521 |
Equity Residential | 1,544,948 | 113,059,295 |
Essex Property Trust, Inc. | 294,956 | 78,181,037 |
Independence Realty Trust, Inc. | 997,308 | 19,397,641 |
Invitation Homes, Inc. | 2,755,429 | 99,966,964 |
Mid-America Apartment Communities, Inc. | 521,130 | 86,335,607 |
NexPoint Residential Trust, Inc. | 104,321 | 5,510,235 |
Sun Communities, Inc. | 549,042 | 84,393,246 |
UDR, Inc. | 1,351,251 | 60,630,632 |
UMH Properties, Inc. | 227,545 | 4,104,912 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Washington Real Estate Investment Trust | 395,238 | 7,750,617 |
893,805,296 | ||
Retail REITs 11.8% | ||
Acadia Realty Trust | 427,985 | 6,817,801 |
Agree Realty Corp. | 339,418 | 25,564,964 |
Brixmor Property Group, Inc. | 1,352,240 | 29,046,115 |
Federal Realty Investment Trust | 322,678 | 32,677,601 |
Getty Realty Corp. | 183,383 | 5,516,161 |
InvenTrust Properties Corp. | 303,968 | 7,982,200 |
Kimco Realty Corp. | 2,790,061 | 58,814,486 |
Kite Realty Group Trust | 988,926 | 19,145,607 |
National Retail Properties, Inc. | 794,234 | 35,661,107 |
NETSTREIT Corp. | 216,151 | 4,249,529 |
Phillips Edison & Co., Inc. | 514,318 | 16,802,769 |
Realty Income Corp. | 2,716,117 | 185,456,469 |
Regency Centers Corp. | 700,332 | 42,608,199 |
Retail Opportunity Investments Corp. | 561,263 | 9,401,155 |
RPT Realty | 383,879 | 3,696,755 |
Simon Property Group, Inc. | 1,482,354 | 151,170,461 |
SITE Centers Corp. | 821,143 | 10,642,013 |
Spirit Realty Capital, Inc. | 606,339 | 24,768,948 |
Tanger Factory Outlet Centers, Inc. | 470,882 | 7,261,000 |
The Macerich Co. | 970,013 | 9,283,024 |
The Necessity Retail REIT, Inc. | 600,095 | 4,476,709 |
Urban Edge Properties | 497,887 | 7,831,762 |
Whitestone REIT | 209,559 | 2,062,061 |
700,936,896 | ||
Specialized REITs 40.9% | ||
American Tower Corp. | 2,097,995 | 532,995,630 |
Crown Castle, Inc. | 1,955,036 | 333,978,800 |
CubeSmart | 1,013,250 | 46,660,163 |
Digital Realty Trust, Inc. | 1,285,207 | 158,890,141 |
EPR Properties | 338,549 | 14,723,496 |
Equinix, Inc. | 410,935 | 270,136,341 |
Extra Space Storage, Inc. | 606,235 | 120,477,082 |
Farmland Partners, Inc. | 142,263 | 2,064,236 |
Four Corners Property Trust, Inc. | 363,137 | 9,764,754 |
Gaming & Leisure Properties, Inc. | 1,061,756 | 51,250,962 |
Gladstone Land Corp. | 140,414 | 3,301,133 |
Iron Mountain, Inc. | 1,311,815 | 69,014,587 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Lamar Advertising Co., Class A | 393,049 | 36,903,371 |
Life Storage, Inc. | 380,879 | 48,466,853 |
National Storage Affiliates Trust | 379,889 | 19,191,992 |
Outfront Media, Inc. | 659,412 | 11,671,592 |
PotlatchDeltic Corp. | 313,296 | 14,543,200 |
Public Storage | 689,454 | 228,092,067 |
Rayonier, Inc. | 660,485 | 23,460,427 |
Safehold, Inc. | 69,941 | 2,659,856 |
SBA Communications Corp. | 486,821 | 158,338,530 |
Uniti Group, Inc. | 1,071,420 | 10,060,634 |
VICI Properties, Inc. | 4,347,664 | 143,429,435 |
Weyerhaeuser Co. | 3,361,216 | 114,819,139 |
2,424,894,421 | ||
Total Common Stocks (Cost $5,614,578,148) | 5,927,304,754 |
SHORT-TERM INVESTMENTS 0.0% OF NET ASSETS | ||
Money Market Funds 0.0% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 2.25% (a) | 3,134,976 | 3,134,976 |
Total Short-Term Investments (Cost $3,134,976) | 3,134,976 | |
Total Investments in Securities (Cost $5,617,713,124) | 5,930,439,730 |
NUMBER OF CONTRACTS | NOTIONAL AMOUNT ($) | CURRENT VALUE/ UNREALIZED DEPRECIATION ($) | |
FUTURES CONTRACTS | |||
Long | |||
Dow Jones U.S. Real Estate Index, expires 09/16/22 | 160 | 5,835,200 | (366,992) |
* | Non-income producing security. |
(a) | The rate shown is the 7-day yield. |
REIT — | Real Estate Investment Trust |
DESCRIPTION | QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | TOTAL |
Asset | ||||
Common Stocks1 | $5,927,304,754 | $— | $— | $5,927,304,754 |
Short-Term Investments1 | 3,134,976 | — | — | 3,134,976 |
Liabilities | ||||
Futures Contracts2 | (366,992) | — | — | (366,992) |
Total | $5,930,072,738 | $— | $— | $5,930,072,738 |
1 | As categorized in the Portfolio Holdings. |
2 | Futures contracts are reported at cumulative unrealized appreciation or depreciation. |
Assets | ||
Investments in securities, at value - unaffiliated (cost $5,617,713,124) | $5,930,439,730 | |
Deposit with broker for futures contracts | 864,000 | |
Receivables: | ||
Fund shares sold | 6,458,492 | |
Dividends | 3,342,402 | |
Income from securities on loan | + | 291 |
Total assets | 5,941,104,915 | |
Liabilities | ||
Payables: | ||
Investments bought | 6,429,318 | |
Management fees | 372,528 | |
Variation margin on futures contracts | + | 25,571 |
Total liabilities | 6,827,417 | |
Net assets | $5,934,277,498 | |
Net Assets by Source | ||
Capital received from investors | $6,342,761,610 | |
Total distributable loss | + | (408,484,112) |
Net assets | $5,934,277,498 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$5,934,277,498 | 275,650,000 | $21.53 | ||
For the period March 1, 2022 through August 31, 2022 | ||
Investment Income | ||
Dividends received from securities - unaffiliated | $81,862,867 | |
Securities on loan, net | + | 662 |
Total investment income | 81,863,529 | |
Expenses | ||
Management fees | 2,266,035 | |
Proxy fees1 | + | 264,635 |
Total expenses | – | 2,530,670 |
Net investment income | 79,332,859 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized gains on sales of securities - unaffiliated | 5,742,823 | |
Net realized gains on sales of in-kind redemptions - unaffiliated | 166,206,797 | |
Net realized gains on futures contracts | + | 2,033,049 |
Net realized gains | 173,982,669 | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | (689,932,055) | |
Net change in unrealized appreciation (depreciation) on futures contracts | + | (207,861) |
Net change in unrealized appreciation (depreciation) | + | (690,139,916) |
Net realized and unrealized losses | (516,157,247) | |
Decrease in net assets resulting from operations | ($436,824,388) |
1 | Proxy fees are non-routine expenses (see financial note 2(e) for additional information). |
OPERATIONS | |||
3/1/22-8/31/22 | 3/1/21-2/28/22 | ||
Net investment income | $79,332,859 | $112,650,874 | |
Net realized gains | 173,982,669 | 140,921,180 | |
Net change in unrealized appreciation (depreciation) | + | (690,139,916) | 808,915,282 |
Increase (decrease) in net assets resulting from operations | ($436,824,388) | $1,062,487,336 | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($49,884,480) | ($105,641,785) |
TRANSACTIONS IN FUND SHARES1 | |||||
3/1/22-8/31/22 | 3/1/21-2/28/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 17,050,000 | $394,159,262 | 47,100,000 | $1,103,067,576 | |
Shares redeemed | + | (26,800,000) | (621,647,489) | (12,800,000) | (303,344,302) |
Net transactions in fund shares | (9,750,000) | ($227,488,227) | 34,300,000 | $799,723,274 | |
SHARES OUTSTANDING AND NET ASSETS1 | |||||
3/1/22-8/31/22 | 3/1/21-2/28/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 285,400,000 | $6,648,474,593 | 251,100,000 | $4,891,905,768 | |
Total increase (decrease) | + | (9,750,000) | (714,197,095) | 34,300,000 | 1,756,568,825 |
End of period | 275,650,000 | $5,934,277,498 | 285,400,000 | $6,648,474,593 |
1 | For the period ended August 31, 2022, and the prior report period, transactions in fund shares have been retroactively adjusted to reflect a 2-for-1 share split effective after market close on March 10, 2022. The retroactive adjustment of the share split does not change the transaction in fund share values (see financial note 12 for additional information). |
SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009) | |
Schwab U.S. REIT ETF | Schwab Short-Term U.S. Treasury ETF |
Schwab U.S. Broad Market ETF | Schwab Intermediate-Term U.S. Treasury ETF |
Schwab 1000 Index® ETF | Schwab Long-Term U.S. Treasury ETF |
Schwab U.S. Large-Cap ETF | Schwab U.S. Aggregate Bond ETF |
Schwab U.S. Large-Cap Growth ETF | Schwab 1-5 Year Corporate Bond ETF |
Schwab U.S. Large-Cap Value ETF | Schwab 5-10 Year Corporate 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 International Dividend Equity ETF | Schwab Fundamental International Large Company Index ETF |
Schwab International Equity ETF | Schwab Fundamental International Small Company Index ETF |
Schwab International Small-Cap Equity ETF | Schwab Fundamental Emerging Markets Large Company Index ETF |
Schwab Emerging Markets Equity ETF | Schwab Ariel ESG ETF |
Schwab U.S. TIPS ETF | Schwab Crypto Thematic ETF |
Schwab MarketTrack All Equity Portfolio | 0.6% |
Schwab MarketTrack Balanced Portfolio | 0.3% |
Schwab MarketTrack Conservative Portfolio | 0.1% |
Schwab MarketTrack Growth Portfolio | 0.6% |
Schwab Target 2010 Index Fund | 0.0%* |
Schwab Target 2015 Index Fund | 0.0%* |
Schwab Target 2020 Index Fund | 0.1% |
Schwab Target 2025 Index Fund | 0.3% |
Schwab Target 2030 Index Fund | 0.6% |
Schwab Target 2035 Index Fund | 0.4% |
Schwab Target 2040 Index Fund | 0.6% |
Schwab Target 2045 Index Fund | 0.4% |
Schwab Target 2050 Index Fund | 0.5% |
Schwab Target 2055 Index Fund | 0.3% |
Schwab Target 2060 Index Fund | 0.4% |
Schwab Target 2065 Index Fund | 0.0%* |
Schwab VIT Balanced Portfolio | 0.1% |
Schwab VIT Balanced with Growth Portfolio | 0.2% |
Schwab VIT Growth Portfolio | 0.2% |
* | Less than 0.05% |
6. Board of Trustees: |
PURCHASES OF SECURITIES | SALES OF SECURITIES |
$396,374,129 | $210,255,485 |
IN-KIND PURCHASES OF SECURITIES | IN-KIND SALES OF SECURITIES |
$357,957,750 | $583,642,215 |
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) |
$5,682,145,608 | $621,630,055 | ($373,702,925) | $247,927,130 |
PRIOR FISCAL YEAR END DISTRIBUTIONS | |
ORDINARY INCOME | |
$105,641,785 |
Denver, Colorado
October 21, 2022
Proposal – To elect each of the following individuals as trustees of the Trust: | For | Withheld |
Walter W. Bettinger II | 1,707,011,744.958 | 53,766,812.577 |
Richard A. Wurster | 1,741,778,933.018 | 18,999,624.517 |
Michael J. Beer | 1,741,911,579.511 | 18,866,978.024 |
Robert W. Burns | 1,742,002,589.714 | 18,775,967.821 |
Nancy F. Heller | 1,743,265,288.229 | 17,513,269.306 |
David L. Mahoney | 1,488,067,807.852 | 272,710,749.683 |
Jane P. Moncreiff | 1,743,396,670.121 | 17,381,887.414 |
Kiran M. Patel | 1,738,761,227.827 | 22,017,329.708 |
Kimberly S. Patmore | 1,740,654,694.664 | 20,123,862.871 |
J. Derek Penn | 1,739,737,491.136 | 21,041,066.399 |
1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of the investment adviser and its affiliates dedicated to the Fund; |
2. | the Fund’s investment performance and how it compared to that of certain other comparable exchange-traded funds and benchmark data; |
3. | the Fund’s expenses and how those expenses compared to those of certain other similar exchange-traded funds; |
4. | the profitability of the investment adviser and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to the Fund, including both direct and indirect benefits accruing to the investment adviser and its affiliates; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
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 |
Michael J. Beer 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022) | Retired. Director, President and Chief Executive Officer (Dec. 2016 – Sept. 2019), Principal Funds (investment management). | 105 | Director (2016 – 2019), Principal Funds, Inc. |
Robert W. Burns 1959 Trustee (Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor. | 105 | None |
Nancy F. Heller 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. | 105 | None |
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | 105 | Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – 2021), Adamas Pharmaceuticals, Inc. Director (2003 – 2019), Symantec Corporation |
Jane P. Moncreiff 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare). | 105 | None |
Independent Trustees (continued) | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
Kiran M. Patel 1948 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Retired. | 105 | Director (2008 – present), KLA-Tencor Corporation |
Kimberly S. Patmore 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008 – present), Patmore Management Consulting (management consulting). | 105 | None |
J. Derek Penn 1957 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Head of Equity Sales and Trading (2006 – 2018), BNY Mellon (financial services). | 105 | None |
Interested Trustees | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
Walter W. Bettinger II2 1960 Chairman and Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust since 2010) | Co-Chairman of the Board (July 2022 – present), Director and Chief Executive Officer (Oct. 2008 – present) and President (Feb. 2007 – Oct. 2021), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – Oct. 2021) and Director (May 2008 – Oct. 2021), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present), Chief Executive Officer (Aug. 2017 – present), and President (Aug. 2017 – Nov. 2021), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – Oct. 2021), Charles Schwab Investment Management, Inc. | 105 | Director (2008 – present), The Charles Schwab Corporation |
Interested Trustees (continued) | |||
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen by the Trustee | Other Directorships |
Richard A. Wurster2 1973 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022) | President (Oct. 2021 – present) and Executive Vice President – Schwab Asset Management Solutions (Apr. 2019 – Oct. 2021), The Charles Schwab Corporation; President, Director (Oct. 2021 – present), Executive Vice President – Schwab Asset Management Solutions (July 2019 – Oct. 2021) and Senior Vice President – Advisory (May 2016 – July 2019), Charles Schwab & Co., Inc.; President (Nov. 2021 – present), Schwab Holdings, Inc.; Director (Oct. 2021 – present) and Chief Executive Officer (Nov. 2019 – Jan. 2022), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Mar. 2018 – present), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (July 2016 – Apr. 2018) and President (Mar. 2017 – Apr. 2018), ThomasPartners, Inc.; Chief Executive Officer (July 2016 – Apr. 2018), Windhaven Investment Management, Inc. | 105 | None |
Officers of the Trust | |
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served3) | Principal Occupations During the Past Five Years |
Jonathan de St. Paer 1973 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019 – present), President (Oct. 2018 – present), Chief Operating Officer (Jan. 2021 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – Mar. 2022) and Chief Operating Officer (Jan. 2021 – Mar. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (Apr. 2019 – present), President (Nov. 2018 – present) and Trustee (Apr. 2019 – Dec. 2020), Schwab Funds, Laudus Trust and Schwab ETFs; Director (Mar. 2019 – Apr. 2022), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Managing Director (May 2022 – present), Senior Vice President (Apr. 2019 – May 2022) and Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), Charles Schwab & Co., Inc. |
Mark Fischer 1970 Treasurer, Chief Financial Officer and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Treasurer and Chief Financial Officer (Jan. 2016 – present) and Chief Operating Officer (Dec. 2020 – present), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.; Director (July 2020 – Apr. 2022), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited. |
Omar Aguilar 1970 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Chief Executive Officer (Jan. 2022 – present), Chief Investment Officer (Apr. 2011 – present) and Senior Vice President (Apr. 2011 – Dec. 2021), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust and Schwab ETFs. |
Brett Wander 1961 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust and Schwab ETFs. |
William P. McMahon, Jr. 1972 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Senior Vice President and Chief Investment Officer (Jan. 2020 – present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2021 – present), Schwab Funds, Laudus Trust and Schwab ETFs; Senior Vice President and Chief Investment Officer – ThomasPartners Strategies (Apr. 2018 – Dec. 2019), Charles Schwab Investment Advisory, Inc.; Senior Vice President and Chief Investment Officer (May 2001 – Apr. 2018), ThomasPartners, Inc. |
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 |
Catherine MacGregor 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Trust (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Chief Legal Officer (Mar. 2022 – present) and Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Managing Director (May 2022 – present) and Vice President (July 2005 – May 2022), Charles Schwab & Co., Inc.; Vice President (Dec. 2005 – present) and Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Trust; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President (Nov. 2005 – Oct. 2021) and Assistant Secretary (June 2007 – Oct. 2021), Schwab Funds; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President and Assistant Secretary (Oct. 2009 – Oct. 2021), Schwab ETFs. |
1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
2 | Mr. Bettinger and Mr. Wurster are Interested Trustees. Each of Mr. Bettinger and Mr. Wurster is an Interested Trustee because he owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc., the investment adviser for the trusts in the Fund Complex, and is an employee of Charles Schwab & Co., Inc. (Schwab), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust. |
3 | The President, Treasurer and Secretary/Clerk hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
Schwab ETFs
Index ETF
Printed on recycled paper.
* | FUNDAMENTAL INDEX is a registered trademark of Research Affiliates LLC. |
• | You may have to pay more money to trade the fund’s shares. This fund will provide less information to traders, who tend to charge more for trades when they have less information. |
• | The price you pay to buy fund shares on an exchange may not match the value of the fund’s portfolio. The same is true when you sell shares. These price differences may be greater for this fund compared to other ETFs because it provides less information to traders. |
• | These additional risks may be even greater in bad or uncertain market conditions. |
• | The ETF will publish on its website each day a “Proxy Portfolio” designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. |
Item 2: Code of Ethics.
Not applicable to this semi-annual report.
Item 3: Audit Committee Financial Expert.
Not applicable to this semi-annual report.
Item 4: Principal Accountant Fees and Services.
Not applicable to this semi-annual report.
Item 5: Audit Committee of Listed Registrants.
Not applicable to this semi-annual report.
Item 6: Schedule of Investments.
The schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11: Controls and Procedures.
(a) | Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Jonathan de St. Paer and Registrant’s Chief Financial Officer, Mark Fischer, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above. |
(b) | During the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting. |
Item 12: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
(a) (1) Code of ethics – not applicable to this semi-annual report.
(2) |
(b) |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Schwab Strategic Trust - Schwab U.S. REIT ETF
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer Chief Executive Officer | ||
Date: | October 21, 2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer Chief Executive Officer | ||
Date: | October 21, 2022 |
By: | /s/ Mark Fischer | |
Mark Fischer Chief Financial Officer | ||
Date: | October 21, 2022 |