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 Ariel ESG ETF and Schwab Crypto Thematic 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 Ariel ESG ETF and Schwab Crypto Thematic 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: March 31
Date of reporting period: September 30, 2022
Item 1: Report(s) to Shareholders.
THIS FUND IS DIFFERENT FROM TRADITIONAL ETFs |
Traditional ETFs tell the public what assets they hold each day. This fund will not. This may create additional risks for your investment. For example: |
• 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. |
The differences between this fund and other ETFs may also have advantages. By keeping certain information about the fund secret, this fund may face less risk that other traders can predict or copy its investment strategy. This may improve the fund’s performance. If other traders are able to copy or predict the fund’s investment strategy, however, this may hurt the fund’s performance. |
For additional information regarding the unique attributes and risks of the fund, see Proxy Portfolio Risk, Premium/Discount Risk, Trading Halt Risk, Authorized Participant Concentration Risk, Tracking Error Risk and Shares of the Fund May Trade at Prices Other Than NAV in the Principal Risks and Proxy Portfolio and Proxy Overlap sections of the prospectus and/or the Statement of Additional Information. These risks are also discussed in the Financial Notes of this report. |
Total Returns for the 6 Months Ended September 30, 2022 | |
Schwab Ariel ESG ETF (Ticker Symbol: SAEF) | |
Market Price Return1 | -21.14% |
NAV Return1 | -21.30% |
Russell 2500TM Index | -19.32% |
ETF Category: Mid-Cap Blend2 | -17.56% |
Performance Details | pages 4-5 |
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. |
Fund and Inception Date | 6 Months | Since Inception* |
Fund: Schwab Ariel ESG ETF (11/16/21) | ||
Market Price Return2 | -21.14% | -27.72% |
NAV Return2 | -21.30% | -27.96% |
Russell 2500TM Index | -19.32% | -27.31% |
ETF Category: Mid-Cap Blend3 | -17.56% | N/A |
Fund Expense Ratio4: 0.59% |
* | Inception (11/16/21) represents the date that the shares began trading in the secondary market. |
1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. |
2 | ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the 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 | 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. |
4 | As stated in the prospectus. |
Number of Holdings | 61 |
Weighted Average Market Cap (millions) | $14,261 |
Price/Earnings Ratio (P/E) | 12.8 |
Price/Book Ratio (P/B) | 1.8 |
Portfolio Turnover Rate | 10% 1,2 |
1 | Not annualized. |
2 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
3 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
4 | This list is not a recommendation of any security by the investment adviser. |
EXPENSE RATIO (ANNUALIZED) 1 | BEGINNING ACCOUNT VALUE AT 4/1/22 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 9/30/22 | EXPENSES PAID DURING PERIOD 4/1/22-9/30/22 2 | |
Schwab Ariel ESG ETF | ||||
Actual Return | 0.59% | $1,000.00 | $ 787.00 | $2.64 |
Hypothetical 5% Return | 0.59% | $1,000.00 | $1,022.11 | $2.99 |
1 | Based on the most recent six-month expense ratio. |
2 | Expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 183 days of the period, and divided by 365 days of the fiscal year. |
4/1/22– 9/30/22* | 11/16/21 1– 3/31/22 | |||||
Per-Share Data | ||||||
Net asset value at beginning of period | $22.84 | $25.00 | ||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.07 | 0.05 | ||||
Net realized and unrealized gains (losses) | (4.93) | (2.16) | ||||
Total from investment operations | (4.86) | (2.11) | ||||
Less distributions: | ||||||
Distributions from net investment income | (0.05) | (0.05) | ||||
Net asset value at end of period | $17.93 | $22.84 | ||||
Total return | (21.30%) 3 | (8.46%) 3 | ||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.59% 4,5 | 0.59% 6 | ||||
Net investment income (loss) | 0.65% 4 | 0.61% 6 | ||||
Portfolio turnover rate7 | 10% 3 | 15% 3 | ||||
Net assets, end of period (x 1,000) | $10,665 | $10,622 |
* | Unaudited. |
1 | Commencement of operations. |
2 | Calculated based on the average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized (except for proxy expenses). |
5 | Ratio includes less than 0.005% of non-routine proxy expenses. |
6 | Annualized. |
7 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
COMMON STOCKS 99.0% OF NET ASSETS | ||
Automobiles & Components 3.4% | ||
BorgWarner, Inc. | 4,745 | 148,993 |
Gentex Corp. | 8,925 | 212,772 |
361,765 | ||
Banks 2.8% | ||
M&T Bank Corp. | 1,709 | 301,331 |
Capital Goods 14.8% | ||
Generac Holdings, Inc. * | 1,125 | 200,408 |
Kennametal, Inc. | 8,476 | 174,436 |
Masco Corp. | 2,436 | 113,737 |
nVent Electric PLC | 7,744 | 244,788 |
Resideo Technologies, Inc. * | 15,515 | 295,716 |
Sensata Technologies Holding PLC | 4,755 | 177,266 |
Simpson Manufacturing Co., Inc. | 1,310 | 102,704 |
Snap-on, Inc. | 744 | 149,804 |
The Middleby Corp. * | 962 | 123,300 |
1,582,159 | ||
Commercial & Professional Services 7.1% | ||
Brady Corp., Class A | 2,380 | 99,317 |
Dun & Bradstreet Holdings, Inc. | 11,424 | 141,543 |
Korn Ferry | 1,588 | 74,557 |
Stericycle, Inc. * | 4,641 | 195,432 |
The Brink's Co. | 4,983 | 241,377 |
752,226 | ||
Consumer Durables & Apparel 3.2% | ||
Mattel, Inc. * | 12,227 | 231,579 |
Mohawk Industries, Inc. * | 1,190 | 108,516 |
340,095 | ||
Consumer Services 11.1% | ||
ADT, Inc. | 27,068 | 202,739 |
Adtalem Global Education, Inc. * | 3,239 | 118,062 |
Lindblad Expeditions Holdings, Inc. * | 30,595 | 206,822 |
Norwegian Cruise Line Holdings Ltd. * | 27,403 | 311,298 |
OneSpaWorld Holdings Ltd. * | 41,146 | 345,627 |
1,184,548 | ||
Diversified Financials 8.1% | ||
KKR & Co., Inc. | 4,760 | 204,680 |
Lazard Ltd., Class A | 5,697 | 181,335 |
Northern Trust Corp. | 2,968 | 253,942 |
The Goldman Sachs Group, Inc. | 777 | 227,700 |
867,657 | ||
SECURITY | NUMBER OF SHARES | VALUE ($) |
Food & Staples Retailing 1.1% | ||
Walgreens Boots Alliance, Inc. | 3,808 | 119,571 |
Food, Beverage & Tobacco 0.7% | ||
The JM Smucker Co. | 565 | 77,637 |
Health Care Equipment & Services 7.9% | ||
Cardinal Health, Inc. | 2,261 | 150,763 |
Envista Holdings Corp. * | 5,060 | 166,019 |
Laboratory Corp. of America Holdings | 872 | 178,594 |
Patterson Cos., Inc. | 5,804 | 139,412 |
Zimmer Biomet Holdings, Inc. | 1,834 | 191,745 |
Zimvie, Inc. * | 1,446 | 14,272 |
840,805 | ||
Household & Personal Products 1.1% | ||
Reynolds Consumer Products, Inc. | 4,614 | 120,010 |
Insurance 5.2% | ||
Aflac, Inc. | 3,641 | 204,624 |
First American Financial Corp. | 3,927 | 181,035 |
The Progressive Corp. | 1,402 | 162,926 |
548,585 | ||
Materials 1.4% | ||
Axalta Coating Systems Ltd. * | 6,902 | 145,356 |
Media & Entertainment 8.0% | ||
Madison Square Garden Entertainment Corp. * | 5,150 | 227,063 |
Madison Square Garden Sports Corp. * | 952 | 130,100 |
Manchester United Plc, Class A | 16,303 | 216,341 |
Paramount Global, Class B | 6,691 | 127,397 |
The Interpublic Group of Cos., Inc. | 6,096 | 156,058 |
856,959 | ||
Pharmaceuticals, Biotechnology & Life Sciences 4.9% | ||
Bio-Rad Laboratories, Inc., Class A * | 281 | 117,216 |
Charles River Laboratories International, Inc. * | 940 | 184,992 |
Prestige Consumer Healthcare, Inc. * | 4,474 | 222,940 |
525,148 | ||
Real Estate 3.0% | ||
CBRE Group, Inc., Class A * | 2,499 | 168,707 |
Jones Lang LaSalle, Inc. * | 979 | 147,898 |
316,605 | ||
Retailing 0.7% | ||
CarMax, Inc. * | 1,190 | 78,564 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Software & Services 5.5% | ||
Fair Isaac Corp. * | 503 | 207,241 |
Fiserv, Inc. * | 2,856 | 267,236 |
The Hackett Group, Inc. | 6,386 | 113,160 |
587,637 | ||
Technology Hardware & Equipment 9.0% | ||
Keysight Technologies, Inc. * | 1,423 | 223,923 |
Knowles Corp. * | 9,610 | 116,954 |
Littelfuse, Inc. | 862 | 171,271 |
Motorola Solutions, Inc. | 727 | 162,826 |
Zebra Technologies Corp., Class A * | 1,066 | 279,303 |
954,277 | ||
Total Common Stocks (Cost $13,705,877) | 10,560,935 |
SECURITY | NUMBEROF SHARES | VALUE ($) |
SHORT-TERM INVESTMENTS 1.4% OF NET ASSETS | ||
Money Market Funds 1.4% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 2.94% (a) | 147,816 | 147,816 |
Total Short-Term Investments (Cost $147,816) | 147,816 | |
Total Investments in Securities (Cost $13,853,693) | 10,708,751 |
* | Non-income producing security. |
(a) | The rate shown is the 7-day yield. |
DESCRIPTION | QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | TOTAL |
Assets | ||||
Common Stocks1 | $10,560,935 | $— | $— | $10,560,935 |
Short-Term Investments1 | 147,816 | — | — | 147,816 |
Total | $10,708,751 | $— | $— | $10,708,751 |
1 | As categorized in the Portfolio Holdings. |
Assets | ||
Investments in securities, at value - unaffiliated (cost $13,853,693) | $10,708,751 | |
Receivables: | ||
Dividends | + | 7,984 |
Total assets | 10,716,735 | |
Liabilities | ||
Payables: | ||
Investments bought | 45,486 | |
Management fees | + | 5,840 |
Total liabilities | 51,326 | |
Net assets | $10,665,409 | |
Net Assets by Source | ||
Capital received from investors | $13,861,114 | |
Total distributable loss | + | (3,195,705) |
Net assets | $10,665,409 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$10,665,409 | 595,000 | $17.93 | ||
For the period April 1, 2022 through September 30, 2022; unaudited | ||
Investment Income | ||
Dividends received from securities - unaffiliated | $68,158 | |
Expenses | ||
Management fees | 32,432 | |
Proxy fees1 | + | 423 |
Total expenses | – | 32,855 |
Net investment income | 35,303 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - unaffiliated | (58,884) | |
Net realized gains on sales of in-kind redemptions - unaffiliated | + | 28,537 |
Net realized losses | (30,347) | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | + | (2,615,972) |
Net realized and unrealized losses | (2,646,319) | |
Decrease in net assets resulting from operations | ($2,611,016) |
1 | Proxy fees are non-routine expenses (see financial note 2(d) for additional information). |
OPERATIONS | |||
4/1/22-9/30/22 | 11/16/21 1-3/31/22 | ||
Net investment income | $35,303 | $19,134 | |
Net realized losses | (30,347) | (31,335) | |
Net change in unrealized appreciation (depreciation) | + | (2,615,972) | (528,970) |
Decrease in net assets from operations | ($2,611,016) | ($541,171) | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($26,297) | ($18,371) |
TRANSACTIONS IN FUND SHARES | |||||
4/1/22-9/30/22 | 11/16/21 1-3/31/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 140,000 | $2,901,658 | 465,000 | $11,181,214 | |
Shares redeemed | + | (10,000) | (220,608) | — | — |
Net transactions in fund shares | 130,000 | $2,681,050 | 465,000 | $11,181,214 | |
SHARES OUTSTANDING AND NET ASSETS | |||||
4/1/22-9/30/22 | 11/16/21 1-3/31/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 465,000 | $10,621,672 | — | $— | |
Total increase | + | 130,000 | 43,737 | 465,000 | 10,621,672 |
End of period | 595,000 | $10,665,409 | 465,000 | $10,621,672 |
1 | Commencement of operations. |
SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009) | |
Schwab Ariel ESG ETF | Schwab U.S. TIPS ETF |
Schwab U.S. REIT ETF | Schwab Short-Term U.S. Treasury ETF |
Schwab 1000 Index® ETF | Schwab Intermediate-Term U.S. Treasury ETF |
Schwab U.S. Broad Market 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 Crypto Thematic ETF |
PURCHASES OF SECURITIES | SALES OF SECURITIES |
$1,290,462 | $1,008,935 |
IN-KIND PURCHASES OF SECURITIES | IN-KIND SALES OF SECURITIES |
$2,694,743 | $205,432 |
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) |
$13,875,418 | $88,080 | ($3,254,747) | ($3,166,667) |
PRIOR FISCAL YEAR END DISTRIBUTIONS | |
ORDINARY INCOME | |
$18,371 |
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 Agreements, including the resources of the investment adviser and its affiliates, and Ariel, dedicated to the Fund; |
2. | the Fund’s limited investment performance; |
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, as well as the profitability of Ariel; and |
5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreements 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. Mr. Bettinger and Mr. Wurster are Interested Trustees because each 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. |
Total Returns for the 6 Months Ended September 30, 2022 | |
Schwab Crypto Thematic ETF (Ticker Symbol: STCE) | |
Market Price Return1 | -20.32% 2 |
NAV Return1 | -20.52% 2 |
Schwab Crypto Thematic Index® (Net)3 | -20.51% 2 |
MSCI ACWI Index (Net)3 | -13.08% 2 |
ETF Category: Digital Assets4 | N/A |
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 | Total returns shown are since the fund’s inception date of August 4, 2022. |
3 | The net version of the index reflects reinvested dividends net of withholding taxes but reflects no deductions for expenses or other taxes. |
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. |
* | The net version of the index reflects reinvested dividends net of withholding taxes but reflects no deductions for expenses or other taxes. |
1 | The fund’s inception date. Inception represents the date that the shares began trading in the secondary market. |
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. |
Chuck Craig, CFA, Senior Portfolio Manager, is responsible for the oversight and day-to-day co-management of the fund. Prior to joining Schwab in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent more than five years as a managing director of portfolio management and supervision, and three years as vice president of product research and development. Prior to that, he worked as an equity research analyst at First Trust Portfolios (formerly Niké Securities), and a trader and analyst at PMA Securities, Inc. |
David Rios, Portfolio Manager, is responsible for the day-to-day co-management of the fund. Prior to this role, Mr. Rios was an associate portfolio manager on the equity index strategies team for four years. His first role with Schwab Asset Management was as a trade operations specialist. Prior to joining Schwab in 2008, Mr. Rios was a senior fund accountant at Investors Bank & Trust (subsequently acquired by State Street Corporation). |
Fund and Inception Date | Since Inception* |
Fund: Schwab Crypto Thematic ETF (8/4/22) | |
Market Price Return2 | -20.32% |
NAV Return2 | -20.52% |
Schwab Crypto Thematic Index® (Net)3 | -20.51% |
MSCI ACWI Index (Net)3 | -13.08% |
ETF Category: Digital Assets4 | N/A |
Fund Expense Ratio5: 0.30% |
* | Inception (8/4/22) represents the date that the shares began trading in the secondary market. |
1 | Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. |
2 | ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the 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 net version of the index reflects reinvested dividends net of withholding taxes but reflects no deductions for expenses or other taxes. |
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 | 37 |
Weighted Average Market Cap (millions) | $19,030 |
Price/Earnings Ratio (P/E) | 11.9 |
Price/Book Ratio (P/B) | 1.4 |
Portfolio Turnover Rate | 9% 1,2 |
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. |
4 | The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets. |
EXPENSE RATIO (ANNUALIZED) 1 | BEGINNING ACCOUNT VALUE AT 4/1/22 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 9/30/222 | EXPENSES PAID DURING PERIOD 4/1/22-9/30/22 2 | |
Schwab Crypto Thematic ETF | ||||
Actual Return | 0.30% | $1,000.00 | $ 794.80 | $0.43 |
Hypothetical 5% Return | 0.30% | $1,000.00 | $1,023.56 | $1.52 |
1 | The expense ratio provided for the fund is for the period from 8/4/22 (commencement of operations) through 9/30/22 (see financial note 4 for additional information). |
2 | Actual expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 58 days of the period from commencement of operations on 8/4/22 through 9/30/22, and divided by 365 days of the fiscal year. Hypothetical expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 183 days of the period, and divided by 365 days of the fiscal year. |
8/4/22 1– 9/30/22* | ||||||
Per-Share Data | ||||||
Net asset value at beginning of period | $25.00 | |||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.05 | |||||
Net realized and unrealized gains (losses) | (5.18) | |||||
Total from investment operations | (5.13) | |||||
Net asset value at end of period | $19.87 | |||||
Total return | (20.52%) 3 | |||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.30% 4 | |||||
Net investment income (loss) | 1.38% 4 | |||||
Portfolio turnover rate5 | 9% 3 | |||||
Net assets, end of period (x 1,000) | $6,954 |
* | Unaudited. |
1 | Commencement of operations. |
2 | Calculated based on the average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized. |
5 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
COMMON STOCKS 99.7% OF NET ASSETS | ||
Australia 0.4% | ||
Appen Ltd. | 15,260 | 30,612 |
Canada 8.5% | ||
Bakkt Holdings, Inc. * | 52,266 | 119,166 |
Hive Blockchain Technologies Ltd. * | 35,262 | 132,585 |
Hut 8 Mining Corp. * | 118,001 | 210,042 |
Nuvei Corp. * | 4,780 | 129,299 |
591,092 | ||
Colombia 2.2% | ||
Bancolombia S.A., ADR | 6,346 | 154,652 |
Japan 11.3% | ||
GMO internet group, Inc. | 5,985 | 105,356 |
Internet Initiative Japan, Inc. | 8,670 | 133,034 |
Monex Group, Inc. | 65,694 | 205,145 |
Remixpoint, Inc. *(a) | 46,091 | 129,919 |
SBI Holdings, Inc. | 11,787 | 211,400 |
784,854 | ||
Netherlands 0.8% | ||
Flow Traders | 3,002 | 56,466 |
United Kingdom 1.7% | ||
IG Group Holdings plc | 13,871 | 118,222 |
United States 74.8% | ||
Bitfarms Ltd. * | 92,625 | 97,256 |
Block, Inc. * | 3,217 | 176,903 |
Cboe Global Markets, Inc. | 1,742 | 204,459 |
Cleanspark, Inc. * | 35,391 | 112,543 |
CME Group, Inc. | 1,300 | 230,269 |
Coinbase Global, Inc., Class A * | 6,488 | 418,411 |
Core Scientific, Inc., Class A * | 61,507 | 79,959 |
Galaxy Digital Holdings Ltd. * | 19,271 | 82,186 |
Interactive Brokers Group, Inc., Class A | 5,829 | 372,532 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Intercontinental Exchange, Inc. | 2,400 | 216,840 |
Marathon Digital Holdings, Inc. * | 44,410 | 475,631 |
MicroStrategy, Inc., Class A * | 2,205 | 468,033 |
NCR Corp. * | 6,110 | 116,151 |
NVIDIA Corp. | 1,459 | 177,108 |
Overstock.com, Inc. * | 6,041 | 147,098 |
PayPal Holdings, Inc. * | 2,784 | 239,619 |
Riot Blockchain, Inc. * | 72,310 | 506,893 |
Robinhood Markets, Inc., Class A * | 39,928 | 403,273 |
Signature Bank | 1,158 | 174,858 |
Silvergate Capital Corp., Class A * | 4,530 | 341,336 |
StoneX Group, Inc. * | 1,099 | 91,151 |
WisdomTree Investments, Inc. | 14,160 | 66,269 |
5,198,778 | ||
Total Common Stocks (Cost $8,579,444) | 6,934,676 |
SHORT-TERM INVESTMENTS 1.6% OF NET ASSETS | ||
Money Market Funds 1.6% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 2.94% (b) | 5,517 | 5,517 |
State Street Institutional U.S. Government Money Market Fund, Premier Class 2.94% (b)(c) | 101,500 | 101,500 |
107,017 | ||
Total Short-Term Investments (Cost $107,017) | 107,017 | |
Total Investments in Securities (Cost $8,686,461) | 7,041,693 |
* | Non-income producing security. |
(a) | All or a portion of this security is on loan. Securities on loan were valued at $98,656. |
(b) | The rate shown is the 7-day yield. |
(c) | Security purchased with cash collateral received for securities on loan. |
ADR — | American Depositary Receipt |
DESCRIPTION | QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) | OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2) | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) | TOTAL |
Assets | ||||
Common Stocks1 | $6,934,676 | $— | $— | $6,934,676 |
Short-Term Investments1 | 107,017 | — | — | 107,017 |
Total | $7,041,693 | $— | $— | $7,041,693 |
1 | As categorized in the Portfolio Holdings. |
Assets | ||
Investments in securities, at value - unaffiliated (cost $8,686,461) including securities on loan of $98,656 | $7,041,693 | |
Foreign currency, at value (cost $361) | 355 | |
Receivables: | ||
Dividends | 14,798 | |
Foreign tax reclaims | + | 360 |
Total assets | 7,057,206 | |
Liabilities | ||
Collateral held for securities on loan | 101,500 | |
Payables: | ||
Management fees | + | 1,972 |
Total liabilities | 103,472 | |
Net assets | $6,953,734 | |
Net Assets by Source | ||
Capital received from investors | $8,717,089 | |
Total distributable loss | + | (1,763,355) |
Net assets | $6,953,734 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$6,953,734 | 350,000 | $19.87 | ||
For the period August 4, 2022* through September 30, 2022; unaudited | ||
Investment Income | ||
Dividends received from securities - unaffiliated (net of foreign withholding tax of $1,484) | $20,312 | |
Expenses | ||
Management fees | 3,653 | |
Total expenses | – | 3,653 |
Net investment income | 16,659 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - unaffiliated | (134,957) | |
Net realized losses on foreign currency transactions | + | (234) |
Net realized losses | (135,191) | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | (1,644,768) | |
Net change in unrealized appreciation (depreciation) on foreign currency translations | + | (55) |
Net change in unrealized appreciation (depreciation) | + | (1,644,823) |
Net realized and unrealized losses | (1,780,014) | |
Decrease in net assets resulting from operations | ($1,763,355) |
* | Commencement of operations. |
OPERATIONS | ||
8/4/22 1-9/30/22 | ||
Net investment income | $16,659 | |
Net realized losses | (135,191) | |
Net change in unrealized appreciation (depreciation) | + | (1,644,823) |
Decrease in net assets from operations | ($1,763,355) |
TRANSACTIONS IN FUND SHARES | |||
8/4/22 1-9/30/22 | |||
SHARES | VALUE | ||
Shares sold | 350,000 | $8,717,089 | |
Net transactions in fund shares | 350,000 | $8,717,089 | |
SHARES OUTSTANDING AND NET ASSETS | |||
8/4/22 1-9/30/22 | |||
SHARES | NET ASSETS | ||
Beginning of period | — | $— | |
Total increase | + | 350,000 | 6,953,734 |
End of period | 350,000 | $6,953,734 |
1 | Commencement of operations. |
SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009) | |
Schwab Crypto Thematic ETF | Schwab U.S. TIPS ETF |
Schwab U.S. REIT ETF | Schwab Short-Term U.S. Treasury ETF |
Schwab 1000 Index® ETF | Schwab Intermediate-Term U.S. Treasury ETF |
Schwab U.S. Broad Market 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 |
PURCHASES OF SECURITIES | SALES OF SECURITIES |
$646,615 | $739,104 |
IN-KIND PURCHASES OF SECURITIES | IN-KIND SALES OF SECURITIES | |
Schwab Crypto Thematic ETF | $8,806,888 | $0 |
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) |
$8,688,066 | $20,007 | ($1,666,380) | ($1,646,373) |
1. | the nature, extent and quality of the services to be provided to the Fund under the Agreement, including the resources of the investment adviser and its affiliates to be dedicated to the Fund; |
2. | the investment adviser’s investment performance in managing other index-based exchange-traded funds; |
3. | the Fund’s estimated expenses and how those expenses compared to those of certain other similar exchange-traded funds; |
4. | the expected profitability of the investment adviser and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to management of 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. |
1 | The meeting on February 24, 2022 was held by means of videoconference in reliance on exemptive relief from the in-person voting requirement under the 1940 Act as provided by the Securities and Exchange Commission. |
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. Mr. Bettinger and Mr. Wurster are Interested Trustees because each 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 Ariel ESG ETF and Schwab Crypto Thematic ETF
By: | /s/ Jonathan de St. Paer | |
Jonathan de St. Paer Chief Executive Officer | ||
Date: | November 16, 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: | November 16, 2022 |
By: | /s/ Mark Fischer | |
Mark Fischer Chief Financial Officer | ||
Date: | November 16, 2022 |