UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-22311
Schwab Strategic Trust – 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: March 31, 2023
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 12 Months Ended March 31, 2023 | |
Schwab Ariel ESG ETF (Ticker Symbol: SAEF) | |
Market Price Return1 | -6.52% |
NAV Return1 | -6.58% |
Russell 2500TM Index | -10.39% |
ETF Category: Morningstar Mid-Cap Blend2 | -6.85% |
Performance Details | pages 5-7 |
Fund and Inception Date | 1 Year | Since Inception* |
Fund: Schwab Ariel ESG ETF (11/16/21) | ||
Market Price Return2 | -6.52% | -10.65% |
NAV Return2 | -6.58% | -10.77% |
Russell 2500TM Index | -10.39% | -14.45% |
ETF Category: Morningstar Mid-Cap Blend3 | -6.85% | N/A |
Fund Expense Ratio4: 0.59% |
Number of Holdings | 61 |
Weighted Average Market Cap (millions) | $15,033 |
Price/Earnings Ratio (P/E) | 18.6 |
Price/Book Ratio (P/B) | 2.2 |
Portfolio Turnover Rate | 16% 1 |
EXPENSE RATIO (ANNUALIZED) 1 | BEGINNING ACCOUNT VALUE AT 10/1/22 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 3/31/23 | EXPENSES PAID DURING PERIOD 10/1/22-3/31/23 2 | |
Schwab Ariel ESG ETF | ||||
Actual Return | 0.59% | $1,000.00 | $1,187.10 | $3.22 |
Hypothetical 5% Return | 0.59% | $1,000.00 | $1,021.99 | $2.97 |
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 the 182 days in the period, and divided by the 365 days in the fiscal year. |
4/1/22– 3/31/23 | 11/16/211– 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 | 0.14 | 0.05 | ||||
Net realized and unrealized gains (losses) | (1.65 ) | (2.16 ) | ||||
Total from investment operations | (1.51 ) | (2.11 ) | ||||
Less distributions: | ||||||
Distributions from net investment income | (0.12 ) | (0.05 ) | ||||
Net asset value at end of period | $21.21 | $22.84 | ||||
Total return | (6.58 %) | (8.46 %)3 | ||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.59 %4 | 0.59 %5 | ||||
Net investment income (loss) | 0.68 % | 0.61 %5 | ||||
Portfolio turnover rate6 | 16 % | 15 %3 | ||||
Net assets, end of period (x 1,000) | $14,108 | $10,622 |
1 | Commencement of operations. |
2 | Calculated based on the average shares outstanding during the period. |
3 | Not annualized. |
4 | Ratio includes less than 0.005% of non-routine proxy expenses. |
5 | Annualized. |
6 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
COMMON STOCKS 97.8% OF NET ASSETS | ||
Automobiles & Components 3.8% | ||
BorgWarner, Inc. | 5,303 | 260,431 |
Gentex Corp. | 9,975 | 279,599 |
540,030 | ||
Banks 1.6% | ||
M&T Bank Corp. | 1,910 | 228,379 |
Capital Goods 15.0% | ||
Generac Holdings, Inc. * | 2,086 | 225,309 |
Kennametal, Inc. | 9,473 | 261,265 |
Masco Corp. | 2,721 | 135,288 |
nVent Electric plc | 8,043 | 345,367 |
Resideo Technologies, Inc. * | 17,340 | 316,975 |
Sensata Technologies Holding plc | 5,315 | 265,856 |
Simpson Manufacturing Co., Inc. | 1,464 | 160,513 |
Snap-on, Inc. | 831 | 205,166 |
The Middleby Corp. * | 1,367 | 200,416 |
2,116,155 | ||
Commercial & Professional Services 6.8% | ||
Brady Corp., Class A | 2,660 | 142,922 |
Dun & Bradstreet Holdings, Inc. | 15,240 | 178,918 |
Korn Ferry | 2,266 | 117,243 |
Stericycle, Inc. * | 3,458 | 150,803 |
The Brink's Co. | 5,569 | 372,009 |
961,895 | ||
Consumer Discretionary Distribution & Retail 2.4% | ||
CarMax, Inc. * | 2,243 | 144,180 |
Leslie's, Inc. * | 17,727 | 195,174 |
339,354 | ||
Consumer Durables & Apparel 2.4% | ||
Mattel, Inc. * | 13,666 | 251,591 |
Mohawk Industries, Inc. * | 885 | 88,695 |
340,286 | ||
Consumer Services 12.0% | ||
ADT, Inc. | 30,251 | 218,714 |
Adtalem Global Education, Inc. * | 3,620 | 139,804 |
Lindblad Expeditions Holdings, Inc. * | 42,246 | 403,872 |
Norwegian Cruise Line Holdings Ltd. * | 30,626 | 411,920 |
OneSpaWorld Holdings Ltd. * | 43,084 | 516,577 |
1,690,887 | ||
Consumer Staples Distribution & Retail 0.4% | ||
Walgreens Boots Alliance, Inc. | 1,695 | 58,613 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Financial Services 10.0% | ||
Fiserv, Inc. * | 3,192 | 360,792 |
KKR & Co., Inc. | 5,320 | 279,406 |
Lazard Ltd., Class A | 6,367 | 210,811 |
Northern Trust Corp. | 3,151 | 277,698 |
The Goldman Sachs Group, Inc. | 870 | 284,586 |
1,413,293 | ||
Food, Beverage & Tobacco 0.7% | ||
The JM Smucker Co. | 632 | 99,458 |
Health Care Equipment & Services 6.4% | ||
Envista Holdings Corp. * | 5,656 | 231,217 |
Laboratory Corp. of America Holdings | 975 | 223,684 |
Patterson Cos., Inc. | 6,487 | 173,657 |
Zimmer Biomet Holdings, Inc. | 2,049 | 264,731 |
Zimvie, Inc. * | 1,617 | 11,691 |
904,980 | ||
Household & Personal Products 1.0% | ||
Reynolds Consumer Products, Inc. | 5,157 | 141,817 |
Insurance 4.6% | ||
Aflac, Inc. | 3,283 | 211,819 |
First American Financial Corp. | 4,389 | 244,292 |
The Progressive Corp. | 1,378 | 197,137 |
653,248 | ||
Materials 1.7% | ||
Axalta Coating Systems Ltd. * | 7,714 | 233,657 |
Media & Entertainment 8.8% | ||
Madison Square Garden Entertainment Corp. * | 5,755 | 339,948 |
Madison Square Garden Sports Corp. | 1,064 | 207,320 |
Manchester United Plc, Class A | 15,019 | 332,671 |
Paramount Global, Class B | 4,986 | 111,238 |
The Interpublic Group of Cos., Inc. | 6,813 | 253,716 |
1,244,893 | ||
Pharmaceuticals, Biotechnology & Life Sciences 4.8% | ||
Bio-Rad Laboratories, Inc., Class A * | 314 | 150,412 |
Charles River Laboratories International, Inc. * | 1,050 | 211,911 |
Prestige Consumer Healthcare, Inc. * | 5,001 | 313,213 |
675,536 | ||
Real Estate Management & Development 2.6% | ||
CBRE Group, Inc., Class A * | 2,793 | 203,358 |
Jones Lang LaSalle, Inc. * | 1,094 | 159,166 |
362,524 | ||
SECURITY | NUMBER OF SHARES | VALUE ($) |
Software & Services 3.2% | ||
Fair Isaac Corp. * | 421 | 295,832 |
The Hackett Group, Inc. | 8,073 | 149,189 |
445,021 | ||
Technology Hardware & Equipment 9.6% | ||
Keysight Technologies, Inc. * | 1,591 | 256,915 |
Knowles Corp. * | 11,856 | 201,552 |
Littelfuse, Inc. | 963 | 258,170 |
Motorola Solutions, Inc. | 736 | 210,592 |
Zebra Technologies Corp., Class A * | 1,347 | 428,346 |
1,355,575 | ||
Total Common Stocks (Cost $14,895,697) | 13,805,601 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
SHORT-TERM INVESTMENTS 2.3% OF NET ASSETS | ||
Money Market Funds 2.3% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 4.70% (a) | 320,438 | 320,438 |
Total Short-Term Investments (Cost $320,438) | 320,438 | |
Total Investments in Securities (Cost $15,216,135) | 14,126,039 |
* | Non-income producing security. |
(a) | The rate shown is the annualized 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 | $13,805,601 | $— | $— | $13,805,601 |
Short-Term Investments1 | 320,438 | — | — | 320,438 |
Total | $14,126,039 | $— | $— | $14,126,039 |
1 | As categorized in the Portfolio Holdings. |
Assets | ||
Investments in securities, at value - unaffiliated (cost $15,216,135) | $14,126,039 | |
Receivables: | ||
Investments sold | 35,243 | |
Dividends | + | 8,207 |
Total assets | 14,169,489 | |
Liabilities | ||
Payables: | ||
Investments bought | 54,489 | |
Management fees | + | 7,247 |
Total liabilities | 61,736 | |
Net assets | $14,107,753 | |
Net Assets by Source | ||
Capital received from investors | $15,312,801 | |
Total distributable loss | + | (1,205,048 ) |
Net assets | $14,107,753 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$14,107,753 | 665,000 | $21.21 | ||
For the period April 1, 2022 through March 31, 2023 | ||
Investment Income | ||
Dividends received from securities - unaffiliated | $151,967 | |
Expenses | ||
Management fees | 70,809 | |
Proxy fees1 | + | 423 |
Total expenses | – | 71,232 |
Net investment income | 80,735 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - unaffiliated | (146,643 ) | |
Net realized gains on sales of in-kind redemptions - unaffiliated | + | 39,469 |
Net realized losses | (107,174 ) | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | + | (561,126 ) |
Net realized and unrealized losses | (668,300 ) | |
Decrease in net assets resulting from operations | ($587,565 ) |
1 | Proxy fees are non-routine expenses (see financial note 2(d) for additional information). |
OPERATIONS | |||
4/1/22-3/31/23 | 11/16/211-3/31/22 | ||
Net investment income | $80,735 | $19,134 | |
Net realized losses | (107,174 ) | (31,335 ) | |
Net change in unrealized appreciation (depreciation) | + | (561,126 ) | (528,970 ) |
Decrease in net assets from operations | ($587,565 ) | ($541,171 ) | |
DISTRIBUTIONS TO SHAREHOLDERS | |||
Total distributions | ($71,467 ) | ($18,371 ) |
TRANSACTIONS IN FUND SHARES | |||||
4/1/22-3/31/23 | 11/16/211-3/31/22 | ||||
SHARES | VALUE | SHARES | VALUE | ||
Shares sold | 215,000 | $4,464,559 | 465,000 | $11,181,214 | |
Shares redeemed | + | (15,000 ) | (319,446 ) | — | — |
Net transactions in fund shares | 200,000 | $4,145,113 | 465,000 | $11,181,214 | |
SHARES OUTSTANDING AND NET ASSETS | |||||
4/1/22-3/31/23 | 11/16/211-3/31/22 | ||||
SHARES | NET ASSETS | SHARES | NET ASSETS | ||
Beginning of period | 465,000 | $10,621,672 | — | $— | |
Total increase | + | 200,000 | 3,486,081 | 465,000 | 10,621,672 |
End of period | 665,000 | $14,107,753 | 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 |
Schwab Municipal Bond ETF |
2. Significant Accounting Policies:
3. Risk Factors:
4. Affiliates and Affiliated Transactions:
6. Board of Trustees:
7. Borrowing from Banks:
8. Purchases and Sales of Investment Securities:
PURCHASES OF SECURITIES | SALES OF SECURITIES |
$2,150,952 | $1,935,641 |
9. In-Kind Transactions:
IN-KIND PURCHASES OF SECURITIES | IN-KIND SALES OF SECURITIES |
$4,118,913 | $296,737 |
10. Federal Income Taxes:
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) |
$15,267,547 | $787,229 | ($1,928,737) | ($1,141,508) |
UNDISTRIBUTED ORDINARY INCOME | NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS | CAPITAL LOSS CARRYFORWARDS AND OTHER LOSSES | TOTAL |
$8,022 | ($1,141,508) | ($71,562) | ($1,205,048) |
CURRENT FISCAL YEAR END DISTRIBUTIONS | PRIOR FISCAL YEAR END DISTRIBUTIONS | |
ORDINARY INCOME | ORDINARY INCOME | |
$71,467 | $18,371 |
Denver, Colorado
May 17, 2023
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 |
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 |
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 – Oct. 2022), 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; 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 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) | Chief Operating Officer (Dec. 2020 – present) and Treasurer and Chief Financial Officer (Jan. 2016 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc. |
Dana Smith 1965 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2023) | Treasurer and Chief Financial Officer (Jan. 2023 – present) and Assistant Treasurer (Dec. 2015 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Vice President (Mar. 2022 – present) and Director (Oct. 2015 – Mar. 2022), Charles Schwab Investment Management, 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 |
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.; Director, Chief Executive Officer and President (Oct. 2022 – present), Charles Schwab Investment Advisory, 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. |
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. |
Schwab ETFs
Index ETF
Printed on recycled paper.
Total Returns for the 12 Months Ended March 31, 2023 | |
Schwab Crypto Thematic ETF (Ticker Symbol: STCE) | |
Market Price Return1 | -18.65% 2 |
NAV Return1 | -18.93% 2,3 |
Schwab Crypto Thematic Index® (Net)4 | -19.17% 2 |
MSCI ACWI Index (Net)4 | 2.37% 2 |
ETF Category: Morningstar Digital Assets5 | N/A |
Performance Details | pages 6-8 |
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, and Schwab Personalized Indexing™ separately managed accounts. 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. |
David Rios, Portfolio Manager for Schwab Asset Management, 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 | -18.65% |
NAV Return2 | -18.93% 4 |
Schwab Crypto Thematic Index® (Net)3 | -19.17% |
MSCI ACWI Index (Net)3 | 2.37% |
ETF Category: Morningstar Digital Assets5 | N/A |
Fund Expense Ratio6: 0.30% |
Number of Holdings | 35 |
Weighted Average Market Cap (millions) | $34,854 |
Price/Earnings Ratio (P/E) | 16.6 |
Price/Book Ratio (P/B) | 1.6 |
Portfolio Turnover Rate | 36% 1,2 |
EXPENSE RATIO (ANNUALIZED) 1 | BEGINNING ACCOUNT VALUE AT 10/1/22 | ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 3/31/23 | EXPENSES PAID DURING PERIOD 10/1/22-3/31/23 2 | |
Schwab Crypto Thematic ETF | ||||
Actual Return | 0.30% | $1,000.00 | $1,019.90 | $1.51 |
Hypothetical 5% Return | 0.30% | $1,000.00 | $1,023.44 | $1.51 |
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 the 182 days in the period, and divided by the 365 days in the fiscal year. |
8/4/221– 3/31/23 | ||||||
Per-Share Data | ||||||
Net asset value at beginning of period | $25.00 | |||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.20 | |||||
Net realized and unrealized gains (losses) | (4.96 ) | |||||
Total from investment operations | (4.76 ) | |||||
Less distributions: | ||||||
Distributions from net investment income | (0.22 ) | |||||
Net asset value at end of period | $20.02 | |||||
Total return | (18.85 %)3 | |||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.30 %4 | |||||
Net investment income (loss) | 1.55 %4 | |||||
Portfolio turnover rate5 | 36 %3 | |||||
Net assets, end of period (x 1,000) | $11,012 |
1 | Commencement of operations. |
2 | Calculated based on the average shares outstanding during the period. |
3 | Not annualized. |
4 | Annualized. |
5 | Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions. |
SECURITY | NUMBER OF SHARES | VALUE ($) |
COMMON STOCKS 99.7% OF NET ASSETS | ||
Canada 7.3% | ||
CI Financial Corp. | 13,027 | 123,017 |
Hut 8 Mining Corp. * | 186,252 | 344,566 |
Nuvei Corp. * | 7,588 | 330,268 |
797,851 | ||
Colombia 1.4% | ||
Bancolombia S.A., ADR | 6,306 | 158,470 |
Japan 10.5% | ||
GMO internet group, Inc. | 6,064 | 116,961 |
Internet Initiative Japan, Inc. | 8,461 | 174,700 |
Mercari, Inc. * | 10,346 | 179,494 |
Monex Group, Inc. | 76,390 | 273,785 |
Remixpoint, Inc. | 41,814 | 95,196 |
SBI Holdings, Inc. | 16,086 | 317,151 |
1,157,287 | ||
Netherlands 0.7% | ||
Flow Traders Ltd. | 2,483 | 72,081 |
United Kingdom 1.4% | ||
IG Group Holdings plc | 18,088 | 156,219 |
United States 78.4% | ||
AMC Entertainment Holdings, Inc., Class A * | 29,336 | 146,973 |
Axos Financial, Inc. * | 5,417 | 199,996 |
Block, Inc. * | 7,136 | 489,886 |
Cboe Global Markets, Inc. | 2,813 | 377,617 |
CME Group, Inc. | 1,534 | 293,792 |
Coinbase Global, Inc., Class A * | 13,609 | 919,560 |
Customers Bancorp, Inc. * | 6,584 | 121,936 |
SECURITY | NUMBER OF SHARES | VALUE ($) |
Galaxy Digital Holdings Ltd. * | 16,548 | 63,094 |
Interactive Brokers Group, Inc., Class A | 4,240 | 350,054 |
Intercontinental Exchange, Inc. | 2,427 | 253,112 |
Marathon Digital Holdings, Inc. * | 98,152 | 855,885 |
MicroStrategy, Inc., Class A * | 3,442 | 1,006,166 |
NCR Corp. * | 9,922 | 234,060 |
NVIDIA Corp. | 1,199 | 333,046 |
Overstock.com, Inc. * | 10,023 | 203,166 |
PayPal Holdings, Inc. * | 8,690 | 659,919 |
Riot Platforms, Inc. * | 122,558 | 1,224,354 |
Robinhood Markets, Inc., Class A * | 36,548 | 354,881 |
Silvergate Capital Corp., Class A * | 29,008 | 46,993 |
StoneX Group, Inc. * | 1,749 | 181,074 |
Virtu Financial, Inc., Class A | 12,992 | 245,549 |
WisdomTree, Inc. | 12,886 | 75,512 |
8,636,625 | ||
Total Common Stocks (Cost $11,379,547) | 10,978,533 |
SHORT-TERM INVESTMENTS 0.1% OF NET ASSETS | ||
Money Market Funds 0.1% | ||
State Street Institutional U.S. Government Money Market Fund, Premier Class 4.70% (a) | 12,191 | 12,191 |
Total Short-Term Investments (Cost $12,191) | 12,191 | |
Total Investments in Securities (Cost $11,391,738) | 10,990,724 |
* | Non-income producing security. |
(a) | The rate shown is the annualized 7-day yield. |
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 | $10,978,533 | $— | $— | $10,978,533 |
Short-Term Investments1 | 12,191 | — | — | 12,191 |
Total | $10,990,724 | $— | $— | $10,990,724 |
1 | As categorized in the Portfolio Holdings. |
Assets | ||
Investments in securities, at value - unaffiliated (cost $11,391,738) | $10,990,724 | |
Foreign currency, at value (cost $949) | 955 | |
Receivables: | ||
Investments sold | 95,398 | |
Dividends | 19,352 | |
Foreign tax reclaims | + | 346 |
Total assets | 11,106,775 | |
Liabilities | ||
Payables: | ||
Investments bought | 92,201 | |
Management fees | + | 2,340 |
Total liabilities | 94,541 | |
Net assets | $11,012,234 | |
Net Assets by Source | ||
Capital received from investors | $12,590,525 | |
Total distributable loss | + | (1,578,291 ) |
Net assets | $11,012,234 |
Net Asset Value (NAV) | ||||
Net Assets | ÷ | Shares Outstanding | = | NAV |
$11,012,234 | 550,000 | $20.02 | ||
For the period August 4, 2022* through March 31, 2023 | ||
Investment Income | ||
Dividends received from securities - unaffiliated (net of foreign withholding tax of $4,022) | $64,804 | |
Securities on loan, net | + | 27,958 |
Total investment income | 92,762 | |
Expenses | ||
Management fees | 15,072 | |
Total expenses | – | 15,072 |
Net investment income | 77,690 | |
REALIZED AND UNREALIZED GAINS (LOSSES) | ||
Net realized losses on sales of securities - unaffiliated | (1,166,206 ) | |
Net realized gains on foreign currency transactions | + | 489 |
Net realized losses | (1,165,717 ) | |
Net change in unrealized appreciation (depreciation) on securities - unaffiliated | (401,014 ) | |
Net change in unrealized appreciation (depreciation) on foreign currency translations | + | (90 ) |
Net change in unrealized appreciation (depreciation) | + | (401,104 ) |
Net realized and unrealized losses | (1,566,821 ) | |
Decrease in net assets resulting from operations | ($1,489,131 ) |
* | Commencement of operations. |
OPERATIONS | ||
8/4/221 -3/31/23 | ||
Net investment income | $77,690 | |
Net realized losses | (1,165,717 ) | |
Net change in unrealized appreciation (depreciation) | + | (401,104 ) |
Decrease in net assets from operations | ($1,489,131 ) | |
DISTRIBUTIONS TO SHAREHOLDERS | ||
Total distributions | ($89,160 ) |
TRANSACTIONS IN FUND SHARES | |||
8/4/221 -3/31/23 | |||
SHARES | VALUE | ||
Shares sold | 550,000 | $12,590,525 | |
Net transactions in fund shares | 550,000 | $12,590,525 | |
SHARES OUTSTANDING AND NET ASSETS | |||
8/4/221 -3/31/23 | |||
SHARES | NET ASSETS | ||
Beginning of period | — | $— | |
Total increase | + | 550,000 | 11,012,234 |
End of period | 550,000 | $11,012,234 |
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 5-10Year 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 Municipal Bond ETF |
2. Significant Accounting Policies:
3. Risk Factors:
4. Affiliates and Affiliated Transactions:
6. Board of Trustees:
7. Borrowing from Banks:
8. Purchases and Sales of Investment Securities:
PURCHASES OF SECURITIES | SALES OF SECURITIES |
$2,916,790 | $2,858,773 |
9. In-Kind Transactions:
IN-KIND PURCHASES OF SECURITIES | IN-KIND SALES OF SECURITIES |
$12,487,735 | $0 |
10. Federal Income Taxes:
TAX COST | GROSS UNREALIZED APPRECIATION | GROSS UNREALIZED DEPRECIATION | NET UNREALIZED APPRECIATION (DEPRECIATION) |
$11,489,826 | $713,633 | ($1,212,735) | ($499,102) |
UNDISTRIBUTED ORDINARY INCOME | NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS | NET OTHER UNREALIZED APPRECIATION (DEPRECIATION) | CAPITAL LOSS CARRYFORWARDS AND OTHER LOSSES | TOTAL |
$13,113 | ($499,102) | ($90) | ($1,092,212) | ($1,578,291) |
CURRENT FISCAL PERIOD END DISTRIBUTIONS | |
ORDINARY INCOME | |
$89,160 |
Denver, Colorado
May 17, 2023
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 |
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 |
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 – Oct. 2022), 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; 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 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) | Chief Operating Officer (Dec. 2020 – present) and Treasurer and Chief Financial Officer (Jan. 2016 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc. |
Dana Smith 1965 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2023) | Treasurer and Chief Financial Officer (Jan. 2023 – present) and Assistant Treasurer (Dec. 2015 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Vice President (Mar. 2022 – present) and Director (Oct. 2015 – Mar. 2022), Charles Schwab Investment Management, 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 |
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.; Director, Chief Executive Officer and President (Oct. 2022 – present), Charles Schwab Investment Advisory, 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. |
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. |
Schwab ETFs
Index ETF
Printed on recycled paper.
Item 2: Code of Ethics.
(a) | Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party. |
(c) | During the period covered by the report, no amendments were made to the provisions of this code of ethics. |
(d) | During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics. |
(f)(1) | Registrant has filed this code of ethics as an exhibit pursuant to Item 13(a)(1) of Form N-CSR. |
Item 3: Audit Committee Financial Expert.
Registrant’s Board of Trustees has determined that Kimberly S. Patmore, Michael J. Beer and J. Derek Penn, each currently serving on its audit, compliance and valuation committee, are each an “audit committee financial expert,” as such term is defined in Item 3 of Form N-CSR. Each member of Registrant’s audit, compliance and valuation committee is “independent” under the standards set forth in Item 3 of Form N-CSR.
The designation of each of Ms. Patmore, Mr. Beer and Mr. Penn as an “audit committee financial expert” pursuant to Item 3 of Form N-CSR does not (i) impose upon such individual any duties, obligations, or liability that are greater than the duties, obligations and liability imposed upon such individual as a member of Registrant’s audit, compliance and valuation committee or Board of Trustees in the absence of such designation; and (ii) affect the duties, obligations or liability of any other member of Registrant’s audit, compliance and valuation committee or Board of Trustees.
Item 4: Principal Accountant Fees and Services.
Registrant is composed of twenty-nine operational series. Two have a fiscal year-end of March 31, whose annual financial statements are reported in Item 1, seven series have a fiscal year-end of the last day of February, twelve series have a fiscal year-end of August 31, and eight series have a fiscal year-end of December 31. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to each of the twenty-nine operational series during 2022/2023 and the twenty-seven operational series during 2021/2022, based on their respective 2022/2023 and 2021/2022 fiscal years, as applicable.
The following table presents fees billed by the principal accountant in each of the last two fiscal years for the services rendered to the Funds:
(a)Audit Fees1 | (b)Audit-Related Fees | (c) Tax Fees2 | (d) All Other Fees | |||||||||||||||||||||||||
Fiscal Year | Fiscal Year 2021/2022 | Fiscal Year 2022/2023 | Fiscal Year 2021/2022 | Fiscal Year 2022/2023 | Fiscal Year 2021/2022 | Fiscal Year 2022/2023 | Fiscal Year 2021/2022 | |||||||||||||||||||||
$505,650 | $ | 468,400 | $ | 0 | $ | 0 | $ | 89,900 | $ | 83,700 | $ | 0 | $ | 0 |
1 | The nature of the services includes audit of the registrant’s annual financial statements and normally provided services in connection with regulatory filings for those fiscal years. |
2 | The nature of the services includes tax compliance, tax advice and tax planning. |
(e) (1) Registrant’s audit, compliance and valuation committee does not have pre-approval policies and procedures as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit, compliance and valuation committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit, compliance and valuation committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Below are the aggregate non-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.
2022/2023: $3,136,515 2021/2022: $2,320,631
(h) During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved. Included in the audit, compliance and valuation committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.
(i) Not applicable.
(j) Not applicable.
Item 5: Audit Committee of Listed Registrants.
The Registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act and has separately-designated standing audit, compliance and valuation committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit, compliance and valuation committee members are Michael J. Beer, J. Derek Penn and Kimberly S. Patmore.
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, Dana Smith, 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) |
(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: | May 17, 2023 |
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: | May 17, 2023 | |
By: | /s/ Dana Smith | |
Dana Smith Chief Financial Officer | ||
Date: | May 17, 2023 |