N-CSRS

Schwab International Equity ETFs

Performance at a Glance

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

Total Returns for the 6 Months Ended February 28, 2017
Schwab International Equity ETF (Ticker Symbol: SCHF)
Market Price Return¹	4.72%
NAV Return¹	5.08%
FTSE Developed ex US Index (Net)^*	5.19%
ETF Category: Morningstar Foreign Large Blend²	3.79%
Performance Details	pages 7-8

Schwab International Small-Cap Equity ETF (Ticker Symbol: SCHC)
Market Price Return¹	3.63%
NAV Return¹	4.18%
FTSE Developed Small Cap ex US Liquid Index (Net)^*	4.19%
ETF Category: Morningstar Foreign Small/Mid Blend²	5.18%
Performance Details	pages 9-10

Schwab Emerging Markets Equity ETF (Ticker Symbol: SCHE)
Market Price Return¹	5.93%
NAV Return¹	5.89%
FTSE Emerging Index (Net)^*	6.03%
ETF Category: Morningstar Diversified Emerging Markets²	4.07%
Performance Details	pages 11-12

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

For index definitions, please see the Glossary.

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

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

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the Schwab International Equity ETFs under license. The Schwab International Equity ETFs are not sponsored, endorsed, sold or promoted by FTSE nor LSEG, and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the funds. Fees payable under the license are paid by the investment adviser.

^*	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
¹	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
²	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

From the President

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

Dear Shareholder,

We hope you are off to a healthy and productive start to the year. At Charles Schwab Investment Management, we have been quite busy over the past six months since our last communication, continuing to pursue more ways to help investors achieve their financial goals. Below I’ll share some exciting news regarding some of the changes we’ve made to bring down the costs of our index products. But first, let’s discuss the market environment that set the tone for the performance of the Schwab International Equity ETFs (the funds) during the six-month reporting period ended February 28, 2017.

The past six months were marked by steady appreciation across most equity classes. U.S. stocks enjoyed the strongest gains, as stock prices rose in anticipation of reflationary policies expected to be enacted by the Trump administration, including tax reform and fewer federal regulations. These expectations also fueled strength in the U.S. dollar, which undercut the returns of international assets denominated in local currencies. But overall, international stocks, and particularly those in emerging market countries, have benefited in recent months from generally rising demand for goods and services and stabilizing commodity prices. Against this backdrop, all three

Asset Class Performance Comparison % returns during the six months ended 2/28/2017

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

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

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

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

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

From the President (continued)

“ Rather than trying to predict the market’s every move, we believe investors are better off focusing on what they can control: how much they pay to invest.”

funds generated positive performance in line with their underlying indexes over the six-month period, led by the Schwab Emerging Markets Equity ETF which returned 5.9%¹.

Though international equities lagged behind their U.S. counterparts over the preceding six months, global economic growth began showing signs of strength and returns on many international investments rose in response. While this momentum could continue in the coming months, political uncertainty in Europe and a stronger U.S. dollar could also pose challenges for some overseas investments. But while the exact path of the markets is uncertain, we do know that investors who simply stay in the market, instead of attempting to time the market, are generally more likely to take advantage of some of the best periods of higher returns.

Rather than trying to predict the market’s every move, we believe investors are better off focusing on what they can control: how much they pay to invest. Costs matter to investors, particularly when it comes to passive investments, such as index ETFs, that they plan to hold for the long haul. Over the last few years, we have taken steps to dramatically reduce costs and complexity for our clients. Just this past October, we reduced expenses on five of our ETFs—including the Schwab International Equity ETF and the Schwab Emerging Markets Equity ETF—to new lows. Then, in February, we announced plans to lower the expense ratios on several more of our market cap index products and on our Fundamental Index^® ETFs. Those expense reductions went into effect on March 1, 2017, giving us among the lowest-cost market cap index mutual funds and ETFs available in the industry. To learn more about these changes, please visit www.csimfunds.com/lowercosts.

Thank you for investing with Charles Schwab Investment Management, and for trusting us to help you achieve your financial goals. For more information about the funds, please continue reading this report. In addition, you can find further details about the funds by visiting our website at www.csimfunds.com. We are also happy to hear from you at 1-877-824-5615.

Sincerely,

¹	Return shown is the fund’s market price return, which is based on the market price per share of the fund. For the definition of market price return, please refer to the glossary.

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

The Investment Environment

Over the six-month reporting period ended February 28, 2017, most international equity markets generated positive returns amid a strengthening global economy and tempered market volatility. Accommodative monetary policies appeared to be working in both Europe and Asia, though the relationship between the United Kingdom (U.K.) and the rest of Europe remained uncertain in wake of the U.K.’s June 2016 decision to leave the European Union (Brexit). Meanwhile, the U.S. dollar continued its general upward trajectory, appreciating against many major currencies over the reporting period. In this environment, the MSCI EAFE Index (Net), a broad measure of developed international equity performance, returned 4.90%, while the MSCI Emerging Markets Index (Net) returned 5.51%. In the U.S., the S&P 500^® Index, a bellwether for the overall U.S. stock market, returned 10.01% for the reporting period.

During the reporting period, central bank policies continued to influence markets across the globe. Citing a strengthening labor market and rising inflation, the Federal Reserve (Fed) increased the federal funds rate by 25 basis points in December 2016 to a target range of 0.50% to 0.75%, with forecasts for several additional hikes in 2017. U.S. stocks, financial shares in particular, moved higher after the Fed’s announcement, as did the U.S. dollar, hitting highs against several major currencies the following day. (After the end of the reporting period, the Fed raised short-term interest rates for the first time in 2017 at its March meeting.) Outside the U.S., many countries faced weak economic growth and inflation below targeted levels early in the reporting period. In response, central banks in both Asia and Europe took steps to stimulate their respective economies, and maintained or increased accommodative monetary policy measures. The European Central Bank announced it would loosen the restrictions on the types of bonds it can purchase, as well as plans to extend the bond purchase plan until at least December 2017. In Asia, the Bank of Japan maintained negative interest rates, and also introduced yield curve management as a policy tool, targeting interest rates on government bonds to achieve its inflation goal. Stock markets in Europe and Japan rallied toward the end of the reporting period, suggesting that these central bank policies were working. Meanwhile, the People’s Bank of China (PBOC) cut its reserve requirement ratio and increased its lending facilities early in the reporting period, which supported positive trends in several economic measurements. However, this also led to credit expanding at twice the rate of economic growth, prompting the PBOC to take steps to address this imbalance and reduce long-term financial risk. As a result, the PBOC tightened its monetary policy stance and raised several key interest rates in early 2017.

Global economic growth steadied during the reporting period, due in part to stimulative central bank policies, alleviating some investor concerns and supporting many international stocks. The U.K. economy performed better than expected in the months following Brexit as a feasible exit plan materialized, and the entire eurozone bloc had exited deflation by the end of January 2017. In Japan, economic growth accelerated and consumer prices fell at a slower pace, with inflation on track to hit the target of 2% in the next two years. Emerging markets faced several headwinds over the six-month reporting period, though showed signs of stability throughout. Early in the reporting period, changing expectations for a potential Fed short-term interest rate increase added to increased volatility in the foreign-exchange market, while concerns increased surrounding potential changes in U.S. policies related to both immigration and trade after the U.S. presidential election. However, despite these headwinds, many emerging market stocks performed well over the reporting period. Rising oil and commodity prices and generally improving fundamentals, including larger foreign exchange reserves and structural reforms, helped to stabilize many emerging market economies. In general, the U.S. dollar strengthened against many international developed and emerging market currencies through the end of 2016, most notably against the British pound. However, the U.S. dollar weakened slightly in the first two months of 2017, providing support to some overseas markets.

For index definitions, please see the Glossary.

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

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

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

Fund Management

Agnes Hong, CFA, Vice President and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2009, Ms. Hong spent five years as a portfolio manager at Barclays Global Investors (subsequently acquired by BlackRock), where she managed institutional index funds and quantitative active funds. Prior to that, Ms. Hong worked in management consulting and product management, servicing global financial services clients.

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

Chuck Craig, CFA, Managing Director and Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining CSIM in 2012, Mr. Craig worked at Guggenheim Funds (formerly Claymore Group), where he spent 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.

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab International Equity ETF (11/3/09)
Market Price Return²	4.72%	17.46%	4.73%	4.71%
NAV Return²	5.08%	17.30%	4.79%	4.74%
FTSE Developed ex US Index (Net)³	5.19%	17.32%	4.77%	4.81%
ETF Category: Morningstar Foreign Large Blend⁴	3.79%	15.08%	4.38%	4.49%
Fund Expense Ratio⁵: 0.07%

For index definitions, please see the Glossary.

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

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

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab International Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG, and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

^*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁵	As stated in the prospectus. Effective March 1, 2017, the management fee was reduced to 0.06%. For more information, see financial note 4 or refer to the prospectus supplement dated March 1, 2017.

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Schwab International Equity ETFs | Semiannual Report

Schwab International Small-Cap Equity ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab International Small-Cap Equity ETF (1/14/10)
Market Price Return²	3.63%	16.58%	5.43%	5.58%
NAV Return²	4.18%	16.17%	5.53%	5.61%
FTSE Developed Small Cap ex US Liquid Index (Net)³	4.19%	16.13%	5.52%	5.74%
ETF Category: Morningstar Foreign Small/Mid Blend⁴	5.18%	17.26%	6.92%	6.50%
Fund Expense Ratio⁵: 0.16%

For index definitions, please see the Glossary.

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

Small-company stocks may be subject to greater volatility than many other asset classes.

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab International Small-Cap Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG, and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

^*	Inception (1/14/10) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	The total return cited for the index is calculated net of foreign withholding taxes; the underlying tax rate information is available from FTSE.
⁴	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁵	As stated in the prospectus. Effective March 1, 2017, the management fee was reduced to 0.12%. For more information, see financial note 4 or refer to the prospectus supplement dated March 1, 2017.

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Schwab International Equity ETFs | Semiannual Report

Schwab Emerging Markets Equity ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab Emerging Markets Equity ETF (1/14/10)
Market Price Return²	5.93%	30.01%	-0.14%	1.28%
NAV Return²	5.89%	30.18%	-0.20%	1.27%
FTSE Emerging Index (Net)³	6.03%	30.70%	-0.02%	1.56%
ETF Category: Morningstar Diversified Emerging Markets⁴	4.07%	25.50%	0.20%	0.96%
Fund Expense Ratio⁵: 0.13%

For index definitions, please see the Glossary.

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

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

Index ownership — FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by the fund under license. The Schwab Emerging Markets Equity ETF is not sponsored, endorsed, sold or promoted by FTSE nor LSEG, and neither FTSE nor LSEG makes any representation regarding the advisability of investing in shares of the fund. Fees payable under the license are paid by the investment adviser.

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

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

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

The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning September 1, 2016 and held through February 28, 2017.

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

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

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

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

	Expense Ratio (Annualized)¹	Beginning Account Value at 9/1/16	Ending Account Value (Net of Expenses) at 2/28/17	Expenses Paid During Period 9/1/16-2/28/17²
Schwab International Equity ETF
Actual Return	0.07%	$1,000.00	$1,050.80	$0.36
Hypothetical 5% Return	0.07%	$1,000.00	$1,024.45	$0.35
Schwab International Small-Cap Equity ETF
Actual Return	0.16%	$1,000.00	$1,041.80	$0.81
Hypothetical 5% Return	0.16%	$1,000.00	$1,024.01	$0.80
Schwab Emerging Markets Equity ETF
Actual Return	0.13%	$1,000.00	$1,058.90	$0.66
Hypothetical 5% Return	0.13%	$1,000.00	$1,024.16	$0.65

Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. Effective March 1, 2017, the advisory fee of the Schwab International Equity ETF, and Schwab International Small-Cap Equity ETF were reduced to 0.06% and 0.12%, respectively. If the fund expense changes had been in place throughout the entire most recent fiscal half-year the expenses paid during period under the actual return and hypothetical 5% return example would have been the following; For Schwab International Equity ETF, $0.31 and $0.30, respectively, and for Schwab International Small-Cap Equity ETF, $0.61 and $0.60, respectively. (See financial note 4)

Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181 days of the period, and divided by 365 days of the fiscal year.

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Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$28.32	$28.55	$32.37	$28.32	$24.96	$25.99
Income (loss) from investment operations:
Net investment income (loss)	0.27 ¹	0.84 ¹	0.87 ¹	0.88	0.66	0.76
Net realized and unrealized gains (losses)	1.13	(0.45)	(3.85)	3.87	3.42	(1.04)
Total from investment operations	1.40	0.39	(2.98)	4.75	4.08	(0.28)
Less distributions:
Distributions from net investment income	(0.71)	(0.62)	(0.84)	(0.70)	(0.72)	(0.75)
Net asset value at end of period	$29.01	$28.32	$28.55	$32.37	$28.32	$24.96
Total return	5.08% ²	1.47%	(9.27%)	16.90%	16.55%	(0.75%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.07% ³^,⁴	0.08%	0.08%	0.09% ⁵	0.09%	0.13%
Net investment income (loss)	1.90% ³	3.06%	2.86%	3.44%	3.03%	3.40%
Portfolio turnover rate⁶	4% ²	5%	4%	7%	9%	8%
Net assets, end of period (x 1,000)	$7,743,173	$6,168,595	$4,042,603	$2,654,016	$1,464,105	$768,666

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

Effective April 18, 2014, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/14 is a blended ratio.

⁶

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

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Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

This section shows the fund's 50 largest portfolio holdings in unaffiliated issuers, any holdings exceeding 1% of the fund's net assets as of the report date, and any affiliated issuers. The remaining securities held by the fund are grouped as "Other Securities" in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab ETFs™ at 1-877-824-5615. This complete schedule, filed on the fund's Form N-CSR(S), is also available on the SEC's website at www.sec.gov.

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

Holdings by Category		Cost ($)	Value ($)
99.0%	Common Stock	7,315,487,513	7,664,297,326
0.6%	Preferred Stock	48,487,184	50,362,298
0.4%	Other Investment Companies	27,240,609	27,240,609
100.0%	Total Investments	7,391,215,306	7,741,900,233
0.0%	Other Assets and Liabilities, Net		1,272,685
100.0%	Net Assets		7,743,172,918

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.0% of net assets

Australia 6.7%
Australia & New Zealand Banking Group Ltd.	1,492,002	0.5	35,446,180
BHP Billiton Ltd.	1,647,022	0.4	31,657,817
Commonwealth Bank of Australia	879,541	0.7	55,667,665
National Australia Bank Ltd.	1,359,303	0.4	33,432,748
Westpac Banking Corp.	1,704,276	0.6	44,158,203
Other Securities		4.1	321,440,205
		6.7	521,802,818

Austria 0.2%
Other Securities		0.2	14,519,718

Belgium 1.1%
Anheuser-Busch InBev S.A.	408,582	0.6	44,826,936
Other Securities		0.5	37,426,018
		1.1	82,252,954

Canada 7.7%
Enbridge, Inc.	790,000	0.4	33,342,897
Royal Bank of Canada	755,863	0.7	55,061,091
Suncor Energy, Inc.	862,780	0.3	26,936,429
The Bank of Nova Scotia	624,738	0.5	36,339,473
The Toronto-Dominion Bank	940,024	0.6	48,589,258
Other Securities		5.2	394,171,609
		7.7	594,440,757

Denmark 1.4%
Novo Nordisk A/S, B Shares	946,936	0.4	33,735,018
Other Securities		1.0	76,275,089
		1.4	110,010,107

Security	Number of Shares	% of Net Assets	Value ($)
Finland 0.9%
Other Securities		0.9	67,301,861

France 8.0%
BNP Paribas S.A.	501,182	0.4	29,359,809
Sanofi	567,510	0.6	49,044,923
Total S.A.	1,103,685	0.7	55,179,090
Other Securities		6.3	486,530,742
		8.0	620,114,564

Germany 7.5%
Allianz SE - Reg'd	233,387	0.5	40,721,107
BASF SE	470,880	0.6	43,981,383
Bayer AG - Reg'd	421,954	0.6	46,540,627
Daimler AG - Reg'd	513,437	0.5	37,448,481
Deutsche Telekom AG - Reg'd	1,626,047	0.4	28,181,027
SAP SE	462,079	0.6	43,183,898
Siemens AG - Reg'd	389,240	0.7	50,790,863
Other Securities		3.6	290,166,147
		7.5	581,013,533

Hong Kong 3.3%
AIA Group Ltd.	6,276,560	0.5	39,660,838
Other Securities		2.8	214,239,454
		3.3	253,900,292

Ireland 0.2%
Other Securities		0.2	12,984,952

Israel 0.5%
Other Securities		0.5	38,612,765

Italy 1.9%
Other Securities		1.9	145,809,180

Japan 22.2%
Honda Motor Co., Ltd.	923,766	0.4	28,806,539
Mitsubishi UFJ Financial Group, Inc.	6,985,748	0.6	46,103,377
SoftBank Group Corp.	442,369	0.4	33,061,533
Sumitomo Mitsui Financial Group, Inc.	666,183	0.3	26,061,429

₁₅

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Toyota Motor Corp.	1,412,675	1.0	80,365,343
Other Securities		19.5	1,502,673,855
		22.2	1,717,072,076

Netherlands 2.7%
ING Groep N.V.	1,983,903	0.4	27,436,858
Unilever N.V. CVA	795,852	0.5	37,729,667
Other Securities		1.8	144,868,159
		2.7	210,034,684

New Zealand 0.2%
Other Securities		0.2	17,143,796

Norway 0.5%
Other Securities		0.5	40,927,814

Portugal 0.1%
Other Securities		0.1	9,668,179

Republic of Korea 4.1%
Samsung Electronics Co., Ltd. GDR	106,513	1.2	90,323,024
Other Securities		2.9	226,276,911
		4.1	316,599,935

Singapore 1.2%
Other Securities		1.2	90,985,171

Spain 2.6%
Banco Santander S.A.	7,421,602	0.5	40,645,441
Other Securities		2.1	160,372,450
		2.6	201,017,891

Sweden 2.5%
Other Securities		2.5	191,954,728

Switzerland 7.6%
Nestle S.A. - Reg'd	1,573,755	1.5	116,682,120
Novartis AG - Reg'd	1,204,633	1.2	94,306,483
Roche Holding AG	359,066	1.1	87,736,232
UBS Group AG - Reg'd	1,792,423	0.4	27,688,635
Other Securities		3.4	263,942,744
		7.6	590,356,214

United Kingdom 15.9%
AstraZeneca plc	644,991	0.5	37,273,995
BP plc	9,600,064	0.7	54,182,541
British American Tobacco plc	948,793	0.8	59,978,452
Diageo plc	1,280,849	0.5	36,149,397
GlaxoSmithKline plc	2,466,241	0.7	50,576,968
HSBC Holdings plc	10,264,599	1.1	82,579,184
Lloyds Banking Group plc	32,708,293	0.4	27,950,205
Prudential plc	1,301,324	0.3	26,031,338
Reckitt Benckiser Group plc	320,489	0.4	29,157,480
Royal Dutch Shell plc, A Shares	2,253,920	0.8	58,325,369
Royal Dutch Shell plc, B Shares	1,891,698	0.7	51,164,828

Security	Number of Shares	% of Net Assets	Value ($)
Shire plc	460,179	0.4	27,796,278
Unilever plc	615,017	0.4	29,227,849
Vodafone Group plc	13,597,034	0.4	34,161,786
Other Securities		7.8	631,217,667
		15.9	1,235,773,337
Total Common Stock
(Cost $7,315,487,513)			7,664,297,326

Preferred Stock 0.6% of net assets

Germany 0.4%
Other Securities		0.4	33,998,679

Republic of Korea 0.2%
Other Securities		0.2	14,482,038

Spain 0.0%
Other Securities		0.0	1,881,581
Total Preferred Stock
(Cost $48,487,184)			50,362,298

Other Investment Companies 0.4% of net assets

United States 0.4%
Money Market Fund 0.1%
Other Securities		0.1	5,590,708

Securities Lending Collateral 0.3%
Other Securities		0.3	21,649,901
Total Other Investment Companies
(Cost $27,240,609)			27,240,609

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $7,395,797,226 and the unrealized appreciation and depreciation were $675,941,939 and ($329,838,932), respectively, with a net unrealized appreciation of $346,103,007.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $20,589,476.
(b)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(c)	The rate shown is the 7-day yield.

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

₁₆

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 03/17/17	237	20,684,175	12,226

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2017 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$7,664,297,326	$—	$— ^*	$7,664,297,326
Preferred Stock¹	50,362,298	—	—	50,362,298
Other Investment Companies¹	27,240,609	—	—	27,240,609
Total	$7,741,900,233	$—	$—	$7,741,900,233
Other Financial Instruments
Futures Contracts²	$12,226	$—	$—	$12,226

*	Level 3 amount shown includes securities determined to have no value at February 28, 2017.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are not included in Investments in the schedule of Condensed Portfolio Holdings and are valued at unrealized appreciation or depreciation.

The fund's policy is to recognize transfers between Level 1, Level 2 and Level 3 as of the beginning of the fiscal year. There were no transfers between Level 1, Level 2 and Level 3 for the period ended February 28, 2017.

₁₇

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $7,369,565,405) including securities on loan of $20,589,476		$7,720,250,332
Collateral invested for securities on loan, at value (cost $21,649,901)	+	21,649,901
Total investments, at value (cost $7,391,215,306)		7,741,900,233
Deposit with broker for futures contracts		1,016,400
Foreign currency, at value (cost $3,497,285)		3,511,095
Receivables:
Investments sold		8,317,704
Dividends		17,795,877
Foreign tax reclaims		5,522,646
Income from securities on loan	+	78,598
Total assets		7,778,142,553
Liabilities
Collateral held for securities on loan		21,649,901
Payables:
Investments bought		12,880,929
Investment adviser fees		407,995
Variation margin on futures contracts	+	30,810
Total liabilities		34,969,635
Net Assets
Total assets		7,778,142,553
Total liabilities	–	34,969,635
Net assets		$7,743,172,918
Net Assets by Source
Capital received from investors		7,638,602,120
Net investment income not yet distributed		7,501,041
Net realized capital losses		(253,550,766)
Net unrealized capital appreciation		350,620,523

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$7,743,172,918		266,900,000		$29.01

₁₈

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends (net of foreign withholding tax of $5,365,828)		$65,683,083
Securities on loan, net	+	611,323
Total investment income		66,294,406
Expenses
Investment adviser fees		2,422,009
Professional fees	+	5,966*
Total expenses		2,427,975
Expense reduction by CSIM	–	5,966*
Net expenses	–	2,422,009
Net investment income		63,872,397
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(62,665,777)
Net realized gains on futures contracts		458,138
Net realized losses on foreign currency transactions	+	(1,673,569)
Net realized losses		(63,881,208)
Net change in unrealized appreciation (depreciation) on investments		362,685,922
Net change in unrealized appreciation (depreciation) on futures contracts		(224,295)
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	145,269
Net change in unrealized appreciation (depreciation)	+	362,606,896
Net realized and unrealized gains		298,725,688
Increase in net assets resulting from operations		$362,598,085

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₁₉

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$63,872,397	$151,933,365
Net realized losses		(63,881,208)	(111,608,147)
Net change in unrealized appreciation (depreciation)	+	362,606,896	100,225,752
Increase in net assets resulting from operations		362,598,085	140,550,970
Distributions to Shareholders
Distributions from net investment income		($173,425,920)	($105,649,560)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		49,100,000	$1,385,406,145	76,200,000	$2,091,090,613
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		49,100,000	$1,385,406,145	76,200,000	$2,091,090,613
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		217,800,000	$6,168,594,608	141,600,000	$4,042,602,585
Total increase	+	49,100,000	1,574,578,310	76,200,000	2,125,992,023
End of period		266,900,000	$7,743,172,918	217,800,000	$6,168,594,608
Net investment income not yet distributed			$7,501,041		$117,054,564

₂₀

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$29.96	$29.46	$33.32	$28.61	$24.94	$27.48
Income (loss) from investment operations:
Net investment income (loss)	0.24 ¹	0.67 ¹	0.73 ¹	0.71	0.76	0.67
Net realized and unrealized gains (losses)	0.98	0.50	(3.84)	4.90	3.72	(2.39)
Total from investment operations	1.22	1.17	(3.11)	5.61	4.48	(1.72)
Less distributions:
Distributions from net investment income	(0.59)	(0.67)	(0.75)	(0.90)	(0.81)	(0.82)
Net asset value at end of period	$30.59	$29.96	$29.46	$33.32	$28.61	$24.94
Total return	4.18% ²	4.12%	(9.29%)	19.84%	18.23%	(5.91%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.16% ³^,⁴	0.17% ⁵	0.18% ⁶	0.19%	0.21% ⁷	0.35%
Net investment income (loss)	1.64% ³	2.34%	2.40%	2.21%	2.86%	2.65%
Portfolio turnover rate⁸	6% ²	23%	23%	16%	20%	25%
Net assets, end of period (x 1,000)	$1,058,357	$787,951	$609,773	$403,229	$280,422	$159,610

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

Effective March 1, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁶

Effective March 4, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/15 is a blended ratio.

⁷

Effective September 20, 2012, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/13 is a blended ratio.

⁸

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

₂₁

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.4%	Common Stock	986,718,908	1,052,472,751
0.3%	Preferred Stock	2,862,287	2,939,671
2.3%	Other Investment Companies	24,603,138	24,603,138
102.0%	Total Investments	1,014,184,333	1,080,015,560
(2.0%)	Other Assets and Liabilities, Net		(21,658,487)
100.0%	Net Assets		1,058,357,073

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.4% of net assets

Australia 5.4%
Other Securities		5.4	56,969,272

Austria 1.1%
Other Securities		1.1	11,278,376

Belgium 1.4%
Other Securities		1.4	15,227,106

Canada 17.6%
Algonquin Power & Utilities Corp.	221,530	0.2	2,018,851
AltaGas Ltd.	93,255	0.2	2,182,721
Bombardier, Inc., B Shares *	1,175,961	0.2	2,042,139
CAE, Inc.	167,951	0.2	2,529,822
Canadian Apartment Properties REIT	83,476	0.2	2,026,946
CCL Industries, Inc., Class B	19,886	0.4	4,238,753
Dollarama, Inc.	61,848	0.5	4,776,181
Element Fleet Management Corp.	223,008	0.2	2,369,076
First Quantum Minerals Ltd.	418,417	0.4	4,365,980
Gildan Activewear, Inc.	141,357	0.3	3,591,425
H&R Real Estate Investment Trust	177,318	0.3	3,159,579
Industrial Alliance Insurance & Financial Services, Inc.	64,529	0.3	2,686,008
Keyera Corp.	112,662	0.3	3,326,823
Kinross Gold Corp. *	751,237	0.3	2,654,528
Lundin Mining Corp. *	384,753	0.2	2,321,097
Methanex Corp.	55,022	0.3	2,812,065
Onex Corp.	49,607	0.3	3,500,899
Open Text Corp.	147,953	0.5	4,890,620
PrairieSky Royalty Ltd.	118,743	0.3	2,784,671
Seven Generations Energy Ltd., A Shares *	161,686	0.3	3,004,336
Teck Resources Ltd., Class B	285,252	0.5	5,718,178
Vermilion Energy, Inc.	63,778	0.2	2,432,275

Security	Number of Shares	% of Net Assets	Value ($)
WSP Global, Inc.	60,782	0.2	2,061,021
Other Securities		10.8	114,986,155
		17.6	186,480,149

Denmark 1.5%
Other Securities		1.5	15,420,113

Finland 1.4%
Other Securities		1.4	14,999,194

France 3.1%
Rubis S.C.A.	22,883	0.2	2,151,919
Other Securities		2.9	30,707,162
		3.1	32,859,081

Germany 4.2%
Dialog Semiconductor plc *	43,192	0.2	2,283,087
Freenet AG	67,135	0.2	2,009,225
Rheinmetall AG	26,449	0.2	2,026,911
STADA Arzneimittel AG	38,468	0.2	2,336,069
Other Securities		3.4	35,866,071
		4.2	44,521,363

Hong Kong 2.2%
Other Securities		2.2	23,677,216

Ireland 0.6%
Kingspan Group plc	108,010	0.3	3,328,371
Other Securities		0.3	3,099,437
		0.6	6,427,808

Israel 0.5%
Other Securities		0.5	4,895,982

Italy 3.2%
Banco BPM S.p.A.	888,547	0.2	2,224,464
Other Securities		3.0	31,843,523
		3.2	34,067,987

Japan 19.5%
Mebuki Financial Group, Inc.	606,058	0.3	2,681,313
Other Securities		19.2	204,128,747
		19.5	206,810,060

₂₂

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Netherlands 2.4%
Aalberts Industries N.V.	62,437	0.2	2,160,211
Other Securities		2.2	23,200,934
		2.4	25,361,145

New Zealand 0.9%
Other Securities		0.9	9,425,373

Norway 1.8%
Subsea 7 S.A. *	170,607	0.2	2,419,060
Other Securities		1.6	17,012,628
		1.8	19,431,688

Portugal 0.4%
Other Securities		0.4	4,284,212

Republic of Korea 4.8%
Other Securities		4.8	51,359,228

Singapore 1.7%
Other Securities		1.7	17,548,896

Spain 2.1%
Merlin Properties Socimi S.A.	192,570	0.2	2,192,555
Other Securities		1.9	19,652,182
		2.1	21,844,737

Sweden 4.5%
Castellum AB	163,927	0.2	2,226,040
Elekta AB, B Shares	219,067	0.2	2,085,773
Other Securities		4.1	43,137,341
		4.5	47,449,154

Switzerland 4.1%
BB Biotech AG - Reg'd (a)	33,983	0.2	1,993,610
Georg Fischer AG - Reg'd	2,532	0.2	2,200,915
Logitech International S.A. - Reg'd	89,454	0.2	2,594,876
Temenos Group AG - Reg'd *	34,958	0.3	2,710,558
Other Securities		3.2	34,319,215
		4.1	43,819,174

United Kingdom 15.0%
BBA Aviation plc	630,170	0.2	2,391,760
Hiscox Ltd.	181,755	0.2	2,456,271
Melrose Industries plc	1,108,004	0.3	2,940,292
Phoenix Group Holdings	225,077	0.2	2,151,060
RPC Group plc	251,118	0.3	2,853,045
Spectris plc	71,203	0.2	2,153,102
Spirax-Sarco Engineering plc	40,753	0.2	2,256,223
TP ICAP plc	324,222	0.2	1,972,929
UBM plc	240,546	0.2	2,231,546
Other Securities		13.0	136,909,209
		15.0	158,315,437
Total Common Stock
(Cost $986,718,908)			1,052,472,751

Security	Number of Shares	% of Net Assets	Value ($)
Preferred Stock 0.3% of net assets

Germany 0.2%
Other Securities		0.2	2,523,142

Sweden 0.1%
Other Securities		0.1	416,529
Total Preferred Stock
(Cost $2,862,287)			2,939,671

Other Investment Companies 2.3% of net assets

United States 2.3%
Money Market Fund 0.0%
Other Securities		0.0	467,117

Securities Lending Collateral 2.3%
Wells Fargo Government Money Market Fund, Select Class 0.48% (b)		2.3	24,136,021
Total Other Investment Companies
(Cost $24,603,138)			24,603,138

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $1,015,496,578 and the unrealized appreciation and depreciation were $131,678,014 and ($67,159,032) , respectively, with a net unrealized appreciation of $64,518,982.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $22,737,206.
(b)	The rate shown is the 7-day yield.
(c)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.

CVA —	Dutch Certificate
Reg'd —	Registered
REIT —	Real Estate Investment Trust

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Depreciation ($)
Futures Contracts
MSCI EAFE, e-mini, Long, expires 03/17/17	25	2,181,875	(6,927)

₂₃

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2017 (see financial note 2(a) for additional information):

Assets Valuation Input

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$943,368,320	$—	$— ^*	$943,368,320
Hong Kong	23,222,880	—	454,336 ^*	23,677,216
Italy	33,864,784	—	203,203	34,067,987
Republic of Korea	50,884,377	—	474,851	51,359,228
Preferred Stock¹	2,939,671	—	—	2,939,671
Other Investment Companies¹	24,603,138	—	—	24,603,138
Total	$1,078,883,170	$—	$1,132,390	$1,080,015,560
Liabilities Valuation Input

Other Financial Instruments
Futures Contracts²	($6,927)	$—	$—	($6,927)

*	Level 3 amount shown includes securities determined to have no value at February 28, 2017.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are not included in Investments in the schedule of Condensed Portfolio Holdings and are valued at unrealized appreciation or depreciation.

₂₄

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $990,048,312) including securities on loan of $22,737,206		$1,055,879,539
Collateral invested for securities on loan, at value (cost $24,136,021)	+	24,136,021
Total investments, at value (cost $1,014,184,333)		1,080,015,560
Deposit with broker for futures contracts		210,000
Foreign currency, at value (cost $725,301)		726,906
Receivables:
Dividends		1,269,912
Foreign tax reclaims		334,724
Income from securities on loan	+	66,053
Total assets		1,082,623,155
Liabilities
Collateral held for securities on loan		24,136,021
Payables:
Investment adviser fees		126,811
Variation margin on futures contracts	+	3,250
Total liabilities		24,266,082
Net Assets
Total assets		1,082,623,155
Total liabilities	–	24,266,082
Net assets		$1,058,357,073
Net Assets by Source
Capital received from investors		1,052,454,893
Distributions in excess of net investment income		(4,639,196)
Net realized capital losses		(55,291,160)
Net unrealized capital appreciation		65,832,536

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$1,058,357,073		34,600,000		$30.59

₂₅

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends (net of foreign withholding tax of $752,929)		$7,443,917
Securities on loan, net	+	515,140
Total investment income		7,959,057
Expenses
Investment adviser fees		709,136
Professional fees	+	221*
Total expenses		709,357
Expense reduction by CSIM	–	221*
Net expenses	–	709,136
Net investment income		7,249,921
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(9,481,630)
Net realized gains on in-kind redemptions		6,426,452
Net realized losses on futures contracts		(19,008)
Net realized losses on foreign currency transactions	+	(214,826)
Net realized losses		(3,289,012)
Net change in unrealized appreciation (depreciation) on investments		35,230,853
Net change in unrealized appreciation (depreciation) on futures contracts		(6,927)
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	25,295
Net change in unrealized appreciation (depreciation)	+	35,249,221
Net realized and unrealized gains		31,960,209
Increase in net assets resulting from operations		$39,210,130

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₂₆

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Small-Cap Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$7,249,921	$15,854,525
Net realized losses		(3,289,012)	(5,889,467)
Net change in unrealized appreciation (depreciation)	+	35,249,221	19,199,793
Increase in net assets resulting from operations		39,210,130	29,164,851
Distributions to Shareholders
Distributions from net investment income		($18,024,160)	($15,625,200)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		9,100,000	$273,184,070	6,300,000	$184,797,227
Shares redeemed	+	(800,000)	(23,964,433)	(700,000)	(20,158,435)
Net transactions in fund shares		8,300,000	$249,219,637	5,600,000	$164,638,792
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		26,300,000	$787,951,466	20,700,000	$609,773,023
Total increase	+	8,300,000	270,405,607	5,600,000	178,178,443
End of period		34,600,000	$1,058,357,073	26,300,000	$787,951,466
Distributions in excess of net investment income/ Net investment income not yet distributed			($4,639,196)		$6,135,043

₂₇

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$22.56	$20.83	$27.34	$22.94	$23.65	$26.10
Income (loss) from investment operations:
Net investment income (loss)	0.13 ¹	0.58 ¹	0.66 ¹	0.63	0.50	0.63
Net realized and unrealized gains (losses)	1.15	1.64	(6.49)	4.40	(0.65)	(2.51)
Total from investment operations	1.28	2.22	(5.83)	5.03	(0.15)	(1.88)
Less distributions:
Distributions from net investment income	(0.49)	(0.49)	(0.68)	(0.63)	(0.56)	(0.57)
Net asset value at end of period	$23.35	$22.56	$20.83	$27.34	$22.94	$23.65
Total return	5.89% ²	11.02%	(21.62%)	22.31%	(0.89%)	(7.04%)
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.13% ³^,⁴	0.14%	0.14%	0.14%	0.15%	0.25%
Net investment income (loss)	1.17% ³	2.85%	2.66%	2.89%	2.63%	2.96%
Portfolio turnover rate⁵	5% ²	10%	8%	9%	15%	9%
Net assets, end of period (x 1,000)	$2,666,838	$2,009,874	$1,276,740	$1,273,840	$811,915	$515,595

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

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

₂₈

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
97.1%	Common Stock	2,419,418,416	2,588,688,968
2.8%	Preferred Stock	69,069,986	73,978,458
0.0%	Rights	—	107,091
0.3%	Other Investment Companies	9,008,404	9,008,404
100.2%	Total Investments	2,497,496,806	2,671,782,921
(0.2%)	Other Assets and Liabilities, Net		(4,945,107)
100.0%	Net Assets		2,666,837,814

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 97.1% of net assets

Brazil 7.7%
Ambev S.A. ADR	3,521,076	0.8	20,034,923
Itau Unibanco Holding S.A. ADR	2,415,371	1.2	30,892,595
Petroleo Brasileiro S.A. *	2,811,834	0.5	14,425,223
Vale S.A.	1,030,589	0.4	10,839,239
Vale S.A. ADR	1,514,655	0.6	14,919,352
Other Securities		4.2	115,051,128
		7.7	206,162,460

Chile 1.4%
Other Securities		1.4	36,749,090

China 25.8%
Agricultural Bank of China Ltd., H Shares	19,767,382	0.3	9,116,610
Bank of China Ltd., H Shares	55,637,697	1.1	28,168,445
China Construction Bank Corp., H Shares	67,910,677	2.1	55,903,642
China Life Insurance Co., Ltd., H Shares	5,536,605	0.6	16,868,477
China Mobile Ltd.	3,928,105	1.6	43,316,967
China Overseas Land & Investment Ltd.	2,910,254	0.3	8,960,453
China Petroleum & Chemical Corp., H Shares	19,110,436	0.6	14,820,685
CNOOC Ltd.	11,930,894	0.5	14,109,670
Industrial & Commercial Bank of China Ltd., H Shares	53,185,539	1.3	34,874,865
PetroChina Co., Ltd., H Shares	15,818,525	0.5	12,043,553
Ping An Insurance Group Co. of China Ltd., H Shares	3,748,426	0.7	19,991,734
Tencent Holdings Ltd.	4,009,186	4.0	106,912,315
Other Securities		12.2	321,845,112
		25.8	686,932,528

Security	Number of Shares	% of Net Assets	Value ($)
Colombia 0.5%
Other Securities		0.5	12,636,971

Czech Republic 0.2%
Other Securities		0.2	5,805,109

Egypt 0.2%
Other Securities		0.2	4,996,722

Greece 0.4%
Other Securities		0.4	10,505,627

Hungary 0.3%
Other Securities		0.3	9,486,698

India 12.2%
Housing Development Finance Corp., Ltd.	1,167,601	0.9	23,976,345
Infosys Ltd.	1,405,474	0.8	21,326,867
Reliance Industries Ltd.	1,180,958	0.8	21,914,155
Tata Consultancy Services Ltd.	349,790	0.5	12,929,942
Other Securities		9.2	244,274,580
		12.2	324,421,889

Indonesia 2.6%
PT Astra International Tbk	14,694,867	0.3	9,035,536
PT Bank Central Asia Tbk	9,131,743	0.4	10,579,291
PT Telekomunikasi Indonesia (Persero) Tbk	37,400,639	0.4	10,797,275
Other Securities		1.5	40,144,470
		2.6	70,556,572

Malaysia 3.5%
Public Bank Berhad	2,368,854	0.4	10,649,172
Other Securities		3.1	81,751,204
		3.5	92,400,376

Mexico 4.3%
America Movil S.A.B. de C.V., Series L	21,909,064	0.5	13,972,093
Fomento Economico Mexicano S.A.B. de C.V.	1,629,004	0.5	13,185,051

₂₉

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Grupo Televisa S.A.B., Series CPO	1,851,255	0.4	9,474,455
Other Securities		2.9	78,510,248
		4.3	115,141,847

Peru 0.3%
Other Securities		0.3	8,363,630

Philippines 1.4%
Other Securities		1.4	38,325,972

Poland 1.5%
Other Securities		1.5	39,294,730

Qatar 0.6%
Other Securities		0.6	15,505,949

Russia 4.6%
Gazprom PAO ADR	4,156,434	0.7	18,539,774
LUKOIL PJSC *	350,106	0.7	18,488,988
NOVATEK OAO *	836,639	0.4	10,795,111
Sberbank of Russia PJSC *	7,525,000	0.8	20,088,560
Other Securities		2.0	53,763,047
		4.6	121,675,480

South Africa 8.8%
MTN Group Ltd.	1,279,644	0.4	11,719,308
Naspers Ltd., N Shares	317,054	1.9	50,846,687
Sasol Ltd.	419,583	0.4	11,965,173
Standard Bank Group Ltd.	895,471	0.4	9,804,312
Steinhoff International Holdings N.V.	2,002,306	0.4	10,689,681
Other Securities		5.3	140,509,594
		8.8	235,534,755

Taiwan 14.7%
Cathay Financial Holding Co., Ltd.	6,043,189	0.4	9,490,581
Chunghwa Telecom Co., Ltd. ADR	281,685	0.3	9,258,986
Formosa Chemicals & Fibre Corp.	3,199,008	0.4	10,120,708
Formosa Plastics Corp.	3,637,560	0.4	10,963,531
Hon Hai Precision Industry Co., Ltd.	11,194,365	1.2	32,610,076
Largan Precision Co., Ltd.	73,256	0.4	10,872,699
Nan Ya Plastics Corp.	4,212,816	0.4	10,229,176
Taiwan Semiconductor Manufacturing Co., Ltd. ADR	3,498,498	4.1	110,097,732
Other Securities		7.1	187,604,080
		14.7	391,247,569

Thailand 3.7%
PTT PCL NVDR	1,045,100	0.4	11,886,514
The Siam Cement PCL NVDR	628,500	0.3	9,290,971
Other Securities		3.0	77,399,965
		3.7	98,577,450

Turkey 1.3%
Other Securities		1.3	34,176,692

Security	Number of Shares	% of Net Assets	Value ($)
United Arab Emirates 1.1%
Other Securities		1.1	30,190,852
Total Common Stock
(Cost $2,419,418,416)			2,588,688,968

Preferred Stock 2.8% of net assets

Brazil 2.4%
Banco Bradesco S.A.	2,036,240	0.8	21,874,362
Itausa - Investimentos Itau S.A.	2,902,418	0.4	9,366,852
Petroleo Brasileiro S.A. *	3,259,980	0.6	15,906,942
Other Securities		0.6	18,010,066
		2.4	65,158,222

Colombia 0.1%
Other Securities		0.1	2,013,284

Russia 0.3%
Other Securities		0.3	6,806,952
Total Preferred Stock
(Cost $69,069,986)			73,978,458

Rights 0.0% of net assets

Brazil 0.0%
Other Securities		0.0	59,600

Malaysia 0.0%
Other Securities		0.0	47,491
Total Rights
(Cost $—)			107,091

Other Investment Companies 0.3% of net assets

United States 0.3%
Money Market Fund 0.2%
Other Securities		0.2	4,844,444

Securities Lending Collateral 0.1%
Other Securities		0.1	4,163,960
Total Other Investment Companies
(Cost $9,008,404)			9,008,404

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $2,533,319,294 and the unrealized appreciation and depreciation were $295,502,808 and ($157,039,181), respectively, with a net unrealized appreciation of $138,463,627.

₃₀

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $3,878,198.
(b)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(c)	The rate shown is the 7-day yield.

ADR —	American Depositary Receipt
GDR —	Global Depositary Receipt
NVDR —	Non-Voting Depositary Receipt
Reg'd —	Registered
REIT —	Real Estate Investment Trust

In addition to the above, the fund held the following at 2/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
MSCI Emerging Markets Index, e-mini, Long, expires 03/17/17	115	5,352,100	42,234

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2017 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$2,573,183,019	$—	$—	$2,573,183,019
Qatar	13,433,631	—	2,072,318	15,505,949
Preferred Stock¹	73,978,458	—	—	73,978,458
Rights ¹
Brazil ¹	—	—	59,600	59,600
Malaysia ¹	—	—	47,491	47,491
Other Investment Companies¹	9,008,404	—	—	9,008,404
Total	$2,669,603,512	$—	$2,179,409	$2,671,782,921
Other Financial Instruments
Futures Contracts²	$42,234	$—	$—	$42,234

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

₃₁

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $2,493,332,846) including securities on loan of $3,878,198		$2,667,618,961
Collateral invested for securities on loan, at value (cost $4,163,960)	+	4,163,960
Total investments, at value (cost $2,497,496,806)		2,671,782,921
Deposit with broker for futures contracts		360,000
Foreign currency, at value (cost $2,880,251)		2,876,854
Receivables:
Dividends		2,895,266
Fund shares sold		53,597
Foreign tax reclaims		15,715
Income from securities on loan	+	11,493
Total assets		2,677,995,846
Liabilities
Collateral held for securities on loan		4,163,960
Payables:
Investments bought		4,174,450
Investment adviser fees		257,452
Foreign capital gains tax		2,507,425
Variation margin on futures contracts		46,000
Due to custodian	+	8,745
Total liabilities		11,158,032
Net Assets
Total assets		2,677,995,846
Total liabilities	–	11,158,032
Net assets		$2,666,837,814
Net Assets by Source
Capital received from investors		2,725,436,263
Distributions in excess of net investment income		(4,934,751)
Net realized capital losses		(225,530,346)
Net unrealized capital appreciation		171,866,648

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$2,666,837,814		114,200,000		$23.35

₃₂

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends (net of foreign withholding tax of $1,618,465)		$14,418,380
Securities on loan, net	+	60,197
Total investment income		14,478,577
Expenses
Investment adviser fees		1,463,380
Professional fees	+	6,177*
Total expenses		1,469,557
Expense reduction by CSIM	–	6,177*
Net expenses	–	1,463,380
Net investment income		13,015,197
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(35,511,467)
Net realized gains on futures contracts		7,345
Net realized losses on foreign currency transactions	+	(278,214)
Net realized losses		(35,782,336)
Net change in unrealized appreciation (depreciation) on investments (net of change in foreign capital gains tax of $583,933)		159,675,493
Net change in unrealized appreciation (depreciation) on futures contracts		124,978
Net change in unrealized appreciation (depreciation) on foreign currency translations	+	28,757
Net change in unrealized appreciation (depreciation)	+	159,829,228
Net realized and unrealized gains		124,046,892
Increase in net assets resulting from operations		$137,062,089

*	Includes professional fees associated with the filing of tax claims in the European Union deemed to be non-routine expenses of the fund. See financial notes 2 (d) and 4 for additional information.

₃₃

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab Emerging Markets Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$13,015,197	$44,702,574
Net realized losses		(35,782,336)	(61,534,041)
Net change in unrealized appreciation (depreciation)	+	159,829,228	211,214,059
Increase in net assets resulting from operations		137,062,089	194,382,592
Distributions to Shareholders
Distributions from net investment income		($49,865,640)	($35,546,040)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		25,100,000	$569,767,571	27,800,000	$574,297,285
Shares redeemed	+	—	—	—	—
Net transactions in fund shares		25,100,000	$569,767,571	27,800,000	$574,297,285
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		89,100,000	$2,009,873,794	61,300,000	$1,276,739,957
Total increase	+	25,100,000	656,964,020	27,800,000	733,133,837
End of period		114,200,000	$2,666,837,814	89,100,000	$2,009,873,794
Distributions in excess of net investment income/ Net investment income not yet distributed			($4,934,751)		$31,915,692

₃₄

Schwab International Equity ETFs | Semiannual Report

See financial notes

Schwab International Equity ETFs

Financial Notes, unaudited

1. Business Structure of the Funds:

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

SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009)
Schwab International Equity ETF	Schwab U.S. TIPS ETF™
Schwab International Small-Cap Equity ETF	Schwab Short-Term U.S. Treasury ETF™
Schwab Emerging Markets Equity ETF	Schwab Intermediate-Term U.S. Treasury ETF™
Schwab U.S. Broad Market ETF™	Schwab U.S. Aggregate Bond ETF™
Schwab U.S. Large-Cap ETF™	Schwab Fundamental U.S. Broad Market Index ETF
Schwab U.S. Large-Cap Growth ETF™	Schwab Fundamental U.S. Large Company Index ETF
Schwab U.S. Large-Cap Value ETF™	Schwab Fundamental U.S. Small Company Index ETF
Schwab U.S. Mid-Cap ETF™	Schwab Fundamental International Large Company Index ETF
Schwab U.S. Small-Cap ETF™	Schwab Fundamental International Small Company Index ETF
Schwab U.S. Dividend Equity ETF™	Schwab Fundamental Emerging Markets Large Company Index ETF
Schwab U.S. REIT ETF™

The funds issue and redeem shares at their net asset value per share (NAV) only in large blocks of shares, typically 100,000 shares or more (Creation Units). These transactions are usually in exchange for a basket of securities and/or an amount of cash. As a practical matter, only institutions or large investors purchase or redeem Creation Units. Except when aggregated in Creation Units, shares of the funds are not redeemable securities.

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

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

2. Significant Accounting Policies:

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

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

(a) Security Valuation:

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

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

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

₃₅

Schwab International Equity ETFs | Semiannual Report

Schwab International Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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

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

• Futures contracts: Futures contracts are valued at their settlement prices as of the close of their exchanges.

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

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

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

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

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

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

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

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Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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

The levels associated with valuing the funds' investments as of February 28, 2017 are disclosed in the Condensed Portfolio Holdings.

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

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

Securities Lending: Under the trust’s Securities Lending Program, a fund (lender) may make short-term loans of its securities to another party (borrower) to generate additional revenue for the fund. The borrower pledges collateral in the form of cash, securities issued or fully guaranteed by the U.S. government or foreign governments, or letters of credit issued by a bank. Collateral at the individual loan level is required to be maintained on a daily marked-to-market basis in an amount at least equal to the current value of the securities loaned. The lending agent provides a fund with indemnification against borrower default (the borrower fails to return the security on loan) reducing the risk of loss as a result of default. The cash collateral of securities loaned is currently invested in money market portfolios operating under Rule 2a-7 of the 1940 Act. Each fund bears the risk of loss with respect to the investment of cash collateral. The terms of the securities lending agreements allow the funds or the lending agent to terminate any loan at any given time and the securities must be returned within the earlier of the standard trade settlement period or the specified time period under the relevant securities lending agreement. Securities lending income, as disclosed in each fund’s Statement of Operations, if applicable, represents the income earned from the investment of the cash collateral plus any fees paid by borrowers, less the fees paid to the lending agent and broker rebates which are subject to adjustments pursuant to the securities lending agreement. On loans not collateralized by cash, a fee is received from the borrower, and is allocated between a fund and the lending agent. The aggregate market value of securities loaned will not at any time exceed one-third of the total assets of a fund, including collateral received from the loan (at market value computed at the time of the loan). Total costs and expenses, including lending agent fees and broker rebates, associated with securities lending activities under the trust’s Securities Lending Program paid to the unaffiliated lending agent start at 10% of gross lending revenue, with subsequent breakpoints to a low of 7.5%.

As of February 28, 2017, the funds had securities on loan, all of which were classified as common stocks. The value of the securities on loan and the related collateral as of February 28, 2017 are disclosed in each fund's Condensed Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.

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

Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange appreciation or depreciation arises from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains or losses are reported in foreign currency transactions or translations on the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

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

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Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

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

(d) Investment Income:

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

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

In 2015, the funds filed claims to recover taxes previously withheld in certain European Union countries on the basis that those countries had purportedly violated certain provisions in the Treaty on the Functioning of the European Union. These filings are subject to various administrative and judicial proceedings within these countries, and all professional fees associated with these filings have been paid by the investment adviser. No other amounts for additional tax reclaims are reflected in the financial statements due to the uncertainty surrounding the ultimate resolution of proceedings, the likelihood of receipt of these claims, and the potential timing of payment.

(e) Expenses:

Pursuant to the Investment Advisory Agreement (Advisory Agreement) between Charles Schwab Investment Management, Inc. (CSIM or the investment adviser) and the trust, the investment adviser will pay the operating expenses of each fund, excluding interest expense, taxes, any brokerage expenses, and extraordinary or non-routine expenses. Interest expense, taxes, any brokerage expenses and extraordinary or non-routine expenses that are specific to a fund are charged directly to the fund. Effective March 1, 2017, the advisory fees will include interest expenses, which were previously excluded.

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

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

(h) Federal Income Taxes:

The funds intend to meet federal income and excise tax requirements for regulated investment companies under subchapter M of the Internal Revenue Code, as amended. Accordingly, the funds distribute substantially all of their net investment income and net realized capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.

(i) Foreign Taxes:

The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges and capital gains on investments. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of February 28, 2017, if any, are reflected in each fund's Statement of Assets and Liabilities.

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Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(j) Indemnification:

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

3. Risk Factors:

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

Market Risk. Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. As with any investment whose performance is tied to these markets, the value of an investment in a fund will fluctuate, which means that an investor could lose money over short or long periods.

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

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

Market Capitalization Risk. Securities issued by companies of different market capitalizations tend to go in and out of favor based on market and economic conditions. During a period when securities of a particular market capitalization fall behind other types of investments, a fund’s performance could be impacted.

Large-Cap Company Risk. Certain funds invest in large-cap company stocks. Large-cap companies are generally more mature and the securities issued by these companies may not be able to reach the same levels of growth as the securities issued by small- or mid-cap companies.

Mid-Cap Company Risk. Certain funds invest in mid-cap company stocks. Mid-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies and the value of securities issued by these companies may move sharply.

Small-Cap Company Risk. Certain funds invest in small-cap company stocks. Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.

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

Emerging Markets Risk. Certain funds invest in emerging markets. Emerging market countries may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and greater risk associated with the custody of securities. In

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Financial Notes, unaudited (continued)

3. Risk Factors (continued):

addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in developed countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar, and, at times, it may be difficult to value such investments.

Sampling Index Tracking Risk. Each fund uses statistical sampling techniques, and as a result, a fund may not fully replicate its respective index and may hold securities not included in the index. As a result, a fund is subject to the risk that the investment adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. Because each fund utilizes a sampling approach, it may not track the return of its respective index as well as it would if a fund purchased all of the securities in its index.

Tracking Error Risk. As index funds, each fund seeks to track the performance of its respective index, although it may not be successful in doing so. The divergence between the performance of a fund and the index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.

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

Liquidity Risk. A fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.

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

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

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

Shares of the Fund May Trade at Prices Other Than NAV. Fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of a fund will approximate the fund’s NAV, there may be times when the market price and the NAV vary significantly. An investor may pay more than NAV when buying shares of a fund in the secondary market, and an investor may receive less than NAV when selling those shares in the secondary market. The market price of the fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or as a result of other factors impacting foreign securities, including liquidity, irregular trading activity and timing differences between foreign markets where securities trade and the secondary market where fund shares are sold.

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

4. Affiliates and Affiliated Transactions:

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

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Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

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

Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
0.07% ^1,2	0.16% ²	0.13% ¹

¹	Prior to October 7, 2016, the advisory fees of the Schwab International Equity ETF and Schwab Emerging Markets Equity ETF were 0.08% and 0.14%, respectively.
²	Subsequent to the reporting period ended February 28, 2017, and effective March 1, 2017, the advisory fees of the Schwab International Equity ETF and Schwab International Small-Cap ETF were reduced to 0.06% and 0.12%, respectively.

Certain Schwab funds may own shares of other Schwab funds. The table below reflects the percentages of shares of each fund in this report that are owned by other Schwab funds as of February 28, 2017, as applicable:

	Underlying Funds
	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
Schwab VIT Balanced Portfolio	0.1%	0.1%	0.1%
Schwab VIT Balanced with Growth Portfolio	0.3%	0.4%	0.3%
Schwab VIT Growth Portfolio	0.4%	0.6%	0.4%
Schwab Target 2010 Index Fund	0.0%*	-%	-%
Schwab Target 2015 Index Fund	0.0%*	-%	-%
Schwab Target 2020 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2025 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2030 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2035 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2040 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2045 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2050 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2055 Index Fund	0.0%*	-%	0.0%*
Schwab Target 2060 Index Fund	0.0%*	-%	0.0%*

*	Less than 0.05%

The funds may engage in direct transactions with certain other Schwab funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and/or officers. For the period ended February 28, 2017, each fund's total aggregate security transactions with other Schwab funds as well as any realized gains (losses) were as follows:

	Total Aggregate Transactions	Realized Gains (Losses)
Schwab International Equity ETF	$23,877,210	($9,508,698)
Schwab International Small-Cap Equity ETF	9,721,707	(427,810)
Schwab Emerging Markets Equity ETF	7,675,191	(4,360,082)

Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to Trustees and Officers section). All loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds/portfolios. The interfund lending facility is subject to the oversight and periodic review of the Board. The funds had no interfund borrowing or lending activity during the period.

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Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

The professional fees related to foreign withholding tax claims discussed in financial note 2 were non-routine expenses. However, the investment adviser agreed to pay these professional fees for this reporting period, subject to reimbursement by the funds to the extent the funds are able to successfully recover taxes withheld in the future.

The Schwab Emerging Markets Equity ETF has recovered previously withheld foreign taxes from Poland. The investment adviser had paid upfront professional fees associated with recovering these foreign taxes in the amounts of $16,248 and $6,177, respectively, for the periods ended August 31, 2016 and February 28, 2017. Those amounts have been reimbursed to the investment advisor by the fund in the current period. The payment received by Schwab Emerging Markets Equity ETF amounted to $59,058 and is recorded in the Statement of Operations.

As of February 28, 2017, the balance of professional fees related to foreign withholding tax subject to future reimbursement by the fund to the investment adviser was $98,284 for Schwab International Equity ETF and $2,090 for Schwab International Small-Cap Equity ETF, respectively. There was no balance of professional fees related to foreign withholding tax subject to future reimbursement by the investment adviser for Schwab Emerging Markets Equity ETF.

5. Other Service Providers:

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

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

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

6. Board of Trustees:

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

7. Borrowing from Banks:

During the period, the funds were participants with other U.S. registered investment companies managed by CSIM in a joint, syndicated, committed $530 million line of credit (the Credit Facility), which matured on October 6, 2016. Under the terms of the Credit Facility, in addition to the interest charged on any borrowings by a fund, each fund paid a commitment fee of 0.125% per annum on its proportionate share of the unused portion of the Credit Facility. On October 6, 2016, the Credit Facility was amended to run for a new 364 day period with an increased line of $555 million and a commitment fee of 0.15% per annum. There were no borrowings from the line of credit during the period.

The funds also have access to custodian overdraft facilities. A fund may have utilized the overdraft facility and incurred an interest expense, which is disclosed on the fund’s Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

8. Derivatives:

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Financial Notes, unaudited (continued)

8. Derivatives (continued):

policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended February 28, 2017, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Contract Values	Number of Contracts
Schwab International Equity ETF	$27,967,413	332
Schwab International Small-Cap Equity ETF	2,709,406	32
Schwab Emerging Markets Equity ETF	5,112,804	114

9. Purchases and Sales/Maturities of Investment Securities:

For the period ended February 28, 2017, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales/Maturities of Securities
Schwab International Equity ETF	$241,057,693	$255,804,490
Schwab International Small-Cap Equity ETF	66,928,672	57,185,852
Schwab Emerging Markets Equity ETF	428,090,689	103,605,769

10. In-Kind Transactions:

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

The in-kind transactions for the period ended February 28, 2017 were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab International Equity ETF	$1,301,847,102	$—
Schwab International Small-Cap Equity ETF	250,532,233	22,855,447
Schwab Emerging Markets Equity ETF	208,802,716	—

For the period ended February 28, 2017, the funds realized net capital gains or losses resulting from in-kind redemptions of Creation Units. Because such gains or losses are not taxable to the funds and are not distributed to existing fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to capital received from investors at the end of the funds' tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the period ended February 28, 2017 are disclosed in the funds' Statements of Operations.

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Financial Notes, unaudited (continued)

11. Federal Income Taxes

Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of August 31, 2016, the funds had capital loss carryforwards available to offset future net capital gains before the expiration dates as follows:

Expiration Date	Schwab International Equity ETF	Schwab International Small-Cap Equity ETF	Schwab Emerging Markets Equity ETF
August 31, 2019	$2,345,874	$215,545	$1,091,404
No expiration*	180,861,261	50,875,015	164,638,143
Total	$183,207,135	$51,090,560	$165,729,547

*	As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss.

As of August 31, 2016, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds' financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended August 31, 2016, the funds did not incur any interest or penalties.

12. Recent Regulatory Development:

In October 2016, the SEC adopted new rules and amended existing rules (together, final rules) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. Management is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on the funds' financial statements and related disclosures.

13. Subsequent Events:

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

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Investment Advisory Agreement Approval

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

At a meeting held on January 18, 2017, the Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the approval of an amended and restated investment advisory agreement (the Amended Agreement) between Schwab Strategic Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including Schwab International Equity ETF, Schwab International Small-Cap Equity ETF, and Schwab Emerging Markets Equity ETF (the Funds) to reflect (i) a reduction to the rate paid by the Trust to CSIM as compensation for CSIM’s services rendered to the Schwab International Equity ETF and Schwab International Small-Cap Equity ETF; and (ii) a change that

would make CSIM responsible for the interest expenses resulting from the Funds’ operations. The Board reviewed materials provided by CSIM relating to these changes (including a representation by CSIM that the changes will not result in the nature and level of services provided to the Funds by CSIM) and also took into account the extensive information that the Board reviewed and the conclusions it reached at its May and June 2016 meetings, in connection with its annual consideration and approval of the continuation of the Funds’ investment advisory agreement. Because the Board had conducted a full review of the Funds’ investment advisory agreement in the spring of 2016, and intends to conduct another such review in the spring of 2017, it limited its discussions in January 2017 primarily to the proposed changes to the agreement.

Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including a majority of the Independent Trustees, approved the Amended Agreement with respect to the Funds effective March 1, 2017 through June 30, 2017 and concluded that the compensation payable by the Funds to CSIM under the Amended Agreement is fair and reasonable in light of the services CSIM renders to (and the expenses it bears relating to) the Funds and such other matters as the Trustees considered to be relevant in the exercise of their reasonable judgment.

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Trustees and Officers

The tables below give information about the trustees and officers for the Schwab Strategic Trust, which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The Fund Complex includes 110 funds.

The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-877-824-5615.

Independent Trustees
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee 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 (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds.	110	Director, PS Business Parks, Inc. (2005 – 2012)
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow, Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015).	110	Director, Gilead Sciences, Inc. (2005 – present)
Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (Jan. 2008 – Apr. 2012).	110	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.	110	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Adamas Pharmaceuticals, Inc. (2009 – present)

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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. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services firm for consumers and small businesses) (Dec. 2008 – Sept. 2013).	110	Director, KLA-Tencor Corporation (2008 – present)
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, Patmore Management Consulting (management consulting) (2008 – present).	110	None
Charles A. Ruffel 1956 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 2015)	Co-Chief Executive Officer, Kudu Investment Management, LLC (financial services) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015).	110	None
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present).	110	Director, Eaton (2012 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – 2013) Director, Oneok, Inc. (2009 – 2013) Lead Independent Director, Board of Cooper Industries (2002 – 2012)
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present).	110	Board Member and Chairman of the Audit Committee, Ionis Pharmaceuticals (1994 – present) Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present)

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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)	Director, President and Chief Executive Officer, The Charles Schwab Corporation (Oct. 2008 – present); President and Chief Executive Officer (Oct. 2008 – present), Director (May 2008 – present), Charles Schwab & Co., Inc.; Director, Charles Schwab Bank (Apr. 2006 – present); Director, Schwab Holdings, Inc. (May 2008 – present); and Director, Charles Schwab Investment Management, Inc. (July 2016 – present).	110	Director, The Charles Schwab Corporation (2008 – present)
Marie A. Chandoha² 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 2016)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; Trustee (Jan. 2016 – present), President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010).	110	None
Joseph R. Martinetto² 1962 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)	Senior Executive Vice President and Chief Financial Officer, The Charles Schwab Corporation and Charles Schwab & Co., Inc. (July 2015 – present); Executive Vice President and Chief Financial Officer of The Charles Schwab Corporation and Charles Schwab & Co., Inc. (May 2007 – July 2015); Director, Charles Schwab & Co., Inc. (May 2007 – present); Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank; Director, Executive Vice President and Chief Financial Officer (May 2007 – present), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.	110	None

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Marie A. Chandoha 1961 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 2010)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; Trustee (Jan. 2016 – present), President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010).
Mark Fischer 1970 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 2013)	Treasurer and Chief Financial Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Jan. 2016 – present); Assistant Treasurer, Schwab Funds and Laudus Funds (Dec. 2013 – Dec. 2015), Schwab ETFs (Nov. 2013 – Dec. 2015); Vice President, Charles Schwab Investment Management, Inc. (Oct. 2013 – present); Executive Director, J.P. Morgan Investor Services (Apr. 2011 – Sept. 2013); Assistant Treasurer, Massachusetts Financial Service Investment Management (May 2005 – Mar. 2011).

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Officers of the Trust (continued)
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
George Pereira 1964 Senior Vice President and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust since 2006; Schwab Strategic Trust since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Operating Officer (Jan. 2016 – present), Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – Dec. 2015); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – Dec. 2015) and Schwab ETFs (Oct. 2009 – Dec. 2015); Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Apr. 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (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 – Equities and Multi-Asset Strategies, Charles Schwab Investment Management, Inc. (Apr. 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – Apr. 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of 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 – Fixed Income, Charles Schwab Investment Management, Inc. (Apr. 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (Apr. 2006 – Jan. 2008).
David Lekich 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (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 (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (Apr. 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (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)	Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).

¹	Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The 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, Ms. Chandoha, and Mr. Martinetto are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser.
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.

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Glossary

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

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

ask See “offer.”

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

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

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

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

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

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

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

cap, capitalization See “market cap.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MSCI Emerging Markets Index A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The Net version of the index reflects reinvested dividends net of withholding taxes, but reflects no deductions for expenses or other taxes; returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.

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

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

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

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

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

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

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

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

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

rights and warrants Rights and warrants are types of securities that entitle the holder to purchase a proportionate amount of common stock at a specified price for a specific period of time. Rights allow a shareholder to buy more shares directly from the company, usually at a price somewhat lower than the current market price of the outstanding shares. Warrants are usually issued with bonds and preferred stock. Rights and warrants can trade on the market separately from the company’s stock. The prices of rights and warrants do not necessarily move parallel to the prices of the underlying common stock. Rights usually expire within a few weeks of issuance, while warrants may not expire for several years. If a right or warrant is not exercised within the specified time period, it will become worthless and a fund will lose the purchase price it paid for the right or warrant and the right to purchase the underlying security.

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

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

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

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

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

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

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

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Schwab ETFs^™

Schwab ETFs are designed to be low-cost, diversified investments which follow broad market indices and provide exposure to specific segments of the market. These ETFs can serve as part of the foundation of a diversified portfolio. The list below shows all currently available Schwab ETFs.

Investors should carefully consider information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges and expenses before investing. Please call 1-877-824-5615 for a prospectus and brochure for any Schwab ETF. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.

Proxy Voting Policies, Procedures and Results

A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Schwab ETFs’ website at www.csimfunds.com/schwabetfs_prospectus, the SEC’s website at www.sec.gov, or by contacting Schwab ETFs at 1-877-824-5615.

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

Schwab ETFs™

U.S. ETFs

Schwab U.S. Broad Market ETF™

Schwab U.S. Large-Cap ETF™

Schwab U.S. Large-Cap Growth ETF™

Schwab U.S. Large-Cap Value ETF™

Schwab U.S. Mid-Cap ETF™

Schwab U.S. Small-Cap ETF™

Schwab U.S. Dividend Equity ETF™

Schwab U.S. REIT ETF™

International ETFs

Schwab International Equity ETF™

Schwab International Small-Cap Equity ETF™

Schwab Emerging Markets Equity ETF™

Fixed Income ETFs

Schwab U.S. TIPS ETF™

Schwab Short-Term U.S. Treasury ETF™

Schwab Intermediate-Term U.S. Treasury ETF™

Schwab U.S. Aggregate Bond ETF™

Fundamental Index* ETFs

Schwab Fundamental U.S. Broad Market Index ETF

Schwab Fundamental U.S. Large Company Index ETF

Schwab Fundamental U.S. Small Company Index ETF

Schwab Fundamental International Large Company Index ETF

Schwab Fundamental International Small Company Index ETF

Schwab Fundamental Emerging Markets Large Company
Index ETF

Investment Adviser

Charles Schwab Investment Management, Inc.

211 Main Street, San Francisco, CA 94105

Schwab ETFs™

1-877-824-5615

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

In This Report

Performance at a Glance	2
From the President	3
The Investment Environment	5
Fund Management	6
Performance and Fund Facts
Schwab U.S. Broad Market ETF	7
Schwab U.S. Large-Cap ETF	9
Schwab U.S. Large-Cap Growth ETF	11
Schwab U.S. Large-Cap Value ETF	13
Schwab U.S. Mid-Cap ETF	15
Schwab U.S. Small-Cap ETF	17
Schwab U.S. Dividend Equity ETF	19
Fund Expenses	21
Financial Statements and Condensed Portfolio Holdings
Schwab U.S. Broad Market ETF	22
Schwab U.S. Large-Cap ETF	29
Schwab U.S. Large-Cap Growth ETF	36
Schwab U.S. Large-Cap Value ETF	43
Schwab U.S. Mid-Cap ETF	50
Schwab U.S. Small-Cap ETF	57
Schwab U.S. Dividend Equity ETF	64
Financial Notes	71
Investment Advisory Agreement Approval	80
Trustees and Officers	81
Glossary	85

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

Distributor: SEI Investments Distribution Co. (SIDCO)

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

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Schwab U.S. Equity ETFs

Performance at a Glance

Total Returns for the 6 Months Ended February 28, 2017
Schwab U.S. Broad Market ETF (Ticker Symbol: SCHB)
Market Price Return¹	10.32%
NAV Return¹	10.26%
Dow Jones U.S. Broad Stock Market Index	10.26%
ETF Category: Morningstar Large Blend²	9.46%
Performance Details	pages 7-8

Schwab U.S. Large-Cap ETF (Ticker Symbol: SCHX)
Market Price Return¹	10.10%
NAV Return¹	10.18%
Dow Jones U.S. Large-Cap Total Stock Market Index	10.15%
ETF Category: Morningstar Large Blend²	9.46%
Performance Details	pages 9-10

Schwab U.S. Large-Cap Growth ETF (Ticker Symbol: SCHG)
Market Price Return¹	9.60%
NAV Return¹	9.58%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	9.62%
ETF Category: Morningstar Large Growth²	7.84%
Performance Details	pages 11-12

Schwab U.S. Large-Cap Value ETF (Ticker Symbol: SCHV)
Market Price Return¹	10.58%
NAV Return¹	10.60%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	10.62%
ETF Category: Morningstar Large Value²	10.79%
Performance Details	pages 13-14

Total Returns for the 6 Months Ended February 28, 2017
Schwab U.S. Mid-Cap ETF (Ticker Symbol: SCHM)
Market Price Return¹	9.69%
NAV Return¹	9.64%
Dow Jones U.S. Mid-Cap Total Stock Market Index	9.68%
ETF Category: Morningstar Mid-Cap Blend²	10.00%
Performance Details	pages 15-16

Schwab U.S. Small-Cap ETF (Ticker Symbol: SCHA)
Market Price Return¹	11.26%
NAV Return¹	11.21%
Dow Jones U.S. Small-Cap Total Stock Market Index	11.21%
ETF Category: Morningstar Small Blend²	12.00%
Performance Details	pages 17-18

Schwab U.S. Dividend Equity ETF (Ticker Symbol: SCHD)
Market Price Return¹	7.14%
NAV Return¹	7.14%
Dow Jones U.S. Dividend 100^TM Index	7.19%
ETF Category: Morningstar Large Value²	10.79%
Performance Details	pages 19-20

For index definitions, please see the Glossary.

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

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

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

From the President

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

Dear Shareholder,

We hope you are off to a healthy and productive start to the year. At Charles Schwab Investment Management, we have been quite busy over the past six months since our last communication, continuing to pursue more ways to help investors achieve their financial goals. Below I’ll share some exciting news regarding some of the changes we’ve made to bring down the costs of our index products. But first, let’s discuss the market environment that set the tone for the performance of the Schwab U.S. Equity ETFs (the funds) during the six-month reporting period ended February 28, 2017.

The past six months were marked by substantial gains across most equity classes. Stock prices rose in anticipation of reflationary policies expected to be enacted by the Trump administration, including tax reform and fewer federal regulations. Small-cap stocks led the way, making the Schwab U.S. Small-Cap ETF our best-performing U.S. equity ETF during the six-month span, returning 11.3%¹. Over the reporting period, all seven funds generated gains, in line with their underlying indexes.

The current bull market is now the second-longest in history, and many market watchers are warning that returns may not be as strong in the months and years ahead. It is quite possible, given our current starting point, that

Asset Class Performance Comparison % returns during the six months ended 2/28/2017

For index definitions, please see the Glossary.

Data source: Index provider websites and CSIM.

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

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

¹	Return shown is the fund’s market price return, which is based on the market price per share of the fund. For the definition of market price return, please refer to the glossary.

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

From the President (continued)

“ Rather than trying to predict the market’s every move, we believe investors are better off focusing on what they can control: how much they pay to invest.”

equity markets may be hard-pressed to provide returns similar to those over the preceding six-month period. While the exact path of the markets is uncertain, we do know that investors who simply stay in the market, instead of attempting to time the market, are generally more likely to take advantage of some of the best periods of higher returns.

Rather than trying to predict the market’s every move, we believe investors are better off focusing on what they can control: how much they pay to invest. Costs matter to investors, particularly when it comes to passive investments, such as index ETFs, that they plan to hold for the long haul. Over the last few years, we have taken steps to dramatically reduce costs and complexity for our investors. Just this past October, we reduced expenses on five of our ETFs—including the Schwab U.S. Mid-Cap ETF—to new lows. Then, in February, we announced plans to lower the expense ratios on several more of our market cap index products and on our Fundamental Index^® ETFs. Those expense reductions went into effect on March 1, 2017, giving us among the lowest-cost market cap index mutual funds and ETFs available in the industry. To learn more about these changes, please visit www.csimfunds.com/lowercosts.

Sincerely,

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

The Investment Environment

Over the six-month reporting period ended February 28, 2017, U.S. equity markets generated positive returns amid generally improving economic conditions, a post-election rally, and an increase in the federal funds rate. Meanwhile, the U.S. dollar continued its upward trajectory, appreciating against many major currencies over the reporting period. The S&P 500^® Index, a bellwether for the overall U.S. stock market, returned 10.01% for the reporting period, while the Dow Jones U.S. Mid-Cap Total Stock Market Index and the Russell 2000^® Index returned 9.68% and 12.61%, respectively. Outside the U.S., the MSCI EAFE Index (Net), a broad measure of developed international equity performance, returned 4.90%, while the MSCI Emerging Markets Index (Net) returned 5.51%.

The U.S. economy generally improved during the six-month reporting period, with strengthening demonstrated in several key measurements. The labor market showed signs of stability, with a slight increase in workers’ wages and nonfarm payroll numbers coming in near or above expectations each month. Though the jobless rate rose in January, it was largely because more individuals became active job seekers, indicating confidence in the potential for new job opportunities. Over the six months, the U.S. housing market remained strong, while steady demand helped U.S. manufacturing activity rise to its highest level since November 2014 toward the end of the reporting period. More upbeat economic news was released in mid-February, with the announcement of an uptick in inflation and better-than-expected U.S. retail sales in the first month of 2017.

Early in the reporting period, the U.S. presidential election contributed to heightened market volatility. Uncertainty regarding changes to existing policies or potential new policies that could come with a new administration in the White House particularly affected the Energy, Financials, and Health Care sectors. After the election results were announced, U.S. equity futures markets fell sharply, but rebounded by the following day. As the reporting continued, however, market volatility tempered and U.S. equity markets generally advanced. With expectations of increased infrastructure spending and tax reform from the Trump administration, this post-election equity rally continued for the remainder of the reporting period. Several U.S. equity indexes reached record highs during the six months, including the first-ever closing above 20,000 for the Dow Jones industrial average in January.

U.S. monetary policy remained fairly accommodative over the reporting period, though the Federal Reserve (Fed) made progress in moving toward a more normalized short-term interest rate environment. After leaving the federal funds rate unchanged at meetings in both September and November, the Fed increased the federal funds rate by 25 basis points in December to a target range of 0.50% to 0.75%, with forecasts for several additional hikes in 2017. The Fed noted a strengthening labor market and rising inflation in its announcement of only the second interest rate increase in 10 years, and voiced optimism about the state of the U.S. economy as a whole. The U.S. dollar rose sharply one day after the Fed’s meeting concluded, and though U.S. stock markets initially fell, most stocks rebounded and continued to rally throughout the remainder of the reporting period. (After the end of the reporting period, the Fed raised short-term interest rates for the first time in 2017 at its March meeting.)

Outside the U.S., many countries continued to face weak economic growth and inflation below targeted levels. In response, central banks in both Asia and Europe took steps to stimulate their respective economies, and maintained or increased accommodative monetary policy measures. The European Central Bank announced a loosening of the restrictions of the types of bonds it can purchase, as well as plans to extend the bond purchase plan until at least December 2017. In Asia, the Bank of Japan maintained negative interest rates, and also introduced yield curve management as a policy tool, targeting interest rates on government bonds to achieve its inflation goal.

From a sector perspective, Financials performed well over the six-month reporting period, supported by signs of strength in the U.S. economy and the increase in short-term interest rates by the Fed. Also performing well over the reporting period was the Information Technology sector. Solid earnings growth and rising consumer confidence were large contributors to this sector’s positive performance. The only negative performance for the reporting period came from the Real Estate sector. The rate hike in December, combined with continued movement away from brick-and-mortar stores to online shopping, weighed on the returns of some stocks in this sector.

For index definitions, please see the Glossary.

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

Fund Management

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Broad Market ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Broad Market ETF (11/3/09)
Market Price Return²	10.32%	26.28%	13.82%	14.40%
NAV Return²	10.26%	26.17%	13.79%	14.40%
Dow Jones U.S. Broad Stock Market Index	10.26%	26.22%	13.80%	14.42%
ETF Category: Morningstar Large Blend³	9.46%	23.36%	12.33%	12.09%
Fund Expense Ratio⁴: 0.03%

For index definitions, please see the Glossary.

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Large-Cap ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap ETF (11/3/09)
Market Price Return²	10.10%	25.42%	13.80%	14.19%
NAV Return²	10.18%	25.40%	13.81%	14.20%
Dow Jones U.S. Large-Cap Total Stock Market Index	10.15%	25.41%	13.86%	14.28%
ETF Category: Morningstar Large Blend³	9.46%	23.36%	12.33%	12.09%
Fund Expense Ratio⁴: 0.03%

For index definitions, please see the Glossary.

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Large-Cap Growth ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap Growth ETF (12/11/09)
Market Price Return²	9.60%	23.79%	13.91%	13.99%
NAV Return²	9.58%	23.77%	13.92%	13.99%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	9.62%	23.85%	14.00%	14.10%
ETF Category: Morningstar Large Growth³	7.84%	20.66%	12.07%	11.85%
Fund Expense Ratio⁴: 0.04%

For index definitions, please see the Glossary.

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Large-Cap Value ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Large-Cap Value ETF (12/11/09)
Market Price Return²	10.58%	26.77%	13.55%	12.87%
NAV Return²	10.60%	26.76%	13.56%	12.88%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	10.62%	26.84%	13.68%	13.03%
ETF Category: Morningstar Large Value³	10.79%	26.31%	12.16%	11.32%
Fund Expense Ratio⁴: 0.04%

For index definitions, please see the Glossary.

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Mid-Cap ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Mid-Cap ETF (1/13/11)
Market Price Return²	9.69%	28.00%	13.77%	12.52%
NAV Return²	9.64%	28.01%	13.77%	12.51%
Dow Jones U.S. Mid-Cap Total Stock Market Index	9.68%	28.07%	13.81%	12.56%
ETF Category: Morningstar Mid-Cap Blend³	10.00%	26.35%	11.97%	9.95%
Fund Expense Ratio⁴: 0.06%

For index definitions, please see the Glossary.

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

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

^*	Inception (1/13/11) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus. Effective March 1, 2017, the management fee was reduced to 0.05%. For more information, see financial note 4 or refer to the prospectus supplement dated March 1, 2017.

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Small-Cap ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Small-Cap ETF (11/3/09)
Market Price Return²	11.26%	33.43%	13.47%	15.63%
NAV Return²	11.21%	33.27%	13.47%	15.62%
Dow Jones U.S. Small-Cap Total Stock Market Index	11.21%	33.29%	13.45%	15.67%
ETF Category: Morningstar Small Blend³	12.00%	31.53%	11.80%	13.64%
Fund Expense Ratio⁴: 0.06%

For index definitions, please see the Glossary.

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

Small-company stocks may be subject to greater volatility than many other asset classes.

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

^*	Inception (11/3/09) represents the date that the shares began trading in the secondary market.
¹	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
²	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the market value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which the shares of the fund are listed for trading, as of the time that the fund’s NAV is calculated. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
³	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs within the category as of the report date.
⁴	As stated in the prospectus. Effective March 1, 2017, the management fee was reduced to 0.05%. For more information, see financial note 4 or refer to the prospectus supplement dated March 1, 2017.

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Dividend Equity ETF

Average Annual Total Returns¹

Fund and Inception Date	6 Months	1 Year	5 Years	Since Inception^*
Fund: Schwab U.S. Dividend Equity ETF (10/20/11)
Market Price Return²	7.14%	21.73%	13.57%	14.72%
NAV Return²	7.14%	21.57%	13.57%	14.71%
Dow Jones U.S. Dividend 100 Index	7.19%	21.73%	13.71%	14.86%
ETF Category: Morningstar Large Value³	10.79%	26.31%	12.16%	13.71%
Fund Expense Ratio⁴: 0.07%

For index definitions, please see the Glossary.

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

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

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

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

Fund Expenses (Unaudited)

Examples for a $1,000 Investment

	Expense Ratio (Annualized)¹	Beginning Account Value at 9/1/16	Ending Account Value (Net of Expenses) at 2/28/17	Expenses Paid During Period 9/1/16-2/28/17²
Schwab U.S. Broad Market ETF
Actual Return	0.03%	$1,000.00	$1,102.60	$0.16
Hypothetical 5% Return	0.03%	$1,000.00	$1,024.65	$0.15
Schwab U.S. Large-Cap ETF
Actual Return	0.03%	$1,000.00	$1,101.80	$0.16
Hypothetical 5% Return	0.03%	$1,000.00	$1,024.65	$0.15
Schwab U.S. Large-Cap Growth ETF
Actual Return	0.05%	$1,000.00	$1,095.80	$0.26
Hypothetical 5% Return	0.05%	$1,000.00	$1,024.55	$0.25
Schwab U.S. Large-Cap Value ETF
Actual Return	0.05%	$1,000.00	$1,106.00	$0.26
Hypothetical 5% Return	0.05%	$1,000.00	$1,024.55	$0.25
Schwab U.S. Mid-Cap ETF
Actual Return	0.06%	$1,000.00	$1,096.40	$0.31
Hypothetical 5% Return	0.06%	$1,000.00	$1,024.50	$0.30
Schwab U.S. Small-Cap ETF
Actual Return	0.06%	$1,000.00	$1,112.10	$0.31
Hypothetical 5% Return	0.06%	$1,000.00	$1,024.50	$0.30
Schwab U.S. Dividend Equity ETF
Actual Return	0.07%	$1,000.00	$1,071.40	$0.36
Hypothetical 5% Return	0.07%	$1,000.00	$1,024.45	$0.35

Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights. Effective December 29, 2016, the advisory fees of the Schwab U.S. Large-Cap Growth ETF and Schwab U.S. Large-Cap Value ETF were each reduced to 0.04%, and effective March 1, 2017, the advisory fees of the Schwab U.S. Mid-Cap ETF and Schwab U.S. Small-Cap ETF were each reduced to 0.05%. If the fund expense changes had been in place throughout the entire most recent fiscal half-year the expenses paid during period under the actual return and hypothetical 5% return example would have been the following; Schwab U.S. Large-Cap Growth ETF, $0.21 and $0.20, respectively, Schwab U.S. Large-Cap Value ETF, $0.21 and $0.20, respectively, Schwab U.S. Mid-Cap ETF $0.26 and $0.25, respectively, and for Schwab U.S. Small-Cap ETF, $0.26 and $0.25, respectively. (See financial note 4)

₂₁

Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Broad Market ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$52.42	$48.02	$48.75	$39.79	$33.84	$29.47
Income (loss) from investment operations:
Net investment income (loss)¹	0.56	1.03	0.99	0.85	0.80	0.65
Net realized and unrealized gains (losses)	4.78	4.34	(0.79)	8.93	5.92	4.32
Total from investment operations	5.34	5.37	0.20	9.78	6.72	4.97
Less distributions:
Distributions from net investment income	(0.52)	(0.97)	(0.93)	(0.82)	(0.77)	(0.60)
Net asset value at end of period	$57.24	$52.42	$48.02	$48.75	$39.79	$33.84
Total return	10.26% ²	11.35%	0.33%	24.77%	20.12%	17.07%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03% ³	0.03% ⁴	0.04%	0.04%	0.04%	0.06%
Net investment income (loss)	2.09% ³	2.09%	1.98%	1.90%	2.15%	2.06%
Portfolio turnover rate⁵	2% ²	5%	3%	4%	4%	5%
Net assets, end of period (x 1,000)	$8,414,277	$6,858,980	$4,919,185	$3,654,037	$2,182,671	$1,072,825

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 08/31/16 is a blended ratio.

⁵

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

₂₂

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.6%	Common Stock	6,647,355,253	8,382,862,625
0.0%	Rights	39,531	52,592
0.5%	Other Investment Companies	42,370,809	42,370,809
100.1%	Total Investments	6,689,765,593	8,425,286,026
(0.1%)	Other Assets and Liabilities, Net		(11,009,512)
100.0%	Net Assets		8,414,276,514

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.6% of net assets

Automobiles & Components 1.0%
Other Securities		1.0	82,890,466

Banks 7.0%
Bank of America Corp.	3,422,830	1.0	84,475,444
Citigroup, Inc.	967,499	0.7	57,866,115
JPMorgan Chase & Co.	1,214,997	1.3	110,103,028
Wells Fargo & Co.	1,524,295	1.0	88,226,195
Other Securities		3.0	245,349,313
		7.0	586,020,095

Capital Goods 7.6%
3M Co.	204,229	0.5	38,058,074
General Electric Co.	2,988,449	1.1	89,085,665
Honeywell International, Inc.	257,091	0.4	32,007,829
The Boeing Co.	195,740	0.4	35,278,220
Other Securities		5.2	448,573,573
		7.6	643,003,361

Commercial & Professional Services 0.9%
Other Securities		0.9	80,084,940

Consumer Durables & Apparel 1.4%
Other Securities		1.4	116,643,938

Consumer Services 2.1%
McDonald's Corp.	282,420	0.4	36,050,913
Other Securities		1.7	137,790,081
		2.1	173,840,994

Diversified Financials 5.2%
Berkshire Hathaway, Inc., Class B *	642,009	1.3	110,053,183
The Charles Schwab Corp. (b)	412,035	0.2	16,650,334

Security	Number of Shares	% of Net Assets	Value ($)
The Goldman Sachs Group, Inc.	125,747	0.4	31,192,801
Other Securities		3.3	275,712,515
		5.2	433,608,833

Energy 6.2%
Chevron Corp.	641,437	0.9	72,161,662
Exxon Mobil Corp.	1,404,628	1.4	114,224,349
Schlumberger Ltd.	469,832	0.4	37,755,700
Other Securities		3.5	295,280,403
		6.2	519,422,114

Food & Staples Retailing 1.8%
Wal-Mart Stores, Inc.	512,410	0.4	36,345,241
Other Securities		1.4	112,440,837
		1.8	148,786,078

Food, Beverage & Tobacco 4.8%
Altria Group, Inc.	664,636	0.6	49,794,529
PepsiCo, Inc.	486,106	0.6	53,656,380
Philip Morris International, Inc.	524,166	0.7	57,317,552
The Coca-Cola Co.	1,311,971	0.7	55,050,303
Other Securities		2.2	189,799,410
		4.8	405,618,174

Health Care Equipment & Services 5.2%
Medtronic plc	469,425	0.5	37,981,177
UnitedHealth Group, Inc.	319,900	0.6	52,905,062
Other Securities		4.1	349,500,449
		5.2	440,386,688

Household & Personal Products 1.8%
The Procter & Gamble Co.	907,998	1.0	82,691,378
Other Securities		0.8	67,393,908
		1.8	150,085,286

Insurance 3.0%
Other Securities		3.0	253,576,162

Materials 3.3%
Other Securities		3.3	281,916,829

₂₃

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Media 3.1%
Comcast Corp., Class A	1,607,514	0.7	60,153,174
The Walt Disney Co.	494,898	0.6	54,483,321
Other Securities		1.8	144,893,253
		3.1	259,529,748

Pharmaceuticals, Biotechnology & Life Sciences 8.1%
AbbVie, Inc.	549,043	0.4	33,952,819
Allergan plc	126,223	0.4	30,901,915
Amgen, Inc.	250,870	0.5	44,286,081
Bristol-Myers Squibb Co.	562,250	0.4	31,885,197
Celgene Corp. *	264,063	0.4	32,614,421
Gilead Sciences, Inc.	446,132	0.4	31,443,383
Johnson & Johnson	923,312	1.3	112,837,960
Merck & Co., Inc.	932,944	0.7	61,453,021
Pfizer, Inc.	2,064,665	0.8	70,446,370
Other Securities		2.8	232,639,953
		8.1	682,461,120

Real Estate 4.1%
Other Securities		4.1	344,060,627

Retailing 4.9%
Amazon.com, Inc. *	133,667	1.3	112,953,962
The Home Depot, Inc.	410,694	0.7	59,513,668
Other Securities		2.9	240,088,640
		4.9	412,556,270

Semiconductors & Semiconductor Equipment 3.1%
Intel Corp.	1,605,047	0.7	58,102,701
Other Securities		2.4	207,198,940
		3.1	265,301,641

Software & Services 12.0%
Alphabet, Inc., Class A *	100,962	1.0	85,305,823
Alphabet, Inc., Class C *	100,162	1.0	82,454,360
Facebook, Inc., Class A *	793,567	1.3	107,560,071
International Business Machines Corp.	291,575	0.6	52,431,016
MasterCard, Inc., Class A	321,355	0.4	35,496,873
Microsoft Corp.	2,635,630	2.0	168,627,607
Oracle Corp.	1,012,782	0.5	43,134,385
Visa, Inc., Class A	632,227	0.7	55,598,042
Other Securities		4.5	382,229,864
		12.0	1,012,838,041

Technology Hardware & Equipment 5.5%
Apple, Inc.	1,805,928	2.9	247,394,077
Cisco Systems, Inc.	1,682,404	0.7	57,504,569
Other Securities		1.9	157,712,081
		5.5	462,610,727

Security	Number of Shares	% of Net Assets	Value ($)
Telecommunication Services 2.2%
AT&T, Inc.	2,095,675	1.0	87,578,258
Verizon Communications, Inc.	1,380,116	0.8	68,495,157
Other Securities		0.4	25,342,919
		2.2	181,416,334

Transportation 2.1%
Union Pacific Corp.	279,731	0.4	30,194,164
Other Securities		1.7	150,347,443
		2.1	180,541,607

Utilities 3.2%
Other Securities		3.2	265,662,552
Total Common Stock
(Cost $6,647,355,253)			8,382,862,625

Rights 0.0% of net assets

Media 0.0%
Other Securities		0.0	13,061

Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Other Securities		0.0	39,531
Total Rights
(Cost $39,531)			52,592

Other Investment Companies 0.5% of net assets

Money Market Fund 0.1%
Other Securities		0.1	12,076,066

Securities Lending Collateral 0.4%
Wells Fargo Government Money Market Fund, Select Class 0.48% (c)		0.4	30,294,743
Total Other Investment Companies
(Cost $42,370,809)			42,370,809

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $6,692,605,931 and the unrealized appreciation and depreciation were $1,850,786,051 and ($118,105,956), respectively, with a net unrealized appreciation of $1,732,680,095.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $29,240,640.
(b)	Issuer is affiliated with the fund's investment adviser.
(c)	The rate shown is the 7-day yield.
(d)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.

₂₄

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	270	31,897,800	466,811

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2017 (see financial note 2(a) for additional information):

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$7,700,401,505	$—	$—	$7,700,401,505
Pharmaceuticals, Biotechnology & Life Sciences	682,239,509	—	221,611	682,461,120
Rights ¹	—	—	52,592	52,592
Other Investment Companies¹	42,370,809	—	—	42,370,809
Total	$8,425,011,823	$—	$274,203	$8,425,286,026
Other Financial Instruments
Futures Contracts²	$466,811	$—	$—	$466,811

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

₂₅

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments in affiliated issuers, at value (cost $11,280,582)		$16,650,334
Investments in unaffiliated issuers, at value (cost $6,648,190,268) including securities on loan of $29,240,640		8,378,340,949
Collateral invested for securities on loan, at value (cost $30,294,743)	+	30,294,743
Total investments, at value (cost $6,689,765,593)		8,425,286,026
Cash		2,551,608
Deposit with broker for futures contracts		1,543,750
Receivables:
Investments sold		9,506,939
Dividends		15,390,555
Income from securities on loan	+	53,318
Total assets		8,454,332,196
Liabilities
Collateral held for securities on loan		30,294,743
Payables:
Investments bought		9,510,337
Investment adviser fees		188,772
Variation margin on futures contracts	+	61,830
Total liabilities		40,055,682
Net Assets
Total assets		8,454,332,196
Total liabilities	–	40,055,682
Net assets		$8,414,276,514
Net Assets by Source
Capital received from investors		6,675,011,391
Net investment income not yet distributed		27,319,314
Net realized capital losses		(24,041,435)
Net unrealized capital appreciation		1,735,987,244

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$8,414,276,514		147,000,000		$57.24

₂₆

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends received from affiliated issuer		$58,890
Dividends received from unaffiliated issuers (net of foreign withholding tax of $3,943)		77,258,153
Securities on loan, net	+	511,240
Total investment income		77,828,283
Expenses
Investment adviser fees		1,102,950
Total expenses	–	1,102,950
Net investment income		76,725,333
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(12,966,966)
Net realized gains on in-kind redemptions on affiliated issuer		94,238
Net realized gains on in-kind redemptions on unaffiliated investments		37,304,644
Net realized gains on futures contracts	+	994,976
Net realized gains		25,426,892
Net change in unrealized appreciation (depreciation) on affiliated issuer		3,305,958
Net change in unrealized appreciation (depreciation) on unaffiliated investments		648,364,012
Net change in unrealized appreciation (depreciation) on futures contracts	+	522,399
Net change in unrealized appreciation (depreciation)	+	652,192,369
Net realized and unrealized gains		677,619,261
Increase in net assets resulting from operations		$754,344,594

₂₇

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Broad Market ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$76,725,333	$119,577,232
Net realized gains		25,426,892	58,473,575
Net change in unrealized appreciation (depreciation)	+	652,192,369	453,187,146
Increase in net assets resulting from operations		754,344,594	631,237,953
Distributions to Shareholders
Distributions from net investment income		($72,030,675)	($111,095,810)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		17,650,000	$953,679,251	36,150,000	$1,780,463,725
Shares redeemed	+	(1,500,000)	(80,696,288)	(7,750,000)	(360,811,273)
Net transactions in fund shares		16,150,000	$872,982,963	28,400,000	$1,419,652,452
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		130,850,000	$6,858,979,632	102,450,000	$4,919,185,037
Total increase	+	16,150,000	1,555,296,882	28,400,000	1,939,794,595
End of period		147,000,000	$8,414,276,514	130,850,000	$6,858,979,632
Net investment income not yet distributed			$27,319,314		$22,624,656

₂₈

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$51.75	$47.30	$47.99	$39.06	$33.49	$29.11
Income (loss) from investment operations:
Net investment income (loss)	0.57 ¹	1.03 ¹	1.01 ¹	0.83	0.77	0.64
Net realized and unrealized gains (losses)	4.66	4.41	(0.77)	8.92	5.56	4.35
Total from investment operations	5.23	5.44	0.24	9.75	6.33	4.99
Less distributions:
Distributions from net investment income	(0.54)	(0.99)	(0.93)	(0.82)	(0.76)	(0.61)
Net asset value at end of period	$56.44	$51.75	$47.30	$47.99	$39.06	$33.49
Total return	10.18% ²	11.66%	0.43%	25.16%	19.17%	17.36%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03% ³	0.03% ⁴	0.04%	0.04%	0.04%	0.08%
Net investment income (loss)	2.17% ³	2.13%	2.04%	1.95%	2.18%	2.10%
Portfolio turnover rate⁵	2% ²	4%	4%	5%	5%	4%
Net assets, end of period (x 1,000)	$8,044,971	$6,218,346	$4,329,918	$3,191,644	$1,781,282	$890,808

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective November 12, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁵

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

₂₉

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.8%	Common Stock	6,517,040,189	8,027,441,194
0.3%	Other Investment Companies	23,872,263	23,872,263
100.1%	Total Investments	6,540,912,452	8,051,313,457
(0.1%)	Other Assets and Liabilities, Net		(6,342,405)
100.0%	Net Assets		8,044,971,052

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 0.9%
Other Securities		0.9	74,503,109

Banks 6.5%
Bank of America Corp.	3,658,069	1.1	90,281,143
Citigroup, Inc.	1,038,034	0.8	62,084,813
JPMorgan Chase & Co.	1,304,261	1.5	118,192,132
U.S. Bancorp	579,420	0.4	31,868,100
Wells Fargo & Co.	1,643,930	1.2	95,150,668
Other Securities		1.5	124,428,437
		6.5	522,005,293

Capital Goods 7.4%
3M Co.	221,351	0.5	41,248,759
General Electric Co.	3,219,577	1.2	95,975,590
Honeywell International, Inc.	275,412	0.4	34,288,794
The Boeing Co.	209,994	0.5	37,847,219
Other Securities		4.8	385,096,781
		7.4	594,457,143

Commercial & Professional Services 0.7%
Other Securities		0.7	56,066,485

Consumer Durables & Apparel 1.3%
Other Securities		1.3	103,125,358

Consumer Services 1.8%
McDonald's Corp.	301,462	0.5	38,481,624
Other Securities		1.3	110,633,594
		1.8	149,115,218

Diversified Financials 5.4%
Berkshire Hathaway, Inc., Class B *	690,972	1.5	118,446,420
The Charles Schwab Corp. (b)	434,497	0.2	17,558,024

Security	Number of Shares	% of Net Assets	Value ($)
The Goldman Sachs Group, Inc.	133,658	0.4	33,155,204
Other Securities		3.3	262,418,706
		5.4	431,578,354

Energy 6.4%
Chevron Corp.	684,687	1.0	77,027,287
Exxon Mobil Corp.	1,507,360	1.5	122,578,515
Schlumberger Ltd.	511,666	0.5	41,117,480
Other Securities		3.4	273,613,848
		6.4	514,337,130

Food & Staples Retailing 1.9%
Wal-Mart Stores, Inc.	546,218	0.5	38,743,243
Other Securities		1.4	115,251,196
		1.9	153,994,439

Food, Beverage & Tobacco 5.2%
Altria Group, Inc.	717,025	0.7	53,719,513
PepsiCo, Inc.	517,891	0.7	57,164,809
Philip Morris International, Inc.	563,978	0.8	61,670,994
The Coca-Cola Co.	1,413,820	0.7	59,323,887
Other Securities		2.3	189,061,128
		5.2	420,940,331

Health Care Equipment & Services 5.2%
Medtronic plc	502,971	0.5	40,695,384
UnitedHealth Group, Inc.	344,659	0.7	56,999,705
Other Securities		4.0	317,951,198
		5.2	415,646,287

Household & Personal Products 1.9%
The Procter & Gamble Co.	976,142	1.1	88,897,252
Other Securities		0.8	62,484,288
		1.9	151,381,540

Insurance 3.0%
Other Securities		3.0	237,844,730

Materials 3.1%
Other Securities		3.1	247,803,680

₃₀

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Media 3.2%
Comcast Corp., Class A	1,723,056	0.8	64,476,756
The Walt Disney Co.	534,129	0.7	58,802,262
Other Securities		1.7	136,212,132
		3.2	259,491,150

Pharmaceuticals, Biotechnology & Life Sciences 8.4%
AbbVie, Inc.	585,097	0.4	36,182,398
Allergan plc	137,591	0.4	33,685,029
Amgen, Inc.	270,142	0.6	47,688,167
Bristol-Myers Squibb Co.	602,297	0.4	34,156,263
Celgene Corp. *	280,094	0.4	34,594,410
Gilead Sciences, Inc.	473,826	0.4	33,395,256
Johnson & Johnson	988,138	1.5	120,760,345
Merck & Co., Inc.	1,001,835	0.8	65,990,871
Pfizer, Inc.	2,197,481	0.9	74,978,052
Other Securities		2.6	190,845,798
		8.4	672,276,589

Real Estate 3.5%
Other Securities		3.5	278,094,727

Retailing 5.1%
Amazon.com, Inc. *	143,825	1.5	121,537,878
The Home Depot, Inc.	443,429	0.8	64,257,296
Other Securities		2.8	226,368,708
		5.1	412,163,882

Semiconductors & Semiconductor Equipment 3.1%
Intel Corp.	1,711,811	0.8	61,967,558
Other Securities		2.3	191,463,415
		3.1	253,430,973

Software & Services 12.6%
Alphabet, Inc., Class A *	107,367	1.1	90,717,599
Alphabet, Inc., Class C *	107,942	1.1	88,858,934
Facebook, Inc., Class A *	847,944	1.4	114,930,330
International Business Machines Corp.	315,054	0.7	56,653,010
MasterCard, Inc., Class A	345,800	0.5	38,197,068
Microsoft Corp.	2,828,929	2.2	180,994,877
Oracle Corp.	1,091,765	0.6	46,498,271
Visa, Inc., Class A	679,572	0.7	59,761,562
Other Securities		4.3	335,963,824
		12.6	1,012,575,475

Technology Hardware & Equipment 5.5%
Apple, Inc.	1,935,561	3.3	265,152,501
Cisco Systems, Inc.	1,822,881	0.8	62,306,073
Other Securities		1.4	117,714,970
		5.5	445,173,544

Security	Number of Shares	% of Net Assets	Value ($)
Telecommunication Services 2.3%
AT&T, Inc.	2,234,533	1.2	93,381,134
Verizon Communications, Inc.	1,487,183	0.9	73,808,892
Other Securities		0.2	21,958,727
		2.3	189,148,753

Transportation 2.2%
Union Pacific Corp.	299,165	0.4	32,291,870
Other Securities		1.8	146,192,415
		2.2	178,484,285

Utilities 3.2%
Other Securities		3.2	253,802,719
Total Common Stock
(Cost $6,517,040,189)			8,027,441,194

Other Investment Companies 0.3% of net assets

Money Market Fund 0.1%
Other Securities		0.1	5,527,938

Securities Lending Collateral 0.2%
Other Securities		0.2	18,344,325
Total Other Investment Companies
(Cost $23,872,263)			23,872,263

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $6,544,247,913 and the unrealized appreciation and depreciation were $1,614,980,732 and ($107,915,188), respectively, with a net unrealized appreciation of $1,507,065,544.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $17,593,504.
(b)	Issuer is affiliated with the fund's investment adviser.
(c)	The rate shown is the 7-day yield.

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	145	17,130,300	227,964

₃₁

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments in affiliated issuers, at value (cost $12,226,429)		$17,558,024
Investments in unaffiliated issuers, at value (cost $6,510,341,698) including securities on loan of $17,593,504		8,015,411,108
Collateral invested for securities on loan, at value (cost $18,344,325)	+	18,344,325
Total investments, at value (cost $6,540,912,452)		8,051,313,457
Deposit with broker for futures contracts		1,686,250
Receivables:
Investments sold		10,404,390
Fund shares sold		36,782,776
Dividends		15,674,755
Income from securities on loan	+	19,829
Total assets		8,115,881,457
Liabilities
Collateral held for securities on loan		18,344,325
Payables:
Investments bought		52,351,666
Investment adviser fees		178,679
Variation margin on futures contracts	+	35,735
Total liabilities		70,910,405
Net Assets
Total assets		8,115,881,457
Total liabilities	–	70,910,405
Net assets		$8,044,971,052
Net Assets by Source
Capital received from investors		6,541,717,610
Net investment income not yet distributed		27,063,397
Net realized capital losses		(34,438,924)
Net unrealized capital appreciation		1,510,628,969

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$8,044,971,052		142,550,000		$56.44

₃₃

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends received from affiliated issuer		$61,320
Dividends received from unaffiliated issuers (net of foreign withholding tax of $2,432)		74,189,804
Securities on loan, net	+	310,117
Total investment income		74,561,241
Expenses
Investment adviser fees		1,018,254
Total expenses	–	1,018,254
Net investment income		73,542,987
Realized and Unrealized Gains (Losses)
Net realized losses on affiliated issuer		(3,555)
Net realized losses on unaffiliated investments		(14,198,300)
Net realized gains on in-kind redemptions on affiliated issuer		35,764
Net realized gains on in-kind redemptions on unaffiliated investments		12,809,251
Net realized gains on futures contracts	+	1,410,651
Net realized gains		53,811
Net change in unrealized appreciation (depreciation) on affiliated issuer		3,468,888
Net change in unrealized appreciation (depreciation) on unaffiliated investments		622,172,768
Net change in unrealized appreciation (depreciation) on futures contracts	+	123,417
Net change in unrealized appreciation (depreciation)	+	625,765,073
Net realized and unrealized gains		625,818,884
Increase in net assets resulting from operations		$699,361,871

₃₄

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$73,542,987	$111,494,584
Net realized gains		53,811	81,546,713
Net change in unrealized appreciation (depreciation)	+	625,765,073	414,216,971
Increase in net assets resulting from operations		699,361,871	607,258,268
Distributions to Shareholders
Distributions from net investment income		($68,571,690)	($103,762,790)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		23,650,000	$1,262,287,553	35,000,000	$1,684,361,815
Shares redeemed	+	(1,250,000)	(66,452,488)	(6,400,000)	(299,429,649)
Net transactions in fund shares		22,400,000	$1,195,835,065	(28,600,000)	($1,384,932,166)
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		120,150,000	$6,218,345,806	91,550,000	$4,329,918,162
Total increase	+	22,400,000	1,826,625,246	28,600,000	1,888,427,644
End of period		142,550,000	$8,044,971,052	120,150,000	$6,218,345,806
Net investment income not yet distributed			$27,063,397		$22,092,100

₃₅

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$55.25	$51.93	$50.11	$39.60	$34.05	$29.44
Income (loss) from investment operations:
Net investment income (loss)	0.33 ¹	0.59 ¹	0.66 ¹	0.56	0.55	0.36
Net realized and unrealized gains (losses)	4.94	3.30	1.79	10.50	5.52	4.59
Total from investment operations	5.27	3.89	2.45	11.06	6.07	4.95
Less distributions:
Distributions from net investment income	(0.30)	(0.57)	(0.63)	(0.55)	(0.52)	(0.34)
Net asset value at end of period	$60.22	$55.25	$51.93	$50.11	$39.60	$34.05
Total return	9.58% ²	7.56%	4.87%	28.11%	18.02%	16.96%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.05% ³^,⁴	0.07% ⁵	0.07%	0.07%	0.07%	0.13%
Net investment income (loss)	1.17% ³	1.14%	1.25%	1.29%	1.55%	1.17%
Portfolio turnover rate⁶	5% ²	7%	10%	7%	11%	8%
Net assets, end of period (x 1,000)	$3,797,049	$2,980,475	$2,246,101	$1,485,805	$827,613	$475,062

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective December 29, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 2/28/17 is a blended ratio. (See financial note 4)

⁵

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 08/31/16 is a blended ratio.

⁶

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

₃₆

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.7%	Common Stock	3,051,980,239	3,787,249,756
0.6%	Other Investment Companies	22,855,688	22,855,688
100.3%	Total Investments	3,074,835,927	3,810,105,444
(0.3%)	Other Assets and Liabilities, Net		(13,056,018)
100.0%	Net Assets		3,797,049,426

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.7% of net assets

Automobiles & Components 0.5%
Other Securities		0.5	17,796,411

Banks 0.5%
Other Securities		0.5	20,931,228

Capital Goods 7.0%
3M Co.	217,236	1.1	40,481,929
Lockheed Martin Corp.	90,522	0.6	24,131,355
The Boeing Co.	207,376	1.0	37,375,376
Other Securities		4.3	163,135,783
		7.0	265,124,443

Commercial & Professional Services 1.0%
Other Securities		1.0	37,062,797

Consumer Durables & Apparel 2.0%
NIKE, Inc., Class B	482,492	0.7	27,579,243
Other Securities		1.3	48,280,569
		2.0	75,859,812

Consumer Services 2.3%
Starbucks Corp.	524,635	0.8	29,835,992
Other Securities		1.5	57,759,015
		2.3	87,595,007

Diversified Financials 7.2%
American Express Co.	276,931	0.6	22,171,096
Berkshire Hathaway, Inc., Class B *	683,581	3.1	117,179,455
Morgan Stanley	520,360	0.6	23,764,841
The Charles Schwab Corp. (b)	432,835	0.5	17,490,862
Other Securities		2.4	92,529,269
		7.2	273,135,523

Security	Number of Shares	% of Net Assets	Value ($)
Energy 3.8%
EOG Resources, Inc.	207,887	0.5	20,162,960
Schlumberger Ltd.	501,592	1.1	40,307,933
Other Securities		2.2	85,126,091
		3.8	145,596,984

Food & Staples Retailing 2.5%
Costco Wholesale Corp.	157,395	0.7	27,887,246
CVS Health Corp.	383,977	0.8	30,940,867
Walgreens Boots Alliance, Inc.	307,988	0.7	26,604,003
Other Securities		0.3	8,189,975
		2.5	93,622,091

Food, Beverage & Tobacco 1.4%
Other Securities		1.4	52,664,736

Health Care Equipment & Services 8.5%
Danaher Corp.	219,087	0.5	18,742,893
Medtronic plc	496,909	1.1	40,204,907
UnitedHealth Group, Inc.	342,203	1.5	56,593,532
Other Securities		5.4	207,955,623
		8.5	323,496,955

Household & Personal Products 0.5%
Other Securities		0.5	20,198,693

Insurance 1.0%
Other Securities		1.0	38,437,983

Materials 2.8%
Monsanto Co.	159,169	0.5	18,118,207
Other Securities		2.3	87,103,317
		2.8	105,221,524

Media 4.7%
Charter Communications, Inc., Class A *	77,799	0.7	25,133,745
Comcast Corp., Class A	1,717,051	1.7	64,252,049
The Walt Disney Co.	527,748	1.5	58,099,777
Other Securities		0.8	32,175,183
		4.7	179,660,754

₃₇

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Pharmaceuticals, Biotechnology & Life Sciences 7.8%
Allergan plc	135,095	0.9	33,073,958
Amgen, Inc.	268,366	1.2	47,374,650
Biogen, Inc. *	78,636	0.6	22,694,350
Celgene Corp. *	278,543	0.9	34,402,846
Gilead Sciences, Inc.	474,139	0.9	33,417,317
Thermo Fisher Scientific, Inc.	142,368	0.6	22,448,586
Other Securities		2.7	101,410,288
		7.8	294,821,995

Real Estate 4.6%
American Tower Corp.	154,210	0.5	17,701,766
Simon Property Group, Inc.	112,473	0.5	20,740,021
Other Securities		3.6	135,043,614
		4.6	173,485,401

Retailing 9.8%
Amazon.com, Inc. *	142,155	3.2	120,126,661
Lowe's Cos., Inc.	312,737	0.6	23,258,251
Netflix, Inc. *	154,477	0.6	21,955,816
The Home Depot, Inc.	438,607	1.7	63,558,540
The Priceline Group, Inc. *	17,740	0.8	30,586,066
The TJX Cos., Inc.	235,372	0.5	18,464,933
Other Securities		2.4	93,382,751
		9.8	371,333,018

Semiconductors & Semiconductor Equipment 2.5%
Broadcom Ltd.	142,914	0.8	30,144,850
NVIDIA Corp.	193,777	0.5	19,664,490
QUALCOMM, Inc.	530,888	0.8	29,984,554
Other Securities		0.4	16,462,606
		2.5	96,256,500

Software & Services 17.7%
Accenture plc, Class A	223,690	0.7	27,402,025
Adobe Systems, Inc. *	178,375	0.6	21,108,898
Alphabet, Inc., Class A *	106,543	2.4	90,021,377
Alphabet, Inc., Class C *	107,033	2.3	88,110,636
Facebook, Inc., Class A *	842,979	3.0	114,257,374
MasterCard, Inc., Class A	344,798	1.0	38,086,387
PayPal Holdings, Inc. *	402,291	0.4	16,896,222
salesforce.com, Inc. *	229,249	0.5	18,649,406
Visa, Inc., Class A	673,432	1.6	59,221,610
Other Securities		5.2	196,924,314
		17.7	670,678,249

Technology Hardware & Equipment 7.8%
Apple, Inc.	1,921,262	6.9	263,193,681
Other Securities		0.9	32,374,472
		7.8	295,568,153

Telecommunication Services 0.3%
Other Securities		0.3	12,393,424

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 3.5%
Union Pacific Corp.	296,947	0.8	32,052,459
United Parcel Service, Inc., Class B	249,108	0.7	26,345,662
Other Securities		2.0	76,466,837
		3.5	134,864,958

Utilities 0.0%
Other Securities		0.0	1,443,117
Total Common Stock
(Cost $3,051,980,239)			3,787,249,756

Other Investment Companies 0.6% of net assets

Money Market Fund 0.2%
Other Securities		0.2	5,842,313

Securities Lending Collateral 0.4%
Wells Fargo Government Money Market Fund, Select Class 0.48% (c)		0.4	17,013,375
Total Other Investment Companies
(Cost $22,855,688)			22,855,688

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $3,076,800,255 and the unrealized appreciation and depreciation were $791,847,521 and ($58,542,332), respectively, with a net unrealized appreciation of $733,305,189.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $16,517,819.
(b)	Issuer is affiliated with the fund's investment adviser.
(c)	The rate shown is the 7-day yield.

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	80	9,451,200	231,973

₃₈

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments in affiliated issuers, at value (cost $12,423,774)		$17,490,862
Investments in unaffiliated issuers, at value (cost $3,045,398,778) including securities on loan of $16,517,819		3,775,601,207
Collateral invested for securities on loan, at value (cost $17,013,375)	+	17,013,375
Total investments, at value (cost $3,074,835,927)		3,810,105,444
Deposit with broker for futures contracts		375,000
Receivables:
Fund shares sold		15,055,707
Dividends		3,556,907
Income from securities on loan	+	19,007
Total assets		3,829,112,065
Liabilities
Collateral held for securities on loan		17,013,375
Payables:
Investments bought		14,915,710
Investment adviser fees		112,934
Variation margin on futures contracts	+	20,620
Total liabilities		32,062,639
Net Assets
Total assets		3,829,112,065
Total liabilities	–	32,062,639
Net assets		$3,797,049,426
Net Assets by Source
Capital received from investors		3,091,839,607
Net investment income not yet distributed		6,562,025
Net realized capital losses		(36,853,696)
Net unrealized capital appreciation		735,501,490

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$3,797,049,426		63,050,000		$60.22

₄₀

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Statement of Operations

For the period September 1, 2016 through February 28, 2017; unaudited

Investment Income
Dividends received from affiliated issuer		$60,473
Dividends received from unaffiliated issuers (net of foreign withholding tax of $2,397)		19,258,082
Securities on loan, net	+	166,423
Total investment income		19,484,978
Expenses
Investment adviser fees		839,368
Total expenses	–	839,368
Net investment income		18,645,610
Realized and Unrealized Gains (Losses)
Net realized losses on investments		(31,395,695)
Net realized gains on in-kind redemptions on affiliated issuer		55,833
Net realized gains on in-kind redemptions on unaffiliated investments		12,335,654
Net realized gains on futures contracts	+	248,173
Net realized losses		(18,756,035)
Net change in unrealized appreciation (depreciation) on affiliated issuer		3,356,383
Net change in unrealized appreciation (depreciation) on unaffiliated investments		313,970,166
Net change in unrealized appreciation (depreciation) on futures contracts	+	163,194
Net change in unrealized appreciation (depreciation)	+	317,489,743
Net realized and unrealized gains		298,733,708
Increase in net assets resulting from operations		$317,379,318

₄₁

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Growth ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$18,645,610	$29,703,445
Net realized gains (losses)		(18,756,035)	59,719,552
Net change in unrealized appreciation (depreciation)	+	317,489,743	100,530,007
Increase in net assets resulting from operations		317,379,318	189,953,004
Distributions to Shareholders
Distributions from net investment income		($17,126,390)	($28,157,885)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		10,600,000	$599,109,372	15,350,000	$807,870,244
Shares redeemed	+	(1,500,000)	(82,787,872)	(4,650,000)	(235,291,453)
Net transactions in fund shares		9,100,000	$516,321,500	10,700,000	$572,578,791
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		53,950,000	$2,980,474,998	43,250,000	$2,246,101,088
Total increase	+	9,100,000	816,574,428	10,700,000	734,373,910
End of period		63,050,000	$3,797,049,426	53,950,000	$2,980,474,998
Net investment income not yet distributed			$6,562,025		$5,042,805

₄₂

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$46.01	$40.89	$43.54	$36.49	$31.24	$27.34
Income (loss) from investment operations:
Net investment income (loss)	0.71 ¹	1.29 ¹	1.20 ¹	1.00	0.93	0.82
Net realized and unrealized gains (losses)	4.12	5.01	(2.75)	7.03	5.24	3.89
Total from investment operations	4.83	6.30	(1.55)	8.03	6.17	4.71
Less distributions:
Distributions from net investment income	(0.67)	(1.18)	(1.10)	(0.98)	(0.92)	(0.81)
Net asset value at end of period	$50.17	$46.01	$40.89	$43.54	$36.49	$31.24
Total return	10.60% ²	15.70%	(3.71%)	22.25%	20.06%	17.53%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.05% ³^,⁴	0.07% ⁵	0.07%	0.07%	0.07%	0.13%
Net investment income (loss)	3.03% ³	3.00%	2.75%	2.54%	2.73%	2.89%
Portfolio turnover rate⁶	5% ²	6%	15%	9%	9%	8%
Net assets, end of period (x 1,000)	$3,205,603	$2,491,664	$1,435,194	$1,162,576	$700,693	$385,791

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective December 29, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

Effective November 17, 2015, the annual operating expense ratio was reduced. The ratio presented for the period ended 08/31/16 is a blended ratio.

⁶

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

₄₃

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.8%	Common Stock	2,710,497,135	3,197,302,536
0.2%	Other Investment Companies	7,285,038	7,285,038
100.0%	Total Investments	2,717,782,173	3,204,587,574
0.0%	Other Assets and Liabilities, Net		1,015,847
100.0%	Net Assets		3,205,603,421

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.8% of net assets

Automobiles & Components 1.4%
General Motors Co.	384,928	0.4	14,180,748
Other Securities		1.0	28,757,350
		1.4	42,938,098

Banks 11.9%
Bank of America Corp.	2,795,847	2.2	69,001,504
Citigroup, Inc.	788,394	1.5	47,153,845
JPMorgan Chase & Co.	989,812	2.8	89,696,763
The PNC Financial Services Group, Inc.	133,938	0.5	17,040,932
U.S. Bancorp	439,214	0.8	24,156,770
Wells Fargo & Co.	1,250,027	2.3	72,351,563
Other Securities		1.8	61,615,192
		11.9	381,016,569

Capital Goods 7.8%
Caterpillar, Inc.	161,993	0.5	15,658,243
General Dynamics Corp.	79,365	0.5	15,064,271
General Electric Co.	2,447,626	2.3	72,963,731
Honeywell International, Inc.	210,526	0.8	26,210,487
United Technologies Corp.	211,129	0.7	23,762,569
Other Securities		3.0	95,029,767
		7.8	248,689,068

Commercial & Professional Services 0.4%
Other Securities		0.4	13,903,683

Consumer Durables & Apparel 0.6%
Other Securities		0.6	20,411,667

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 1.5%
McDonald's Corp.	230,016	0.9	29,361,542
Other Securities		0.6	16,806,153
		1.5	46,167,695

Diversified Financials 3.7%
The Goldman Sachs Group, Inc.	102,425	0.8	25,407,545
Other Securities		2.9	93,949,760
		3.7	119,357,305

Energy 8.7%
Chevron Corp.	522,610	1.8	58,793,625
ConocoPhillips	341,973	0.5	16,267,656
Exxon Mobil Corp.	1,147,502	2.9	93,314,863
Other Securities		3.5	110,966,209
		8.7	279,342,353

Food & Staples Retailing 1.4%
Wal-Mart Stores, Inc.	417,112	0.9	29,585,754
Other Securities		0.5	15,553,215
		1.4	45,138,969

Food, Beverage & Tobacco 8.7%
Altria Group, Inc.	540,209	1.3	40,472,458
Mondelez International, Inc., Class A	425,187	0.6	18,674,213
PepsiCo, Inc.	396,953	1.4	43,815,672
Philip Morris International, Inc.	429,461	1.5	46,961,560
Reynolds American, Inc.	227,958	0.4	14,035,374
The Coca-Cola Co.	1,073,682	1.4	45,051,697
The Kraft Heinz Co.	164,355	0.5	15,040,126
Other Securities		1.6	55,270,211
		8.7	279,321,311

Health Care Equipment & Services 2.1%
Abbott Laboratories	475,802	0.7	21,449,154
Other Securities		1.4	46,739,359
		2.1	68,188,513

Household & Personal Products 3.1%
Colgate-Palmolive Co.	246,063	0.6	17,957,678
The Procter & Gamble Co.	740,157	2.1	67,406,098
Other Securities		0.4	14,304,934
		3.1	99,668,710

₄₄

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Insurance 4.7%
American International Group, Inc.	268,653	0.5	17,172,300
Chubb Ltd.	128,778	0.6	17,793,256
MetLife, Inc.	304,171	0.5	15,950,727
Other Securities		3.1	100,303,263
		4.7	151,219,546

Materials 3.4%
E.I. du Pont de Nemours & Co.	240,516	0.6	18,890,127
The Dow Chemical Co.	310,230	0.6	19,314,920
Other Securities		2.2	69,367,735
		3.4	107,572,782

Media 1.8%
Time Warner, Inc.	212,286	0.7	20,848,608
Other Securities		1.1	38,095,450
		1.8	58,944,058

Pharmaceuticals, Biotechnology & Life Sciences 8.9%
AbbVie, Inc.	450,211	0.9	27,841,048
Bristol-Myers Squibb Co.	462,255	0.8	26,214,481
Eli Lilly & Co.	269,095	0.7	22,283,757
Johnson & Johnson	752,152	2.9	91,920,496
Merck & Co., Inc.	762,315	1.6	50,213,689
Pfizer, Inc.	1,677,486	1.8	57,235,822
Other Securities		0.2	9,111,526
		8.9	284,820,819

Real Estate 2.4%
Other Securities		2.4	77,806,668

Retailing 0.9%
Other Securities		0.9	28,618,183

Semiconductors & Semiconductor Equipment 3.7%
Intel Corp.	1,308,594	1.5	47,371,103
Texas Instruments, Inc.	274,307	0.7	21,017,402
Other Securities		1.5	50,696,207
		3.7	119,084,712

Software & Services 8.0%
International Business Machines Corp.	239,492	1.3	43,065,451
Microsoft Corp.	2,150,592	4.3	137,594,876
Oracle Corp.	829,089	1.1	35,310,901
Other Securities		1.3	39,580,525
		8.0	255,551,753

Technology Hardware & Equipment 3.5%
Cisco Systems, Inc.	1,388,053	1.5	47,443,652
Other Securities		2.0	64,722,783
		3.5	112,166,435

Security	Number of Shares	% of Net Assets	Value ($)
Telecommunication Services 4.2%
AT&T, Inc.	1,699,141	2.2	71,007,102
Verizon Communications, Inc.	1,128,334	1.7	55,999,217
Other Securities		0.3	6,932,316
		4.2	133,938,635

Transportation 1.0%
Other Securities		1.0	31,864,061

Utilities 6.0%
Duke Energy Corp.	191,208	0.5	15,784,220
NextEra Energy, Inc.	129,384	0.5	16,949,304
Other Securities		5.0	158,837,419
		6.0	191,570,943
Total Common Stock
(Cost $2,710,497,135)			3,197,302,536

Other Investment Companies 0.2% of net assets

Money Market Fund 0.2%
Other Securities		0.2	5,804,788

Securities Lending Collateral 0.0%
Other Securities		0.0	1,480,250
Total Other Investment Companies
(Cost $7,285,038)			7,285,038

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $2,719,949,265 and the unrealized appreciation and depreciation were $523,844,298 and ($39,205,989), respectively, with a net unrealized appreciation of $484,638,309.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $1,251,182.
(b)	The rate shown is the 7-day yield.

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	65	7,679,100	103,575

₄₅

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $2,716,301,923) including securities on loan of $1,251,182		$3,203,107,324
Collateral invested for securities on loan, at value (cost $1,480,250)	+	1,480,250
Total investments, at value (cost $2,717,782,173)		3,204,587,574
Deposit with broker for futures contracts		522,500
Receivables:
Investments sold		10,339,393
Fund shares sold		10,033,187
Dividends		9,213,700
Income from securities on loan	+	792
Total assets		3,234,697,146
Liabilities
Collateral held for securities on loan		1,480,250
Payables:
Investments bought		24,987,487
Investment adviser fees		95,171
Fund shares redeemed		2,512,942
Variation margin on futures contracts	+	17,875
Total liabilities		29,093,725
Net Assets
Total assets		3,234,697,146
Total liabilities	–	29,093,725
Net assets		$3,205,603,421
Net Assets by Source
Capital received from investors		2,683,892,355
Net investment income not yet distributed		15,515,512
Net realized capital gains		19,286,578
Net unrealized capital appreciation		486,908,976

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$3,205,603,421		63,900,000		$50.17

₄₇

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Large-Cap Value ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$40,853,916	$57,539,088
Net realized gains		32,248,979	14,607,551
Net change in unrealized appreciation (depreciation)	+	213,367,708	211,036,903
Increase in net assets resulting from operations		286,470,603	283,183,542
Distributions to Shareholders
Distributions from net investment income		($38,235,425)	($51,275,935)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		12,700,000	$601,195,833	21,700,000	$931,456,390
Shares redeemed	+	(2,950,000)	(135,491,185)	(2,650,000)	(106,894,736)
Net transactions in fund shares		9,750,000	$465,704,648	19,050,000	$824,561,654
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		54,150,000	$2,491,663,595	35,100,000	$1,435,194,334
Total increase	+	9,750,000	713,939,826	19,050,000	1,056,469,261
End of period		63,900,000	$3,205,603,421	54,150,000	$2,491,663,595
Net investment income not yet distributed			$15,515,512		$12,897,021

₄₉

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$43.67	$40.70	$40.56	$32.94	$26.56	$23.75
Income (loss) from investment operations:
Net investment income (loss)	0.38 ¹	0.74 ¹	0.59 ¹	0.56	0.51	0.37
Net realized and unrealized gains (losses)	3.80	2.84	0.12	7.62	6.40	2.77
Total from investment operations	4.18	3.58	0.71	8.18	6.91	3.14
Less distributions:
Distributions from net investment income	(0.39)	(0.61)	(0.57)	(0.56)	(0.53)	(0.33)
Net asset value at end of period	$47.46	$43.67	$40.70	$40.56	$32.94	$26.56
Total return	9.64% ²	8.94%	1.71%	24.97%	26.27%	13.32%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.06% ³^,⁴	0.07%	0.07%	0.07%	0.07%	0.13%
Net investment income (loss)	1.72% ³	1.83%	1.42%	1.53%	1.70%	1.53%
Portfolio turnover rate⁵	16% ²	21%	12%	9%	25%	19%
Net assets, end of period (x 1,000)	$3,194,193	$2,532,590	$1,841,785	$1,190,517	$611,081	$205,840

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

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

₅₀

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.7%	Common Stock	2,739,097,634	3,185,488,186
1.0%	Other Investment Companies	30,415,835	30,415,835
100.7%	Total Investments	2,769,513,469	3,215,904,021
(0.7%)	Other Assets and Liabilities, Net		(21,710,849)
100.0%	Net Assets		3,194,193,172

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.7% of net assets

Automobiles & Components 1.6%
Lear Corp.	80,527	0.4	11,434,029
Other Securities		1.2	40,350,681
		1.6	51,784,710

Banks 5.7%
Comerica, Inc.	197,589	0.4	14,084,144
First Republic Bank	174,490	0.5	16,372,397
Huntington Bancshares, Inc.	1,238,347	0.5	17,510,227
SVB Financial Group *	60,666	0.4	11,580,533
Zions Bancorp	237,304	0.3	10,654,950
Other Securities		3.6	111,009,048
		5.7	181,211,299

Capital Goods 10.6%
Huntington Ingalls Industries, Inc.	52,379	0.4	11,444,811
Snap-on, Inc.	67,300	0.4	11,418,791
United Rentals, Inc. *	95,895	0.4	12,277,437
Other Securities		9.4	302,232,568
		10.6	337,373,607

Commercial & Professional Services 1.7%
Other Securities		1.7	56,056,235

Consumer Durables & Apparel 3.4%
Hasbro, Inc.	129,672	0.4	12,561,327
Lennar Corp., Class A	226,144	0.3	11,033,566
Other Securities		2.7	86,074,890
		3.4	109,669,783

Consumer Services 3.3%
Other Securities		3.3	106,160,899

Security	Number of Shares	% of Net Assets	Value ($)
Diversified Financials 4.9%
ETRADE Financial Corp.	318,585	0.3	10,994,369
Raymond James Financial, Inc.	145,114	0.4	11,400,156
Other Securities		4.2	133,581,753
		4.9	155,976,278

Energy 5.3%
ONEOK, Inc.	240,052	0.4	12,974,811
Targa Resources Corp.	219,913	0.4	12,425,084
TechnipFMC plc *	539,054	0.5	17,422,225
Other Securities		4.0	125,991,979
		5.3	168,814,099

Food & Staples Retailing 0.6%
Other Securities		0.6	18,114,128

Food, Beverage & Tobacco 2.0%
The WhiteWave Foods Co. *	201,912	0.3	11,121,313
Other Securities		1.7	51,948,831
		2.0	63,070,144

Health Care Equipment & Services 4.8%
IDEXX Laboratories, Inc. *	103,208	0.5	14,958,968
ResMed, Inc.	161,023	0.4	11,598,487
The Cooper Cos., Inc.	56,252	0.4	11,202,023
Other Securities		3.5	115,743,960
		4.8	153,503,438

Household & Personal Products 0.6%
Other Securities		0.6	20,074,161

Insurance 5.7%
Alleghany Corp. *	17,774	0.4	11,478,449
Arch Capital Group Ltd. *	141,955	0.4	13,424,684
Arthur J. Gallagher & Co.	203,278	0.4	11,576,682
Everest Re Group Ltd.	46,450	0.3	10,922,253
FNF Group	309,041	0.4	11,845,542
Unum Group	268,621	0.4	13,116,763
Other Securities		3.4	110,945,109
		5.7	183,309,482

₅₁

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Materials 6.1%
Albemarle Corp.	129,834	0.4	13,179,449
International Flavors & Fragrances, Inc.	90,428	0.4	11,366,800
Other Securities		5.3	170,132,378
		6.1	194,678,627

Media 2.3%
The Interpublic Group of Cos., Inc.	457,788	0.3	11,032,691
Other Securities		2.0	63,421,117
		2.3	74,453,808

Pharmaceuticals, Biotechnology & Life Sciences 4.3%
Mettler-Toledo International, Inc. *	30,126	0.4	14,346,604
Quintiles IMS Holdings, Inc. *	155,060	0.4	12,000,093
Other Securities		3.5	112,384,815
		4.3	138,731,512

Real Estate 10.9%
Alexandria Real Estate Equities, Inc.	100,896	0.4	12,037,902
Extra Space Storage, Inc.	145,865	0.4	11,551,049
Mid-America Apartment Communities, Inc.	131,505	0.4	13,509,509
UDR, Inc.	304,351	0.3	11,108,811
Other Securities		9.4	298,814,569
		10.9	347,021,840

Retailing 3.2%
Foot Locker, Inc.	153,827	0.4	11,640,089
LKQ Corp. *	351,937	0.3	11,114,170
Other Securities		2.5	78,049,344
		3.2	100,803,603

Semiconductors & Semiconductor Equipment 2.4%
Advanced Micro Devices, Inc. *	873,243	0.4	12,627,094
KLA-Tencor Corp.	180,961	0.5	16,308,205
Other Securities		1.5	46,450,243
		2.4	75,385,542

Software & Services 8.8%
ANSYS, Inc. *	99,643	0.3	10,637,887
CDK Global, Inc.	170,161	0.4	11,303,795
Computer Sciences Corp.	164,644	0.4	11,287,993
Synopsys, Inc. *	171,661	0.4	12,263,462
Vantiv, Inc., Class A *	177,408	0.4	11,598,935
Other Securities		6.9	223,734,794
		8.8	280,826,866

Technology Hardware & Equipment 3.8%
CDW Corp.	182,910	0.3	10,773,399
Other Securities		3.5	109,209,619
		3.8	119,983,018

Telecommunication Services 0.3%
Other Securities		0.3	10,313,955

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 2.7%
Alaska Air Group, Inc.	141,473	0.4	13,838,889
Expeditors International of Washington, Inc.	205,435	0.4	11,582,425
Other Securities		1.9	62,155,954
		2.7	87,577,268

Utilities 4.7%
CenterPoint Energy, Inc.	494,398	0.4	13,506,953
SCANA Corp.	164,619	0.4	11,416,328
Other Securities		3.9	125,670,603
		4.7	150,593,884
Total Common Stock
(Cost $2,739,097,634)			3,185,488,186

Other Investment Companies 1.0% of net assets

Money Market Fund 0.1%
Other Securities		0.1	2,830,964

Securities Lending Collateral 0.9%
Wells Fargo Government Money Market Fund, Select Class 0.48% (b)		0.9	27,584,871
Total Other Investment Companies
(Cost $30,415,835)			30,415,835

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $2,773,250,118 and the unrealized appreciation and depreciation were $538,382,205 and ($95,728,302), respectively, with a net unrealized appreciation of $442,653,903.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $26,043,777.
(b)	The rate shown is the 7-day yield.

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	72	8,506,080	99,143

₅₂

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $2,741,928,598) including securities on loan of $26,043,777		$3,188,319,150
Collateral invested for securities on loan, at value (cost $27,584,871)	+	27,584,871
Total investments, at value (cost $2,769,513,469)		3,215,904,021
Cash		4,531,385
Deposit with broker for futures contracts		441,750
Receivables:
Investments sold		3,320
Fund shares sold		4,750,320
Dividends		2,606,667
Income from securities on loan	+	30,965
Total assets		3,228,268,428
Liabilities
Collateral held for securities on loan		27,584,871
Payables:
Investments bought		6,336,637
Investment adviser fees		143,332
Variation margin on futures contracts	+	10,416
Total liabilities		34,075,256
Net Assets
Total assets		3,228,268,428
Total liabilities	–	34,075,256
Net assets		$3,194,193,172
Net Assets by Source
Capital received from investors		2,803,902,050
Net investment income not yet distributed		7,426,748
Net realized capital losses		(63,625,321)
Net unrealized capital appreciation		446,489,695

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$3,194,193,172		67,300,000		$47.46

₅₄

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Mid-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$23,311,286	$37,655,235
Net realized gains		6,862,340	36,243,784
Net change in unrealized appreciation (depreciation)	+	230,650,332	112,503,628
Increase in net assets resulting from operations		260,823,958	186,402,647
Distributions to Shareholders
Distributions from net investment income		($23,892,640)	($30,341,985)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		16,700,000	$742,267,097	22,550,000	$932,205,713
Shares redeemed	+	(7,400,000)	(317,595,495)	(9,800,000)	(397,461,135)
Net transactions in fund shares		9,300,000	$424,671,602	12,750,000	$534,744,578
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		58,000,000	$2,532,590,252	45,250,000	$1,841,785,012
Total increase	+	9,300,000	661,602,920	12,750,000	690,805,240
End of period		67,300,000	$3,194,193,172	58,000,000	$2,532,590,252
Net investment income not yet distributed			$7,426,748		$8,008,102

₅₆

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	9/1/11– 8/31/12
Per-Share Data
Net asset value at beginning of period	$57.42	$53.54	$54.53	$45.71	$36.55	$32.34
Income (loss) from investment operations:
Net investment income (loss)	0.50 ¹	0.93 ¹	0.80 ¹	0.73	0.74	0.49
Net realized and unrealized gains (losses)	5.91	3.75	(1.07)	8.84	9.18	4.16
Total from investment operations	6.41	4.68	(0.27)	9.57	9.92	4.65
Less distributions:
Distributions from net investment income	(0.55)	(0.80)	(0.72)	(0.75)	(0.76)	(0.44)
Net asset value at end of period	$63.28	$57.42	$53.54	$54.53	$45.71	$36.55
Total return	11.21% ²	8.89%	(0.54%)	21.01%	27.47%	14.52%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.06% ³^,⁴	0.08% ⁵	0.08%	0.08%	0.09% ⁶	0.13%
Net investment income (loss)	1.70% ³	1.76%	1.44%	1.41%	1.74%	1.44%
Portfolio turnover rate⁷	9% ²	11%	9%	13%	22%	12%
Net assets, end of period (x 1,000)	$5,213,917	$3,772,207	$2,893,741	$2,104,717	$1,446,857	$641,516

*	Unaudited.

Calculated based on the average shares outstanding during the period.

Not annualized.

Annualized.

⁴

Effective October 7, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 02/28/17 is a blended ratio. (See financial note 4)

⁵

Effective May 2, 2016, the annual operating expense ratio was reduced. The ratio presented for the period ended 8/31/16 is a blended ratio.

⁶

Effective September 20, 2012, the annual operating expense ratio was reduced to 0.10%. On March 11, 2013, the rate was further reduced to 0.08%. The ratio presented for the period ended 8/31/13 is a blended ratio.

⁷

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

₅₇

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.6%	Common Stock	4,482,108,778	5,195,030,052
0.0%	Rights	215,274	270,394
2.0%	Other Investment Companies	102,535,681	102,535,681
101.6%	Total Investments	4,584,859,733	5,297,836,127
(1.6%)	Other Assets and Liabilities, Net		(83,919,610)
100.0%	Net Assets		5,213,916,517

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.6% of net assets

Automobiles & Components 1.5%
Gentex Corp.	557,098	0.2	11,715,771
Thor Industries, Inc.	94,367	0.2	10,457,751
Other Securities		1.1	54,322,596
		1.5	76,496,118

Banks 11.1%
Bank of the Ozarks, Inc.	183,113	0.2	10,021,774
Commerce Bancshares, Inc.	173,948	0.2	10,266,411
PacWest Bancorp	236,766	0.3	13,045,807
Prosperity Bancshares, Inc.	139,422	0.2	10,392,516
Synovus Financial Corp.	240,913	0.2	10,171,347
Webster Financial Corp.	181,253	0.2	9,956,227
Other Securities		9.8	512,290,789
		11.1	576,144,871

Capital Goods 9.8%
AECOM *	302,837	0.2	11,008,125
Graco, Inc.	108,951	0.2	9,888,393
Hexcel Corp.	183,243	0.2	10,074,700
Orbital ATK, Inc.	114,424	0.2	10,575,066
Oshkosh Corp.	147,771	0.2	10,032,173
Other Securities		8.8	461,005,919
		9.8	512,584,376

Commercial & Professional Services 3.0%
Other Securities		3.0	158,249,906

Consumer Durables & Apparel 2.2%
Brunswick Corp.	175,313	0.2	10,499,496
Other Securities		2.0	106,195,371
		2.2	116,694,867

Security	Number of Shares	% of Net Assets	Value ($)
Consumer Services 3.8%
Panera Bread Co., Class A *	43,607	0.2	10,064,496
ServiceMaster Global Holdings, Inc. *	265,032	0.2	10,556,225
Six Flags Entertainment Corp.	168,343	0.2	10,203,269
Other Securities		3.2	168,539,675
		3.8	199,363,665

Diversified Financials 3.4%
New Residential Investment Corp.	597,353	0.2	10,077,345
SLM Corp. *	854,206	0.2	10,241,930
Other Securities		3.0	154,667,676
		3.4	174,986,951

Energy 4.5%
WPX Energy, Inc. *	772,918	0.2	9,970,642
Other Securities		4.3	223,085,547
		4.5	233,056,189

Food & Staples Retailing 0.5%
Other Securities		0.5	27,516,285

Food, Beverage & Tobacco 1.5%
Other Securities		1.5	77,555,518

Health Care Equipment & Services 5.7%
Envision Healthcare Corp. *	233,619	0.3	16,353,330
WellCare Health Plans, Inc. *	86,958	0.2	12,278,470
Other Securities		5.2	270,843,136
		5.7	299,474,936

Household & Personal Products 0.9%
Coty, Inc., Class A	934,966	0.3	17,558,661
Other Securities		0.6	31,621,054
		0.9	49,179,715

Insurance 3.6%
Assured Guaranty Ltd.	256,496	0.2	10,544,551
Endurance Specialty Holdings Ltd.	127,243	0.2	11,824,692
Old Republic International Corp.	480,530	0.2	9,951,776
Other Securities		3.0	154,905,190
		3.6	187,226,209

₅₈

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Materials 5.7%
Alcoa Corp.	292,918	0.2	10,132,034
Eagle Materials, Inc.	94,753	0.2	9,826,834
Olin Corp.	318,774	0.2	9,907,496
The Chemours Co.	357,842	0.2	12,044,962
United States Steel Corp.	339,161	0.3	13,132,314
Other Securities		4.6	241,961,367
		5.7	297,005,007

Media 2.0%
Other Securities		2.0	104,789,077

Pharmaceuticals, Biotechnology & Life Sciences 6.3%
TESARO, Inc. *	66,617	0.2	12,548,644
Other Securities		6.1	314,956,222
		6.3	327,504,866

Real Estate 9.5%
Colony NorthStar, Inc., Class A	1,080,913	0.3	15,867,803
CubeSmart	357,122	0.2	9,731,574
EPR Properties	128,856	0.2	9,916,758
Hospitality Properties Trust	325,650	0.2	10,349,157
Hudson Pacific Properties, Inc.	292,291	0.2	10,692,005
Other Securities		8.4	439,523,960
		9.5	496,081,257

Retailing 3.1%
Other Securities		3.1	163,227,554

Semiconductors & Semiconductor Equipment 3.2%
Microsemi Corp. *	228,054	0.2	11,817,758
ON Semiconductor Corp. *	809,690	0.2	12,250,610
Teradyne, Inc.	408,125	0.2	11,607,075
Other Securities		2.6	130,221,950
		3.2	165,897,393

Software & Services 7.6%
Booz Allen Hamilton Holding Corp.	289,781	0.2	10,365,466
PTC, Inc. *	224,441	0.2	12,095,125
Take-Two Interactive Software, Inc. *	201,496	0.2	11,481,242
Other Securities		7.0	364,815,895
		7.6	398,757,728

Technology Hardware & Equipment 5.2%
ARRIS International plc *	380,698	0.2	9,822,008
Brocade Communications Systems, Inc.	790,236	0.2	9,727,805
Cognex Corp.	173,273	0.3	13,309,099
Other Securities		4.5	236,147,081
		5.2	269,005,993

Telecommunication Services 0.6%
Other Securities		0.6	29,810,183

Security	Number of Shares	% of Net Assets	Value ($)
Transportation 1.6%
Other Securities		1.6	84,752,541

Utilities 3.3%
Great Plains Energy, Inc.	429,081	0.2	12,469,094
MDU Resources Group, Inc.	381,620	0.2	10,345,718
Other Securities		2.9	146,854,035
		3.3	169,668,847
Total Common Stock
(Cost $4,482,108,778)			5,195,030,052

Rights 0.0% of net assets

Health Care Equipment & Services 0.0%
Other Securities		0.0	—

Media 0.0%
Other Securities		0.0	55,120

Pharmaceuticals, Biotechnology & Life Sciences 0.0%
Other Securities		0.0	215,274
Total Rights
(Cost $215,274)			270,394

Other Investment Companies 2.0% of net assets

Money Market Fund 0.3%
State Street Institutional U.S. Government Money Market Fund, Premier Class 0.46% (c)	14,093,689	0.3	14,093,689

Securities Lending Collateral 1.7%
Wells Fargo Government Money Market Fund, Select Class 0.48% (c)		1.7	88,441,992
Total Other Investment Companies
(Cost $102,535,681)			102,535,681

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $4,593,051,657 and the unrealized appreciation and depreciation were $939,562,654 and ($234,778,184), respectively, with a net unrealized appreciation of $704,784,470.

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

*	Non-income producing security.
(a)	All or a portion of this security is on loan. Securities on loan were valued at $85,671,956.
(b)	Fair-valued by management in accordance with procedures approved by the Board of Trustees.
(c)	The rate shown is the 7-day yield.

₅₉

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

CVR —	Contingent Value Rights
REIT —	Real Estate Investment Trust

In addition to the above, the fund held the following at 2/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Depreciation ($)
Futures Contracts
Russell 2000 Index, e-mini, Long, expires 03/17/17	262	18,143,500	(224,789)

The following is a summary of the inputs used to value the fund’s investments as of February 28, 2017 (see financial note 2(a) for additional information):

Assets Valuation Input

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)	Other Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Common Stock¹	$4,867,525,186	$—	$—	$4,867,525,186
Pharmaceuticals, Biotechnology & Life Sciences	325,953,655	—	1,551,211	327,504,866
Rights ¹	—	—	270,394 ^*	270,394
Other Investment Companies¹	102,535,681	—	—	102,535,681
Total	$5,296,014,522	$—	$1,821,605	$5,297,836,127
Liabilities Valuation Input

Other Financial Instruments
Futures Contracts²	($224,789)	$—	$—	($224,789)

*	Level 3 amount shown includes securities determined to have no value at February 28, 2017.
¹	As categorized in the complete schedule of Portfolio Holdings.
²	Futures contracts are not included in Investments in the schedule of Condensed Portfolio Holdings and are valued at unrealized appreciation or depreciation.

₆₀

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Statement of Assets and Liabilities

As of February 28, 2017; unaudited

Assets
Investments, at value (cost $4,496,417,741) including securities on loan of $85,671,956		$5,209,394,135
Collateral invested for securities on loan, at value (cost $88,441,992)	+	88,441,992
Total investments, at value (cost $4,584,859,733)		5,297,836,127
Cash		13,754,346
Deposit with broker for futures contracts		1,023,000
Receivables:
Investments sold		1,965,522
Fund shares sold		22,454,302
Dividends		3,711,514
Income from securities on loan	+	315,037
Total assets		5,341,059,848
Liabilities
Collateral held for securities on loan		88,441,992
Payables:
Investments bought		38,136,882
Investment adviser fees		233,934
Variation margin on futures contracts	+	330,523
Total liabilities		127,143,331
Net Assets
Total assets		5,341,059,848
Total liabilities	–	127,143,331
Net assets		$5,213,916,517
Net Assets by Source
Capital received from investors		4,472,393,594
Net investment income not yet distributed		9,825,312
Net realized capital gains		18,946,006
Net unrealized capital appreciation		712,751,605

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$5,213,916,517		82,400,000		$63.28

₆₁

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Small-Cap ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$36,276,660	$54,948,126
Net realized gains		114,309,007	79,006,472
Net change in unrealized appreciation (depreciation)	+	306,711,361	157,262,021
Increase in net assets resulting from operations		457,297,028	291,216,619
Distributions to Shareholders
Distributions from net investment income		($38,443,900)	($46,392,950)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		20,350,000	$1,229,391,545	(20,950,000)	$1,122,818,001
Shares redeemed	+	(3,650,000)	(206,535,219)	(9,300,000)	(489,175,354)
Net transactions in fund shares		16,700,000	$1,022,856,326	11,650,000	$633,642,647
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		65,700,000	$3,772,207,063	54,050,000	$2,893,740,747
Total increase	+	16,700,000	1,441,709,454	11,650,000	878,466,316
End of period		82,400,000	$5,213,916,517	65,700,000	$3,772,207,063
Net investment income not yet distributed			$9,825,312		$11,992,552

₆₃

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Financial Statements

Financial Highlights

	9/1/16– 2/28/17*	9/1/15– 8/31/16	9/1/14– 8/31/15	9/1/13– 8/31/14	9/1/12– 8/31/13	10/19/11 ¹– 8/31/12
Per-Share Data
Net asset value at beginning of period	$42.47	$36.52	$38.90	$33.00	$28.58	$25.00
Income (loss) from investment operations:
Net investment income (loss)	0.67 ²	1.29 ²	1.19 ²	1.04	0.91	0.62
Net realized and unrealized gains (losses)	2.33	5.85	(2.46)	5.86	4.40	3.43
Total from investment operations	3.00	7.14	(1.27)	6.90	5.31	4.05
Less distributions:
Distributions from net investment income	(0.64)	(1.19)	(1.11)	(1.00)	(0.89)	(0.47)
Net asset value at end of period	$44.83	$42.47	$36.52	$38.90	$33.00	$28.58
Total return	7.14% ³	19.89%	(3.47%)	21.15%	18.93%	16.31% ³
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.07% ⁴	0.07%	0.07%	0.07%	0.07%	0.17% ⁴
Net investment income (loss)	3.14% ⁴	3.27%	3.03%	3.01%	3.09%	3.19% ⁴
Portfolio turnover rate⁵	4% ³	22%	19%	26%	13%	17% ³
Net assets, end of period (x 1,000)	$5,209,385	$4,300,443	$2,497,808	$2,075,331	$1,141,690	$504,464

*	Unaudited.

Commencement of operations.

Calculated based on the average shares outstanding during the period.

Not annualized.

⁴

Annualized.

⁵

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

₆₄

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited)

Holdings by Category		Cost ($)	Value ($)
99.4%	Common Stock	4,662,683,937	5,179,278,162
0.2%	Other Investment Companies	7,199,480	7,470,326
99.6%	Total Investments	4,669,883,417	5,186,748,488
0.4%	Other Assets and Liabilities, Net		22,636,145
100.0%	Net Assets		5,209,384,633

Security	Number of Shares	% of Net Assets	Value ($)
Common Stock 99.4% of net assets

Automobiles & Components 0.3%
Other Securities		0.3	13,681,509

Banks 0.4%
Other Securities		0.4	20,250,156

Capital Goods 12.9%
3M Co.	824,103	2.9	153,571,594
Caterpillar, Inc.	798,371	1.5	77,170,541
Cummins, Inc.	210,966	0.6	31,326,341
Eaton Corp. plc	618,442	0.9	44,515,455
Emerson Electric Co.	875,110	1.0	52,594,111
Fastenal Co.	392,489	0.4	19,636,225
Lockheed Martin Corp.	343,891	1.8	91,674,463
PACCAR, Inc.	476,132	0.6	31,810,379
Rockwell Automation, Inc.	175,898	0.5	26,578,188
The Boeing Co.	790,668	2.7	142,502,093
		12.9	671,379,390

Commercial & Professional Services 0.1%
Other Securities		0.1	7,048,357

Consumer Durables & Apparel 1.0%
Other Securities		1.0	54,776,169

Consumer Services 3.2%
McDonald's Corp.	1,163,248	2.9	148,488,607
Other Securities		0.3	18,322,516
		3.2	166,811,123

Security	Number of Shares	% of Net Assets	Value ($)
Diversified Financials 2.0%
CME Group, Inc.	460,657	1.1	55,951,399
T. Rowe Price Group, Inc.	338,244	0.5	24,086,355
Other Securities		0.4	22,488,668
		2.0	102,526,422

Energy 10.1%
Chevron Corp.	1,984,365	4.3	223,241,063
Exxon Mobil Corp.	2,580,326	4.0	209,832,110
The Williams Cos., Inc.	928,966	0.5	26,326,896
Valero Energy Corp.	626,784	0.8	42,589,973
Other Securities		0.5	25,468,338
		10.1	527,458,380

Food & Staples Retailing 2.8%
Wal-Mart Stores, Inc.	2,065,639	2.8	146,515,774

Food, Beverage & Tobacco 14.7%
Altria Group, Inc.	2,661,804	3.8	199,422,356
General Mills, Inc.	812,033	0.9	49,022,432
PepsiCo, Inc.	1,959,443	4.2	216,283,318
Reynolds American, Inc.	1,128,916	1.3	69,507,358
The Coca-Cola Co.	5,299,424	4.3	222,363,831
Other Securities		0.2	8,762,058
		14.7	765,361,353

Health Care Equipment & Services 0.0%
Other Securities		0.0	1,221,025

Household & Personal Products 6.5%
Kimberly-Clark Corp.	489,748	1.2	64,916,098
The Clorox Co.	176,372	0.5	24,129,453
The Procter & Gamble Co.	2,698,700	4.7	245,770,609
Other Securities		0.1	3,554,990
		6.5	338,371,150

Insurance 0.6%
Principal Financial Group, Inc.	364,455	0.4	22,793,016
Other Securities		0.2	6,915,131
		0.6	29,708,147

₆₅

Schwab U.S. Equity ETFs | Semiannual Report

See financial notes

Schwab U.S. Dividend Equity ETF

Condensed Portfolio Holdings as of February 28, 2017 (Unaudited) (continued)

Security	Number of Shares	% of Net Assets	Value ($)
Materials 2.9%
International Paper Co.	559,295	0.6	29,474,846
The Dow Chemical Co.	1,537,099	1.8	95,699,784
Other Securities		0.5	24,116,820
		2.9	149,291,450

Media 0.6%
Omnicom Group, Inc.	322,109	0.5	27,411,476
Other Securities		0.1	3,205,851
		0.6	30,617,327

Pharmaceuticals, Biotechnology & Life Sciences 9.6%
Johnson & Johnson	2,043,768	4.8	249,768,887
Pfizer, Inc.	7,280,822	4.8	248,421,647
		9.6	498,190,534

Retailing 2.3%
Genuine Parts Co.	202,461	0.4	19,377,542
Target Corp.	781,990	0.9	45,957,552
Other Securities		1.0	57,681,298
		2.3	123,016,392

Semiconductors & Semiconductor Equipment 10.8%
Analog Devices, Inc.	418,822	0.7	34,314,087
Intel Corp.	6,398,051	4.4	231,609,446
Linear Technology Corp.	325,398	0.4	21,014,203
Maxim Integrated Products, Inc.	386,757	0.3	17,133,335
Microchip Technology, Inc.	293,122	0.4	21,257,207
QUALCOMM, Inc.	2,008,791	2.2	113,456,516
Texas Instruments, Inc.	1,366,892	2.0	104,731,265
Xilinx, Inc.	345,384	0.4	20,315,487
		10.8	563,831,546

Software & Services 10.9%
Automatic Data Processing, Inc.	620,324	1.2	63,657,649
International Business Machines Corp.	1,185,382	4.1	213,155,391
Microsoft Corp.	3,698,126	4.5	236,606,101
Paychex, Inc.	437,316	0.5	26,859,949
Other Securities		0.6	27,060,810
		10.9	567,339,900

Technology Hardware & Equipment 0.8%
HP, Inc.	2,328,551	0.8	40,446,931
Other Securities		0.0	992,938
		0.8	41,439,869

Security	Number of Shares	% of Net Assets	Value ($)
Telecommunication Services 4.2%
Verizon Communications, Inc.	4,419,072	4.2	219,318,543

Transportation 2.2%
United Parcel Service, Inc., Class B	942,301	1.9	99,657,754
Other Securities		0.3	15,590,655
		2.2	115,248,409

Utilities 0.5%
WEC Energy Group, Inc.	429,322	0.5	25,875,237
Total Common Stock
(Cost $4,662,683,937)			5,179,278,162

Other Investment Companies 0.2% of net assets

Equity Fund 0.1%
Other Securities		0.1	2,712,900

Money Market Fund 0.1%
Other Securities		0.1	4,757,426
Total Other Investment Companies
(Cost $7,199,480)			7,470,326

End of Investments.

At 02/28/17, the tax basis cost of the fund's investments was $4,672,971,223 and the unrealized appreciation and depreciation were $583,704,095 and ($69,926,830), respectively, with a net unrealized appreciation of $513,777,265.

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

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

ETF —

Exchange-traded fund

In addition to the above, the fund held the following at 02/28/17:

	Number of Contracts	Contract Value ($)	Unrealized Appreciation ($)
Futures Contracts
S&P 500 Index, e-mini, Long, expires 03/17/17	225	26,581,500	492,252

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See financial notes

Schwab U.S. Dividend Equity ETF

Statement of Changes in Net Assets

For the current and prior report periods

Figures for the current period are unaudited

Operations
	9/1/16-2/28/17		9/1/15-8/31/16
Net investment income		$73,132,522	$106,265,224
Net realized gains		49,904,517	62,108,001
Net change in unrealized appreciation (depreciation)	+	215,201,089	408,384,916
Increase in net assets resulting from operations		338,238,128	576,758,141
Distributions to Shareholders
Distributions from net investment income		($70,514,980)	($95,093,961)

Transactions in Fund Shares
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	VALUE	SHARES	VALUE
Shares sold		21,600,000	$921,414,871	44,000,000	$1,750,920,347
Shares redeemed	+	(6,650,000)	(280,196,001)	(11,150,000)	(429,949,595)
Net transactions in fund shares		14,950,000	$641,218,870	32,850,000	$1,320,970,752
Shares Outstanding and Net Assets
		9/1/16-2/28/17		9/1/15-8/31/16
		SHARES	NET ASSETS	SHARES	NET ASSETS
Beginning of period		101,250,001	$4,300,442,615	68,400,001	$2,497,807,683
Total increase	+	14,950,000	908,942,018	32,850,000	1,802,634,932
End of period		116,200,001	$5,209,384,633	101,250,001	$4,300,442,615
Net investment income not yet distributed			$28,560,981		$25,943,439

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Schwab U.S. Equity ETFs

Financial Notes, unaudited

1. Business Structure of the Funds:

SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009)
Schwab U.S. Broad Market ETF	Schwab U.S. TIPS ETF™
Schwab U.S. Large-Cap ETF	Schwab Short-Term U.S. Treasury ETF™
Schwab U.S. Large-Cap Growth ETF	Schwab Intermediate-Term U.S. Treasury ETF™
Schwab U.S. Large-Cap Value ETF	Schwab U.S. Aggregate Bond ETF™
Schwab U.S. Mid-Cap ETF	Schwab Fundamental U.S. Broad Market Index ETF
Schwab U.S. Small-Cap ETF	Schwab Fundamental U.S. Large Company Index ETF
Schwab U.S. Dividend Equity ETF	Schwab Fundamental U.S. Small Company Index ETF
Schwab U.S. REIT ETF™	Schwab Fundamental International Large Company Index ETF
Schwab International Equity ETF™	Schwab Fundamental International Small Company Index ETF
Schwab International Small-Cap Equity ETF™	Schwab Fundamental Emerging Markets Large Company Index ETF
Schwab Emerging Markets Equity ETF™

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

2. Significant Accounting Policies:

(a) Security Valuation:

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

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Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

• Futures contracts: Futures contracts are valued at their settlement prices as of the close of their exchanges.

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

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

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

The levels associated with valuing the funds' investments as of February 28, 2017 are disclosed in the Condensed Portfolio Holdings.

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

As of February 28, 2017, the funds had securities on loan, all of which were classified as common stocks. The value of the securities on loan and the related collateral as of February 28, 2017, if any, are disclosed in each fund's Condensed Portfolio Holdings. The value of the securities on loan and the investment of cash collateral are also disclosed in each fund's Statement of Assets and Liabilities.

(d) Investment Income:

(e) Expenses:

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

2. Significant Accounting Policies (continued):

(f) Distributions to Shareholders:

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

(g) Accounting Estimates:

(h) Federal Income Taxes:

(i) Indemnification:

3. Risk Factors:

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

3. Risk Factors (continued):

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

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

Sampling Index Tracking Risk. Certain funds may not fully replicate the index and may hold securities not included in the index. As a result, a fund is subject to the risk that the investment adviser’s investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. Because certain funds utilize a sampling approach they may not track the return of their respective index as well as they would if the funds purchased all of the securities in their respective index.

Liquidity Risk. A fund may be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.

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

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions:

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

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

Schwab U.S. Broad Market ETF	Schwab U.S. Large-Cap ETF	Schwab U.S. Large-Cap Growth ETF	Schwab U.S. Large-Cap Value ETF	Schwab U.S. Mid-Cap ETF	Schwab U.S. Small-Cap ETF	Schwab U.S. Dividend Equity ETF
0.03%	0.03%	0.04% ¹	0.04% ¹	0.06% ^2,3	0.06% ^2,3	0.07%

¹	Prior to December 29, 2016, the advisory fees of the Schwab U.S. Large-Cap Growth ETF and Schwab U.S. Large-Cap Value ETF were 0.06%.
²	Prior to October 7, 2016, the advisory fees of the Schwab U.S. Mid-Cap ETF and Schwab U.S. Small-Cap ETF were 0.07%.
³	Subsequent to the reporting period ended February 28, 2017, and effective March 1, 2017, the advisory fees of the Schwab U.S. Mid-Cap ETF and Schwab U.S. Small-Cap ETF were reduced to 0.05%.

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

Fund	Balance of Shares Held at 8/31/16	Gross Purchases	Gross Sales	Balance of Shares Held at 2/28/17	Market Value at 2/28/17	Realized Gains(Losses) 9/1/16 to 2/28/17	Dividends Received 9/1/16 to 2/28/17
Schwab U.S. Broad Market ETF	366,815	49,420	(4,200)	412,035	$16,650,334	$94,238	$58,890
Schwab U.S. Large-Cap ETF	374,662	70,428	(10,593)	434,497	17,558,024	32,209	61,320
Schwab U.S. Large-Cap Growth ETF	365,001	70,578	(2,744)	432,835	17,490,862	55,833	60,473

	Underlying Funds
	Schwab U.S. Large-Cap ETF	Schwab U.S. Small-Cap ETF
Schwab VIT Balanced Portfolio	0.1%	0.0%*
Schwab VIT Balanced with Growth Portfolio	0.4%	0.2%
Schwab VIT Growth Portfolio	0.5%	0.2%
Schwab Target 2010 Index Fund	0.0%*	0.0%*
Schwab Target 2015 Index Fund	0.0%*	0.0%*
Schwab Target 2020 Index Fund	0.0%*	0.0%*
Schwab Target 2025 Index Fund	0.1%	0.0%*
Schwab Target 2030 Index Fund	0.1%	0.0%*
Schwab Target 2035 Index Fund	0.1%	0.0%*
Schwab Target 2040 Index Fund	0.1%	0.0%*
Schwab Target 2045 Index Fund	0.0%*	0.0%*
Schwab Target 2050 Index Fund	0.0%*	0.0%*
Schwab Target 2055 Index Fund	0.0%*	0.0%*
Schwab Target 2060 Index Fund	0.0%*	0.0%*

*	Less than 0.05%

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

4. Affiliates and Affiliated Transactions (continued):

	Total Aggregate Transactions	Realized Gains (Losses)
Schwab U.S. Broad Market ETF	$45,871,190	($8,308,279)
Schwab U.S. Large-Cap ETF	106,663,445	(7,958,360)
Schwab U.S. Large-Cap Growth ETF	122,059,341	(26,840,985)
Schwab U.S. Large-Cap Value ETF	148,432,187	(5,299,306)
Schwab U.S. Mid-Cap ETF	134,528,167	(36,453,021)
Schwab U.S. Small-Cap ETF	190,204,435	3,551,764
Schwab U.S. Dividend Equity ETF	61,501,357	(941,741)

5. Other Service Providers:

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

6. Board of Trustees:

7. Borrowing from Banks:

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

8. Derivatives:

Certain funds entered into equity index futures contracts during the report period. The funds invested in futures contracts to equitize available cash. The fair value and variation margin for futures contracts held at February 28, 2017 are presented on the Condensed Portfolio Holdings and Statement of Assets and Liabilities, respectively. The net realized and change in unrealized gains (losses) on futures contracts are presented on the Statement of Operations. Refer to financial note 2(b) for the funds’ accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period ended February 28, 2017, the month-end average contract values of futures contracts held by the funds and the month-end average number of contracts held were as follows:

	Contract Values	Number of Contracts
Schwab U.S. Broad Market ETF	$19,971,829	178
Schwab U.S. Large-Cap ETF	15,824,592	142
Schwab U.S. Large-Cap Growth ETF	5,530,847	49
Schwab U.S. Large-Cap Value ETF	6,948,592	62
Schwab U.S. Mid-Cap ETF	4,088,264	36
Schwab U.S. Small-Cap ETF	12,456,141	146
Schwab U.S. Dividend Equity ETF	12,308,938	109

9. Purchases and Sales/Maturities of Investment Securities:

For the period ended February 28, 2017, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

	Purchases of Securities	Sales/Maturities of Securities
Schwab U.S. Broad Market ETF	$216,140,620	$152,881,501
Schwab U.S. Large-Cap ETF	217,238,885	161,361,542
Schwab U.S. Large-Cap Growth ETF	184,949,975	157,191,610
Schwab U.S. Large-Cap Value ETF	150,533,164	142,815,067
Schwab U.S. Mid-Cap ETF	487,569,877	438,280,461
Schwab U.S. Small-Cap ETF	471,430,640	370,127,325
Schwab U.S. Dividend Equity ETF	191,680,317	184,861,964

10. In-Kind Transactions:

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Schwab U.S. Equity ETFs

Financial Notes, unaudited (continued)

10. In-Kind Transactions (continued):

The in-kind transactions for the period ended February 28, 2017 were as follows:

	In-Kind Purchases of Securities	In-Kind Sales of Securities
Schwab U.S. Broad Market ETF	$937,215,026	$79,311,817
Schwab U.S. Large-Cap ETF	1,209,592,883	28,435,414
Schwab U.S. Large-Cap Growth ETF	574,472,022	62,980,251
Schwab U.S. Large-Cap Value ETF	595,284,582	131,080,577
Schwab U.S. Mid-Cap ETF	710,021,315	309,813,819
Schwab U.S. Small-Cap ETF	1,196,319,648	187,799,696
Schwab U.S. Dividend Equity ETF	891,224,183	253,738,914

11. Federal Income Taxes

Expiration Date	Schwab U.S. Broad Market ETF	Schwab U.S. Large-Cap ETF	Schwab U.S. Large-Cap Growth ETF	Schwab U.S. Large-Cap Value ETF	Schwab U.S. Mid-Cap ETF	Schwab U.S. Small-Cap ETF	Schwab U.S. Dividend Equity ETF
August 31, 2019	$—	$721,062	$631,601	$295,384	$218,695	$927,631	$—
No expiration*	48,891,506	32,403,690	16,111,999	11,935,433	65,892,934	89,373,828	36,609,985
Total	$48,891,506	$33,124,752	$16,743,600	$12,230,817	$66,111,629	$90,301,459	$36,609,985

*	As a result of the passage of the Regulated Investment Company Modernization Act of 2010, capital losses incurred after December 31, 2010 may now be carried forward indefinitely, but must retain the character of the original loss.

12. Recent Regulatory Development:

13. Subsequent Events:

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

Investment Advisory Agreement Approval

At a meeting held on January 18, 2017, the Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the approval of an amended and restated investment advisory agreement (the Amended Agreement) between Schwab Strategic Trust (the Trust) and Charles Schwab Investment Management, Inc. (CSIM) with respect to the existing funds in the Trust, including Schwab U.S. Broad Market ETF, Schwab U.S. Large-Cap ETF, Schwab U.S. Large-Cap Growth ETF, Schwab U.S. Large-Cap Value ETF, Schwab U.S. Mid-Cap ETF, Schwab U.S. Small-Cap ETF, and Schwab U.S. Dividend Equity ETF (the Funds) to reflect (i) a reduction to the rate paid by the Trust to CSIM as compensation for CSIM’s services rendered to the Schwab U.S. Mid-Cap ETF and Schwab U.S. Small-Cap ETF; and (ii) a

change that would make CSIM responsible for the interest expenses resulting from the Funds’ operations. The Board reviewed materials provided by CSIM relating to these changes (including a representation by CSIM that the changes will not result in any reduction in the nature and level of services provided to the Funds by CSIM) and also took into account the extensive information that the Board reviewed and conclusions it reached at its May and June 2016 meetings, in connection with its annual consideration and approval of the continuation of the Funds’ investment advisory agreement. Because the Board had conducted a full review of the Funds’ investment advisory agreement in the spring of 2016, and intends to conduct another such review in the spring of 2017, it limited its discussions in January 2017 primarily to the proposed changes to the agreement.

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Schwab U.S. Equity ETFs

Trustees and Officers

Independent Trustees
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served¹)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Robert W. Burns 1959 Trustee (Trustee 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 (Jan. 2009 – present). Formerly, Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds.	110	Director, PS Business Parks, Inc. (2005 – 2012)
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Fellow, The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow, Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015).	110	Director, Gilead Sciences, Inc. (2005 – present)
Stephen Timothy Kochis 1946 Trustee (Trustee of Schwab Strategic Trust since 2012; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	CEO and Owner, Kochis Global (wealth management consulting) (May 2012 – present); Chairman and CEO, Aspiriant, LLC (wealth management) (Jan. 2008 – Apr. 2012).	110	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.	110	Director, Symantec Corporation (2003 – present) Director, Corcept Therapeutics Incorporated (2004 – present) Director, Adamas Pharmaceuticals, Inc. (2009 – present)

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Schwab U.S. Equity ETFs

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. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services firm for consumers and small businesses) (Dec. 2008 – Sept. 2013).	110	Director, KLA-Tencor Corporation (2008 – present)
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, Patmore Management Consulting (management consulting) (2008 – present).	110	None
Charles A. Ruffel 1956 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 2015)	Co-Chief Executive Officer, Kudu Investment Management, LLC (financial services) (Jan. 2015 – present); Partner, Kudu Advisors, LLC (financial services) (June 2008 – Jan. 2015); Advisor, Asset International, Inc. (publisher of financial services information) (Aug. 2008 – Jan. 2015).	110	None
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (Mar. 1990 – present).	110	Director, Eaton (2012 – present) Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – 2013) Director, Oneok, Inc. (2009 – 2013) Lead Independent Director, Board of Cooper Industries (2002 – 2012)
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust since 2010; Schwab Strategic Trust since 2016)	Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (Jan. 2008 – present); Partner, Colgin Partners, LLC (vineyards) (Feb. 1998 – present).	110	Board Member and Chairman of the Audit Committee, Ionis Pharmaceuticals (1994 – present) Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present)

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Schwab U.S. Equity ETFs | Semiannual Report

Schwab U.S. Equity ETFs

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)	Director, President and Chief Executive Officer, The Charles Schwab Corporation (Oct. 2008 – present); President and Chief Executive Officer (Oct. 2008 – present), Director (May 2008 – present), Charles Schwab & Co., Inc.; Director, Charles Schwab Bank (Apr. 2006 – present); Director, Schwab Holdings, Inc. (May 2008 – present); and Director, Charles Schwab Investment Management, Inc. (July 2016 – present).	110	Director, The Charles Schwab Corporation (2008 – present)
Marie A. Chandoha² 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 2016)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; Trustee (Jan. 2016 – present), President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010).	110	None
Joseph R. Martinetto² 1962 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)	Senior Executive Vice President and Chief Financial Officer, The Charles Schwab Corporation and Charles Schwab & Co., Inc. (July 2015 – present); Executive Vice President and Chief Financial Officer of The Charles Schwab Corporation and Charles Schwab & Co., Inc. (May 2007 – July 2015); Director, Charles Schwab & Co., Inc. (May 2007 – present); Director (Apr. 2010 – present) and Chief Executive Officer (July 2013 – Apr. 2015), Charles Schwab Bank; Director, Executive Vice President and Chief Financial Officer (May 2007 – present), Senior Executive Vice President (Feb. 2016 – present), and Executive Vice President (May 2007 – Feb. 2016), Schwab Holdings, Inc.	110	None

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
Marie A. Chandoha 1961 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 2010)	Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer (Sept. 2010 – Oct. 2011), Charles Schwab Investment Management, Inc.; Trustee (Jan. 2016 – present), President, Chief Executive Officer (Dec. 2010 – present), and Chief Investment Officer (Sept. 2010 – Oct. 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Jan. 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (Mar. 2007 – Aug. 2010).
Mark Fischer 1970 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 2013)	Treasurer and Chief Financial Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Jan. 2016 – present); Assistant Treasurer, Schwab Funds and Laudus Funds (Dec. 2013 – Dec. 2015), Schwab ETFs (Nov. 2013 – Dec. 2015); Vice President, Charles Schwab Investment Management, Inc. (Oct. 2013 – present); Executive Director, J.P. Morgan Investor Services (Apr. 2011 – Sept. 2013); Assistant Treasurer, Massachusetts Financial Service Investment Management (May 2005 – Mar. 2011).

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Officers of the Trust (continued)
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served³)	Principal Occupations During the Past Five Years
George Pereira 1964 Senior Vice President and Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2004; Laudus Trust since 2006; Schwab Strategic Trust since 2009)	Senior Vice President and Chief Financial Officer (Nov. 2004 – present), Chief Operating Officer (Jan. 2011 – present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Operating Officer (Jan. 2016 – present), Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – Dec. 2015); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – Dec. 2015) and Schwab ETFs (Oct. 2009 – Dec. 2015); Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (Apr. 2005 – present).
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (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 – Equities and Multi-Asset Strategies, Charles Schwab Investment Management, Inc. (Apr. 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – Apr. 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – Jan. 2009).
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of 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 – Fixed Income, Charles Schwab Investment Management, Inc. (Apr. 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (Jan. 2008 – Oct. 2010); Director of Alpha Strategies Loomis, Sayles & Company (Apr. 2006 – Jan. 2008).
David Lekich 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (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 (Sept. 2011 – present), Vice President (Mar. 2004 – Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011 – present), Vice President (Jan. 2011 – Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011 – present) and Chief Legal Officer (Dec. 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (Apr. 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (Nov. 2011 – present), Schwab ETFs.
Catherine MacGregor 1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (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)	Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Funds; Vice President (Nov. 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (Oct. 2009 – present).

¹	Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The 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, Ms. Chandoha, and Mr. Martinetto are Interested Trustees because they own stock of The Charles Schwab Corporation, the parent company of the investment adviser.
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.

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Schwab U.S. Equity ETFs | Semiannual Report

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Glossary

ask See “offer.”

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

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

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

cap, capitalization See “market cap.”

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

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

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

Dow Jones U.S. Dividend 100 Index An index that is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The 100-component index is a subset of the Dow Jones U.S. Broad Market Index, excluding REITs, master limited partnerships,

preferred stocks and convertibles. All index eligible stocks must have sustained at least 10 consecutive years of dividend payments, have a minimum float-adjusted market capitalization of $500 million and meet minimum liquidity criteria. The index is modified market capitalization weighted.

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

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

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

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

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

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

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

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

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

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

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

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