N-CSR

Schwab Municipal Bond ETF

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 data quoted. To obtain performance information current to the most recent month end, please visit www.schwabassetmanagement.com/schwabetfs_prospectus.

Total Returns for the 12 Months Ended December 31, 2022
Schwab Municipal Bond ETF (Ticker Symbol: SCMB)
Market Price Return1	3.21%*
NAV Return1	2.93%*
ICE AMT-Free Core U.S. National Municipal Index	2.60%*
ETF Category: Morningstar Muni National Interm2	N/A
Performance Details	pages 7-8

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 or sale 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.

Fixed-income securities are subject to increased loss of principal during periods of rising interest rates. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

“ICE®” is a registered trademark of ICE Data Indices, LLC or its affiliates. This trademark has been licensed, along with the ICE AMT-Free Core U.S. National Municipal Index (“Index”) for use by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, in connection with the Schwab Municipal Bond ETF. The Schwab Municipal Bond ETF is not sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in the Schwab Municipal Bond ETF.

Total returns shown are since the fund’s inception date of October 12, 2022.

ETF performance must be shown based on both a Market Price and a NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price of the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.

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

Schwab Municipal Bond ETF | Annual Report2

Schwab Municipal Bond ETF

From the President

Jonathan de St. Paer
President of Schwab Asset
Management and the fund
covered in this report.

Dear Shareholder,

Schwab Asset Management was pleased to launch the Schwab Municipal Bond ETF on October 12, 2022. During the two month reporting period, financial markets generally gained ground on hopes that interest rates had peaked and that the U.S. Federal Reserve would begin easing the increasingly tight monetary policies imposed in 2022. Although a host of macroeconomic and geopolitical uncertainties continued to roil beneath the surface of the markets, including Russia’s war in Ukraine and concerns regarding a possible U.S. recession, most investors faced more favorable conditions during the reporting period compared to earlier in 2022. Fixed-income markets, in particular, benefited from moderating yields and tightening credit spreads, with higher-credit-quality bonds tending to outperform their lower-credit-quality counterparts. Relatively low levels of issuance and declining fund outflows further bolstered the returns of municipal bonds, which strongly outperformed U.S. Treasury securities of comparable duration.

Municipal bonds appear well positioned to offer the potential for attractive yields, bolstered by prevailing conditions of restrained levels of issuance, improving demand, a positive credit outlook for state and local governments, and low rates of default. The Schwab Municipal Bond ETF offers investors low-cost, straightforward access to this market, seeking to provide income exempt from federal income taxes and not subject to the Alternative Minimum Tax. The fund generally invests in a wide range of investment-grade rated securities.

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

Sincerely,

“Schwab Asset Management was pleased to launch the Schwab Municipal Bond ETF on October 12, 2022.”

Past performance is no guarantee of future results.

Management views may have changed since the report date.

Schwab Asset Management is the dba name for Charles Schwab Investment Management, Inc., the investment adviser for Schwab Funds and Schwab ETFs.

3Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

The Investment Environment

For the reporting period of October 12, 2022* through December 31, 2022, U.S. fixed-income markets posted gains. Inflation, which peaked in July, moderated through the reporting period, interest rates rose, and economic growth around the world showed continued signs of slowing. The ongoing war between Russia and Ukraine and the continuing, albeit uneven, fallout from the COVID-19 pandemic also weighed on economies and markets around the world. The Bloomberg US Aggregate Bond Index suffered its worst calendar year performance since its inception in 1976, with longer-term bonds underperforming shorter-term bonds and several key U.S. stock indices posted their largest calendar year drop since the 2008 recession. For the calendar year, the Bloomberg US Aggregate Bond Index, representing the broad U.S. bond market, and the S&P 500® Index, a bellwether for the overall U.S. stock market, returned -13.01% and -18.11%, respectively. For the reporting period of October 12, 2022* through December 31, 2022, the ICE AMT-Free Core U.S. National Municipal Index returned 2.60%

Rising interest rates in 2022 negatively impacted municipal (muni) bond prices, and demand for muni bonds fell sharply, driving yields to their highest levels in more than a decade. (Bond yields and bond prices typically move in opposite directions.) For the 2022 calendar year, total issuance of muni bonds was down more than 20%, with the bulk of the decline due to the scarcity of refinancings as interest rates rose. In the final three months of 2022, however, muni bond yields retreated from recent highs and muni bond prices ended the reporting period higher than where they started it.

In the United States, following fading government stimuli, ongoing supply chain disruptions, and historically high inflation, gross domestic product (GDP) contracted for the first two quarters of 2022 but grew at an annualized rate of 3.2% for the third quarter of 2022, driven primarily by energy exports and consumer spending. Inflation, which had begun a steady upward climb early in 2021 that continued through the first half of 2022, and hit a 40-year high in July, subsequently declined through the end of the reporting period as certain consumer and energy prices began to recede. The unemployment rate remained low despite inflationary pressures, ending the reporting period at pre-pandemic lows.

Yields of U.S. Treasury Securities: Effective Yields of Three-Month, Two-Year and 10-Year Treasuries

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

For index definitions, please see the Glossary.

Data source: Bloomberg L.P.

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

Management views may have changed since the report date.

The fund’s inception date. Inception represents the date that the shares began trading in the secondary market.

Schwab Municipal Bond ETF | Annual Report4

Schwab Municipal Bond ETF

The Investment Environment (continued)

Monetary policy around the world varied as central banks responded to the rapidly changing conditions. In the United States, the U.S. Federal Reserve (Fed) began raising interest rates in March 2022 following two years of historically low rates brought on by the COVID-19 pandemic, raising them five times prior to the beginning of the reporting period—by 0.25% in mid-March, 0.50% in early May, 0.75% in mid-June, 0.75% in late July, and 0.75% in late September—and an additional two times during it—by 0.75% in early November and 0.50% in mid-December. The federal funds rate ended the reporting period in a range of 4.25% to 4.50%. The Fed continued its program to reduce the assets held on its balance sheet, having vowed to be even more aggressive than during its last round of quantitative tightening between 2017 and 2019. In developed international countries, both the European Central Bank and the Bank of England raised interest rates multiple times throughout 2022 and twice during the reporting period. In contrast, the Bank of Japan continued to uphold its short-term interest rate target of -0.1%, unchanged since 2016, but in late December unexpectedly announced that it would widen the band around the yield target on its 10-year government bond, which pushed the yen higher and effectively marked the end of an extended period in which Japan was the only major developed country to resist raising rates.

5Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Fund Management

Jason D. Diefenthaler, Managing Director and Head of Tax-Exempt Strategies for Schwab Asset

Management, is responsible for the day-to-day co-management of the fund and for developing, managing,

and implementing Schwab Asset Management’s tax-exempt fixed income investment strategies, including

separately managed accounts, actively managed mutual funds, and exchange-traded funds (ETFs). Previously,

Mr. Diefenthaler led the portfolio management team for the Wasmer SchroederTM Municipal Bond Strategies

and was responsible for the day-to-day co-management of several tax-free Schwab Funds. Prior to that, he

was the director of tax-exempt portfolio management at Wasmer Schroeder & Company, LLC (Schwab Asset

Management became the investment adviser for Wasmer Schroeder Strategies in 2020). He oversaw all

tax-exempt strategies and management of the Wasmer Schroeder High Yield Municipal Fund, which

subsequently reorganized into the Schwab Opportunistic Municipal Bond Fund. Mr. Diefenthaler began his

career with Wasmer Schroeder in 2000. He was a credit analyst for taxable and tax-exempt strategies before

becoming a portfolio manager.

Matthew Hastings, CFA, Managing Director and Head of Taxable Bond Strategies for Schwab Asset

Management, is responsible for the day-to-day co-management of the fund. Mr. Hastings leads the portfolio

management team for the Schwab Taxable Bond Funds and Schwab Fixed-Income ETFs. He also has overall

responsibility for all aspects of the management of the funds. Prior to joining Schwab in 1999, Mr. Hastings

was in fixed-income sales and trading at Lehman Brothers. He has worked in the fixed-income securities

industry since 1996.

Steven Hung, Senior Portfolio Manager for Schwab Asset Management, is responsible for the day-to-day

co-management of the fund. He is primarily responsible for the management and oversight of corporate

bonds within the taxable bond strategies, with additional responsibility for managing municipal bond index

strategies. Mr. Hung has been a portfolio manager with Schwab Asset Management since 2005 and prior to

that, served in various roles as an associate portfolio manager and trader since 1999. In 1998, he joined

Schwab’s management training program and worked as a clerk on the options trading floor of the Pacific

Coast Stock Exchange.

John Khodarahmi, Senior Portfolio Manager for Schwab Asset Management, is responsible for the day-to-day

co-management of the fund. He is a member of the team responsible for managment of the Schwab Tax-Free

Bond Funds and has been a portfolio manager with Schwab Asset Management since 2015. Prior to joining

Schwab in 2015, Mr. Khodarahmi was a vice president and senior municipal trader at Eaton Vance

Management for the firm’s tax-free bond funds. Previous to Eaton Vance, he was a vice president and portfolio

manager at both Banc of America Montgomery Securities and Thomas Weisel Partners, managing corporate

cash and high net worth portfolios. Prior to those roles, Mr. Khodarahmi was a municipal trader and

underwriter for Fleet Securities, Inc. (now part of Bank of America).

Schwab Municipal Bond ETF | Annual Report6

Schwab Municipal Bond ETF

The Schwab Municipal Bond ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of the U.S. AMT-free municipal bond market. To pursue its goal, the fund generally invests in securities that are included in the ICE AMT-Free Core U.S. National Municipal Index (the index). For more information about the fund’s investment objective, strategy, and risks, please see the fund’s prospectus.

Market Highlights. For the reporting period of October 12, 2022* through December 31, 2022, U.S. fixed-income markets posted gains. Inflation, which peaked in July, moderated through the reporting period, interest rates rose, and economic growth around the world showed continued signs of slowing. The ongoing war between Russia and Ukraine and the continuing, albeit uneven, fallout from the COVID-19 pandemic also weighed on economies and markets around the world. The S&P 500® Index posted its largest calendar year drop since the 2008 recession and the Bloomberg US Aggregate Bond Index suffered its worst calendar year since its inception in 1976, with longer-term bonds underperforming shorter-term bonds. After maintaining the federal funds rate in a range of 0.00% to 0.25% through mid-March, the U.S. Federal Reserve (Fed) shifted its stance as inflation continued to rise and indicators of economic activity and employment continued to strengthen. After issuing successively stronger signals that interest rates could begin to rise sooner in 2022 than previously anticipated, the Fed increased the federal funds rate five times between March 2022 and the beginning of the reporting period and an additional two times during the reporting period. The federal funds rate ended the reporting period in a range of 4.25% to 4.50%. In addition, the Fed’s bond-buying program, which had begun to scale back in November 2021, was ended altogether in early March 2022. In June, the Fed also began to reduce the $9 trillion in assets it holds on its balance sheet.

Rising interest rates in 2022 negatively impacted muni bond prices through the first three quarters of the year, and demand for municipal (muni) bonds fell sharply, driving yields to their highest levels in more than a decade. (Bond yields and bond prices typically move in opposite directions.) In the final three months of 2022, however, muni bond yields retreated from recent highs and muni bond prices ended the reporting period higher than where they started it. For the 2022 calendar year, total issuance of muni bonds was down more than 20%, with a particularly large drop-off in December.

Performance. During the reporting period of October 12, 2022 (the fund’s inception date*), through December 31, 2022, the fund generally tracked the performance of the index. For the reporting period, the fund’s market price return was 3.21% and its NAV return was 2.93% (for an explanation of market price and NAV returns, please refer to footnote 2 on the following page). The index returned 2.60% during the same period. Both positive price returns and coupon income generated by the fund’s holdings contributed to fund performance.

Inception represents the date that the shares began trading in the secondary market.

Portfolio Composition % of Investments1

By Security Type

Weighted Average Maturity2	7.7 Yrs
Weighted Average Duration2	6.9 Yrs

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

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

The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.

See Glossary for definitions of maturity and duration.

7Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Performance and Fund Facts as of December 31, 2022

Performance of Hypothetical $10,000 Investment (October 12, 2022 – December 31, 2022)1

Average Annual Total Returns1

Fund and Inception Date	Since Inception*
Fund: Schwab Municipal Bond ETF (10/12/22)
Market Price Return2	3.21%
NAV Return2	2.93%
ICE AMT-Free Core U.S. National Municipal Index	2.60%
ETF Category: Morningstar Muni National Interm3	N/A
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.

Inception (10/12/22) represents the date that the shares began trading in the secondary market.

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

ETF performance must be shown based on both a Market Price and a NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price of the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.

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

As stated in the prospectus.

Schwab Municipal Bond ETF | Annual Report8

Schwab Municipal Bond ETF

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 the 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 July 1, 2022 and held through December 31, 2022.

The Actual Return line in the table below provides 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 the fund under the heading entitled “Expenses Paid During Period.”

The Hypothetical Return line in the table below provides information about hypothetical account values and hypothetical expenses based on the 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 the 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 7/1/22	ENDING ACCOUNT VALUE (NET OF EXPENSES) AT 12/31/222	EXPENSES PAID DURING PERIOD 7/1/22-12/31/22 2
Schwab Municipal Bond ETF
Actual Return	0.03%	$1,000.00	$1,029.30	$0.07
Hypothetical 5% Return	0.03%	$1,000.00	$1,011.03	$0.07

The expense ratio provided for the fund is for the period from 10/12/22 (commencement of operations) through 12/31/22 (see financial note 4 for additional information).

Actual expenses for the fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by 81 days in the period from

commencement of operations on 10/12/22 through 12/31/22, and divided by 365 days in the fiscal year. Hypothetical expenses for the fund are equal to its annualized

expense ratio, multiplied by the average account value over the period, multiplied by 184 days in the period, and divided by 365 days in the fiscal year.

9Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022

This section shows all the securities in the fund’s portfolio and their values as of the report date.

The fund files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT Part F. The fund’s Form N-PORT Part F is available on the SEC’s website at www.sec.gov. You can also obtain this information at no cost on the fund’s website at www.schwabassetmanagement.com/schwabetfs_prospectus, by calling 1-866-414-6349, or by sending an email request to [email protected]. The fund also makes available its complete schedule of portfolio holdings 15 to 20 days after the end of the month on the fund’s website.

Based on index eligibility requirements, securities must have a fixed coupon schedule (including zero coupon bonds), the rate shown is the interest rate. The index excludes certain types of securities, including, among others, step coupon securities, taxable municipal securities, floating rate notes and variable rate demand obligations or notes. The maturity date shown for all the securities is the final legal maturity.

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
MUNICIPAL SECURITIES 98.4% OF NET ASSETS
ALABAMA 0.9%
Birmingham Water Works Board
Water Refunding RB Series 2015A	5.00%	01/01/42 (a)(b)	300,000	313,571
Tuscaloosa City Board of Education Capital Outlay Warrants
School Tax Warrants Series 2016	5.00%	08/01/46 (a)(b)	200,000	215,334
				528,905
ARIZONA 1.9%
Arizona Health Facilities Auth
RB (Banner Health) Series 2014A	5.00%	01/01/44 (a)(b)	150,000	153,177
Maricopa Cnty
GO Bonds Series 2018C	4.00%	07/01/38 (b)	400,000	396,849
Phoenix Civic Improvement Corp
Jr Lien Airport RB Series 2019A	4.00%	07/01/49 (b)	100,000	91,630
Salt River Project Agricultural Improvement & Power District
Electric System RB Series 2021A	5.00%	01/01/24	200,000	204,334
Refunding RB Series 2016A	5.00%	01/01/31 (b)	300,000	327,178
				1,173,168
CALIFORNIA 19.3%
Alameda Cnty Transportation Commission
Sr Sales Tax RB Series 2022	5.00%	03/01/45 (b)	110,000	122,835
California
GO Bonds	4.00%	11/01/23	100,000	100,979
GO Bonds	5.00%	11/01/25 (b)	500,000	522,508
GO Bonds	5.00%	08/01/27 (b)	200,000	216,924
GO Bonds	5.00%	11/01/28	120,000	135,710
GO Bonds	5.00%	11/01/29	100,000	115,102
GO Bonds	5.00%	10/01/30 (b)	275,000	310,325
GO Bonds	5.00%	04/01/31 (b)	125,000	142,105
GO Bonds	3.75%	04/01/37 (b)	105,000	103,783
GO Bonds	4.00%	04/01/49 (b)	250,000	240,911
GO Refunding Bonds	5.00%	10/01/25	165,000	175,912
GO Refunding Bonds	5.00%	03/01/27 (b)	250,000	262,790
GO Refunding Bonds	5.00%	12/01/27	210,000	233,980
GO Refunding Bonds	5.00%	10/01/28	325,000	366,987

See financial notes

11Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
GO Refunding Bonds	5.25%	08/01/32 (c)	300,000	360,202
GO Refunding Bonds	5.00%	03/01/35 (b)	245,000	276,072
GO Refunding Bonds	3.00%	10/01/36 (b)	200,000	180,134
GO Refunding Bonds	4.00%	11/01/37 (b)	150,000	152,917
GO Refunding Bonds	5.00%	09/01/41 (b)	100,000	110,867
California Dept of Water Resources
Water System RB Series BB	5.00%	12/01/23	250,000	255,275
California Educational Facilities Auth
RB (Standford Univ) Series V2	2.25%	04/01/51 (b)	300,000	187,878
California Infrastructure & Economic Development Bank
RB (UCSF 2130 3rd St) Series 2017	5.00%	05/15/42 (b)	100,000	106,815
California Public Works Board
Lease RB Series 2021B	4.00%	05/01/46 (b)	100,000	96,259
Lease RB Series 2021C	5.00%	11/01/46 (b)	200,000	217,845
California State Univ
RB Series 2016A	5.00%	11/01/30 (b)	200,000	216,061
Coast CCD
GO Bonds Series 2006B	0.00%	08/01/30 (c)(d)	385,000	303,677
East Bay Municipal Utility District
Water System Refunding RB Series 2014B	5.00%	06/01/25	235,000	248,799
Foothill Eastern Transportation Corridor Agency
Sr Lien RB Series 1995A	0.00%	01/01/24 (a)(d)	100,000	97,224
Golden State Tobacco Securitization Corp
Enhanced Tobacco Settlement Bonds Series 2013A	5.00%	06/01/30 (a)(b)	250,000	252,180
Grossmont-Cuyamaca CCD
GO Bonds Series 2018B	4.00%	08/01/47 (b)	130,000	125,676
Los Angeles
Sub Refunding RB Series 2018B	5.00%	06/01/25	215,000	227,676
Los Angeles Dept of Airports
Sr RB Series 2020D	4.00%	05/15/48 (b)	200,000	195,858
Los Angeles Dept of Water & Power
Power System RB Series 2018B	5.00%	01/01/24 (b)(c)	200,000	204,278
Power System RB Series 2019D	5.00%	07/01/44 (b)	250,000	268,941
Water System RB Series 2020A	5.00%	07/01/50 (b)	100,000	107,013
Water System Refunding RB Series 2022C	5.00%	07/01/41 (b)	245,000	274,427
Los Angeles USD
GO Refunding Bonds Series 2014C	5.00%	07/01/25 (b)	250,000	258,329
GO Refunding Bonds Series 2017A	5.00%	07/01/25	200,000	212,122
Oakland USD
GO Bonds Series 2021A	4.00%	08/01/46 (b)(c)	195,000	189,144
Orange County Transportation Auth
BAN 2021	5.00%	10/15/24 (a)	210,000	218,280
Riverside County Public Finance Auth
Lease RB Series 2015	5.25%	11/01/45 (a)(b)	100,000	107,418
San Diego Assoc of Governments
Capital Grant Receipts RB (Mid Coast Corridor Transit) Series 2019A	5.00%	11/15/25 (b)	230,000	239,744
San Diego CCD
GO Refunding Bonds Series 2016	5.00%	08/01/29 (a)(b)	145,000	157,250
San Diego Cnty Regional Airport Auth
Sub Airport RB Series 2021A	4.00%	07/01/46 (b)	115,000	107,192

See financial notes

Schwab Municipal Bond ETF | Annual Report12

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
San Diego Cnty Regional Transportation Commission
Sales Tax RB Series 2016A	5.00%	04/01/48 (b)	200,000	209,031
San Diego Public Facilities Financing Auth
Water Sub RB Series 2018A	5.00%	08/01/43 (b)	200,000	215,616
San Diego USD
GO Bonds Series 2016I	0.00%	07/01/36 (b)(d)	175,000	101,827
GO Bonds Series 2020M2	4.00%	07/01/50 (b)	100,000	94,291
San Francisco Public Utilities Commission
Water RB Series 2020A	5.00%	11/01/50 (b)	295,000	316,051
Water Refunding RB Series 2016A	5.00%	11/01/26	350,000	381,784
Water Refunding RB Series 2016A	5.00%	11/01/35 (b)	100,000	107,061
Santa Monica CCD
GO Bonds Series 2018A	4.00%	08/01/47 (b)	250,000	241,848
Southern California Metropolitan Water District
RB Series 2021A	5.00%	10/01/46 (b)	100,000	110,429
Sub Water Refunding RB Series 2017A	2.50%	07/01/26	250,000	249,227
Twin Rivers USD
GO Bonds Series 2016	0.00%	08/01/41 (b)(c)(d)	390,000	166,908
Univ of California
Limited Project RB Series 2018O	5.00%	05/15/58 (b)	245,000	257,747
RB Series 2018O	4.00%	05/15/48 (b)	155,000	149,822
RB Series 2020 BE	4.00%	05/15/47 (b)	250,000	244,145
				11,852,191
COLORADO 0.6%
Colorado
COP Series 2020A	4.00%	12/15/35 (b)	150,000	154,065
Weld Cnty SD #RE2
GO Bonds Series 2016	5.00%	12/01/44 (b)(c)	220,000	236,907
				390,972
CONNECTICUT 2.2%
Connecticut
GO Bonds Series 2016E	3.00%	10/15/32 (b)	200,000	192,374
GO Bonds Series 2020A	5.00%	01/15/25	100,000	104,554
GO Bonds Series 2020A	5.00%	01/15/26	100,000	106,828
Special Tax Obligation Bonds Series 2020A	5.00%	05/01/24	200,000	205,825
Transportation RB Series 2016A	4.00%	09/01/35 (b)	170,000	172,359
Transportation RB Series 2020A	5.00%	05/01/27	500,000	547,737
				1,329,677
DISTRICT OF COLUMBIA 1.8%
District of Columbia
GO Bonds Series 2019A	5.00%	10/15/44 (b)	240,000	256,811
Income Tax Secured RB Series 2019A	5.00%	03/01/30 (b)	220,000	252,303
Income Tax Secured RB Series 2019A	4.00%	03/01/44 (b)	200,000	195,040

See financial notes

13Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Washington Metropolitan Transit Auth
RB Series 2020A	5.00%	07/15/45 (b)	125,000	133,398
RB Series 2021A	5.00%	07/15/46 (b)	280,000	300,279
				1,137,831
FLORIDA 2.1%
Central Florida Expressway Auth
Sr Lien Refunding RB Series 2017	5.00%	07/01/42 (b)	125,000	130,558
Florida State Board of Education
Lottery Refunding RB Series 2017A	5.00%	07/01/27	165,000	182,059
Public Education Refunding Bonds Series 2013A	5.00%	06/01/23	250,000	252,303
Fort Myers
Utility System Refunding RB Series 2019A	4.00%	10/01/44 (b)	100,000	96,852
Fort Pierce Utilities Authority
Utilities Refunding RB Series 2022A	4.00%	10/01/52 (b)	125,000	115,682
Hillsborough Cnty Aviation Auth
RB Series 2018F	5.00%	10/01/43 (b)	115,000	120,913
Miami-Dade Cnty
RB Series 2017B	5.00%	10/01/33 (b)	100,000	105,065
Refunding RB Series 2009A	6.88%	10/01/34 (b)(c)	240,000	297,882
				1,301,314
GEORGIA 1.8%
Atlanta
Water & Wastewater Refunding RB Series 2018B	5.00%	11/01/43 (b)	100,000	105,610
Fulton Cnty
Water & Sewerage RB Series 2020A	2.25%	01/01/43 (b)	150,000	101,999
Georgia
GO Bonds Series 2017A	5.00%	02/01/31 (b)	200,000	218,988
GO Bonds Series 2021A	4.00%	07/01/38 (b)	200,000	205,527
Gwinnett Cnty SD
Sales Tax GO Bonds Series 2022B	5.00%	08/01/27	80,000	88,449
Metropolitan Atlanta Rapid Transit Auth
Sales Tax Refunding RB Series 2017C	3.25%	07/01/37 (b)	100,000	91,096
Private Colleges & Universities Auth
RB (Emory Univ) Series 2020B	5.00%	09/01/25	250,000	265,742
				1,077,411
HAWAII 0.4%
Hawaii
GO Bonds Series 2017FK	4.00%	05/01/31 (b)	250,000	261,236
ILLINOIS 4.7%
Chicago
GO Bonds Series 1999	0.00%	01/01/33 (c)(d)	400,000	259,772
Chicago O’Hare International Airport
O’Hare General Airport Sr Lien Refunding RB Series 2015B	5.00%	01/01/26 (b)	150,000	156,675
Cook Cnty
Sales Tax RB Series 2021A	4.00%	11/15/41 (b)	325,000	299,988

See financial notes

Schwab Municipal Bond ETF | Annual Report14

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Illinois
GO Bonds Series 2013	5.50%	07/01/38 (b)	110,000	110,258
GO Bonds Series 2014	5.25%	02/01/29 (b)	200,000	201,842
GO Bonds Series 2017C	5.00%	11/01/29 (b)	400,000	409,957
GO Bonds Series 2017D	5.00%	11/01/25	95,000	97,407
GO Refunding Bonds Series 2016	5.00%	02/01/25	150,000	153,104
Illinois Municipal Electric Agency
Power System Refunding RB Series 2015A	4.00%	02/01/34 (b)	300,000	302,581
Illinois Toll Highway Auth
Sr RB Series 2020A	5.00%	01/01/45 (b)	200,000	210,915
Toll Sr RB Series 2021A	5.00%	01/01/46 (b)	250,000	264,469
Metropolitan Pier & Exposition Auth
RB Series 2002A	0.00%	06/15/34 (c)(d)	325,000	195,398
Refunding Bonds (McCormick Place Expansion) Series 2020A	5.00%	06/15/50 (b)	200,000	195,394
				2,857,760
INDIANA 0.7%
Indiana Finance Auth
Hospital RB (Community Health Network) Series 2012A	5.00%	05/01/42 (a)(b)	100,000	100,661
State Revolving Fund Refunding Bonds Series 2015B	5.00%	02/01/24	90,000	92,114
Indianapolis Local Public Improvement Bond Bank
RB Series 1999E	0.00%	02/01/28 (c)(d)	250,000	211,814
				404,589
IOWA 0.4%
Iowa Higher Education Loan Auth
RB (Grinnell College) Series 2017	5.00%	12/01/46 (b)	220,000	231,247
KANSAS 0.2%
Kansas Department of Transportation
Highway RB Series 2015B	5.00%	09/01/25	125,000	132,639
KENTUCKY 0.7%
Kentucky Municipal Power Agency
Power System Refunding RB Series 2015A	4.00%	09/01/39 (b)(c)	100,000	95,871
Kentucky State Property & Buildings Commission
Refunding RB Series B	5.00%	11/01/25	215,000	226,901
Kentucky Turnpike Auth
Economic Development Road Refunding RB Series 2017B	5.00%	07/01/25	115,000	120,916
				443,688
LOUISIANA 0.4%
Louisiana Public Facilities Auth
Refunding RB (Tulane Univ) Series 2020A	5.00%	04/01/45 (b)	250,000	259,839

See financial notes

15Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
MARYLAND 3.1%
Maryland
GO Bonds 2nd Series 2017A	5.00%	08/01/27	265,000	292,865
ULT GO Bonds Series 2017	5.00%	03/15/29 (b)	200,000	219,317
ULT GO Bonds Series 2017B	5.00%	08/01/25	460,000	487,666
Maryland Dept of Transportation
Consolidated Bonds Series 2021A	2.13%	10/01/36 (b)	190,000	148,664
RB Series 2018	5.00%	10/01/26	125,000	135,884
Transportation Bonds Series 2018	5.00%	10/01/28 (b)	85,000	92,241
Maryland Transportation Auth
Transportation Facilities RB Series 2020	4.00%	07/01/50 (b)	250,000	234,106
Prince Georges Cnty
GO Bonds Series 2018A	5.00%	07/15/29 (b)	245,000	275,641
				1,886,384
MASSACHUSETTS 4.7%
Massachusetts
GO Bonds Series 2020E	5.00%	11/01/50 (b)	300,000	320,991
GO Bonds Series 2020D	3.00%	07/01/35 (b)	200,000	183,992
GO Bonds Series 2020E	5.00%	11/01/45 (b)	250,000	269,264
GO Bonds Series 2021A	3.00%	03/01/36 (b)	250,000	227,191
GO Bonds Series 2021D	5.00%	09/01/50 (b)	250,000	269,061
GO Refunding Bonds Series 2016C	5.00%	10/01/24	190,000	197,529
Massachusetts Bay Transportation Auth
RB Series 2021	4.00%	05/01/25	220,000	226,906
Sr Sales Tax Bonds Series 2005A	5.00%	07/01/25	145,000	153,356
Massachusetts Development Finance Agency
RB (Emerson College) Series 2016A	5.00%	01/01/47 (b)	200,000	200,041
RB (Harvard Univ) Series 2016A	5.00%	07/15/26	275,000	297,672
Massachusetts School Building Auth
Sub Sales Tax Bonds Series 2018A	5.25%	02/15/48 (b)	200,000	212,568
Massachusetts Transportation Fund
RB Series 2022B	5.00%	06/01/52 (b)	300,000	324,438
				2,883,009
MICHIGAN 1.0%
Michigan Building Auth
Refunding RB Series 2015I	5.00%	04/15/33 (b)	150,000	157,273
Michigan Finance Auth
RB (Public Lighting Auth) Series 2014B	5.00%	07/01/39 (b)	200,000	200,466
Wayne Cnty Airport Auth
Airport RB Series 2021A	5.00%	12/01/46 (b)	220,000	229,802
				587,541
MINNESOTA 0.2%
Minneapolis Metropolitan Council
ULT GO Series 2021C	5.00%	12/01/26	115,000	125,435

See financial notes

Schwab Municipal Bond ETF | Annual Report16

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
NEVADA 0.9%
Clark Cnty
GO Bonds Series 2018A	5.00%	06/01/43 (b)	165,000	175,106
Clark Cnty SD
GO Refunding Bonds Series 2017A	5.00%	06/15/25	200,000	210,676
LT GO Refunding Bonds Series 2016D	5.00%	06/15/23	175,000	176,515
				562,297
NEW JERSEY 4.6%
Hudson Cnty Improvement Auth
Lease RB (Hudson Cnty Courthouse) Series 2020	4.00%	10/01/51 (b)	150,000	140,076
New Jersey
GO Bonds Series 2020A	5.00%	06/01/28	250,000	278,030
ULT GO Series 2020A	5.00%	06/01/29	250,000	282,692
New Jersey Economic Development Auth
RB Series 2016AAA	5.00%	06/15/41 (b)	190,000	193,110
State Lease RB Series 2018A	5.00%	06/15/47 (b)	250,000	252,675
New Jersey Transportation Trust Fund Auth
RB Series 2013AA	5.00%	06/15/36 (b)	220,000	220,789
RB Series 2018A	5.00%	06/15/31 (b)	225,000	236,333
RB Series 2021A	5.00%	06/15/31	100,000	110,751
Revenue Notes Series 2016A1	5.00%	06/15/23	250,000	251,897
Transportation Bonds Series 2019BB	5.00%	06/15/50 (b)	145,000	146,399
Transportation RB Series 2020AA	4.00%	06/15/50 (b)	100,000	84,236
New Jersey Turnpike Auth
RB Series 2015E	5.00%	01/01/45 (b)	150,000	152,961
Refunding RB Series 2005D3	5.25%	01/01/26 (c)	300,000	320,595
Turnpike RB Series 2019A	4.00%	01/01/48 (b)	155,000	147,267
				2,817,811
NEW MEXICO 0.3%
New Mexico Finance Auth
RB Series 2018A	5.00%	06/15/24	155,000	159,795
NEW YORK 22.0%
Hudson Yards Infrastructure
2nd Indenture RB Fiscal 2017 Series A	4.00%	02/15/36 (b)	290,000	291,766
Long Island Power Auth
Electric System RB Series 2016B	5.00%	09/01/41 (b)	190,000	197,748
Electric System RB Series 2018	5.00%	09/01/38 (b)	120,000	128,278
Metropolitan Transportation Auth
Dedicated Tax Fund Refunding Bonds Series 2012A	0.00%	11/15/30 (d)	150,000	111,749
RB Series 2012E	4.00%	11/15/38 (b)	375,000	375,073
RB Series 2017B	5.00%	11/15/25	100,000	103,663
RB Series 2017D	4.00%	11/15/42 (b)	300,000	260,490
RB Series 2020A1	4.00%	11/15/52 (b)	100,000	80,482
New York City
GO Bonds Fiscal 2014 Series D1	5.00%	08/01/30 (b)	200,000	202,064
GO Bonds Fiscal 2019 Series A	5.00%	08/01/26	160,000	173,062

See financial notes

17Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
GO Bonds Fiscal 2020 Series C1	5.00%	08/01/30	500,000	576,185
GO Bonds Fiscal 2020 Series D1	4.00%	03/01/50 (b)	100,000	92,741
GO Bonds Fiscal 2021 Series F	3.00%	03/01/51 (b)	200,000	151,672
ULT GO Series 2015F1	3.50%	06/01/33 (b)	185,000	186,483
ULT GO Series 2018F1	5.00%	04/01/43 (b)	125,000	131,588
New York City Municipal Water Finance Auth
Water & Sewer 2nd Resolution RB Fiscal 2017 Series CC1	4.00%	06/15/46 (b)	200,000	188,094
Water & Sewer 2nd Resolution RB Fiscal 2020 Series AA	4.00%	06/15/40 (b)	500,000	485,563
Water & Sewer System 2nd Resolution RB Fiscal 2013 Series CC	3.75%	06/15/47 (b)	100,000	89,002
Water & Sewer System 2nd Resolution RB Fiscal 2021 Series AA1	5.00%	06/15/29	300,000	343,255
Water & Sewer System RB Fiscal 2018 Series CC1	4.00%	06/15/48 (b)	150,000	139,728
New York City Transitional Finance Auth
Building Aid RB Fiscal 2015 Series S1	5.00%	07/15/40 (b)	200,000	204,920
Building Aid RB Fiscal 2016 Series S1	4.00%	07/15/40 (b)	100,000	96,863
Future Tax Secured Sub Bonds Fiscal 2015 Series B1	5.00%	08/01/32 (b)	175,000	180,390
Future Tax Secured Sub Bonds Fiscal 2016 Series E1	3.00%	02/01/33 (b)	235,000	226,934
Future Tax Secured Sub Bonds Fiscal 2021 Series C1	4.00%	05/01/42 (b)	100,000	95,315
Future Tax Secured Sub Bonds Fiscal 2021 Series F1	5.00%	11/01/27	100,000	110,759
Future Tax Secured Sub Bonds Fiscal 2021 Series F1	5.00%	11/01/29	250,000	286,576
Future Tax Secured Sub Bonds Fiscal 2022 Series A1	5.00%	11/01/28	215,000	242,403
Future Tax Secured Sub Bonds Fiscal 2022 Series B	4.00%	08/01/48 (b)	150,000	137,978
Future Tax Secured Sub Bonds Fiscal 2022 Series B1	3.00%	08/01/48 (b)	200,000	146,764
RB Fiscal 2018 Series S1	4.00%	07/15/36 (b)	150,000	150,811
RB Fiscal 2019 Series S2A	5.00%	07/15/35 (b)(c)	175,000	189,580
RB Series C1	4.00%	05/01/45 (b)	285,000	266,597
New York Power Auth
RB Series 2020A	4.00%	11/15/50 (b)	100,000	92,086
New York State Dormitory Auth
RB Series 2015A	5.00%	07/01/35 (b)	200,000	209,404
RB Series 2019A	4.00%	07/01/44 (b)	100,000	93,814
Refunding RB (Cornell Univ) Series 2020A	4.00%	07/01/50 (b)	275,000	260,457
Sales Tax RB Series 2018E	5.00%	03/15/48 (b)	250,000	261,931
State Personal Income Tax RB Series 2013A	5.00%	02/15/43 (a)(b)	400,000	400,947
State Personal Income Tax RB Series 2016A	5.00%	02/15/33 (b)	200,000	213,358
State Personal Income Tax RB Series 2016A	5.00%	02/15/36 (b)	100,000	105,277
State Personal Income Tax RB Series 2017B	5.00%	02/15/28 (b)	310,000	340,685
State Personal Income Tax RB Series 2019D	5.00%	02/15/30	200,000	230,361
State Personal Income Tax RB Series 2019D	5.00%	02/15/48 (b)	215,000	226,117
State Personal Income Tax RB Series 2020A	4.00%	03/15/36 (b)	160,000	160,797
State Personal Income Tax Refunding RB Series 2016D	5.00%	02/15/28 (b)	270,000	291,008
State Sales Tax RB Series 2018E	5.00%	03/15/41 (b)	400,000	423,484
New York State Thruway Auth
Jr GO RB Series 2019B	4.00%	01/01/39 (b)	175,000	169,445
Jr Obligation RB Series 2019B	5.00%	01/01/30	135,000	152,972
State Personal Income Tax RB Series 2021A1	5.00%	03/15/35 (b)	435,000	488,354
State Personal Income Tax RB Series 2021A1	4.00%	03/15/41 (b)	250,000	239,318
State Personal Income Tax RB Series 2022A	5.00%	03/15/30	200,000	230,252
New York State Urban Development Corp
State Personal Income Tax RB Series 2017A	5.00%	03/15/27 (a)	155,000	169,521

See financial notes

Schwab Municipal Bond ETF | Annual Report18

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Port Auth of New York & New Jersey
Consolidated Bonds 200th Series	5.25%	10/15/57 (b)	200,000	208,660
Sales Tax Asset Receivable Corp
RB Fiscal 2015 Series A	5.00%	10/15/31 (a)(b)	390,000	405,170
Suffolk Cnty Water Auth
Water System Refunding RB Series 2015	3.00%	06/01/32 (b)	300,000	298,903
Triborough Bridge & Tunnel Auth
General RB Series 2022A	5.00%	11/15/47 (b)	290,000	310,400
Sr Lien RB Series 2021C3	4.00%	05/15/51 (b)	225,000	206,476
Sub Refunding RB Series 2013A	0.00%	11/15/31 (d)	555,000	396,028
Utility Debt Securitization Auth
Restructuring Bonds Series 2015	5.00%	12/15/33 (b)	250,000	265,574
				13,495,375
NORTH CAROLINA 1.4%
North Carolina
GO Refunding Bonds Series 2017A	5.00%	06/01/23	150,000	151,265
Refunding RB Series 2014B	5.00%	06/01/24	150,000	154,691
North Carolina Turnpike Auth
BAN 2020	5.00%	02/01/24	250,000	254,671
RB Series 2019	0.00%	01/01/41 (b)(d)	195,000	86,923
Toll RB (Monroe Expressway) Series 2016A	5.00%	07/01/54 (b)	200,000	198,610
				846,160
OHIO 0.8%
American Municipal Power Ohio
RB (Greenup Hydroelectric) Series 2016A	5.00%	02/15/41 (b)	275,000	281,985
Ohio Higher Educational Facility Commission
Refunding RB (Case Western Reserve Univ) Series 2016	5.00%	12/01/40 (b)	200,000	209,481
				491,466
OKLAHOMA 0.3%
Canadian Cnty Educational Facilities Auth
Lease RB (Mustang Public Schools) Series 2017	3.00%	09/01/29 (b)	200,000	198,536
OREGON 1.9%
Beaverton SD #48J
GO Bonds Series 2014	5.00%	06/15/28 (a)(b)(c)	100,000	103,170
GO Bonds Series 2014B	5.00%	06/15/31 (a)(b)(c)	250,000	257,924
GO Bonds Series 2022B	5.00%	06/15/52 (b)(c)	250,000	273,948
Oregon Dept of Transportation
Highway Sub Lien Refunding RB Series 2019A	5.00%	11/15/36 (b)	200,000	222,236
Highway Tax Sub Lien RB Series 2020A	5.00%	11/15/40 (b)	290,000	319,549
				1,176,827
PENNSYLVANIA 3.2%
Delaware River Port Auth
RB Series 2013	5.00%	01/01/31 (a)(b)	120,000	122,423
Refunding RB Series 2018B	5.00%	01/01/23	200,000	200,000

See financial notes

19Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Pennsylvania
GO Bonds 2nd Series 2016	3.00%	09/15/36 (b)	125,000	111,517
GO Refunding Bonds Series 2017	5.00%	01/01/26	120,000	127,916
GO Refunding Bonds Series 2017	5.00%	01/01/27	300,000	325,399
Pennsylvania State Turnpike Commission
RB Series 2021A	5.00%	12/01/46 (b)	125,000	132,365
Sub RB Series 2021B	5.00%	12/01/46 (b)	200,000	211,023
Sub Refunding RB 3rd Series 2016A	5.00%	12/01/30 (b)	125,000	132,687
Philadelphia
Gas RB 16th Series A	5.00%	08/01/50 (b)(c)	95,000	100,447
Philadelphia IDA
RB (Thomas Jefferson Univ) Series 2017A	5.00%	09/01/47 (b)	200,000	200,626
Philadelphia SD
GO Bonds Series 2018B	4.00%	09/01/43 (b)(c)	195,000	184,805
GO Refunding Bonds Series 2016F	5.00%	09/01/28 (b)(c)	110,000	117,195
				1,966,403
SOUTH CAROLINA 0.7%
South Carolina Public Service Auth
Refunding RB Series 2016A	5.00%	12/01/29 (b)	85,000	89,442
Refunding RB Series 2022A	4.00%	12/01/52 (b)	250,000	213,051
South Carolina Transportation Infrastructure Bank
Refunding RB Series 2021B	5.00%	10/01/25	105,000	111,485
				413,978
TENNESSEE 0.7%
Metro Government of Nashville & Davidson Cnty
GO Bonds Series 2021C	3.00%	01/01/34 (b)	125,000	117,978
RB Series 2013	4.00%	07/01/43 (a)(b)	300,000	301,609
				419,587
TEXAS 9.5%
Bexar Cnty
Tax Refunding Bonds Series 2017	5.00%	06/15/43 (a)(b)	150,000	161,884
Dallas Area Rapid Transit
Sr Lien Sales Tax Refunding RB Series 2007	5.25%	12/01/30 (b)(c)	315,000	371,876
Sr Lien Sales Tax Refunding RB Series 2021B	4.00%	12/01/51 (b)	275,000	258,489
Dallas-Fort Worth International Airport
Jt Refunding RB Series 2020A	5.00%	11/01/24	200,000	207,621
Refunding RB Series 2020A	5.00%	11/01/27	150,000	165,065
El Paso
Water & Sewer Refunding RB Series 2022A	4.00%	03/01/44 (b)	200,000	190,976
Grand Parkway Transportation Corp
1st Tier Refunding RB Series 2020C	4.00%	10/01/45 (b)	250,000	227,706
Hidalgo Cnty
GO Bonds Series 2018A	4.00%	08/15/43 (b)	200,000	194,914
Houston
Utility System 1st Lien Refunding RB Series 2014C	5.00%	05/15/24	270,000	278,190
Utility System 1st Lien Refunding RB Series 2019B	5.00%	11/15/49 (b)	100,000	105,843

See financial notes

Schwab Municipal Bond ETF | Annual Report20

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Leander ISD
ULT GO Refunding Bonds Series 2016A	0.00%	08/16/42 (b)(c)(d)	350,000	148,436
North Texas Tollway Auth
1st Tier Refunding RB Series 2016A	5.00%	01/01/27 (b)	275,000	280,336
1st Tier System Revenue & Refunding Bonds Series 2017A	5.00%	01/01/43 (b)	145,000	150,784
Refunding RB Series 2008I	6.50%	01/01/43 (a)(b)	295,000	315,805
Refunding RB Series 2014B	5.00%	01/01/31 (b)	230,000	233,920
Refunding RB Series 2015A	4.00%	01/01/38 (b)	150,000	148,760
San Antonio
Electric & Gas System Refunding RB Series 2020	5.00%	02/01/49 (b)	125,000	131,479
Electric & Gas Systems Refunding RB Series 2012	5.25%	02/01/25 (b)	295,000	309,971
Texas
GO Refunding Bonds Series 2014	5.00%	10/01/26 (a)(b)	150,000	154,035
GO Refunding Bonds Series 2014	5.00%	10/01/28 (a)(b)	150,000	154,035
GO Refunding Bonds Series 2014A	5.00%	10/01/44 (a)(b)	420,000	436,351
GO Refunding Bonds Series 2017A	5.00%	10/01/33 (b)	100,000	109,296
Texas Transportation Commission
State Highway Fund 1st Tier Refunding RB Series 2015	5.00%	10/01/24	160,000	166,479
Texas Water Dev Brd
State Water Fund RB Series 2018A	5.00%	10/15/43 (b)	100,000	105,844
State Water Implementation Fund RB Series 2019A	4.00%	10/15/49 (b)	250,000	239,020
Trinity River Auth
Refunding RB Series 2020	3.00%	08/01/31 (b)	115,000	114,719
Univ of Texas
Financing System RB Series 2020A	5.00%	08/15/30	150,000	174,862
Ysleta ISD
ULT GO Bonds Series 2020	4.00%	08/15/50 (b)(c)	300,000	283,203
				5,819,899
VIRGINIA 1.0%
Chesapeake Bay Bridge & Tunnel District
1st Tier RB Series 2016	5.00%	07/01/46 (b)	150,000	150,429
Univ of Virginia
General RB Series 2019B	5.00%	09/01/49 (b)	250,000	272,141
Virginia College Building Auth
Educational Facilities Refunding RB Series 2017E	5.00%	02/01/29 (b)	200,000	221,610
				644,180
WASHINGTON 3.7%
Central Puget Sound Regional Transit Auth
Sales & Motor Vehicle Tax Refunding Bonds Series 2021S1	5.00%	11/01/27	130,000	143,986
Sales & Motor Vehicle Tax Refunding Bonds Series 2021S1	5.00%	11/01/36 (b)	250,000	284,549
Energy Northwest
Electric Refunding RB Series 2018B	5.00%	07/01/23	330,000	333,304
Electric Refunding RB Series 2021A	4.00%	07/01/42 (b)	100,000	96,091
King Cnty
GO Refunding Bonds Series 2021A	4.00%	01/01/27	330,000	346,820
Northshore SD #417
ULT GO Refunding Bonds Series 2022	5.00%	12/01/39 (b)(c)	110,000	123,726

See financial notes

21Schwab Municipal Bond ETF | Annual Report

Schwab Municipal Bond ETF

Portfolio Holdings as of December 31, 2022 (continued)

ISSUER TYPE OF SECURITY, SERIES	RATE	MATURITY	FACE AMOUNT ($)	VALUE ($)
Washington
GO Bonds Series 2020C	5.00%	02/01/40 (b)	160,000	173,299
GO Bonds Series 2023A	5.00%	08/01/47 (b)	200,000	217,197
GO Refunding Bonds Series R2013C	4.00%	07/01/26 (b)	400,000	402,828
GO Refunding Bonds Series R2018C	5.00%	08/01/30 (b)	40,000	43,646
Motor Vehicle Fuel Tax GO Refunding Bonds Series R2022D	4.00%	07/01/28	130,000	139,229
				2,304,675
WEST VIRGINIA 0.3%
W Virginia Parkway Auth
Sr Lien RB Series 2021	5.00%	06/01/47 (b)	190,000	200,886
Total Municipal Securities (Cost $59,520,205)				60,382,711
Total Investments in Securities (Cost $59,520,205)				60,382,711

(a)	Refunded bond.
(b)	The effective maturity may be shorter than the final maturity shown because the security is subject to a put, demand or call feature.
(c)	Credit-enhanced or liquidity-enhanced.
(d)	Zero coupon bond.

BAN —	Bond anticipation note
CCD —	Community college district
COP —	Certificate of participation
GO —	General obligation
IDA —	Industrial development agency/authority
ISD —	Independent school district
LT —	Limited tax
RB —	Revenue bond
SD —	School district
ULT —	Unlimited tax
USD —	Unified school district

The following is a summary of the inputs used to value the fund’s investments as of December 31, 2022 (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
Assets
Municipal Securities1	$—	$60,382,711	$—	$60,382,711
Total	$—	$60,382,711	$—	$60,382,711

1	As categorized in the Portfolio Holdings.

See financial notes

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Schwab Municipal Bond ETF

Financial Notes

1. Business Structure of the Fund:

The Schwab Municipal Bond ETF 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 fund discussed in this report, which is highlighted:

SCHWAB STRATEGIC TRUST (ORGANIZED JANUARY 27, 2009)
Schwab Municipal Bond ETF	Schwab Short-Term U.S. Treasury ETF
Schwab U.S. Broad Market ETF	Schwab Intermediate-Term U.S. Treasury ETF
Schwab 1000 Index® ETF	Schwab Long-Term U.S. Treasury ETF
Schwab U.S. Large-Cap ETF	Schwab U.S. Aggregate Bond ETF
Schwab U.S. Large-Cap Growth ETF	Schwab 1-5 Year Corporate Bond ETF
Schwab U.S. Large-Cap Value ETF	Schwab 5-10 Year Corporate Bond ETF
Schwab U.S. Mid-Cap ETF	Schwab Fundamental U.S. Broad Market Index ETF
Schwab U.S. Small-Cap ETF	Schwab Fundamental U.S. Large Company Index ETF
Schwab U.S. Dividend Equity ETF	Schwab Fundamental U.S. Small Company Index ETF
Schwab International Dividend Equity ETF	Schwab Fundamental International Large Company Index ETF
Schwab International Equity ETF	Schwab Fundamental International Small Company Index ETF
Schwab International Small-Cap Equity ETF	Schwab Fundamental Emerging Markets Large Company Index ETF
Schwab Emerging Markets Equity ETF	Schwab Ariel ESG ETF
Schwab U.S. REIT ETF	Schwab Crypto Thematic ETF
Schwab U.S. TIPS ETF

The fund issues and redeems shares at its net asset value per share (NAV) only in large blocks of shares (Creation Units). These transactions are usually in exchange for a basket of securities and/or an amount of cash. As a practical matter, only institutional investors who have entered into an authorized participant agreement purchase or redeem Creation Units. Except when aggregated in Creation Units, shares of the fund are not redeemable securities.

Individual shares of the fund 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). A chart showing the frequency at which the fund’s daily closing market price was at a discount or premium to the fund’s NAV can be found at www.schwabassetmanagement.com.

Schwab Municipal Bond ETF commenced operations on October 12, 2022.

The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the 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 fund uses in its preparation of financial statements. The fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 Financial Services — Investment Companies. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (GAAP).

(a) Security Valuation

Pursuant to Rule 2a-5 under the 1940 Act, the Board of Trustees (the Board) has designated authority to a Valuation Designee, the fund’s investment adviser, to make fair valuation determinations under adopted procedures, subject to Board oversight. The investment adviser has formed a Pricing Committee to administer the pricing and valuation of portfolio securities and other assets and liabilities and to ensure that prices used for internal purposes or provided by third parties reasonably reflect fair value. The Valuation Designee may utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

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Schwab Municipal Bond ETF

Financial Notes (continued)

2. Significant Accounting Policies (continued):

Securities held in the fund’s portfolio are valued every business day. The following valuation policies and procedures are used by the Valuation Designee to value various types of securities:

• Bonds and notes: Fixed income investments are generally valued using an evaluated price at the mid-point of the bid/ask spread provided by an approved, independent pricing service (mid-price). To determine the evaluated mid-price, a pricing service may use a variety of techniques and inputs. Techniques may include, but are not limited to, spread models that calculate an investment-specific price relative to a benchmark or yield curve models that establish a price based on yields of comparable bonds along a range of maturities. Inputs differ by valuation approach and technique, as appropriate, and examples of inputs may include, but are not limited to, interest rates, market conditions, comparable bonds, market trades, projected cash flows, credit reviews and issuer news.

• Short-term securities (60 days or less to maturity): Securities with remaining maturities of 60 days or less are generally valued at an evaluated price; however, such securities may be valued at their amortized cost if it approximates the security’s fair value.

• Securities for which no quoted value is available: The Valuation Designee has adopted procedures to fair value the fund’s securities when market prices are not “readily available” or are unreliable. For example, a security may be fair valued 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. Fair value determinations are made in good faith in accordance with adopted valuation procedures. The Valuation Designee considers a number of factors, including unobservable market inputs, when arriving at fair value. The Valuation Designee may employ methods 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. Due to the subjective and variable nature of fair value pricing, there can be no assurance that the fund could obtain the fair value assigned to the security upon the sale of such security.

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the fund discloses the fair value of its investments in a hierarchy that prioritizes the significant inputs to valuation methods 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 it is determined 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 Valuation Designee’s 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, mutual funds and exchange-traded funds.

• 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 Valuation Designee’s 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 readily available for these securities, one or more valuation methods are used for which sufficient and reliable data is available. The inputs used 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 in the absence of market information. Assumptions used due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations.

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Schwab Municipal Bond ETF

Financial Notes (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 fund’s investments as of December 31, 2022 are disclosed in the Portfolio Holdings.

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

Delayed-Delivery Transactions and When-Issued Securities: The fund may transact in securities on a delayed-delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed-delivery or when-issued basis are identified as such in the fund’s Portfolio Holdings, if any. The fund may receive compensation for interest forgone in the purchase of a delayed-delivery or when-issued security. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors. The fund complies with Rule 18f-4 under the 1940 Act, the fund operates as a limited derivatives user, with respect to purchase commitments held within the fund, portfolio securities are no longer required to be segregated as collateral with a value at least equal to the amount of a purchase commitment and the fund’s exposure is monitored under a derivatives risk management program.

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.

(d) Investment Income:

Interest income is recorded as it accrues. If the fund buys a debt security at a discount (less than face value) or a premium (more than face value), it amortizes premiums and accretes discounts from the purchase settlement date up to maturity. The fund then increases (in the case of discounts) or reduces (in the case of premiums) the income it records from the security. Certain securities may be callable (meaning that the issuer has the option to pay it off before its maturity date). The fund amortizes the premium and accretes the discount on each callable security to the security’s maturity date, except when the purchase price is higher than the call price at the security’s call date (in which case the premium is amortized to the call date).

(e) Expenses:

Pursuant to the Amended and Restated Advisory Agreement (Advisory Agreement) between the investment adviser and the trust, the investment adviser will pay the operating expenses of the fund, excluding taxes, any brokerage expenses, and extraordinary or non-routine expenses. Taxes, any brokerage expenses and extraordinary or non-routine expenses that are specific to the fund are charged directly to the fund. The Advisory Agreement excludes paying acquired fund fees and expenses, which are indirect expenses incurred by a fund through its investments in underlying funds.

(f) Distributions to Shareholders:

The fund makes distributions from net investment income, if any, monthly and from net realized capital gains, if any, once a year. To receive a distribution, you must be a registered shareholder on the record date. Distributions are paid to shareholders on the payable date.

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

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Financial Notes (continued)

2. Significant Accounting Policies (continued):

(i) Indemnification:

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

(j) Regulatory Update:

Effective January 24, 2023, the SEC adopted rule and form amendments to require mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information deemed important for retail investors to assess and monitor their fund investments. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these rule and form amendment changes on the content of the current shareholder report and the newly created annual and semiannual streamlined shareholder reports.

3. Risk Factors:

Investing in the fund may involve certain risks, as discussed in the fund’s 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. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.

Investment Style Risk. The fund is an index fund. Therefore, the fund follows the securities included in the index during upturns as well as downturns. Because of its indexing strategy, the fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of the fund’s expenses, the fund’s performance may be below that of the index. Errors relating to the index may occur from time to time and may not be identified by the index provider for a period of time. In addition, market disruptions could cause delays in the index’s rebalancing schedule. Such errors and/or market disruptions may result in losses for the fund.

Municipal Securities Risk. The fund primarily invests in municipal securities whose interest, in the opinion of the issuers’ counsel, is exempt from federal income tax and from the AMT. Neither the investment adviser nor the fund guarantees that this opinion is correct, and there is no assurance that the Internal Revenue Service (IRS) will agree with such counsel’s opinion. If certain types of investments the fund buys as tax-exempt are later ruled to be taxable, a portion of the fund’s income could be taxable. To the extent that the fund invests in municipal securities from a given state or geographic region, its share price and performance could be affected by local, state and regional factors, including erosion of the tax base and changes in the economic climate. In addition, many municipal securities are issued to finance specific projects (especially those relating to education, health care, transportation and utilities) and conditions in those sectors can affect the overall municipal market. National governmental actions, such as the elimination of tax-exempt status or the reduction of financial support to municipalities, also could affect performance. Municipalities continue to experience difficulties in the current economic and political environment.

Interest Rate Risk. Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund’s yield will change over time. During periods when interest rates are low, the fund’s yield (and total return) also may be low. Changes in interest rates also may affect the fund’s share price: a rise in interest rates generally causes the fund’s share price to fall. The longer the fund’s portfolio duration, the more sensitive to interest rate movements its share price is likely to be. Also, a change in a central bank’s monetary policy or economic conditions, among other things, may result in a change in interest rates, which could have sudden and unpredictable effects on the markets and significantly impact the value of fixed-income securities in which the fund invests. A sudden or unpredictable rise in interest rates may cause volatility and the value of fixed-income securities to decline.

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Financial Notes (continued)

3. Risk Factors (continued):

Credit Risk. A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations.

Sampling Index Tracking Risk. The fund may not fully replicate the index and may hold securities not included in the index. As a result, the 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 the fund utilizes a sampling approach it may not track the return of the index as well as it would if the fund purchased all of the securities in the index.

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

Portfolio Turnover Risk. The fund may engage in frequent trading of its portfolio securities in connection with its tracking of the index. A higher portfolio turnover rate may result in increased transaction costs, which may lower the fund’s performance. A higher portfolio turnover rate can also result in an increase in taxable capital gains distributions to the fund’s shareholders.

Prepayment and Extension Risk. Certain fixed-income securities are subject to the risk that the securities may be paid off earlier or later than expected, especially during periods of falling or rising interest rates, respectively. Prepayments of obligations could cause the fund to forgo future interest income on the portion of the security’s principal repaid early and force the fund to reinvest that money at the lower prevailing interest rates. Extensions of obligations could cause the fund to exhibit additional volatility and hold securities paying lower-than-market rates of interest. Either case could hurt the fund’s performance.

Derivatives Risk. The fund may invest in derivative instruments. The principal types of derivatives used by the fund are futures contracts. A futures contract is an agreement to buy or sell a financial instrument at a specific price on a specific day. The 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, credit risk and liquidity risk, are discussed elsewhere in this section. The fund’s use of derivatives is also subject to lack of availability risk, valuation risk, correlation risk and tax risk. 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 the fund to realize higher amounts of short-term capital gains. 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. The fund’s use of derivatives also could create a risk of counterparty default under certain transactions, risks that the fund would need to liquidate portfolio positions when it may not be advantageous to do so in order to meet margin and payment obligations, and legal risks relating to insufficient documentation, insufficient capacity or authority of a counterparty, or legality or enforceability of a contract. 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. The 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, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.

Concentration Risk. To the extent that the fund’s or the 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.

Taxable Investments Risk. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal income tax and in securities whose interest is subject to the AMT. These investments could generate taxable income for shareholders.

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.

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Financial Notes (continued)

3. Risk Factors (continued):

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 the 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 the 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 fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or market disruption.

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

4. Affiliates and Affiliated Transactions:

Investment Adviser

Charles Schwab Investment Management, Inc., dba Schwab Asset Management, a wholly owned subsidiary of The Charles Schwab Corporation, serves as the fund’s investment adviser pursuant to the Advisory Agreement between the investment adviser and the trust.

For its advisory services to the fund, the investment adviser is entitled to receive an annual management fee, payable monthly, equal to 0.03% of the fund’s average daily net assets.

Interfund Borrowing and Lending

Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions with other funds in the Fund Complex (for definition refer to the 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. The interfund lending facility is subject to the oversight and periodic review of the Board. The fund had no interfund borrowing or lending activity during the period.

5. Other Service Providers:

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

State Street Bank and Trust Company (State Street) serves as the fund’s transfer agent. As part of these services, the transfer agent maintains records pertaining to the sale, redemption and transfer of the fund’s shares. The transfer agent is also responsible for the order-taking function for the fund’s shares.

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

6. Board of Trustees:

The Board may include people who are officers and/or directors of the investment adviser 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 fund does not pay any interested or non-interested trustees (independent trustees). The independent trustees are paid by the investment adviser. 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 fund was a participant with other funds in the Fund Complex in a joint, syndicated, committed $1 billion line of credit (the Syndicated Credit Facility), maturing on September 28, 2023. Under the terms of the Syndicated Credit Facility, in addition to the investment adviser paying the interest charged on any borrowings by the fund, the investment adviser paid a commitment fee of 0.15% per annum on the fund’s proportionate share of the unused portion of the Syndicated Credit Facility.

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Financial Notes (continued)

7. Borrowing from Banks (continued):

During the period, the fund was a participant with other funds in the Fund Complex, in a joint, unsecured, uncommitted $400 million line of credit (the Uncommitted Credit Facility), with State Street, maturing on September 28, 2023. Under the terms of the Uncommitted Credit Facility, the investment adviser pays interest on the amount the fund borrows. There were no borrowings from either line of credit during the period.

The fund also has access to custodian overdraft facilities. The fund may have utilized the overdraft facility and incurred an interest expense, which is paid by the investment adviser. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.

8. Purchases and Sales/Maturities of Investment Securities:

For the period ended December 31, 2022, purchases and sales/maturities of securities (excluding in-kind transactions and short-term obligations) were as follows:

PURCHASES OF SECURITIES	SALES OF SECURITIES
$34,655,873	$6,192,172

9. In-Kind Transactions:

The consideration for the purchase of Creation Units of the fund often consists of the in-kind deposit of a designated portfolio of fixed-income 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. Such variable charges, if any, are included in Other Capital on the Financial Highlights and on the Statement of Changes in Net Assets. 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, the investment adviser may cover the cost of any transaction fees when believed to be in the best interests of the fund.

The in-kind transactions for the period ended December 31, 2022, were as follows:

IN-KIND PURCHASES OF SECURITIES	IN-KIND SALES OF SECURITIES
$31,140,846	$0

For the period ended December 31, 2022, the fund may realize net capital gains or losses resulting from in-kind redemptions of Creation Units. Because such gains or losses are not taxable to the fund 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 fund’s tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized gains or losses on sales of in-kind redemptions for the period ended December 31, 2022 are disclosed in the fund’s Statement of Operations, if any.

10. Federal Income Taxes:

As of December 31, 2022, the tax basis cost of the fund’s investments and gross unrealized appreciation and depreciation were as follows:

TAX COST	GROSS UNREALIZED APPRECIATION	GROSS UNREALIZED DEPRECIATION	NET UNREALIZED APPRECIATION (DEPRECIATION)
$59,512,867	$1,026,524	($156,680)	$869,844

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Financial Notes (continued)

10. Federal Income Taxes (continued):

As of December 31, 2022, the components of distributable earnings on a tax basis were as follows:

UNDISTRIBUTED TAX-EXEMPT INCOME	NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS	CAPITAL LOSS CARRYFORWARDS AND OTHER LOSSES	TOTAL
$24,279	$869,844	($19,602)	$874,521

The primary difference between book basis and tax basis unrealized appreciation or unrealized depreciation of investments is the differing treatment of amortization of bond discounts and premiums. The tax cost of the fund’s investments, disclosed above, have been adjusted from its book amounts to reflect these unrealized appreciation or depreciation differences, as applicable.

Capital loss carryforwards have no expiration and may be used to offset future realized capital gains for federal income tax purposes. As of December 31, 2022 , the fund had capital loss carryforwards of $19,602.

The tax-basis components of distributions paid during the period ended December 31, 2022 were as follows:

	CURRENT FISCAL YEAR END DISTRIBUTIONS
	TAX-EXEMPT INCOME	ORDINARY INCOME
	$294,373	$272

Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

Permanent book and tax basis differences may result in reclassifications between components of net assets as required. The adjustments have no impact on net assets or the results of operations.

As of December 31, 2022, 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 fund, and has determined that no provision for income tax is required in the fund’s financial statements. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period ended December 31, 2022, the fund did not incur any interest or penalties.

11. 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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Schwab Municipal Bond ETF

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Schwab Strategic Trust and Shareholders of Schwab Municipal Bond ETF

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities, including the portfolio holdings, of Schwab Municipal Bond ETF (the “Fund”), one of the funds constituting Schwab Strategic Trust, as of December 31, 2022, the related statement of operations, the statement of changes in net assets and the financial highlights for the period from October 12, 2022 (commencement of operations) through December 31, 2022, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, as of December 31, 2022, and the results of its operations, the changes in its net assets and the financial highlights for the period from October 12, 2022 (commencement of operations) through December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2022, by correspondence with the custodian and brokers . We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP
Denver, Colorado
February 16, 2023

We have served as the auditor of one or more investment companies in the Schwab Funds Complex since 2020.

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Schwab Municipal Bond ETF

Liquidity Risk Management Program (unaudited)

The fund has adopted and implemented a liquidity risk management program (the “program”) as required by Rule 22e-4 under the Investment Company Act of 1940, as amended. The fund’s Board of Trustees (the “Board”) has designated the fund’s investment adviser, Charles Schwab Investment Management, Inc., dba Schwab Asset Management, as the administrator of the program. Personnel of the investment adviser or its affiliates conduct the day-to-day operation of the program.

Under the program, the investment adviser manages a fund’s liquidity risk, which is the risk that the fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the fund. The program is reasonably designed to assess and manage a fund’s liquidity risk, taking into consideration the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its historical redemption history and shareholder concentrations; and its cash holdings and access to other funding sources, including the custodian overdraft facility and lines of credit. The investment adviser’s process of determining the degree of liquidity of each fund’s investments is supported by third-party liquidity assessment vendors.

The fund’s Board reviewed a report at its meeting held on September 19, 2022 prepared by the investment adviser regarding the operation and effectiveness of the program for the period June 1, 2021, through May 31, 2022, which included individual fund liquidity metrics. No significant liquidity events were noted in the report. In addition, the investment adviser provided its assessment that the program had been operating effectively in managing liquidity risk. The fund commenced operations on October 12, 2022.

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Schwab Municipal Bond ETF

Investment Advisory Agreement Approval

Initial Approval of Investment Advisory Agreement

The Investment Company Act of 1940, as amended (the 1940 Act), requires that the approval 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 agreements or “interested persons” of any party (the Independent Trustees), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.

The Board of Trustees (the Board or the Trustees, as appropriate) called and held a meeting on June 8, 2022, in part, for the purpose of considering whether to appoint Charles Schwab Investment Management, Inc. (dba Schwab Asset Management) (the investment adviser), as investment adviser to the Schwab Municipal Bond ETF (the Fund) under the investment advisory agreement between Schwab Strategic Trust (the Trust) and the investment adviser (the Agreement). In preparation for the meeting, the Board requested and reviewed a wide variety of materials provided by the investment adviser and considered information that the Board receives from the investment adviser throughout the year, including information about the investment adviser’s affiliates, personnel, business goals and priorities, profitability, third-party oversight, corporate structure and operations. The Board also received data provided by an independent provider of investment company data. In recognition of the fact that the Fund had not yet commenced operations, the Board also considered information provided by the investment adviser in connection with the Board’s consideration of approval of the investment advisory agreement with respect to the other funds within the Trust. The Board also took into account the detailed information about other funds within the Trust that the Board reviews during the course of each year, including information that relates to those funds’ operations and performance, legal and compliance matters, risk management, portfolio turnover, and sales and marketing activity. The Independent Trustees received advice from Independent Trustees’ legal counsel, including with respect to the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees participated in question and answer sessions with representatives of the investment adviser and met in executive session outside the presence of Fund management.

The Board, including a majority of the Independent Trustees, approved the Agreement with respect to the Fund. The

Board’s approval was based on consideration and evaluation of a variety of specific factors discussed at this meeting, including:

the nature, extent and quality of the services to be provided to the Fund under the Agreement, including the resources of the investment adviser and its affiliates to be dedicated to the Fund;

the investment adviser’s investment performance in managing other index-based exchange-traded funds;

the Fund’s estimated expenses and how those expenses compared to those of certain other similar exchange-traded funds;

the expected profitability of the investment adviser and its affiliates, including Charles Schwab & Co., Inc. (Schwab), with respect to management of the Fund, including both direct and indirect benefits accruing to the investment adviser and its affiliates; and

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

Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services to be provided by the investment adviser to the Fund and the resources that the investment adviser and its affiliates will dedicate to the Fund. In this regard, the Trustees evaluated, among other things, the investment adviser’s experience, track record, compliance program, resources dedicated to hiring and retaining skilled personnel and specialized talent, and information security resources. The Trustees also considered information provided by the investment adviser relating to services and support to be provided with respect to the Fund’s portfolio management team, portfolio strategy, and internal investment guidelines, as well as trading infrastructure, liquidity management, product design and analysis, shareholder communications, securities valuation, fund accounting and custody, and vendor and risk oversight. The Trustees also considered investments the investment adviser has made in its infrastructure, including modernizing the investment adviser’s technology and use of data, increasing expertise in key areas (including portfolio management and trade operations), and improving business continuity, cybersecurity, due diligence, risk management processes, and information security programs, which are designed to provide enhanced services to the Fund and its shareholders. The Trustees also considered Schwab’s overall financial condition and reputation as a full service brokerage firm as well as the wide range of products, services, and account features that benefit Fund shareholders who are brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations,

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that the nature, extent and quality of services to be provided by the investment adviser to the Fund and the resources of the investment adviser and its affiliates dedicated to the Fund supported approval of the Agreement with respect to the Fund.

Fund Performance. Since the Fund had not commenced operations and therefore did not have any performance of its own, the Board considered the Fund’s expected index tracking error and the characteristics of the Fund’s proposed index relative to other market indices in determining whether to approve the Agreement. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expected performance of the Fund supported approval of the Agreement with respect to the Fund.

Fund Expenses. With respect to the Fund’s expenses, the Trustees considered the proposed rate of compensation called for by the Agreement and the Fund’s estimated operating expense ratio, in each case, in comparison to those of other similar exchange-traded funds, such peer groups and comparisons having been selected and calculated by an independent provider of investment company data. The investment adviser reported to the Board, and the Board took into account, the risk assumed by the investment adviser in the development of the Fund and the services to be provided as well as the competitive marketplace for financial products. The Trustees also considered fees charged by the investment adviser to mutual funds and other exchange-traded funds that it manages. The Board evaluated the Fund’s unitary fee through review of comparative information with respect to fees paid by other similar exchange-traded funds tracking national municipal bond indices. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Fund are reasonable and supported approval of the Agreement with respect to the Fund.

Profitability. With regard to profitability, the Trustees considered the expected compensation to be flowing to the investment adviser and its affiliates, directly or indirectly. The Trustees reviewed management’s profitability analysis of the investment adviser relating to the Fund, noting the benefits to Fund shareholders of being part of the Schwab fund complex, including the allocations of certain fixed costs across the Fund and other funds in the complex. The Trustees also considered any other potential benefits to be derived by the investment adviser from its relationship with the Fund, such as whether, by virtue of its management of the Fund, the investment adviser obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the expected compensation and profitability with respect to the Fund under

the Agreement and other service agreements were reasonable and justified in light of the quality of all services to be rendered to the Fund by the investment adviser and its affiliates. The Trustees noted that the investment adviser continues to invest substantial sums in its business in order to provide enhanced research capabilities, services, and systems that would benefit the Fund. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the expected profitability of the investment adviser, albeit uncertain, is reasonable and supported approval of the Agreement with respect to the Fund.

Economies of Scale. Recognizing that the Fund had not yet commenced operations and had no assets, the Trustees considered the potential existence of any economies of scale and whether those could be expected to be passed along to the Fund’s shareholders by way of the relatively low advisory fee and unitary fee structure of the Fund through (i) the enhancement of services provided to the Fund in return for fees paid, including through investments by the investment adviser in the investment adviser’s infrastructure, including modernizing its technology and use of data, increasing expertise and capabilities in key areas (including portfolio and trade operations), and improving business continuity, cybersecurity, due diligence and information security programs, which are designed to provide enhanced services to the Fund and its shareholders; and (ii) pricing the Fund to scale and keeping overall expenses down as the Fund grows. The Trustees acknowledged that the investment adviser’s internal costs of providing investment management, technology, administrative, legal and compliance services to the Fund may increase as a result of regulatory or other developments. Based on this evaluation, the Board concluded within the context of its full deliberations that the Fund may be expected to obtain reasonable benefits from economies of scale if such economies develop.

In the course of their deliberations, the Trustees may have accorded different weights to various factors and did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the Agreement with respect to the Fund and concluded that the compensation under the Agreement with respect to the Fund is fair and reasonable in light of the services to be provided and the related expenses to be borne by the investment adviser and its affiliates 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 of Schwab Strategic Trust, which includes the fund 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 105 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
Michael J. Beer 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022)	Retired. Director, President and Chief Executive Officer (Dec. 2016 – Sept. 2019), Principal Funds (investment management).	105	Director (2016 – 2019), Principal Funds, Inc.
Robert W. Burns 1959 Trustee (Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016)	Retired/Private Investor.	105	None
Nancy F. Heller 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	Retired.	105	None
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016)	Private Investor.	105	Director (2004 – present), Corcept Therapeutics Incorporated Director (2009 – 2021), Adamas Pharmaceuticals, Inc. Director (2003 – 2019), Symantec Corporation
Jane P. Moncreiff 1961 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019)	Consultant (2018 – present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009 – 2017), CareGroup Healthcare System, Inc. (healthcare).	105	None

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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)	Co-Chairman of the Board (July 2022 – present), Director and Chief Executive Officer (Oct. 2008 – present) and President (Feb. 2007 – Oct. 2021), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008 – Oct. 2021) and Director (May 2008 – Oct. 2021), Charles Schwab & Co., Inc.; Director (Apr. 2006 – present), Charles Schwab Bank, SSB; Director (Nov. 2017 – present), Charles Schwab Premier Bank, SSB; Director (July 2019 – present), Charles Schwab Trust Bank; Director (May 2008 – present), Chief Executive Officer (Aug. 2017 – present) and President (Aug. 2017 – Nov. 2021), Schwab Holdings, Inc.; Director (Oct. 2020 – present), TD Ameritrade Holding Corporation; Director (July 2016 – Oct. 2021), Charles Schwab Investment Management, Inc.	105	Director (2008 – present), The Charles Schwab Corporation
Richard A. Wurster2 1973 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022)	President (Oct. 2021 – present) and Executive Vice President – Schwab Asset Management Solutions (Apr. 2019 – Oct. 2021), The Charles Schwab Corporation; President, Director (Oct. 2021 – present), Executive Vice President – Schwab Asset Management Solutions (July 2019 – Oct. 2021) and Senior Vice President – Advisory (May 2016 – July 2019), Charles Schwab & Co., Inc.; President (Nov. 2021 – present), Schwab Holdings, Inc.; Director (Oct. 2021 – present) and Chief Executive Officer (Nov. 2019 – Jan. 2022), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Mar. 2018 – Oct. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (July 2016 – Apr. 2018) and President (Mar. 2017 – Apr. 2018), ThomasPartners, Inc.; Chief Executive Officer (July 2016 – Apr. 2018), Windhaven Investment Management, Inc.	105	None

Officers of the Trust
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served3)	Principal Occupations During the Past Five Years
Jonathan de St. Paer 1973 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018)	Director (Apr. 2019 – present), President (Oct. 2018 – present), Chief Operating Officer (Jan. 2021 – present), and Chief Executive Officer (Apr. 2019 – Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020 – Mar. 2022) and Chief Operating Officer (Jan. 2021 – Mar. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (Apr. 2019 – present), President (Nov. 2018 – present) and Trustee (Apr. 2019 – Dec. 2020), Schwab Funds, Laudus Trust and Schwab ETFs; Managing Director (May 2022 – present), Senior Vice President (Apr. 2019 – May 2022) and Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014 – Mar. 2019), Charles Schwab & Co., Inc.
Mark Fischer 1970 Chief Operating Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013)	Chief Operating Officer (Dec. 2020 – present) and Treasurer and Chief Financial Officer (Jan. 2016 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020 – present) and Vice President (Oct. 2013 – present), Charles Schwab Investment Management, Inc.
Dana Smith 1965 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2023)	Treasurer and Chief Financial Officer (Jan. 2023 – present) and Assistant Treasurer (Dec. 2015 – Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Vice President (Mar. 2022 – present) and Director (Oct. 2015 – Mar. 2022), Charles Schwab Investment Management, Inc.

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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
Omar Aguilar 1970 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Chief Executive Officer (Jan. 2022 – present), Chief Investment Officer (Apr. 2011 – present) and Senior Vice President (Apr. 2011 – Dec. 2021), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Oct. 2022 – present), Charles Schwab Investment Advisory, Inc.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust and Schwab ETFs.
Brett Wander 1961 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011)	Senior Vice President and Chief Investment Officer (Apr. 2011 – present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2011 – present), Schwab Funds, Laudus Trust and Schwab ETFs.
William P. McMahon, Jr. 1972 Vice President and Chief Investment Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021)	Senior Vice President and Chief Investment Officer (Jan. 2020 – present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2021 – present), Schwab Funds, Laudus Trust and Schwab ETFs; Senior Vice President and Chief Investment Officer – ThomasPartners Strategies (Apr. 2018 – Dec. 2019), Charles Schwab Investment Advisory, Inc.; Senior Vice President and Chief Investment Officer (May 2001 – Apr. 2018), ThomasPartners, Inc.
Catherine MacGregor 1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Trust (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009)	Chief Legal Officer (Mar. 2022 – present) and Vice President (Sept. 2005 – present), Charles Schwab Investment Management, Inc.; Managing Director (May 2022 – present) and Vice President (July 2005 – May 2022), Charles Schwab & Co., Inc.; Vice President (Dec. 2005 – present) and Chief Legal Officer and Clerk (Mar. 2007 – present), Laudus Trust; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President (Nov. 2005 – Oct. 2021) and Assistant Secretary (June 2007 – Oct. 2021), Schwab Funds; Chief Legal Officer and Secretary (Oct. 2021 – present), Vice President and Assistant Secretary (Oct. 2009 – Oct. 2021), Schwab ETFs.

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.

Mr. Bettinger and Mr. Wurster are Interested Trustees. Mr. Bettinger and Mr. Wurster are Interested Trustees because each owns stock of The Charles Schwab Corporation (CSC), the parent company of Charles Schwab Investment Management, Inc., the investment adviser for the trusts in the Fund Complex, and is an employee of Charles Schwab & Co., Inc. (Schwab), the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust.

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

Alternative Minimum Tax (AMT) A federal income tax designed to limit the extent to which high-income taxpayers (including individuals, estates, trusts and corporations) can benefit from certain deductions and exemptions. For example, some types of income that are exempt from regular federal income tax are not exempt from the AMT.

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-backed securities Bond or other debt securities that represent ownership in a pool of assets such as credit card debt.

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.

Bloomberg US Aggregate Bond Index An index that is a broad-based benchmark measuring the performance of the U.S. investment grade, taxable bond market, including U.S. Treasuries, government-related and corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities, and asset-backed securities that are publicly available for sale in the United States. To be eligible for inclusion in the index, securities must be fixed rate, non-convertible, U.S. dollar-denominated with at least $300 million or more of outstanding face value and have one or more years remaining to maturity. The index excludes certain types of securities, including tax-exempt state and local government series bonds, structured notes embedded with swaps or other special features, private placements, floating rate securities, inflation-linked bonds and Eurobonds. The index is market capitalization weighted and the securities in the index are updated on the last business day of each month.

bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”

call An early repayment of a bond’s principal by the issuer, usually done because the issuer is able to refinance its bond debt at a lower rate.

call protection A term used in reference to a bond that cannot be called by the issuer before maturity, or at least for many years from the present date. A bond that offers call protection can more reliably be expected to provide a given yield over a given number of years than a bond that could be called (assuming both bonds are of the same credit quality).

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.

coupon, coupon rate The annual rate of interest paid until maturity by the issuer of a debt security.

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.

credit-enhanced securities Securities that are backed by the credit of an entity other than the issuer (such as a financial institution). Credit enhancements, which can equal up to 100% of the security’s value, are designed to help lower the risk of default on a security and may also make the security more liquid.

credit quality The capacity of an issuer to make its interest and principal payments; an assessment typically rendered by an independent third-party organization.

credit risk The risk that a bond issuer may be unable to pay interest or principal to its bondholders.

duration A measure of an individual bond’s sensitivity to interest rates, expressed in years. Calculations of duration generally take into account the bond’s yield, interest payments, maturity date and call features.

weighted average duration A measure of the duration of all bonds in a fund’s portfolio, also expressed in years, based on the market value weighted average duration of each bond in the portfolio.

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.

face value The value of a bond, note, mortgage or other security as given on the certificate or instrument. Face value is also referred to as par value or nominal value.

general obligation bonds Municipal bonds that are secured by the issuer’s full faith and credit, which typically is backed by the power of the issuer to levy taxes.

ICE AMT-Free Core U.S. National Municipal Index An index that tracks the performance of U.S. dollar denominated investment grade tax-exempt debt publicly issued in the U.S. domestic market by U.S. states and territories as well as their political subdivisions. Qualifying securities must be exempt from Federal taxes and must not be subject to alternative minimum tax. In addition, qualifying securities must have at least one day remaining term to final maturity, a fixed coupon schedule (including zero coupon bonds) and an investment grade rating (based on the middle rating of Moody’s, S&P and Fitch). If rated by all three agencies, two of the three ratings must be Baa3/BBB- or higher; if rated by two agencies, the lowest rating must be Baa3/BBB- or higher; and if rated by a single agency the security must be rated Baa3/BBB- or higher. Qualifying securities must have at least $25 million currently outstanding face value and must be part of a deal with an original offering size of at least $100 million. Limited offering securities qualify for inclusion. The index excludes certain types of securities, including, among others, floating rate debt, step-coupon bonds, private placements, and securities in legal default. Index constituents are market capitalization weighted. Accrued interest is

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calculated assuming next-day settlement. Cash flows from bond payments that are received during the month are retained in the index until the end of the month and then are removed as part of the rebalancing. Cash does not earn any reinvestment income while it is held in the index. All inclusion rules and constraints are imposed monthly as part of the index rebalancing. The index is rebalanced on the last calendar day of the month.

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.

interest Payments to bondholders (usually made twice a year) as compensation for loaning the bond principal to the issuer.

interest rate risk The risk that a bond’s value will fluctuate if market interest rates change or are expected to change. Bond prices tend to move in the opposite direction of interest rates: when interest rates rise, bond prices tend to fall.

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

liquidity-enhanced security A security that when tendered is paid from funds advanced by an entity other than the issuer (such as a large financial institution). Liquidity enhancements are often used on variable-rate securities where the portfolio manager has an option to tender the securities prior to their final maturity.

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.

market risk Those elements of risk that are common to all securities in an asset class, and therefore cannot be significantly reduced by diversification within the asset class. Also known as “systemic risk.”

maturity The maturity of a bond will generally be determined using a portfolio security’s final maturity date (date on which the final principal payment of a bond is scheduled to be paid); however, for securitized products, such as mortgage-backed securities and certain other asset-backed securities, maturity will be determined on an average life basis (weighted average time to receipt of all principal payments) by the investment adviser. Because pre-payment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted precisely. For securities with embedded demand features, such as puts or calls, either the demand date or the final maturity date will be used depending on interest rates, yields and other market conditions. The weighted average maturity (WAM) of a fund is dollar-weighted based upon the market value of a fund’s securities at the time of the calculation.

mortgage-backed securities Bond or other debt securities that represent ownership in a pool of mortgage loans.

muni, municipal bonds, municipal securities Debt securities issued by a state, its counties, municipalities, authorities and other subdivisions, or the territories and possessions of the United States and the District of Columbia, including their subdivisions, agencies and instrumentalities and corporations. These securities may be issued to obtain money for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, public utilities, schools, streets, and water and sewer works.

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.

prepayment risk The risk that a mortgage-backed security may be paid off early, typically because interest rates have fallen and the homeowners who hold the underlying mortgages have refinanced those mortgages at lower rates. In this type of situation, the investor who held the mortgage-backed security will usually have to settle for a lower rate when reinvesting the principal.

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

refunded bond A bond for which the principal and interest payments are secured or guaranteed by cash or U.S. government securities held in an escrow account.

replication If a fund uses a full replication method, the fund will invest substantially all of its assets proportionately in the securities included in the underlying index.

revenue bonds Municipal bonds that are issued to finance public works projects and are secured by revenue generated by the project (such as water and sewer fees) rather than the full faith and credit of the issuer.

S&P 500 Index An index that is designed to measure the performance of 500 leading publicly traded companies from a broad range of industries.

sampling If a fund uses a sampling method, the fund will not fully replicate the underlying 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 as closely as a fund that uses a full replication method.

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.

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.

Treasury inflation protected security (TIPS) A United States Treasury bond whose principal increases at the same rate as the Consumer Price Index (CPI).The interest payment is then calculated off that inflated (adjusted) principal and repaid at maturity.

weighted average For mutual funds or ETFs, an average that gives the same weight to each security as the security represents in the fund’s portfolio.

yield The income paid out by an investment, expressed as a percentage of the investment’s market value.

Schwab Municipal Bond ETF | Annual Report44

Schwab Municipal Bond ETF

Schwab ETFs

Schwab ETFs are designed to serve as simple low-cost core investment products for a diversified portfolio. These ETFs seek to provide consistent, repeatable performance through a variety of investment strategies that span the equity and fixed income spectrum. 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 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.schwabassetmanagement.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.schwabassetmanagement.com/schwabetfs_prospectus or the SEC’s website at www.sec.gov.

Schwab ETFs

U.S. ETFs

Schwab U.S. Broad Market ETF

Schwab 1000 Index® 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 Dividend Equity ETF

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 Long-Term U.S. Treasury ETF

Schwab U.S. Aggregate Bond ETF

Schwab 1-5 Year Corporate Bond ETF

Schwab 5-10 Year Corporate Bond ETF

Schwab Municipal 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

Active, Semi-Transparent (Also Known As Non-Transparent) ETF

Schwab Ariel ESG ETF

Thematic ETFs

Schwab Crypto Thematic ETF

Investment Adviser

Charles Schwab Investment Management, Inc., dba Schwab Asset Management

211 Main Street, San Francisco, CA 94105

Schwab ETFs

1-877-824-5615

FUNDAMENTAL INDEX is a registered trademark of Research Affiliates LLC.

The Schwab Ariel ESG ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This fund will not. This may create additional risks for your investment. For example:

•

You may have to pay more money to trade the fund’s shares. This fund will provide less information to traders, who tend to charge more for trades when they have less information.

•

The price you pay to buy fund shares on an exchange may not match the value of the fund’s portfolio. The same is true when you sell shares. These price differences may be greater for this fund compared to other ETFs because it provides less information to traders.

•

These additional risks may be even greater in bad or uncertain market conditions.

•

The ETF will publish on its website each day a “Proxy Portfolio” designed to help trading in shares of the ETF. While the Proxy Portfolio includes some of the ETF’s holdings, it is not the ETF’s actual portfolio.

The differences between this fund and other ETFs may also have advantages. By keeping certain information about the fund secret, this fund may face less risk that other traders can predict or copy its investment strategy. This may improve the fund’s performance. If other traders are able to copy or predict the fund’s investment strategy, however, this may hurt the fund’s performance.

For additional information regarding the unique attributes and risks of the fund, see Proxy Portfolio Risk, Premium/Discount Risk, Trading Halt Risk, Authorized Participant Concentration Risk, Tracking Error Risk and Shares of the Fund May Trade at Prices Other Than NAV in the Principal Risks and Proxy Portfolio and Proxy Overlap sections of the prospectus and/or the Statement of Additional Information. These risks are discussed on the next page.

Schwab Municipal Bond ETF

Active semi-transparent ETFs operate differently from other exchange-traded funds (ETFs). Unlike other ETFs, an active semi-transparent ETF does not publicly disclose its entire portfolio composition each business day, which may affect the price at which shares of the ETF trade in the secondary market. Active semi-transparent ETFs have limited public trading history. There can be no assurance that an active trading market will develop, be maintained or operate as intended. There is a risk that the market price of an active semi-transparent ETF may vary significantly from the ETF’s net asset value and that its shares may trade at a wider bid/ask spread and, therefore, cost investors more to trade than shares of other ETFs. These risks are heightened during periods of market disruption or volatility.

Proxy Portfolio Risk: Unlike traditional ETFs, this fund does not disclose its portfolio holdings (Actual Portfolio) daily. The fund instead posts a Proxy Portfolio on its website each day. The Proxy Portfolio is designed to reflect the economic exposures and risk characteristics of the fund’s actual holdings on each trading day, but it is not the same as the fund’s Actual Portfolio. Although the Proxy Portfolio is intended to provide investors with enough information to allow for an effective arbitrage mechanism that will keep the market price of the Fund at or close to the underlying NAV per Share of the Fund, there is a risk (which may increase during periods of market disruption or volatility) that market prices will vary significantly from the underlying NAV of the fund. ETF trading on the basis of a published Proxy Portfolio may trade at a wider bid/ask spread than ETFs that publish their portfolios on a daily basis, especially during periods of market disruption or volatility, and therefore may cost investors more to trade. Also, while the Fund seeks to benefit from keeping its portfolio information secret, market participants may attempt to use the Proxy Portfolio to identify a Fund’s trading strategy, which if successful, could result in such market participants engaging in certain predatory trading practices that may have the potential to harm the Fund and its shareholders.

Proxy Portfolio Construction: The Proxy Portfolio is designed to recreate the daily performance of the Actual Portfolio. This is achieved by performing a “Factor Model” analysis of the Actual Portfolio. The Factor Model is comprised of three sets of factors or analytical metrics: market-based factors, fundamental factors, and industry/sector factors. The fund uses a “Model Universe” to generate its Proxy Portfolio. The Model Universe is comprised of securities that the fund can purchase and will be a financial index or stated portfolio of securities from which fund investments will be selected. The results of the Factor Model analysis are then applied to the Model Universe. The Proxy Portfolio is then generated as a result of this Model Universe analysis with the Proxy Portfolio being a small sub-set of the Model Universe. The Factor Model is applied to both the Actual Portfolio and the Model Universe to construct the fund’s Proxy Portfolio that performs in a manner substantially identical to the performance of its Actual Portfolio. The Proxy Portfolio will only include investments the fund is permitted to hold. The fund’s SAI contains more information on the Proxy Portfolio and its construction.

Proxy Portfolio and Proxy Overlap Information regarding the contents of the Proxy Portfolio, and the percentage weight overlap between the holdings of the Proxy Portfolio and the fund’s Actual Portfolio holdings that formed the basis for its calculation of NAV at the end of the prior Business Day (the Portfolio Overlap), is available by visiting the fund’s website www.schwabassetmanagement.com.

Because environmental, social and governance (ESG) strategies exclude some securities, ESG-focused products may not be able to take advantage of the same opportunities or market trends as products that do not use such strategies. Additionally, the criteria used to select companies for investment may result in investing in securities, industries or sectors that underperform the market as a whole.

	10/12/221– 12/31/22
Per-Share Data
Net asset value at beginning of period	$50.00
Income (loss) from investment operations:
Net investment income (loss)2	0.39
Net realized and unrealized gains (losses)	1.00
Total from investment operations	1.39
Less distributions:
Distributions from net investment income	(0.30)
Other capital2	0.07
Net asset value at end of period	$51.16
Total return	2.93%3
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03%4
Net investment income (loss)	3.50%4
Portfolio turnover rate5	13%3
Net assets, end of period (x 1,000)	$61,387

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

Assets
Investments in securities, at value - unaffiliated (cost $59,520,205)		$60,382,711
Cash		242,417
Receivables:
Interest		754,236
Investments sold	+	269,247
Total assets		61,648,611

Liabilities
Payables:
Investments bought		260,649
Management fees	+	1,409
Total liabilities		262,058
Net assets		$61,386,553

Net Assets by Source
Capital received from investors		$60,512,032
Total distributable earnings	+	874,521
Net assets		$61,386,553

Net Asset Value (NAV)
Net Assets	÷	Shares Outstanding	=	NAV
$61,386,553		1,200,000		$51.16

For the period October 12, 2022* through December 31, 2022
Investment Income
Interest received from securities - unaffiliated		$329,133

Expenses
Management fees		2,798
Total expenses	–	2,798
Net investment income		326,335

REALIZED AND UNREALIZED GAINS (LOSSES)
Net realized losses on sales of securities - unaffiliated		(19,675)
Net change in unrealized appreciation (depreciation) on securities - unaffiliated	+	862,506
Net realized and unrealized gains		842,831
Increase in net assets resulting from operations		$1,169,166

OPERATIONS
	10/12/22*-12/31/22
Net investment income		$326,335
Net realized losses		(19,675)
Net change in unrealized appreciation (depreciation)	+	862,506
Increase in net assets resulting from operations		$1,169,166

DISTRIBUTIONS TO SHAREHOLDERS
Total distributions		($294,645)

TRANSACTIONS IN FUND SHARES
	10/12/22*-12/31/22
		SHARES	VALUE
Shares sold		1,200,000	$60,454,448
Other capital		—	57,584
Net transactions in fund shares		1,200,000	$60,512,032

SHARES OUTSTANDING AND NET ASSETS
	10/12/22*-12/31/22
		SHARES	NET ASSETS
Beginning of period		—	$—
Total increase	+	1,200,000	61,386,553
End of period		1,200,000	$61,386,553

Independent Trustees (continued)
Name, Year of Birth, and Position(s) with the trust (Terms of office, and length of Time Served1)	Principal Occupations During the Past Five Years	Number of Portfolios in Fund Complex Overseen by the Trustee	Other Directorships
Kimberly S. Patmore 1956 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016)	Consultant (2008 – present), Patmore Management Consulting (management consulting).	105	None
J. Derek Penn 1957 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021)	Head of Equity Sales and Trading (2006 – 2018), BNY Mellon (financial services).	105	None