Annual Report  |  August 31, 2022

Schwab U.S. Equity ETFs

Schwab U.S. Broad Market ETF	SCHB
Schwab 1000 Index® ETF	SCHK
Schwab U.S. Large-Cap ETF	SCHX
Schwab U.S. Large-Cap Growth ETF	SCHG
Schwab U.S. Large-Cap Value ETF	SCHV
Schwab U.S. Mid-Cap ETF	SCHM
Schwab U.S. Small-Cap ETF	SCHA
Schwab U.S. Dividend Equity ETF	SCHD

         

This page is intentionally left blank.

Fund investment adviser: Charles Schwab Investment Management, Inc., dba Schwab Asset Management^TM

Distributor: SEI Investments Distribution Co. (SIDCO)

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

Performance at a Glance

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

Total Returns for the 12 Months Ended August 31, 2022
Schwab U.S. Broad Market ETF (Ticker Symbol: SCHB)
Market Price Return1	-13.66%
NAV Return1	-13.64%
Dow Jones U.S. Broad Stock Market Index	-13.62%
ETF Category: Morningstar Large Blend2	-12.08%
Performance Details	pages 7-9
Schwab 1000 Index ETF (Ticker Symbol: SCHK)
Market Price Return1	-13.30%
NAV Return1	-13.36%
Schwab 1000 Index®	-13.32%
Russell 1000® Index	-12.96%
ETF Category: Morningstar Large Blend2	-12.08%
Performance Details	pages 10-12
Schwab U.S. Large-Cap ETF (Ticker Symbol: SCHX)
Market Price Return1	-13.16%
NAV Return1	-13.22%
Dow Jones U.S. Large-Cap Total Stock Market Index	-13.20%
ETF Category: Morningstar Large Blend2	-12.08%
Performance Details	pages 13-15
Schwab U.S. Large-Cap Growth ETF (Ticker Symbol: SCHG)
Market Price Return1	-20.34%
NAV Return1	-20.37%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	-20.34%
ETF Category: Morningstar Large Growth2	-23.75%
Performance Details	pages 16-18

Total Returns for the 12 Months Ended August 31, 2022
Schwab U.S. Large-Cap Value ETF (Ticker Symbol: SCHV)
Market Price Return1	-6.76%
NAV Return1	-6.78%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	-6.75%
ETF Category: Morningstar Large Value2	-4.79%
Performance Details	pages 19-21
Schwab U.S. Mid-Cap ETF (Ticker Symbol: SCHM)
Market Price Return1	-14.59%
NAV Return1	-14.62%
Dow Jones U.S. Mid-Cap Total Stock Market Index	-14.64%
ETF Category: Morningstar Mid-Cap Blend2	-11.22%
Performance Details	pages 22-24
Schwab U.S. Small-Cap ETF (Ticker Symbol: SCHA)
Market Price Return1	-17.72%
NAV Return1	-17.78%
Dow Jones U.S. Small-Cap Total Stock Market Index	-17.83%
ETF Category: Morningstar Small Blend2	-13.07%
Performance Details	pages 25-27
Schwab U.S. Dividend Equity ETF (Ticker Symbol: SCHD)
Market Price Return1	-3.76%
NAV Return1	-3.74%
Dow Jones U.S. Dividend 100TM Index	-3.66%
ETF Category: Morningstar Large Value2	-4.79%
Performance Details	pages 28-30

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

From the President

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

Dear Shareholder,

The fiscal year ended August 31, 2022, may have felt like a roller coaster ride for investors. U.S. equities advanced during the last four months of 2021 despite escalating inflationary pressures and the lingering economic impact of the COVID-19 pandemic. However, the start of 2022 saw a negative turn in investor sentiment due to rising energy and commodity prices, global supply-chain disruptions, and the increasing likelihood that the U.S. Federal Reserve (Fed) would raise short-term interest rates. The Fed subsequently raised rates in March, May, June, and July. These concerns were heightened by Russia’s invasion of Ukraine in February, which triggered a humanitarian crisis, heightened geopolitical instability, and exacerbated energy, food, and commodity price inflation. As a result, after reaching record heights during the first few days of the new year, the S&P 500^® Index, a bellwether for the overall U.S. stock market, lost nearly 20% over the first six months of 2022, touching bear market territory. Although stocks staged a partial recovery in July and early August, they fell again during the final weeks of August. In this environment, the S&P 500^® Index returned -11.2% for the reporting period.

Market declines and volatility can unsettle confidence even in well-established investment plans and can cause investors to impulsively react to market movements. At such times, it is helpful to remember that, in the longer-term, this can often make investing outcomes worse. While bear markets occur periodically, they tend to be shorter than bull markets and eventually come to an end. In fact, the Schwab Center for Financial Research found that going back to the late 1960s, the average bull market lasted about six years while the average bear market lasted about 15 months.¹ In addition, missing out on early gains after the market has hit bottom can lead to lower returns over time as market rebounds tend to be front-loaded. At Schwab Asset Management, we believe investors are best served by maintaining a long-term investment plan and a portfolio with exposure to a mix of asset classes based on their risk tolerance and goals. The Schwab U.S. Equity ETFs can serve as part of the core of a diversified portfolio, offering simple, low-cost access to U.S. small-, mid-, and large-cap stocks, growth, value, and dividend yielding stocks.

Thank you for investing with Schwab Asset Management. For more information about the Schwab U.S. Equity ETFs, please continue reading this report. In addition, you can find further details about these funds by visiting our website at www.schwabassetmanagement.com. We are also happy to hear from you at 1-877-824-5615.

Sincerely,

“ In fact, the Schwab Center for Financial Research found that going back to the late 1960s, the average bull market lasted about six years while the average bear market lasted about 15 months.¹”

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

The Investment Environment

For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. For the reporting period, the S&P 500^® Index, a bellwether for the overall U.S. stock market, returned -11.23%. Small- and mid-cap stocks were weaker, with the Russell 2000^® Index and the Dow Jones U.S. Mid-Cap Total Stock Market Index returning -17.88% and -14.64%, respectively.

The U.S. economy continued its recovery from the impact of the COVID-19 pandemic in the third and fourth quarters of 2021. Gross domestic product (GDP) rose at an annualized rate of 2.3% and 6.9% for the third and fourth quarters of 2021, respectively. However, amid fading government stimuli, ongoing supply chain disruptions, persisting inflation, a tight labor market, and a widening U.S. trade deficit, GDP decreased at an annualized rate of -1.6% for the first quarter of 2022, followed by a decrease at an annualized rate of -0.6% for the second quarter of 2022. The unemployment rate, which has fallen steadily since skyrocketing in April 2020, ended the reporting period near pre-pandemic levels. Inflation remained stubbornly high due to imbalances in the labor market, supply chain bottlenecks, and soaring energy costs.

Monetary policies around the world varied. In the United States, after maintaining the federal funds rate in a range of 0.00% to 0.25% through mid-March 2022, 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 by 0.25% in mid-March, 0.50% in early May, 0.75% in mid-June, and 0.75% in late July in an effort to

Asset Class Performance Comparison % returns during the 12 months ended August 31, 2022    

 

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 a guarantee of future results.

For index definitions, please see the Glossary.

Data source: Index provider websites and Schwab Asset Management.

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

Management views may have changed since the report date.

*	The net version of the index reflects reinvested dividends net of withholding taxes but reflects no deductions for expenses or other taxes.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

The Investment Environment (continued)

achieve a return to price stability. The federal funds rate ended the reporting period in a range of 2.25% to 2.50%. The Fed also set expectations for further rate hikes by the end of 2022. In addition, the Fed ended its bond-buying program, which it had begun to scale back in November 2021, in early March 2022. In June, the Fed began to reduce the $9 trillion in assets it holds on its balance sheet, vowing to be even more aggressive than during its last round of quantitative tightening in 2017 through 2019.

Among the sectors in the Dow Jones U.S. Broad Market Index, eight of 11 posted losses for the reporting period. The weakest sector for the reporting period was the communication services sector, driven by weakness among several large companies including Meta Platforms, Inc., the parent company of Facebook, and Alphabet, Inc., the parent company of Google. The industry is facing subdued growth as a result of rising interest rates, waning demand for products and services, and declines in ad spending. The rise in the yield of the 10-year U.S. Treasury has also negatively impacted the sector; it is seen as a headwind for high-growth and relatively expensive stocks as it reduces the present value of future earnings. The consumer discretionary sector was also weak as consumers tempered their buying in the face of inflationary pressures. The strongest performer was the energy sector, driven primarily by rising oil prices in the face of increasing demand and constrained supply. The utilities sector also posted gains for the reporting period.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

Fund Management

Christopher Bliss, CFA, Managing Director and Head of Passive Equity Strategies for Schwab Asset Management, is responsible for overseeing the investment process and portfolio management of investment strategies for passive equity Schwab Funds and Schwab ETFs. Before joining Schwab in 2016, Mr. Bliss spent 12 years at BlackRock (formerly Barclays Global Investors) managing and leading institutional index teams, most recently as a managing director and the head of the Americas institutional index team. In this role, Mr. Bliss was responsible for overseeing a team of portfolio managers managing domestic, developed international and emerging markets index strategies. Prior to BlackRock, he worked as an equity analyst and portfolio manager for Harris Bretall and before that, as a research analyst for JP Morgan.

    

Jeremy Brown, CFA, Senior Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining Schwab in 2017, Mr. Brown spent six years with ALPS Advisors, Inc. in Denver, most recently as a senior analyst on the ETF portfolio management and research team where he performed portfolio management, trading, and analytics/research functions for ALPS ETFs and passive funds. Additionally, Mr. Brown led a number of investment research, commentary, industry trend analysis, and sales and marketing support initiatives.

    

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

    

Sabya Sinha, Portfolio Manager, is responsible for the day-to-day co-management of the funds. Prior to joining Schwab in 2015, Mr. Sinha spent a year at F-Squared Investments on the product development and analytics team. Prior to F-Squared, he worked at IndexIQ Advisors as a senior index portfolio manager for three years and for Bank of America’s Columbia Management subsidiary as a portfolio manager for three years. Mr. Sinha also spent time as a software consultant at DPM Mellon, LLC and an equity trader at Jane Street Capital.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Broad Market ETF as of August 31, 2022

The Schwab U.S. Broad Market ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Broad Stock Market Index (the index). The index includes the largest 2,500 publicly traded U.S. companies for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace. The fund invests in a representative sample of securities included in the index that, when taken together, are expected to perform similarly to the index as a whole. Due to the use of representative sampling, the fund may not hold all of the securities in the index.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communication services and consumer discretionary stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -13.66% and its NAV return was -13.64% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -13.62% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The information technology sector detracted the most from the total return of the fund. Information technology stocks represented an average weight of approximately 27% of the fund’s investments and returned approximately -18% for the reporting period. One example from this sector is Microsoft Corp., which develops, manufactures, licenses, sells, and supports software product. The fund’s holdings of Microsoft Corp. represented an average weight of approximately 5% of the fund’s investments and returned approximately -13% for the reporting period.

The communications sector also detracted from the total return of the fund, representing an average weight of approximately 9% of the fund’s investments and returning approximately -37% for the reporting period.

The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 4% of the fund’s investments and returned approximately 74% for the reporting period. One example from this sector is Exxon Mobil Corp., which operates petroleum and petro chemicals businesses. The fund’s holdings of Exxon Mobil Corp. represented an average weight of less than 1% of the fund’s investments and returned approximately 83% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing an average weight of approximately 3% of the fund’s investments and returning approximately 11% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Broad Market ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Broad Market ETF (11/3/09)
Market Price Return2	-13.66%	11.18%	12.68%
NAV Return2	-13.64%	11.19%	12.69%
Dow Jones U.S. Broad Stock Market Index	-13.62%	11.20%	12.69%
ETF Category: Morningstar Large Blend3	-12.08%	10.27%	11.68%
Fund Expense Ratio4: 0.03%

    

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.

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Broad Market ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab 1000 Index ETF as of August 31, 2022

The Schwab 1000 Index ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Schwab 1000 Index^® (the index). The index is a float-adjusted market capitalization weighted index that includes the 1,000 largest stocks of publicly traded companies in the United States, with size being determined by market capitalization (total market value of all shares outstanding). The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communication services and consumer discretionary stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -13.30% and its NAV return was -13.36% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -13.32% during the same period.

Contributors and Detractors. The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately 77% for the reporting period. One example from this sector is Exxon Mobil Corp., which operates petroleum and petro chemicals businesses. The fund’s holdings of Exxon Mobil Corp. represented an average weight of less than 1% of the fund’s investments and returned approximately 83% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing an average weight of approximately 3% of the fund’s investments and returning approximately 12% for the reporting period.

The information technology sector detracted the most from the total return of the fund. Information technology stocks represented an average weight of approximately 28% of the fund’s investments and returned approximately -18% for the reporting period. One example from this sector is Microsoft Corp., which develops, manufactures, licenses, sells, and supports software products. The fund’s holdings of Microsoft Corp. represented an average weight of approximately 5% of the fund’s investments and returned approximately -13% for the reporting period.

The communications services sector also detracted from the total return of the fund, representing an average weight of 9% of the fund’s investments and returning approximately -37% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab 1000 Index ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	3 Years	Since Inception*
Fund: Schwab 1000 Index ETF (10/11/17)
Market Price Return2	-13.30%	11.84%	10.88%
NAV Return2	-13.36%	11.80%	10.87%
Schwab 1000 Index®	-13.32%	11.86%	10.93%
Russell 1000® Index	-12.96%	12.14%	11.11%
ETF Category: Morningstar Large Blend3	-12.08%	10.77%	N/A
Fund Expense Ratio4: 0.05%

    

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.

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 (10/11/17) represents the date that the shares began trading in the secondary market.
1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab 1000 Index ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	As a result of the Schwab 1000 Index®’s once per year reconstitution and the effects of certain corporate actions, the fund may hold more or less than 1,000 securities.
3	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
4	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
5	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap ETF as of August 31, 2022

The Schwab U.S. Large-Cap ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Total Stock Market Index (the index). The index includes the large-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1-750 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communications services and consumer discretionary stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -13.16% and its NAV return was -13.22% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -13.20% during the same period.

Contributors and Detractors. The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 3% of the fund’s investments and returned approximately 75% for the reporting period. One example from this sector is Exxon Mobil Corp., which operates petroleum and petro chemicals businesses. The fund’s holding of Exxon Mobil Corp. represented an average weight of less than 1% of the fund’s investments and returned approximately 83% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing an average weight of approximately 3% of the fund’s investments and returning approximately 12% for the reporting period.

The information technology sector detracted the most from the total return of the fund. Information technology stocks represented an average weight of approximately 28% of the fund’s investments and returned approximately -18% for the reporting period. One example from this sector is Microsoft Corp., which develops, manufactures, licenses, sells, and supports software products. The fund’s holdings of Microsoft Corp. represented an average weight of approximately 6% of the fund’s investments and returned approximately -13% for the reporting period.

The communications services sector also detracted from the total return of the fund, representing an average weight of approximately 9% of the fund’s investments and returning approximately -37% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Large-Cap ETF (11/3/09)
Market Price Return2	-13.16%	11.63%	12.93%
NAV Return2	-13.22%	11.62%	12.93%
Dow Jones U.S. Large-Cap Total Stock Market Index	-13.20%	11.65%	12.97%
ETF Category: Morningstar Large Blend3	-12.08%	10.27%	11.68%
Fund Expense Ratio4: 0.03%

    

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.

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Growth ETF as of August 31, 2022

The Schwab U.S. Large-Cap Growth ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index (the index). The index includes the large-cap growth portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1-750 by full market capitalization and that are classified as “growth” based on a number of factors. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and consumer staples sectors were the top performers, while communications services and financials stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -20.34% and its NAV return was -20.37% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -20.34% during the same period.

Contributors and Detractors. The energy sector was the only sector that contributed to the total return of the fund. Energy stocks represented an average weight of less than 1% of the fund’s investments and returned approximately 55% for the reporting period. One example from this sector is Cheniere Energy, Inc., an energy company focused on liquified natural gas-related businesses. The fund’s holdings of Cheniere Energy, Inc. represented an average weight of less than 1% of the fund’s investments and returned approximately 85% for the reporting period.

While no additional sectors contributed to the total return of the fund over the reporting period, the consumer staples sector was the smallest detractor from the total return of the fund, representing an average weight of approximately 2% of the fund’s investments and returning less than 1% for the reporting period.

The information technology sector was the largest detractor from the return of the fund. Information technology stocks represented an average weight of approximately 48% of the fund’s investments and returned approximately -18% for the reporting period. One example from this sector is Microsoft Corp., which develops, manufactures, licenses, sells, and supports software products. The fund’s holdings of Microsoft Corp. represented an average weight of approximately 12% of the fund’s investments and returned approximately -13% for the reporting period.

The communication services sector also detracted from the total return of the fund, representing an average weight of approximately 14% of the fund’s investments and returning approximately -39% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Growth ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Large-Cap Growth ETF (12/11/09)
Market Price Return2	-20.34%	14.55%	14.95%
NAV Return2	-20.37%	14.55%	14.96%
Dow Jones U.S. Large-Cap Growth Total Stock Market Index	-20.34%	14.59%	15.02%
ETF Category: Morningstar Large Growth3	-23.75%	11.46%	12.74%
Fund Expense Ratio4: 0.04%

    

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.

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Growth ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Value ETF as of August 31, 2022

The Schwab U.S. Large-Cap Value ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index (the index). The index includes the large-cap value portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 1-750 by full market capitalization and that are classified as “value” based on a number of factors. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communication services and consumer discretionary stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -6.76% and its NAV return was -6.78% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -6.75% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The financial sector detracted the most from the total return of the fund. Financial stocks represented an average weight of approximately 18% of the fund’s investments and returned approximately -11% for the reporting period. One example from this sector is JPMorgan Chase & Co., which provides global financial services and retail banking. The fund’s holdings of JPMorgan Chase & Co. represented an average weight of approximately 2% of the fund’s investments and returned approximately -27% for the reporting period.

The information technology also detracted from the total return of the fund, representing an average weight of approximately 12% of the fund’s investments and returning approximately -16% for the reporting period.

The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 6% of the fund’s investments and returned approximately 77% for the reporting period. One example from this sector is Exxon Mobil Corp, which operates petroleum and petro chemicals businesses. The fund’s holdings of Exxon Mobil Corp. represented an average weight of approximately 2% of the fund’s investments and returned approximately 83% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing an average weight of approximately 5% of the fund’s investments and returning approximately 12% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Value ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Large-Cap Value ETF (12/11/09)
Market Price Return2	-6.76%	7.93%	10.47%
NAV Return2	-6.78%	7.93%	10.47%
Dow Jones U.S. Large-Cap Value Total Stock Market Index	-6.75%	7.97%	10.54%
ETF Category: Morningstar Large Value3	-4.79%	8.31%	10.22%
Fund Expense Ratio4: 0.04%

    

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.

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Large-Cap Value ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Mid-Cap ETF as of August 31, 2022

The Schwab U.S. Mid-Cap ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index (the index). The index includes the mid-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 501-1,000 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communication services and health care stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -14.59% and its NAV return was -14.62% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -14.64% during the same period.

Contributors and Detractors. The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 4% of the fund’s investments and returned approximately 96% for the reporting period. One example from this sector is Devon Energy Corp., which operates as an independent energy company that is involved primarily in oil and gas exploration, development and production, the transportation of oil, gas, and natural gas liquids, and the processing of natural gas. The fund’s holdings of Devon Energy Corp. represented an average weight of less than 1% of the fund’s investments and returned approximately 157% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing an average weight of approximately 4% of the fund’s investments and returning approximately 9% for the reporting period.

The consumer discretionary sector detracted the most from the total return of the fund. Consumer discretionary stocks represented an average weight of approximately 13% of the fund’s holdings and returned approximately -30% for the reporting period. One example from this sector is Caesars Entertainment, Inc., which owns and operates as a chain of resorts. The fund’s holdings of Caesars Entertainment, Inc. represented an average weight of less than 1% of the fund’s investments and returned approximately -58% for the reporting period.

The health care sector also detracted from the total return of the fund, representing approximately 11% of the fund’s investments and returning approximately -30% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Mid-Cap ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Mid-Cap ETF (1/13/11)
Market Price Return2	-14.59%	8.20%	11.38%
NAV Return2	-14.62%	8.20%	11.39%
Dow Jones U.S. Mid-Cap Total Stock Market Index	-14.64%	8.23%	11.42%
ETF Category: Morningstar Mid-Cap Blend3	-11.22%	8.13%	10.36%
Fund Expense Ratio4: 0.04%

    

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.

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Mid-Cap ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Small-Cap ETF as of August 31, 2022

The Schwab U.S. Small-Cap ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index (the index). The index includes the small-cap portion of the Dow Jones U.S. Total Stock Market Index actually available to investors in the marketplace. The index includes the components ranked 751-2,500 by full market capitalization. The index is a float-adjusted market capitalization weighted index. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communications services and health care stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -17.72% and its NAV return was -17.78% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -17.83% during the same period.

Contributors and Detractors. The energy sector contributed the most to the total return of the fund. Energy stocks represented an average weight of approximately 5% of the fund’s investments and returned approximately 66% for the reporting period. One example from this sector is EQT Corp., an integrated energy company with emphasis on Appalachian area natural-gas supply, transmission, and distribution. The fund’s holdings of EQT Corp. represented an average weight of less than 1% of the fund’s investments and returned approximately 164% for the reporting period.

The utilities sector also contributed to the total return of the fund, representing approximately 3% of the fund’s investments and returning approximately 6% for the reporting period.

The health care sector detracted the most from the total return of the fund. Health care stocks represented an average weight of approximately 14% of the fund’s investments and returned approximately -33% for the reporting period. One example from this sector is Intellia Therapeutics, Inc., a biotechnology company. The fund’s holdings of Intellia Therapeutics, Inc. represented an average weight of less than 1% of the fund’s investments and returned approximately -63% for the reporting period.

The information technology sector also detracted from the total return of the fund, representing approximately 14% of the fund’s investments and returning -29% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Small-Cap ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Small-Cap ETF (11/3/09)
Market Price Return2	-17.72%	7.05%	10.27%
NAV Return2	-17.78%	7.05%	10.27%
Dow Jones U.S. Small-Cap Total Stock Market Index	-17.83%	7.01%	10.24%
ETF Category: Morningstar Small Blend3	-13.07%	7.03%	9.80%
Fund Expense Ratio4: 0.04%

    

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.

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

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

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Small-Cap ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Dividend Equity ETF as of August 31, 2022

The Schwab U.S. Dividend Equity ETF’s (the fund) goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100^TM Index (the index). The 100-component index is a subset of the Dow Jones U.S. Broad Market Index, excluding real estate investment trusts (REITs), master limited partnerships, preferred stocks, and convertibles. The index is modified market capitalization weighted. The fund generally will seek to replicate the performance of the index by giving the same weight to a given stock as the index does.

Market Highlights. For the 12-month reporting period ended August 31, 2022, U.S. equity markets lost ground as a result of accelerating inflation, rising interest rates, and geopolitical tensions, including the war in Ukraine. Over the first four months of the reporting period, U.S. stocks held their ground, with several key market indices repeatedly exceeding previous record highs through early January 2022. However, beginning in early 2022, equity markets declined in reaction to growing headwinds including accelerating inflation, an increasing likelihood of rising interest rates, and, in late February 2022, Russia’s invasion of Ukraine, which drove oil prices to over $100 per barrel for the first time since 2014 and roiled stock markets around the world. Albeit decelerating, COVID-19 continued to weigh on economies worldwide, with highly transmissible variants and subvariants keeping infection rates high in many areas. Economic growth slowed and recession fears rose. Within the index, stocks in the energy and utilities sectors were the top performers, while communications services and materials stocks underperformed.

Performance. During the 12-month reporting period ended August 31, 2022, the fund closely tracked the index. The fund’s market price return was -3.76% and its NAV return was -3.74% (for an explanation of the market price and NAV returns, please refer to footnote 2 on the following page). The index returned -3.66% during the same period. Differences between the return of the fund and the return of the index may be attributable to, among other things, the operational and transactional costs incurred by the fund and not the index.

Contributors and Detractors. The financials sector detracted the most from the total return of the fund. Financials stocks represented an average weight of approximately 21% of the fund’s investments and returned approximately -12% for the reporting period. One example from this sector is BlackRock, Inc., which provides investment management services to institutional clients and to retail investors through various investment vehicles. The fund’s holdings of BlackRock, Inc. represented an average weight of approximately 3% of the fund’s investments and returned approximately -28% for the reporting period.

The communication services sector also detracted from the total return of the fund, representing an average weight of approximately 5% of the fund’s investments and returning approximately -22% for the reporting period.

The health care sector contributed the most to the total return of the fund. Health care stocks represented an average weight of approximately 13% of the fund’s investments and returned approximately 9% for the reporting period. One example from this sector is Merck & Co., Inc., a global health care company. The fund’s holdings of Merck & Co., Inc. represented approximately 4% of the fund’s investments and returned approximately 16% for the reporting period.

The energy sector also contributed to the total return of the fund, representing an average weight of approximately 3% of the fund’s investments and returning approximately 51% for the reporting period.

    
    

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

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Dividend Equity ETF

Performance and Fund Facts as of August 31, 2022

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

 

 

Fund and Inception Date	1 Year	5 Years	10 Years
Fund: Schwab U.S. Dividend Equity ETF (10/20/11)
Market Price Return2	-3.76%	13.12%	13.11%
NAV Return2	-3.74%	13.12%	13.12%
Dow Jones U.S. Dividend 100TM Index	-3.66%	13.22%	13.23%
ETF Category: Morningstar Large Value3	-4.79%	8.31%	10.22%
Fund Expense Ratio4: 0.06%

    

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.

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.

The fund may underperform other funds that do not limit their investment to dividend paying stocks. Stocks held by the fund may reduce or stop paying dividends, affecting the fund’s ability to generate income. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

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

1	Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares.
2	ETF performance must be shown based on both a market price and NAV basis. The fund’s per share NAV is the value of one share of the fund. NAV is calculated by taking the fund’s total assets (including the fair value of securities owned), subtracting liabilities, and dividing by the number of shares outstanding. The NAV Return is based on the NAV of the fund, and the Market Price Return is based on the market price per share of the fund. The price used to calculate market return (Market Price) is determined using the Official Closing Price on the primary stock exchange (generally, 4:00 p.m. Eastern time) and may not represent the returns you would receive if shares were traded at other times. NAV is used as a proxy for purposes of calculating Market Price Return on inception date. Market Price and NAV returns assume that dividends and capital gain distributions have been reinvested in the fund at Market Price and NAV, respectively.
3	Source for category information: Morningstar, Inc. The Morningstar Category return represents all passively- and actively-managed ETFs and mutual funds within the category as of the report date.
4	As stated in the prospectus.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Dividend Equity ETF

Performance and Fund Facts as of August 31, 2022 (continued)

    

    
    
    
    

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 trading and management costs incurred by the fund.

Source of Sector Classification: S& P and MSCI.

1	Excludes derivatives.
2	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.
3	The percentage may differ from the Portfolio Holdings because the above calculation is based on a percentage of total investments, excluding derivatives, whereas the calculation in the Portfolio Holdings is based on a percentage of net assets.
4	Amount is less than 0.05%.
5	This list is not a recommendation of any security by the investment adviser.

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Equity ETFs

Fund Expenses (Unaudited)

Schwab U.S. Equity ETFs  |  Annual Report

Schwab U.S. Broad Market ETF

Financial Statements

FINANCIAL HIGHLIGHTS

	9/1/21– 8/31/221	9/1/20– 8/31/211	9/1/19– 8/31/201	9/1/18– 8/31/191	9/1/17– 8/31/181
Per-Share Data
Net asset value at beginning of period	$54.57	$41.64	$35.07	$35.28	$29.86
Income (loss) from investment operations:
Net investment income (loss)2	0.71	0.67	0.74	0.72	0.59
Net realized and unrealized gains (losses)	(8.09)	12.99	6.55	(0.28)	5.39
Total from investment operations	(7.38)	13.66	7.29	0.44	5.98
Less distributions:
Distributions from net investment income	(0.71)	(0.73)	(0.72)	(0.65)	(0.56)
Net asset value at end of period	$46.48	$54.57	$41.64	$35.07	$35.28
Total return	(13.64%)	33.23%	21.24%	1.35%	20.20%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses	0.03% 3	0.03%	0.03%	0.03%	0.03%
Net investment income (loss)	1.38%	1.42%	2.02%	2.12%	1.81%
Portfolio turnover rate4	4%	4%	4%	4%	4%
Net assets, end of period (x 1,000,000)	$20,360	$22,368	$16,549	$14,877	$13,326

    

1	Per-Share Data has been retroactively adjusted to reflect a 2-for-1 share split effective after market close on March 10, 2022 (see financial note 12 for additional information).
2	Calculated based on the average shares outstanding during the period.
3	Ratio includes less than 0.005% of non-routine proxy expenses.
4	Portfolio turnover rate excludes securities received or delivered from processing of in-kind creations or redemptions.

Schwab U.S. Equity ETFs  |  Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Portfolio Holdings  as of August 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 orders@mysummaryprospectus.com. The fund also makes available its complete schedule of portfolio holdings on a daily basis on the fund’s website.

 

Schwab U.S. Equity ETFs  |  Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Portfolio Holdings  as of August 31, 2022 (continued)

Schwab U.S. Equity ETFs  |  Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Portfolio Holdings  as of August 31, 2022 (continued)

Schwab U.S. Equity ETFs  |  Annual Report

See financial notes

Schwab U.S. Broad Market ETF

Portfolio Holdings  as of August 31, 2022 (continued)