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Name | Symbol | Market | Type |
---|---|---|---|
Schwab US Large Cap | AMEX:SCHX | AMEX | Exchange Traded Fund |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.08 | 0.12% | 65.44 | 65.46 | 64.78 | 65.30 | 491,068 | 00:09:12 |
Post-Effective Amendment No. 122 | ☒ |
Amendment No. 124 | ☒ |
Douglas P. Dick, Esq.
1900 K Street, N.W. Washington, DC 20006 |
John M. Loder, Esq.
Ropes & Gray LLP 800 Boylston Street Boston, MA 02199-3600 |
Schwab® 1-5 Year Corporate Bond ETF | SCHJ |
Schwab® 5-10 Year Corporate Bond ETF | SCHI |
Schwab® U.S. Aggregate Bond ETF | SCHZ |
Schwab® U.S. TIPS ETF | SCHP |
Schwab® Short-Term U.S. Treasury ETF | SCHO |
Schwab® Intermediate-Term U.S. Treasury ETF | SCHR |
Schwab® Long-Term U.S. Treasury ETF | SCHQ |
• | If you invest through Charles Schwab & Co, Inc. (broker-dealer), by calling 1-866-345-5954 and using the unique identifier attached to this mailing; or |
• | If you invest through another financial intermediary (such as a bank or broker-dealer) by contacting them directly. |
Fund Summaries | |
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Ticker Symbol: | SCHJ |
1 | “Other expenses” is an estimate based on the expenses the fund expects to incur for its first full fiscal year. |
2 | The information in the table has been restated to reflect current fees and expenses. |
Expenses on a $10,000 Investment | |
1 Year | 3 Years |
$5 | $16 |
Ticker Symbol: | SCHI |
1 | “Other expenses” is an estimate based on the expenses the fund expects to incur for its first full fiscal year. |
2 | The information in the table has been restated to reflect current fees and expenses. |
Expenses on a $10,000 Investment | |
1 Year | 3 Years |
$5 | $16 |
Ticker Symbol: | SCHZ |
Expenses on a $10,000 Investment | |||
1 Year | 3 Years | 5 Years | 10 Years |
$4 | $13 | $23 | $51 |
Average Annual Total Returns as of 12/31/19 | |||
1 Year | 5 Years |
Since
Inception (7/14/11) |
|
Before taxes | 8.64% | 2.97% | 3.08% |
After taxes on distributions | 7.40% | 1.91% | 2.12% |
After taxes on distributions and sale of shares | 5.10% | 1.79% | 1.95% |
Comparative Index (reflects no deduction for expenses or taxes) | |||
Bloomberg Barclays US Aggregate Bond Index | 8.72% | 3.05% | 3.20% |
Ticker Symbol: | SCHP |
Expenses on a $10,000 Investment | |||
1 Year | 3 Years | 5 Years | 10 Years |
$5 | $16 | $28 | $64 |
Average Annual Total Returns as of 12/31/19 | |||
1 Year | 5 Years |
Since
Inception (8/5/10) |
|
Before taxes | 8.36% | 2.55% | 2.98% |
After taxes on distributions | 7.47% | 1.85% | 2.33% |
After taxes on distributions and sale of shares | 4.94% | 1.65% | 2.04% |
Comparative Index (reflects no deduction for expenses or taxes) | |||
Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L) | 8.43% | 2.62% | 3.07% |
Ticker Symbol: | SCHO |
1 | The information in the table has been restated to reflect current fees and expenses. |
Expenses on a $10,000 Investment | |||
1 Year | 3 Years | 5 Years | 10 Years |
$5 | $16 | $28 | $64 |
Average Annual Total Returns as of 12/31/19 | |||
1 Year | 5 Years |
Since
Inception (8/5/10) |
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Before taxes | 3.53% | 1.31% | 0.99% |
After taxes on distributions | 2.57% | 0.75% | 0.63% |
After taxes on distributions and sale of shares | 2.08% | 0.75% | 0.60% |
Comparative Index (reflects no deduction for expenses or taxes) | |||
Bloomberg Barclays US Treasury 1-3 Year Index | 3.59% | 1.39% | 1.08% |
Ticker Symbol: | SCHR |
1 | The information in the table has been restated to reflect current fees and expenses. |
Expenses on a $10,000 Investment | |||
1 Year | 3 Years | 5 Years | 10 Years |
$5 | $16 | $28 | $64 |
Average Annual Total Returns as of 12/31/19 | |||
1 Year | 5 Years |
Since
Inception (8/5/10) |
|
Before taxes | 6.38% | 2.38% | 2.64% |
After taxes on distributions | 5.38% | 1.60% | 1.99% |
After taxes on distributions and sale of shares | 3.77% | 1.47% | 1.76% |
Comparative Index (reflects no deduction for expenses or taxes) | |||
Bloomberg Barclays US Treasury 3-10 Year Index | 6.43% | 2.46% | 2.74% |
Ticker Symbol: | SCHQ |
1 | “Other expenses” is an estimate based on the expenses the fund expects to incur for its first full fiscal year. |
2 | The information in the table has been restated to reflect current fees and expenses. |
Expenses on a $10,000 Investment | |
1 Year | 3 Years |
$5 | $16 |
• | Relative to longer duration bonds, shorter duration bonds would fall less in price because an investor’s principal would be repaid at the lower interest rate sooner. |
• | Longer-duration bonds, on the other hand, would fall in price more than shorter-duration bonds, due to the longer horizon of holding bonds paying less interest than current interest rates. |
1 | All investments are subject to risks, including risks not discussed in this section of the prospectus. Please refer to the risks disclosed elsewhere in this prospectus and the SAI to understand the risks of investing in the funds. |
• | Relative to longer-duration bonds, shorter duration bonds would appreciate less in price; longer-duration bonds would appreciate more in price than shorter-duration bonds. |
• | A bond with a 6 year duration would generally be expected to increase in value by approximately 6% (1% price move for each year of duration), while a bond, or bond fund, with a 7 year duration would generally be expected to increase in value by approximately 7%. |
10/10/191–
12/31/19 |
||||||
Per-Share Data | ||||||
Net asset value at beginning of period | $50.00 | |||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.23 | |||||
Net realized and unrealized gains (losses) | 0.02 | |||||
Total from investment operations | 0.25 | |||||
Less distributions: | ||||||
Distributions from net investment income | (0.21) | |||||
Net asset value at end of period | $50.04 | |||||
Total return | 0.50%3 | |||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.06%4,5 | |||||
Net investment income (loss) | 2.01%4 | |||||
Portfolio turnover rate | 12%3 | |||||
Net assets, end of period (x 1,000) | $35,029 |
10/10/191–
12/31/19 |
||||||
Per-Share Data | ||||||
Net asset value at beginning of period | $50.00 | |||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.29 | |||||
Net realized and unrealized gains (losses) | 0.04 | |||||
Total from investment operations | 0.33 | |||||
Less distributions: | ||||||
Distributions from net investment income | (0.26) | |||||
Net asset value at end of period | $50.07 | |||||
Total return | 0.67%3 | |||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.06%4,5 | |||||
Net investment income (loss) | 2.61%4 | |||||
Portfolio turnover rate | 8%3 | |||||
Net assets, end of period (x 1,000) | $110,151 |
1/1/19–
12/31/19 |
1/1/18–
12/31/18 |
1/1/17–
12/31/17 |
1/1/16–
12/31/16 |
1/1/15–
12/31/15 |
||
Per-Share Data | ||||||
Net asset value at beginning of period | $50.59 | $52.07 | $51.55 | $51.41 | $52.20 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 1.43 | 1.35 | 1.18 | 1.06 | 1.00 | |
Net realized and unrealized gains (losses) | 2.90 | (1.42) | 0.59 | 0.232 | (0.71) | |
Total from investment operations | 4.33 | (0.07) | 1.77 | 1.29 | 0.29 | |
Less distributions: | ||||||
Distributions from net investment income | (1.49) | (1.41) | (1.25) | (1.15) | (1.08) | |
Net asset value at end of period | $53.43 | $50.59 | $52.07 | $51.55 | $51.41 | |
Total return | 8.64% | (0.09%) | 3.46% | 2.49% | 0.56% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.04% | 0.04% | 0.04% | 0.05%3 | 0.05% | |
Net investment income (loss) | 2.71% | 2.67% | 2.26% | 2.01% | 1.92% | |
Portfolio turnover rate4,5 | 63% | 71% | 101% | 119% | 104%6 | |
Net assets, end of period (x 1,000) | $7,383,509 | $5,544,583 | $4,925,693 | $3,309,447 | $2,102,482 |
1/1/19–
12/31/19 |
1/1/18–
12/31/18 |
1/1/17–
12/31/17 |
1/1/16–
12/31/16 |
1/1/15–
12/31/15 |
||
Per-Share Data | ||||||
Net asset value at beginning of period | $53.27 | $55.39 | $54.84 | $53.15 | $54.11 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 1.21 | 1.51 | 1.17 | 0.99 | 0.17 | |
Net realized and unrealized gains (losses) | 3.23 | (2.23) | 0.43 | 1.46 | (0.98) | |
Total from investment operations | 4.44 | (0.72) | 1.60 | 2.45 | (0.81) | |
Less distributions: | ||||||
Distributions from net investment income | (1.14) | (1.40) | (1.05) | (0.76) | (0.15) | |
Net asset value at end of period | $56.57 | $53.27 | $55.39 | $54.84 | $53.15 | |
Total return | 8.36% | (1.31%) | 2.95% | 4.60% | (1.50%) | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.05% | 0.05% | 0.05%2 | 0.07% | 0.07% | |
Net investment income (loss) | 2.18% | 2.80% | 2.13% | 1.78% | 0.31% | |
Portfolio turnover rate3 | 20% | 17% | 19% | 16% | 19% | |
Net assets, end of period (x 1,000) | $8,733,970 | $5,779,263 | $2,880,386 | $1,614,977 | $815,816 |
1/1/19–
12/31/19 |
1/1/18–
12/31/18 |
1/1/17–
12/31/17 |
1/1/16–
12/31/16 |
1/1/15–
12/31/15 |
||
Per-Share Data | ||||||
Net asset value at beginning of period | $49.88 | $50.03 | $50.41 | $50.43 | $50.55 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 1.14 | 0.94 | 0.57 | 0.42 | 0.35 | |
Net realized and unrealized gains (losses) | 0.60 | (0.20)2 | (0.39) | (0.03) | (0.13) | |
Total from investment operations | 1.74 | 0.74 | 0.18 | 0.39 | 0.22 | |
Less distributions: | ||||||
Distributions from net investment income | (1.14) | (0.89) | (0.56) | (0.41) | (0.34) | |
Net asset value at end of period | $50.48 | $49.88 | $50.03 | $50.41 | $50.43 | |
Total return | 3.53% | 1.50% | 0.35% | 0.78% | 0.44% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.06%3 | 0.06% | 0.06% | 0.08%4 | 0.08% | |
Net investment income (loss) | 2.27% | 1.89% | 1.13% | 0.83% | 0.69% | |
Portfolio turnover rate5 | 77% | 65% | 65% | 66% | 89% | |
Net assets, end of period (x 1,000) | $5,262,952 | $4,254,630 | $2,181,398 | $1,414,092 | $1,071,573 |
1/1/19–
12/31/19 |
1/1/18–
12/31/18 |
1/1/17–
12/31/17 |
1/1/16–
12/31/16 |
1/1/15–
12/31/15 |
||
Per-Share Data | ||||||
Net asset value at beginning of period | $52.89 | $53.35 | $53.41 | $53.55 | $53.52 | |
Income (loss) from investment operations: | ||||||
Net investment income (loss)1 | 1.28 | 1.21 | 0.89 | 0.79 | 0.85 | |
Net realized and unrealized gains (losses) | 2.07 | (0.55)2 | (0.07) | (0.15) | 0.022 | |
Total from investment operations | 3.35 | 0.66 | 0.82 | 0.64 | 0.87 | |
Less distributions: | ||||||
Distributions from net investment income | (1.27) | (1.12) | (0.88) | (0.78) | (0.84) | |
Net asset value at end of period | $54.97 | $52.89 | $53.35 | $53.41 | $53.55 | |
Total return | 6.38% | 1.28% | 1.54% | 1.16% | 1.62% | |
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.06%3 | 0.06% | 0.06% | 0.09%4 | 0.10%5 | |
Net investment income (loss) | 2.35% | 2.34% | 1.66% | 1.44% | 1.59% | |
Portfolio turnover rate6 | 38% | 41% | 30% | 30% | 32% | |
Net assets, end of period (x 1,000) | $4,735,743 | $3,480,449 | $1,165,708 | $790,506 | $441,747 |
10/10/191–
12/31/19 |
||||||
Per-Share Data | ||||||
Net asset value at beginning of period | $50.00 | |||||
Income (loss) from investment operations: | ||||||
Net investment income (loss)2 | 0.22 | |||||
Net realized and unrealized gains (losses) | (2.67) | |||||
Total from investment operations | (2.45) | |||||
Less distributions: | ||||||
Distributions from net investment income | (0.21) | |||||
Net asset value at end of period | $47.34 | |||||
Total return | (4.91%)3 | |||||
Ratios/Supplemental Data | ||||||
Ratios to average net assets: | ||||||
Total expenses | 0.06%4,5 | |||||
Net investment income (loss) | 2.07%4 | |||||
Portfolio turnover rate | 3%3 | |||||
Net assets, end of period (x 1,000) | $18,935 |
Fund | Management Fee |
Schwab 1-5 Year Corporate Bond ETF | 0.05% |
Schwab 5-10 Year Corporate Bond ETF | 0.05% |
Schwab U.S. Aggregate Bond ETF | 0.04% |
Schwab U.S. TIPS ETF | 0.05% |
Schwab Short-Term U.S. Treasury ETF | 0.05% |
Schwab Intermediate-Term U.S. Treasury ETF | 0.05% |
Schwab Long-Term U.S. Treasury ETF | 0.05% |
Fund | Management Fee |
Schwab 1-5 Year Corporate Bond ETF | 0.06% |
Schwab 5-10 Year Corporate Bond ETF | 0.06% |
Schwab U.S. Aggregate Bond ETF | 0.04% |
Schwab U.S. TIPS ETF | 0.05% |
Schwab Short-Term U.S. Treasury ETF | 0.06% |
Schwab Intermediate-Term U.S. Treasury ETF | 0.06% |
Schwab Long-Term U.S. Treasury ETF | 0.06% |
Fund |
Approximate Value
of One Creation Unit |
Standard
Creation/Redemption Transaction Fee |
Maximum
Additional Creation Transaction Fee* |
Maximum
Additional Redemption Transaction Fee* |
Schwab 1-5 Year Corporate Bond ETF | $2,446,000 | $100 | 3.0% | 2.0% |
Schwab 5-10 Year Corporate Bond ETF | $2,395,500 | $100 | 3.0% | 2.0% |
Schwab U.S. Aggregate Bond ETF | $5,494,320 | $500 | 3.0% | 2.0% |
Schwab U.S. TIPS ETF | $2,875,785 | $0 | 3.0% | 2.0% |
Schwab Short-Term U.S. Treasury ETF | $2,586,810 | $0 | 3.0% | 2.0% |
Schwab Intermediate-Term U.S. Treasury ETF | $2,934,440 | $0 | 3.0% | 2.0% |
Schwab Long-Term U.S. Treasury ETF | $2,867,500 | $0 | 3.0% | 2.0% |
* | As a percentage of total amount invested or redeemed. |
Schwab Strategic Trust | 811-22311 |
Schwab® 1-5 Year Corporate Bond ETF | SCHJ |
Schwab® 5-10 Year Corporate Bond ETF | SCHI |
Schwab® U.S. Aggregate Bond ETF | SCHZ |
Schwab® U.S. TIPS ETF | SCHP |
Schwab® Short-Term U.S. Treasury ETF | SCHO |
Schwab® Intermediate-Term U.S. Treasury ETF | SCHR |
Schwab® Long-Term U.S. Treasury ETF | SCHQ |
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Appendix – Ratings Of Investment Securities | |
appendix – proxy voting policy |
(1) | Purchase securities of an issuer, except as consistent with the maintenance of its status as an open-end diversified company under the 1940 Act, the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. |
(2) | Concentrate investments in a particular industry or group of industries, as concentration is defined under the 1940 Act, the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time, except that each fund may concentrate its investments to approximately the same extent that the index the fund is designed to track concentrates in the securities of a particular industry or group of industries and each fund may invest without limitation in (a) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, and (b) tax-exempt obligations of state or municipal governments and their political subdivisions. |
(3) | Purchase or sell commodities, commodities contracts or real estate, lend or borrow money, issue senior securities, underwrite securities issued by others, or pledge, mortgage or hypothecate any of its assets, except as permitted or not prohibited by the 1940 Act or the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. |
(1) | Sell securities short unless it owns the security or the right to obtain the security or equivalent securities, or unless it covers such short sale as required by current SEC rules and interpretations (transactions in futures contracts, options and other derivative instruments are not considered selling securities short). |
(2) | Purchase securities on margin, except such short term credits as may be necessary for the clearance of purchases and sales of securities and provided that margin deposits in connection with futures contracts, options on futures or other derivative instruments shall not constitute purchasing securities on margin. |
(3) | Borrow money, except that each fund (a) may borrow money from banks or through an interfund lending facility, if any, and engage in reverse repurchase agreements with any party provided that such borrowings and reverse repurchase agreements in combination do not exceed 33 1/3% of its total assets, including the amount borrowed (not including temporary or emergency borrowings not exceeding 5% of the fund’s total assets); and (b) may borrow an additional amount up to 5% of its assets for temporary or emergency purposes. |
(4) | Lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (this restriction does not apply to purchases of debt securities or repurchase agreements). |
(5) | Purchase securities (other than securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or tax-exempt obligations of state or municipal governments and their political subdivisions) if, as a result of such purchase, 25% or more of the value of its total assets would be invested in any industry or group of industries except that each fund may concentrate its investments to approximately the same extent that the index the fund is designed to track concentrates in the securities of a particular industry or group of industries). |
(6) | Purchase or sell physical commodities or commodity contracts based on physical commodities or invest in unmarketable interests in real estate limited partnerships or invest directly in real estate. For the avoidance of doubt, the foregoing policy does not prevent a fund from, |
among other things, (i) purchasing marketable securities of companies that deal in real estate or interests therein (including REITs); (ii) purchasing marketable securities of companies that deal in physical commodities or interests therein; and (iii) purchasing, selling and entering into futures contracts (including futures contracts on indices of securities, interest rates and currencies), options on futures contracts (including futures contracts on indices of securities, interest rates and currencies), warrants, swaps, forward contracts, foreign currency spot and forward contracts or other derivative instruments. |
Name, Year of Birth, and Position(s) with the Trust
(Term 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 During
the Past Five Years |
INDEPENDENT TRUSTEES | |||
Gerald B. Smith
1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust since 2010; Schwab Strategic Trust since 2016) |
Chairman, Chief Executive Officer and Founder (Mar. 1990-present), Smith Graham & Co. (investment advisors). | 99 | Director (2012-present), Eaton Corporation plc |
INTERESTED TRUSTEES | |||
Walter W. Bettinger II2
1960 Chairman and Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust since 2010) |
Director, President and Chief Executive Officer (Oct. 2008-present), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008-present) and Director (May 2008-present), Charles Schwab & Co., Inc.; Director (Apr. 2006-present), Charles Schwab Bank; Director (Nov. 2017-present), Charles Schwab Premier Bank; Director (July 2019-present), Charles Schwab Trust Bank; Director (May 2008-present) and President and Chief Executive Officer (Aug. 2017-present), Schwab Holdings, Inc.; Director (July 2016-present), Charles Schwab Investment Management, Inc. | 99 | Director (2008-present), The Charles Schwab Corporation |
Jonathan de St. Paer2
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 2019) |
Director (Apr. 2019-present), President (Oct. 2018-present), and Chief Executive Officer (Apr. 2019-Nov. 2019), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019-present) and President (Nov. 2018-present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019-present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019-present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014-Mar. 2019), and Vice President (Jan. 2009-Dec. 2013), Charles Schwab & Co., Inc. | 99 | None |
Joseph R. Martinetto2
1962 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) |
Chief Operating Officer (Feb. 2018-present) and Senior Executive Vice President (July 2015-Feb. 2018), The Charles Schwab Corporation; Senior Executive Vice President (July 2015-present), Charles Schwab & Co., Inc.; Chief Financial Officer (July 2015-Aug. 2017) and Executive Vice President and Chief Financial Officer (May 2007-July 2015), The Charles Schwab Corporation and Charles Schwab & Co., Inc.; Director (May 2007-present), Charles Schwab & Co., Inc.; Director (Apr. 2010-present) and Chief Executive Officer (July 2013-Apr. 2015), Charles Schwab Bank; Director (Nov. 2017-present), Charles Schwab Premier Bank; Director (May 2007-present), Chief Financial Officer (May 2007-Aug. 2017), Senior Executive Vice President (Feb. 2016-present), and Executive Vice President (May 2007-Feb. 2016), Schwab Holdings, Inc. | 99 | None |
Name, Year of Birth, and Position(s) with the Trust
(Term of Office and Length of Time Served3) |
Principal Occupations During the Past Five Years |
OFFICERS | |
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), and Chief Executive Officer (Apr. 2019-Nov. 2019), Charles Schwab Investment Management, Inc.; Trustee and Chief Executive Officer (Apr. 2019-present) and President (Nov. 2018-present), Schwab Funds, Laudus Funds and Schwab ETFs; Director (Apr. 2019-present), Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited; Senior Vice President (Apr. 2019-present), Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014-Mar. 2019), and Vice President (Jan. 2009-Dec. 2013), Charles Schwab & Co., Inc. |
Mark Fischer
1970 Treasurer and Chief Financial Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) |
Treasurer and Chief Financial Officer (Jan. 2016-present), Schwab Funds, Laudus Funds and Schwab ETFs; Assistant Treasurer (Dec. 2013-Dec. 2015), Schwab Funds and Laudus Funds; Assistant Treasurer (Nov. 2013-Dec. 2015), Schwab ETFs; Chief Financial Officer (Mar. 2020-present) and Vice President (Oct. 2013-present), Charles Schwab Investment Management, Inc.; Executive Director (Apr. 2011-Sept. 2013), J.P. Morgan Investor Services; Assistant Treasurer (May 2005-Mar. 2011), Massachusetts Financial Service Investment Management. |
Omar Aguilar
1970 Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) |
Senior Vice President and Chief Investment Officer (Apr. 2011-present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies (June 2011-present), Schwab Funds, Laudus Funds and Schwab ETFs; Head of the Portfolio Management Group and Vice President of Portfolio Management (May 2009-Apr. 2011), Financial Engines, Inc. (investment management firm); Head of Quantitative Equity (July 2004-Jan. 2009), ING Investment Management. |
Brett Wander
1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) |
Senior Vice President and Chief Investment Officer (Apr. 2011-present), Charles Schwab Investment Management, Inc.; Senior Vice President and Chief Investment Officer – Fixed Income (June 2011-present), Schwab Funds, Laudus Funds and Schwab ETFs; Senior Managing Director and Global Head of Active Fixed-Income Strategies (Jan. 2008-Oct. 2010), State Street Global Advisors; Director of Alpha Strategies (Apr. 2006-Jan. 2008), Loomis, Sayles & Company (investment management firm). |
David Lekich
1964 Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs Vice President and Assistant Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) |
Senior Vice President (Sept. 2011-present) and Vice President (Mar. 2004-Sept. 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (Sept. 2011-present) and Vice President (Jan. 2011-Sept. 2011), Charles Schwab Investment Management, Inc.; Secretary (Apr. 2011-present) and Chief Legal Officer (Dec. 2011-present), Schwab Funds; Vice President and Assistant Clerk (Apr. 2011-present), Laudus Funds; Secretary (May 2011-present) and Chief Legal Officer (Nov. 2011-present), Schwab ETFs. |
Catherine MacGregor
1964 Vice President and Assistant Secretary, Schwab Funds and Schwab ETFs Chief Legal Officer, Vice President and Clerk, Laudus Funds (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009) |
Vice President (July 2005-present), Charles Schwab & Co., Inc.; Vice President (Sept. 2005-present), Charles Schwab Investment Management, Inc.; Vice President (Dec. 2005-present) and Chief Legal Officer and Clerk (Mar. 2007-present), Laudus Funds; Vice President (Nov. 2005-present) and Assistant Secretary (June 2007-present), Schwab Funds; Vice President and Assistant Secretary (Oct. 2009-present), Schwab ETFs. |
1 | Each Trustee shall hold office until the election and qualification of his or her successor, or until he or she dies, resigns or is removed. The retirement policy requires that each independent trustee retire by December 31 of the year in which the Trustee turns 74 or the Trustee’s twentieth year of service as an independent trustee on any trust in the Fund Complex, whichever occurs first. |
2 | Mr. Bettinger, Mr. de St. Paer and Mr. Martinetto are Interested Trustees. Mr. Bettinger is an Interested Trustee because he owns stock of CSC, the parent company of CSIM, the investment adviser for the trusts in the Fund Complex, is an employee and director of Charles Schwab & Co., Inc., the principal underwriter for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, and is a director of CSIM. Mr. de St. Paer is an Interested Trustee because he owns stock of CSC and is an employee and director of CSIM. Mr. Martinetto is an Interested Trustee because he owns stock of CSC and is an employee and director of Schwab. |
3 | The President, Treasurer and Secretary/Clerk hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
• | The Audit, Compliance and Valuation Committee reviews the integrity of the Trust’s financial reporting processes and compliance policies, procedures and processes, and the Trust’s overall system of internal controls. The Audit, Compliance and Valuation Committee also reviews and evaluates the qualifications, independence and performance of the Trust’s independent auditors, and the implementation and operation of the Trust’s valuation policy and procedures. This Committee is comprised of at least three independent trustees and currently has the following members: Kiran M. Patel (Chair), John F. Cogan, Nancy F. Heller and Kimberly S. Patmore. The Committee met four times during the most recent fiscal year. |
• | The Governance Committee reviews and makes recommendations to the Board regarding Trust governance-related matters, including but not limited to Board compensation practices, retirement policies and term limits, Board self-evaluations, the effectiveness and allocation of assignments and functions by the Board, the composition of Committees of the Board, and the training of trustees. The Governance Committee is responsible for selecting and nominating candidates to serve as trustees. The Governance Committee does not have a written policy with respect to consideration of candidates for trustee submitted by shareholders. However, if the Governance Committee determined that it would be in the best interests of the Trust to fill a vacancy on the Board, and a shareholder submitted a candidate for consideration by the Board to fill the vacancy, the Governance Committee would evaluate that candidate in the same manner as it evaluates nominees identified by the Governance Committee. Nominee recommendations may be submitted to the Secretary of the Trust at the Trust’s principal business address. This Committee is comprised of at least three independent trustees and currently has the following members: John F. Cogan (Chair), Stephen Timothy Kochis, David L. Mahoney and Kimberly S. Patmore. The Committee met four times during the most recent fiscal year. |
• | The Investment Oversight Committee reviews the investment activities of the Trust and the performance of the funds’ investment adviser. This Committee is comprised of at least three trustees (at least two-thirds of whom shall be independent trustees) and currently has the following members: Gerald B. Smith (Chair), Robert W. Burns, Stephen Timothy Kochis, David L. Mahoney and Jane P. Moncreiff. The Committee met five times during the most recent fiscal year. |
Name of Trustee |
Aggregate Compensation
from the Funds in this SAI1 |
Pension or Retirement Benefits
Accrued as Part of Fund Expenses |
Total Compensation from the Funds
and Fund Complex Paid to Trustees2 |
Interested Trustees | |||
Walter W. Bettinger II | None | N/A | None |
Marie A. Chandoha3 | None | N/A | None |
Jonathan de St. Paer4 | None | N/A | None |
Joseph R. Martinetto | None | N/A | None |
Independent Trustees | |||
Robert W. Burns | $15,122 | N/A | $310,000 |
John F. Cogan | $16,098 | N/A | $330,000 |
Nancy F. Heller | $15,122 | N/A | $310,000 |
Name of Trustee |
Aggregate Compensation
from the Funds in this SAI1 |
Pension or Retirement Benefits
Accrued as Part of Fund Expenses |
Total Compensation from the Funds
and Fund Complex Paid to Trustees2 |
Independent Trustees | |||
Stephen Timothy Kochis | $15,122 | N/A | $310,000 |
David L. Mahoney | $15,122 | N/A | $310,000 |
Jane P. Moncreiff | $15,122 | N/A | $310,000 |
Kiran M. Patel | $16,098 | N/A | $330,000 |
Kimberly S. Patmore | $15,122 | N/A | $310,000 |
Gerald B. Smith | $16,098 | N/A | $330,000 |
3 | Ms. Chandoha retired from the Board effective March 31, 2019. |
4 | Mr. de St. Paer joined the Board effective April 1, 2019. |
Name of Trustee | Dollar Range of Trustee Ownership of the Funds Included in the SAI |
Aggregate Dollar Range of
Trustee Ownership in the Family of Investment Companies |
|
Interested Trustees | |||
Walter W. Bettinger II | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | $1-$10,000 | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | $1-$10,000 | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Jonathan de St. Paer1 | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | $1-$10,000 | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Joseph R. Martinetto | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | $1-$10,000 | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | $1-$10,000 | ||
Schwab Long-Term U.S. Treasury ETF | None |
Name of Trustee | Dollar Range of Trustee Ownership of the Funds Included in the SAI |
Aggregate Dollar Range of
Trustee Ownership in the Family of Investment Companies |
|
Independent Trustees | |||
Robert W. Burns | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | Over $100,000 | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | Over $100,000 | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
John F. Cogan | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Nancy F. Heller | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | $1-$10,000 | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Stephen Timothy Kochis | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
David L. Mahoney | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Jane P. Moncreiff | None | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None |
Name of Trustee | Dollar Range of Trustee Ownership of the Funds Included in the SAI |
Aggregate Dollar Range of
Trustee Ownership in the Family of Investment Companies |
|
Independent Trustees | |||
Kiran M. Patel | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Kimberly S. Patmore | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None | ||
Gerald B. Smith | Over $100,000 | ||
Schwab 1-5 Year Corporate Bond ETF | None | ||
Schwab 5-10 Year Corporate Bond ETF | None | ||
Schwab U.S. Aggregate Bond ETF | None | ||
Schwab U.S. TIPS ETF | None | ||
Schwab Short-Term U.S. Treasury ETF | None | ||
Schwab Intermediate-Term U.S. Treasury ETF | None | ||
Schwab Long-Term U.S. Treasury ETF | None |
1 | Mr. de St. Paer joined the Board effective April 1, 2019. |
Fund | Name and Address | Percentage of Ownership |
Schwab 1-5 Year Corporate Bond ETF |
Charles Schwab & Co., Inc.
211 Main Street San Francisco, CA 94105 |
72.02% |
J.P. Morgan Securities LLC
277 Park Avenue New York, NY 10172 |
20.69% |
Fund | Name and Address | Percentage of Ownership |
Schwab 5-10 Year Corporate Bond ETF | Charles Schwab & Co., Inc. | 85.03% |
J.P. Morgan Securities LLC | 7.87% | |
BofA Securities, Inc.
100 North Tryon Street Charlotte, NC 28255 |
5.67% | |
Schwab U.S. Aggregate Bond ETF | Charles Schwab & Co., Inc. | 70.70% |
Charles Schwab Trust Bank
SIA Omnibus Account FBO Retirement Plan Clients 2360 Corporate Circle Ste. 400 Henderson, NV 89074 |
7.94%1 | |
Brown Brothers Harriman & Co.
140 Broadway New York, NY 10005-1101 |
7.61% | |
Schwab U.S. TIPS ETF | Charles Schwab & Co., Inc. | 49.53% |
The Bank of New York Mellon
240 Greenwich Street New York, NY 10286 |
6.94% | |
Merrill Lynch, Pierce, Fenner & Smith Inc.
1500 American Blvd. Pennington, NJ 08534 |
6.80% | |
National Financial Services LLC
200 Seaport Blvd. Boston, MA 02110 |
5.71% | |
Schwab Short-Term U.S. Treasury ETF | Charles Schwab & Co., Inc. | 44.79% |
Merrill Lynch, Pierce, Fenner & Smith Inc. | 13.07% | |
American Enterprise Investment Services Inc.
707 2nd Avenue South Minneapolis, MN 55474 |
6.40% | |
National Financial Services LLC | 5.66% | |
Schwab Intermediate-Term U.S. Treasury ETF | Charles Schwab & Co., Inc. | 79.79% |
Schwab Long-Term U.S. Treasury ETF | Charles Schwab & Co., Inc. | 58.80% |
J.P. Morgan Securities LLC | 26.77% | |
BofA Securities, Inc. | 8.83% |
1 | These shares are held within the Charles Schwab & Co., Inc. account listed elsewhere in the table. |
1 | Effective December 13, 2019, the management fee of the fund was reduced from 0.06%. |
1 | From October 10, 2019 (commencement of operations) to December 31, 2019. |
Schwab
U.S. Aggregate Bond ETF |
|
Gross income from securities lending activities | $8,471 |
Fees and/or compensation paid for securities lending activities and related services: | |
Fees paid to securities lending agent from a revenue split | $363 |
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in a revenue split | $571 |
Administrative fees not included in revenue split | - |
Indemnification fees not included in revenue split | - |
Rebates (paid to borrower) | $3,058 |
Other fees not included in revenue split | - |
Aggregate fees/compensation paid for securities lending activities | $3,992 |
Schwab
U.S. Aggregate Bond ETF |
|
Net income from securities lending activities* | $4,479 |
* | “Net income from securities lending activities” may not match the fund’s current financial statements, which may reflect certain accrual adjustments. |
Registered Investment Companies
(this amount does not include the funds in this SAI) |
Other Pooled Investment Vehicles | Other Accounts | ||||
Name | Number of Accounts | Total Assets | Number of Accounts | Total Assets | Number of Accounts | Total Assets |
Matthew Hastings | 3 | $5,317,725,299 | 0 | $0 | 0 | $0 |
Steven Hung | 2 | $4,289,554,826 | 0 | $0 | 0 | $0 |
Mark McKissick | 3 | $5,317,725,299 | 0 | $0 | 0 | $0 |
Alfonso Portillo, Jr. | 1 | $3,331,094,537 | 0 | $0 | 0 | $0 |
• | 75% of the funding is based on equal weighting of Investment Fund Performance and Risk Management and Mitigation |
• | 25% of the funding is based on Corporate results |
• | Balancing safety of fund principal with appropriate limits that provide investment flexibility given existing market conditions |
• | Making timely sell recommendations to avoid significant deterioration of value resulting from the weakening condition of the issuer |
• | Escalating operating events and errors for prompt resolution |
• | Identifying largest risks and actively discussing with management |
• | Accurately validating fund information disseminated to the public (e.g., Annual and Semiannual reports, fund fact sheets, fund prospectus) |
• | Executing transactions timely and without material trade errors that result in losses to the funds |
• | Ensuring ongoing compliance with prospectus and investment policy guidelines |
• | Minimizing fund compliance exceptions |
• | Actively following up and resolving compliance exceptions |
• | Fund performance relative to performance measure |
• | Risk management and mitigation |
• | Individual performance against key objectives |
• | Contribution to overall group results |
• | Functioning as an active contributor to the firm’s success |
• | Team work |
• | Collaboration between Analysts and Portfolio Managers |
• | Regulatory/Compliance management |
2 | Includes to-be-announced (TBA) transactions. |
Fund | Regular Broker-Dealer | Value of Holdings* |
Schwab 1-5 Year Corporate Bond ETF | J.P. Morgan Securities LLC | $886,108 |
BofA Securities, Inc. | $840,878 | |
Goldman Sachs & Co. LLC | $692,815 | |
Citigroup Global Markets, Inc. | $619,306 | |
Credit Suisse Securities (USA) LLC | $255,200 | |
Barclays Capital Inc. | $205,126 | |
Schwab 5-10 Year Corporate Bond ETF | BofA Securities, Inc. | $3,398,101 |
J.P. Morgan Securities LLC | $2,917,514 | |
Citigroup Global Markets, Inc. | $2,563,239 | |
Goldman Sachs & Co. LLC | $1,594,243 | |
Barclays Capital Inc. | $463,346 | |
Schwab U.S. Aggregate Bond ETF | Wells Fargo Securities, LLC | $50,232,878 |
Citigroup Global Markets, Inc. | $44,298,983 | |
J.P. Morgan Securities LLC | $42,841,842 | |
Goldman Sachs & Co. LLC | $30,650,016 | |
Morgan Stanley & Co. LLC | $30,381,640 | |
Barclays Capital Inc. | $7,857,827 | |
Deutsche Bank Securities, Inc. | $5,115,482 | |
Schwab U.S. TIPS ETF | None | N/A |
Schwab Short-Term U.S. Treasury ETF | None | N/A |
Schwab Intermediate-Term U.S. Treasury ETF | None | N/A |
Schwab Long-Term U.S. Treasury ETF | None | N/A |
* | Includes securities issued by regular broker-dealer’s parent and affiliates, if any. |
Fund |
Approximate Value of
One Creation Unit |
Standard Creation/Redemption
Transaction Fee |
Maximum Additional
Creation Transaction Fee* |
Maximum Additional
Redemption Transaction Fee* |
Schwab 1-5 Year Corporate Bond ETF | $2,446,000 | $100 | 3.0% | 2.0% |
Schwab 5-10 Year Corporate Bond ETF | $2,395,500 | $100 | 3.0% | 2.0% |
Schwab U.S. Aggregate Bond ETF | $5,494,320 | $500 | 3.0% | 2.0% |
Schwab U.S. TIPS ETF | $2,875,785 | $0 | 3.0% | 2.0% |
Schwab Short-Term U.S. Treasury ETF | $2,586,810 | $0 | 3.0% | 2.0% |
Schwab Intermediate-Term U.S. Treasury ETF | $2,934,440 | $0 | 3.0% | 2.0% |
Schwab Long-Term U.S. Treasury ETF | $2,867,500 | $0 | 3.0% | 2.0% |
* | As a percentage of the total amount invested or redeemed. |
Aaa: | Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. |
Aa: | Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. |
A: | Obligations rated A are judged to be upper-medium grade and are subject to low credit risk. |
Baa: | Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. |
Ba: | Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. |
B: | Obligations rated B are considered speculative and are subject to high credit risk. |
Caa: | Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. |
Ca: | Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. |
C: | Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest. |
P-1: | Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations. |
P-2: | Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations. |
P-3: | Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations. |
AAA: | An obligation rated ‘AAA’ has the highest rating assigned by S&P Global Ratings. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. |
AA: | An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong. |
A: | An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong. |
BBB: | An obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. |
BB: | An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. |
B: | An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation. |
CCC: | An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. |
CC: | An obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred, but S&P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default. |
C: | An obligation rated ‘C’ is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher. |
D: | An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such |
payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer. |
A-1: | A short-term obligation rated ‘A-1’ is rated in the highest category by S&P Global Ratings. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong. |
A-2: | A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory. |
A-3: | A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. |
AAA: | ‘AAA’ ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. |
AA: | ‘AA’ ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. |
A: | ‘A’ ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings. |
BBB: | ‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity. |
BB: | ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments. |
B: | ‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment. |
CCC: | Default is a real possibility. |
CC: | Default of some kind appears probable. |
C: | A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a ‘C’ category rating for an issuer include: |
a. | the issuer has entered into a grace or cure period following non-payment of a material financial obligation; |
b. | the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation; |
c. | the formal announcement by the issuer or their agent of a distressed debt exchange; |
d. | a closed financing vehicle where payment capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent. |
RD: | ‘RD’ ratings indicate an issuer that in Fitch’s opinion has experienced: |
a. | an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but |
b. | has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and |
c. | has not otherwise ceased operating. |
i. | the selective payment default on a specific class or currency of debt; |
ii. | the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation; |
iii. | the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; |
iv. | ordinary execution of a distressed debt exchange on one or more material financial obligations. |
D: | ‘D’ ratings indicate an issuer that in Fitch Ratings’ opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, or which has otherwise ceased business. |
F1: | Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added “+” to denote any exceptionally strong credit feature. |
F2: | Good intrinsic capacity for timely payment of financial commitments. |
F3: | The intrinsic capacity for timely payment of financial commitments is adequate. |
I. | INTRODUCTION |
II. | PHILOSOPHY |
III. | PROXY VOTING PRINCIPLES |
A. | DIRECTORS AND AUDITORS |
i. | Directors |
• | The board is not majority independent |
• | The board does not have any female directors and has not provided a reasonable explanation for its lack of gender diversity |
• | Non-independent directors serve on the nominating, compensation or audit committees |
• | Director recently failed to attend at least 75% of meetings or serves on an excessive number of publically traded company boards |
• | Directors approved executive compensation schemes that appear misaligned with shareholders’ interests |
• | Director recently acted in a manner inconsistent with these Proxy Policies or failed to be responsive to concerns of shareholders |
ii. | Auditors |
• | Audit-related fees are less than half of the total fees paid by the company to the audit firm |
• | A recent material restatement of annual financial statements |
• | A pattern of inaccurate audits or other behavior that may call into question an auditor’s effectiveness |
B. | BOARD MATTERS |
i. | Classified Boards |
• | The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings |
• | The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting |
• | The company had material financial statement restatements |
• | The company’s board adopted a Shareholder Rights Plan (a defensive tactic used by a company’s board to fight a hostile takeover, commonly referred to as a Poison Pill) during the past year and did not submit it to shareholders for approval |
ii. | Majority Voting |
iii. | Cumulative Voting |
iv. | Proxy Access |
• | The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings |
• | The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting |
• | The company had material financial statement restatements |
• | The company’s board adopted a Shareholder Rights Plan during the past year and did not submit it to shareholders for approval |
v. | Independent Chair |
• | The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings |
• | The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting |
• | The company had material financial statement restatements |
• | The company’s board adopted a Shareholder Rights Plan during the past year and did not submit it to shareholders for approval |
C. | COMPENSATION |
i. | Advisory Vote on Executive Compensation and Frequency |
• | Executive compensation is out of line with industry peers considering the company’s performance over time |
• | Executive compensation plan includes significant guaranteed bonuses or has a low amount of compensation at risk |
• | Executive compensation plan offers excessive perquisites, tax-gross up provisions, or golden parachutes |
ii. | Equity Compensation Plans |
• | Plan’s total potential dilution appears excessive |
• | Plan’s burn rate appears excessive compared to industry peers |
• | Plan allows for the re-pricing of options without shareholder approval |
• | Plan has an evergreen feature |
iii. | Employee Stock Purchase Plans |
iv. | Re-price/Exchange Option Plans |
D. | ANTI-TAKEOVER |
i. | Shareholder Rights Plans |
• | Plan does not expire in a relatively short time horizon |
• | Plan does not have a well-crafted permitted bid or qualified offer feature that mandates shareholder votes in certain situations |
• | Plan automatically renews without shareholder approval |
• | Company’s corporate governance profile |
ii. | Right to Call Special Meeting |
iii. | Right to Act by Written Consent |
iv. | Supermajority Voting |
E. | CAPITAL STRUCTURE, MERGERS AND ACQUISITIONS |
i. | Increase in Authorized Common Shares |
ii. | Preferred Shares |
iii. | Mergers and Acquisitions |
F. | ENVIRONMENTAL AND SOCIAL PROPOSALS |
Environmental and social shareholder proposals typically request companies to either change their business practices or enhance their disclosures. CSIM believes that, in most instances, the board is best positioned to determine a company’s strategy and manage its operations, and generally does not support shareholder proposals seeking a change in business practices. CSIM generally evaluates shareholder proposals seeking additional disclosures on relevant environmental and social issues based on a company’s current level of reporting, peer disclosures and the existence of controversies or litigation related to the issue. |
i. | Political Contribution Proposals |
IV. | ADMINISTRATION |
A. | CONFLICTS OF INTERESTS |
CSIM maintains the following practices that seek to prevent undue influence on its proxy voting activity. Such influence might arise from any relationship between the company holding the proxy (or any shareholder or board member of the company) and CSIM, CSIM’s affiliates, a Fund or a Fund affiliate, or a CSIM employee. | |
With respect to proxies of an underlying affiliated Fund, the Proxy Committee will vote such proxies in the same proportion as the vote of all other shareholders of such Fund (i.e., “echo vote”), unless otherwise required by law. When required by law or applicable exemptive order, the Proxy Committee will also “echo vote” proxies of an unaffiliated mutual fund or exchange traded fund. For example, certain exemptive orders issued to the Funds by the Securities and Exchange Commission and Section 12(d)(1)(F) of the Investment Company Act of 1940, as amended, require the Funds, under certain circumstances, to “echo vote” proxies of registered investment companies that serve as underlying investments of the Funds. |
In addition, with respect to holdings of The Charles Schwab Corporation (“CSC”) (ticker symbol: SCHW), the Proxy Committee will vote such proxies in the same proportion as the vote of all other shareholders of CSC (i.e., “echo vote”), unless otherwise required by law. |
Where the Proxy Committee has delegated an item to the Investment Stewardship Team or a portfolio manager of a fundamentally managed separate account, CSIM has taken certain steps to mitigate perceived or potential conflicts of interest, including, but not limited to, the following: |
• | maintaining a reporting structure that separates employees with voting authority from those with sales or business relationship authority; |
• | reporting of potential conflicts to the Proxy Committee to review the conflict and provide final vote determination; |
• | defaulting to the standard CSIM Proxy Voting Guidelines. |
B. | FOREIGN SECURITIES/SHAREBLOCKING |
CSIM has arrangements with Glass Lewis for the execution of proxy votes. However, voting proxies with respect to shares of foreign securities may involve significantly greater effort and corresponding cost than voting proxies with respect to domestic securities due to the variety of regulatory schemes and corporate practices in foreign countries with respect to proxy voting. Problems voting foreign proxies may include the following: |
• | proxy statements and ballots written in a foreign language; |
• | untimely and/or inadequate notice of shareholder meetings; |
• | restrictions of foreigner’s ability to exercise votes; |
• | requirements to vote proxies in person; |
• | requirements to provide local agents with power of attorney to facilitate CSIM’s voting instructions. |
C. | SECURITIES LENDING |
Certain of the Funds enter into securities lending arrangements with lending agents to generate additional revenue for their portfolios. In securities lending arrangements, any voting rights that accompany the loaned securities generally pass to the borrower of the securities, but the lender retains the right to recall a security and may then exercise the security’s voting rights. In order to vote the proxies of securities out on loan, the securities must be recalled prior to the established record date. CSIM will use its best efforts to recall a Fund’s securities on loan where deemed appropriate and in the best interest of shareholders. |
D. | SUB-ADVISORY RELATIONSHIPS |
Where CSIM has delegated day-to-day investment management responsibilities to an investment sub-adviser, CSIM may (but generally does not) delegate proxy voting responsibility to such investment sub-adviser. Each sub-adviser to whom proxy voting responsibility has been delegated will be required to review all proxy solicitation material and to exercise the voting rights associated with the securities it has been allocated in the best interest of each investment company and its shareholders, or other client. Prior to delegating the proxy voting responsibility, CSIM will review each sub-adviser’s proxy voting policy to determine whether it believes that each sub-adviser’s proxy voting policy is generally consistent with the maximization of the value of CSIM’s clients’ investments by protecting the long-term best interest of shareholders. | |
E. | REPORTING AND RECORD RETENTION |
CSIM will maintain, or cause Glass Lewis to maintain, records that identify the manner in which proxies have been voted (or not voted) on behalf of CSIM clients. CSIM will comply with all applicable rules and regulations regarding disclosure of its or its clients’ proxy voting records and procedures. | |
CSIM will retain all proxy voting materials and supporting documentation as required under the Investment Advisers Act of 1940, as amended. |
Item 29. | Persons Controlled By Or Under Common Control With The Registrant. |
Item 30. | Indemnification. |
Item 31. | Business And Other Connections Of Investment Adviser. |
Name and Position with Adviser | Name of Other Company | Capacity |
Walter W. Bettinger, II, Director | The Charles Schwab Corporation | Director, President and Chief Executive Officer |
Charles Schwab & Co., Inc. | Director, President and Chief Executive Officer | |
Americano Acquisition Corp. | Director, President and Chief Executive Officer | |
Schwab Holdings, Inc. | Director, President and Chief Executive Officer | |
Schwab International Holdings, Inc. | President and Chief Executive Officer | |
Charles Schwab Bank | Director | |
Charles Schwab Premier Bank | Director | |
Charles Schwab Trust Bank | Director | |
Schwab (SIS) Holdings, Inc. I | President and Chief Executive Officer | |
Schwab Funds | Chairman and Trustee | |
Laudus Funds | Chairman and Trustee | |
Schwab ETFs | Chairman and Trustee | |
Peter B. Crawford, Director | The Charles Schwab Corporation | Executive Vice President and Chief Financial Officer |
Charles Schwab & Co., Inc. | Director, Executive Vice President and Chief Financial Officer | |
Americano Acquisition Corp. | Director, Executive Vice President and Chief Financial Officer | |
Schwab Holdings, Inc. | Director, Executive Vice President and Chief Financial Officer | |
Charles Schwab Global Holdings, Inc. | Executive Vice President and Chief Financial Officer | |
Schwab International Holdings, Inc. | Executive Vice President and Chief Financial Officer | |
Performance Technologies, Inc. | Executive Vice President and Chief Financial Officer | |
Schwab (SIS) Holdings, Inc. I | Executive Vice President and Chief Financial Officer | |
Schwab Technology Holdings, Inc. | Executive Vice President and Chief Financial Officer | |
Richard A. Wurster, Chief Executive Officer | The Charles Schwab Corporation | Executive Vice President – Schwab Asset Management Solutions |
Charles Schwab & Co., Inc. | Executive Vice President – Schwab Asset Management Solutions | |
Charles Schwab Investment Advisory, Inc. | Director, Chief Executive Officer and President | |
Jonathan de St. Paer, Director and President | Charles Schwab & Co., Inc. | Senior Vice President |
Schwab Funds | Trustee, President and Chief Executive Officer | |
Laudus Funds | Trustee, President and Chief Executive Officer | |
Schwab ETFs | Trustee, President and Chief Executive Officer | |
Charles Schwab Worldwide Funds, plc | Director | |
Charles Schwab Asset Management (Ireland) Limited | Director |
Name and Position with Adviser | Name of Other Company | Capacity |
Omar Aguilar, Senior Vice President and Chief Investment Officer | Schwab Funds | Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies |
Laudus Funds | Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies | |
Schwab ETFs | Senior Vice President and Chief Investment Officer – Equities and Multi-Asset Strategies | |
Brett Wander, Senior Vice President and Chief Investment Officer | Schwab Funds | Senior Vice President and Chief Investment Officer – Fixed Income |
Laudus Funds | Senior Vice President and Chief Investment Officer – Fixed Income | |
Schwab ETFs | Senior Vice President and Chief Investment Officer – Fixed Income | |
William P. McMahon, Jr., Senior Vice President and Chief Investment Officer | None | None |
David Lekich, Senior Vice President and Chief Counsel | Charles Schwab & Co., Inc. | Senior Vice President |
Schwab Funds | Secretary and Chief Legal Officer | |
Laudus Funds | Vice President and Assistant Clerk | |
Schwab ETFs | Secretary and Chief Legal Officer | |
Michael Hogan, Senior Vice President and Chief Compliance Officer | Schwab Funds | Chief Compliance Officer |
Schwab ETFs | Chief Compliance Officer | |
Laudus Funds | Chief Compliance Officer | |
Charles Schwab & Co., Inc. | Senior Vice President and Chief Compliance Officer – IIMS Compliance | |
Bryan L. Olson, Senior Vice President and Chief Operating Officer | Charles Schwab Investment Advisory, Inc. | Senior Vice President and Chief Operating Officer |
Mark D. Fischer, Vice President and Chief Financial Officer | Schwab Funds | Treasurer and Chief Financial Officer |
Laudus Funds | Treasurer and Chief Financial Officer | |
Schwab ETFs | Treasurer and Chief Financial Officer |
Item 32. | Principal Underwriter: |
Name | Position and Office with Underwriter | Positions and Offices with Registrant |
William M. Doran | Director | None |
Paul F. Klauder | Director | None |
Wayne M. Withrow | Director | None |
Kevin Barr | Director, President & Chief Executive Officer | None |
Maxine Chou | Chief Financial Officer, Chief Operations Officer, & Treasurer | None |
Jennifer H. Campisi | Chief Compliance Officer, Anti-Money Laundering Officer & Assistant Secretary | None |
John C. Munch | General Counsel & Secretary | None |
Name | Position and Office with Underwriter | Positions and Offices with Registrant |
Mark J. Held | Senior Vice President | None |
Lori L. White | Vice President & Assistant Secretary | None |
John P. Coary | Vice President & Assistant Secretary | None |
Robert Silvestri | Vice President | None |
Judith A. Hirx | Vice President | None |
Jason McGhin | Vice President | None |
Gary Michael Reese | Vice President | None |
Item 33. | Location Of Accounts And Records. |
1) | Schwab Strategic Trust, 211 Main Street, San Francisco, CA 94105 |
2) | Charles Schwab Investment Management, Inc., 211 Main Street, San Francisco, CA 94105 |
3) | Principal Underwriter – SEI Investments Distribution Co., 1 Freedom Valley Drive, Oaks, PA 19456 |
4) | Custodian – State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111 |
5) | Transfer Agent – State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111 |
Item 34. | Management Services. |
Item 35. | Undertakings. |
SCHWAB STRATEGIC TRUST |
Registrant |
/s/ Jonathan de St. Paer |
Jonathan de St. Paer, President and Chief Executive Officer |
Signature | Title | |
Walter W. Bettinger II*
Walter W. Bettinger II |
Chairman and Trustee | |
/s/ Jonathan de St. Paer
Jonathan de St. Paer |
Trustee, President and Chief Executive Officer | |
Joseph R. Martinetto*
Joseph R. Martinetto |
Trustee | |
Robert W. Burns*
Robert W. Burns |
Trustee | |
John F. Cogan*
John F. Cogan |
Trustee | |
Nancy F. Heller*
Nancy F. Heller |
Trustee | |
Stephen Timothy Kochis*
Stephen Timothy Kochis |
Trustee | |
David L. Mahoney*
David L. Mahoney |
Trustee | |
Jane P. Moncreiff*
Jane P. Moncreiff |
Trustee | |
Kiran M. Patel*
Kiran M. Patel |
Trustee | |
Kimberly S. Patmore*
Kimberly S. Patmore |
Trustee | |
Gerald B. Smith*
Gerald B. Smith |
Trustee | |
Mark D. Fischer*
Mark D. Fischer |
Treasurer and Chief Financial Officer |
1 Year Schwab US Large Cap Chart |
1 Month Schwab US Large Cap Chart |
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