# EDGAR Filing Document

**Accession Number:** 0001454889
**File Stem:** 0001104659-23-004135
**Filing Date:** 2023-1
**Character Count:** 489462
**Document Hash:** 84512dda37bdd1bf2b6edfe4421b2b19
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-004135.hdr.sgml**: 20230727

**ACCESSION NUMBER**: 0001104659-23-004135

**CONFORMED SUBMISSION TYPE**: 485APOS

**PUBLIC DOCUMENT COUNT**: 7

**FILED AS OF DATE**: 20230117

**DATE AS OF CHANGE**: 20230628

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SCHWAB STRATEGIC TRUST
- **CENTRAL INDEX KEY:** 0001454889
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 485APOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-22311
- **FILM NUMBER:** 23530801

**BUSINESS ADDRESS:**
- **STREET 1:** 211 MAIN STREET
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105
- **BUSINESS PHONE:** 1-415-667-7000

**MAIL ADDRESS:**
- **STREET 1:** 211 MAIN STREET
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Schwab Strategic Trust
- **DATE OF NAME CHANGE:** 20090127
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SCHWAB STRATEGIC TRUST
- **CENTRAL INDEX KEY:** 0001454889
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 485APOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-160595
- **FILM NUMBER:** 23530800

**BUSINESS ADDRESS:**
- **STREET 1:** 211 MAIN STREET
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105
- **BUSINESS PHONE:** 1-415-667-7000

**MAIL ADDRESS:**
- **STREET 1:** 211 MAIN STREET
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Schwab Strategic Trust
- **DATE OF NAME CHANGE:** 20090127

**As filed with the Securities and Exchange Commission on January 17, 2023

File Nos. 333-160595 <br> 811-22311

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A <br> REGISTRATION STATEMENT

 *UNDER <br> THE SECURITIES ACT OF 1933* 

Post-Effective Amendment No. 154

☒

and

REGISTRATION STATEMENT

 *UNDER <br> THE INVESTMENT COMPANY ACT OF 1940 <br> Amendment No. 156* 

☒

## SCHWAB STRATEGIC TRUST
(Exact Name of Registrant as Specified in Charter)

211 Main Street <br> San Francisco, California 94105

(Address of Principal Executive Offices)

(800) 648-5300

(Registrant's Telephone Number, including Area Code)

Catherine M. MacGregor, Esq. <br> 211 Main Street <br> San Francisco, California 94105

(Name and Address of Agent for Service)

 *Copies of communications to:* 

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| | |
|:---|:---|
| Douglas P. Dick, Esq. <br> Dechert LLP <br> 1900 K Street, N.W. <br> Washington, DC 20006  | John M. Loder, Esq. <br> Ropes & Gray LLP <br> 800 Boylston Street <br> Boston, MA 02199-3600  |

---

It is proposed that this filing will become effective (check appropriate box):

□ Immediately upon filing pursuant to paragraph (b)

□ On (date) pursuant to paragraph (b)

□ 60 days after filing pursuant to paragraph (a)(1)

□ On (date) pursuant to paragraph (a)(1)

□ 75 days after filing pursuant to paragraph (a)(2)

☒ On April 3, 2023, pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

□ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

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[**TABLE OF CONTENTS**](#TOC)

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

![[MISSING IMAGE: log-csamctr299c.jpg]](log-csamctr299c.jpg)

**Prospectus** \| [ ], [ ]

Schwab<sup>®</sup> ETFs

Schwab<sup>®</sup> High Yield Bond ETF

---

| | |
|:---|:---|
| Ticker Symbol | **SCYB**  |

---

Principal U.S. Listing Exchange: [**NYSE Arca, Inc.**]

As with all exchange-traded funds, the Securities and Exchange Commission (SEC) has not approved these securities or passed on whether the information in this prospectus is adequate and accurate. Anyone who indicates otherwise is committing a federal crime.

------

[**TABLE OF CONTENTS**](#TOC)

## Schwab High Yield Bond ETF

---

| | |
|:---|:---|
| **Fund Summary** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; [Schwab High Yield Bond ETF](#iddhagcSHYBETF)  | [1](#iddhagcSHYBETF) |
| **[About the Fund](#iddfjgAF)**  | [5](#iddfjgAF) |
| **[Fund Details](#idehbajFD)**  | [6](#idehbajFD) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Investment Objective and More About Principal Risks](#iddbeibIOMAPR)  | [6](#iddbeibIOMAPR) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Portfolio Holdings](#iddjjPH)  | [11](#iddjjPH) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Financial Highlights](#iddghFH)  | [12](#iddghFH) |
| **[Fund Management](#idefhdFM)**  | [13](#idefhdFM) |
| **[Investing in the Fund](#ideafbbIF)**  | [14](#ideafbbIF) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Share Trading Prices](#idbecjSTP)  | [14](#idbecjSTP) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Determination of Net Asset Value](#idegghDNAV)  | [14](#idegghDNAV) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Purchase and Redemption of Creation Units](#idibagPRCU)  | [15](#idibagPRCU) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Additional Policies](#idfgifAP)  | [16](#idfgifAP) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Distributions and Taxes](#idiijfDT)  | [17](#idiijfDT) |
| &nbsp;&nbsp;&nbsp;&nbsp; [Additional Information](#idhfihAI)  | [18](#idhfihAI) |

---

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[**TABLE OF CONTENTS**](#TOC)

Schwab<sup>®</sup> High Yield Bond ETF

---

| | |
|:---|:---|
| **Ticker Symbol:**  | **SCYB** |

---

#### Investment Objective
The fund's goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of U.S. dollar denominated below investment grade corporate debt.

#### Fund Fees and Expenses
 **This table describes the fees and expenses you may pay if you buy, hold and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and Example below.** 

**Shareholder Fees** (fees paid directly from your investment) <br>

---

| | |
|:---|:---|
|  **Annual Fund Operating Expenses** (expenses that you pay each year as a % <br> of the value of your investment)  | **Annual Fund Operating Expenses** (expenses that you pay each year as a % <br> of the value of your investment)  |
| Management fees | [ ]  |
| Other expenses<sup>(1)</sup> |  |
| **Total annual fund operating expenses** | **[ ]**  |

---

<sup>(1)</sup> <br>

"Other expenses" is an estimate based on the expenses the fund expects to incur for its first full fiscal year.

#### Example
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then sell all of your shares at the end of those time periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Your actual costs may be higher or lower.

---

| | |
|:---|:---|
| **Expenses on a $10,000 Investment**  | **Expenses on a $10,000 Investment**  |
| **1 Year**  | **3 Years**  |
| $[] | $[] |

---

#### Portfolio Turnover
The fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect the fund's performance. The fund is new and therefore does not have a historical portfolio turnover rate.

#### Principal Investment Strategies
**To pursue its goal, the fund generally invests in securities that are included in the ICE BofA US Cash Pay High Yield Constrained Index**<sup>†</sup>. ICE BofA US Cash Pay High Yield Constrained Index tracks the performance of U.S. dollar denominated below investment grade corporate debt, currently in a coupon paying period, that is publicly issued in the U.S. domestic market. Qualifying securities must have a below investment grade rating (based on an average of Moody's, S&P and Fitch), at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $250 million. In addition, qualifying securities must have risk exposure to countries that are members of the FX-G10, Western Europe or territories of the U.S. and Western Europe. The FX-G10 includes all Euro members, the U.S., Japan, the United Kingdom, Canada, Australia, New Zealand, Switzerland, Norway and Sweden. Securities included in the index, are, among others, Rule 144A securities (both with and without registration rights), callable perpetual securities (at least one year from the first call date), and fixed-to-floating rate securities (callable within the fixed rate period and are at least one year from the last call prior to the date the bond transitions from a fixed to a floating rate security). The index excludes certain types of securities, including, among others, contingent capital securities, other hybrid capital securities, securities trading without accrued interest, deferred interest bonds, original issue zero coupon bonds, pay-in-kind bonds, and taxable and tax-exempt U.S. municipal securities. The securities in the index are updated on the last business day of each month. As of January 31, 2023, there were approximately [ ] securities in the index.

It is the fund's policy that under normal circumstances it will invest at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in below investment grade bonds (based on an average of Moody's, S&P and Fitch).

Under normal circumstances, the fund may invest up to 20% of its net assets in securities not included in its index. The principal types of these investments include those that the investment adviser believes will help the fund track the index, such as investments in (a) securities that are not represented in the index but the investment adviser anticipates will be added to the index; (b) high-quality liquid investments, such as securities issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, and obligations that are issued

<sup>†</sup> <br>

"ICE<sup>®</sup>" is a registered trademark of ICE Data Indices, LLC or its affiliates and "BofA<sup>®</sup>" is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates ("BofA") and may not be used without BofA's prior written approval. These trademarks have been licensed, along with the ICE BofA US Cash Pay High Yield Constrained Index ("Index") for use by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, in connection with the Schwab High Yield Bond ETF. The Schwab High Yield Bond ETF is not sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers ("ICE Data and its Suppliers"). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in the Schwab High Yield Bond ETF.

Schwab High Yield Bond ETF \| Fund Summary1

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by private issuers; (c) other investment companies; and (d) derivatives, principally futures contracts. The fund may use futures contracts and other derivatives primarily to help manage interest rate exposure. The fund may also invest in cash and cash equivalents, including money market funds, and lend its securities to minimize the difference in performance that naturally exists between an index fund and its corresponding index.

Because it may not be possible or practical to purchase all of the securities in the index, the investment adviser will seek to track the total return of the index by using sampling techniques. Sampling techniques involve investing in a limited number of index securities that, when taken together, are expected to perform similarly to the index as a whole. These techniques are based on a variety of factors, including interest rate and yield curve risk, maturity exposures, industry, sector and issuer weights, credit quality, and other risk factors and characteristics. The fund generally expects that its portfolio will hold less than the total number of securities in the index, but reserves the right to hold as many securities as it believes necessary to achieve the fund's investment objective. The fund may sell securities that are represented in the index in anticipation of their removal from the index.

The fund will concentrate its investments (i.e., hold more than 25% of its total assets) in a particular industry, group of industries or sector to approximately the same extent that its index is so concentrated. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities), and repurchase agreements collateralized by U.S. government securities are not considered to be issued by members of any industry. Similarly, tax-exempt obligations of state or municipal governments and their political subdivisions are not considered to be issued by members of any industry.

A number of factors may affect the fund's ability to achieve a high correlation with its index, including the degree to which the fund uses a sampling technique (or otherwise gives a different weighting to a security than the index does). The correlation between the performance of the fund and its index may also diverge due to transaction costs, asset valuations, timing variances, and differences between the fund's portfolio and the index resulting from legal restrictions (such as diversification requirements) that apply to the fund but not to the index.

#### Principal Risks
The fund is subject to risks, any of which could cause an investor to lose money. The fund's principal risks include:

**Market Risk.** Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.

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

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

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

**High-Yield Risk.** High-yield securities and unrated securities of similar credit quality (junk bonds) are subject to greater levels of credit and liquidity risks, and may be more volatile than higher-rated securities. High-yield securities are considered predominately speculative with respect to the issuer's continuing ability to make principal and interest payments.

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

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

2Schwab High Yield Bond ETF \| Fund Summary

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**Non-U.S. Issuer Risk.** The fund may invest in U.S.-registered, dollar-denominated bonds of non-U.S. corporations. The fund's investments in bonds of non-U.S. issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with bonds issued by non-U.S. corporations and entities in emerging markets.

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

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

**Derivatives Risk.** The fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. The fund's use of derivatives could reduce the fund's performance, increase its volatility and cause the fund to lose more than the initial amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on the fund.

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

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

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

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

**Shares of the Fund May Trade at Prices Other Than NAV.** Fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of the fund will approximate the fund's net asset value (NAV), there may be times when the market price and the NAV vary significantly. An investor may pay more than NAV when buying shares of the fund in the secondary market, and an investor may receive less than NAV when selling those shares in the secondary market. The market price of fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or market disruption.

For more information on the risks of investing in the fund, please see the "Fund Details" section in the prospectus.

#### Performance
Because the fund is new, no performance figures are given. Once the fund has completed a full calendar year of operations, a bar chart and table will be included that will provide some indication of the risks of investing in the fund by showing the variability of the fund's returns and comparing the fund's performance to the index. For current performance information, once available, please see **www.schwabassetmanagement.com/schwabetfs_prospectus**.

#### Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management™

#### Portfolio Managers
**Matthew Hastings, CFA,** Managing Director and Head of Taxable Bond Strategies, is responsible for the day-to-day co-management of the fund. He has managed the fund since [ ].

**Ryan Hook,** [ ], is responsible for the day-to-day co-management of the fund. He has managed the fund since [ ].

**Steven Hung,** Senior Portfolio Manager, is responsible for the day-to-day co-management of the fund. He has managed the fund since [ ].

#### Purchase and Sale of Fund Shares
The fund issues and redeems shares at its NAV only in large blocks of shares (Creation Units). These transactions are usually in exchange for a basket of securities included in the index and/or an amount of cash. As a practical matter, only Authorized Participants purchase or redeem Creation Units.

Individual shares may only be purchased and sold in the secondary market (i.e., on a national securities exchange) through a broker or dealer at market prices. Because fund shares trade at market prices rather than at NAV, fund shares may trade at a price greater than NAV (premium) or less than NAV (discount). When buying or selling shares in the secondary market, you may incur costs

Schwab High Yield Bond ETF \| Fund Summary3

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attributable to the difference between the highest price a buyer is willing to pay to purchase shares of the fund (bid) and the lowest price a seller is willing to accept for shares of the fund (ask) (the "bid-ask spread"). Because the fund is new, the fund does not have a sufficient trading history to report trading information and related costs. When available, recent information regarding the fund's NAV, market price, premiums and discounts, and bid-ask spreads will be available at www.schwabassetmanagement.com.

#### Tax Information
Dividends and capital gains distributions received from the fund will generally be taxable as ordinary income or capital gains, unless you are investing through an IRA, 401(k) or other tax-advantaged account (in which case you may be taxed later, upon withdrawal of your investment from such account).

#### Payments to Financial Intermediaries
If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the adviser and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary's website for more information.

4Schwab High Yield Bond ETF \| Fund Summary

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## About the Fund
The fund described in this prospectus is advised by Charles Schwab Investment Management, Inc., dba Schwab Asset Management (the investment adviser). The fund is an "exchange-traded fund" (ETF). ETFs are funds that trade like other publicly-traded securities. The fund is an index fund and is designed to track the total return of an index. Because the composition of an index tends to be comparatively stable, most index funds historically have shown low portfolio turnover compared to actively managed funds.

This strategy distinguishes an index fund from an "actively managed" fund. Instead of choosing investments for the fund based on portfolio management's judgment, an index is used to determine which securities the fund should own.

Unlike shares of a mutual fund, shares of the fund are listed on a national securities exchange and trade at market prices that change throughout the day. The market price for the fund's shares may be different from its net asset value per share (NAV). The fund has its own CUSIP number and trades on the [NYSE Arca, Inc]. under the following ticker:

Schwab High Yield Bond ETF SCYB

The fund issues and redeems shares at its NAV only in large blocks of shares (Creation Units). These transactions are usually in exchange for a basket of securities and/or an amount of cash. As a practical matter, only institutional investors who have entered into an authorized participant agreement (Authorized Participants) purchase or redeem Creation Units.

#### A Note to Retail Investors
Shares can be purchased directly from the fund only in exchange for a basket of securities and/or an amount of cash that is expected to be worth a minimum of [ ] million dollars or more. Most individual investors, therefore, will not be able to purchase shares directly from the fund. Instead, these investors will purchase shares in the secondary market through a brokerage account or with the assistance of a broker. Thus, some of the information contained in this prospectus – such as information about purchasing and redeeming shares from the fund and references to transaction fees imposed on purchases and redemptions – is not relevant to most individual investors. Shares purchased or sold through a brokerage account or with the assistance of a broker may be subject to brokerage commissions and charges.

The fund's performance will fluctuate over time and, as with all investments, future performance may differ from past performance.

Schwab High Yield Bond ETF \| About the Fund5

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## Fund Details
There can be no assurance that the fund will achieve its objective. Except as explicitly described otherwise, the investment objective, strategies and policies of the fund may be changed without shareholder approval.

The principal investment strategies and the main risks associated with investing in the fund are summarized in the fund summary at the front of this prospectus. This section takes a more detailed look at some of the types of securities, the associated risks, and the various investment strategies that may be used in the day-to-day portfolio management of the fund, as described below. In addition to the particular types of securities and strategies that are described in this prospectus, the fund may use strategies that are not described herein in support of its overall investment goal. These additional strategies and the risks associated with them are described in the "Investment Objective, Strategies, Risks and Limitations" section in the Statement of Additional Information (SAI).

The fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the agreement with the sponsor of its current index is terminated or for any other reason determined in good faith by the fund's Board of Trustees. In any such instance, the substitute index would represent the same market segment as the current index.

Investment Objective and More About Principal Risks

#### Investment Objective
The fund's goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of U.S. dollar denominated below investment grade corporate debt. The fund's investment objective is not fundamental and therefore may be changed by the fund's Board of Trustees without shareholder approval.

#### More Information About Principal Investment Risks
The fund is subject to risks, any of which could cause an investor to lose money.

**Market Risk.** Financial markets rise and fall in response to a variety of factors, sometimes rapidly and unpredictably. Markets may be impacted by economic, political, regulatory and other conditions, including economic sanctions and other government actions. In addition, the occurrence of global events, such as war, terrorism, environmental disasters, natural disasters and epidemics, may also negatively affect the financial markets. These events could reduce consumer demand or economic output; result in market closures, changes in interest rates, inflation/deflation, travel restrictions or quarantines; and significantly adversely impact the economy. Governmental and quasi-governmental authorities and regulators throughout the world have in the past often responded to serious economic disruptions with a variety of significant fiscal and monetary policy changes which could have an unexpected impact on financial markets and the fund's investments. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money over short or long periods.

**Index-Related Risk.** The index provider does not provide any warranty as to the timeliness, accuracy or completeness of any data relating to the index. Errors relating to the index, including index data, computations and/or construction, may occur from time to time and may not be identified by the index provider for a period of time or at all. Losses resulting from index errors may be borne by the fund and its shareholders.

In addition, market disruptions could cause delays in the index's rebalancing schedule which may result in the index and, in turn, the fund experiencing returns different than those that would have been achieved under a normal rebalancing schedule.

**Interest Rate Risk.** Interest rates rise and fall over time. As with any investment whose yield reflects current interest rates, the fund's yield will change over time. During periods when interest rates are low or there are negative interest rates, the fund's yield (and total return) also may be low or the fund may be unable to maintain positive returns. Changes in interest rates also may affect the fund's share price: a rise in interest rates generally causes the fund's share price to fall. This risk is greater when the fund holds fixed-income securities with longer maturities. The longer the fund's portfolio duration, the more sensitive to interest rate movements its share price is likely to be. For example, a fund with a longer portfolio duration is more likely to experience a decrease in its share price as interest rates rise. Duration is an estimate of a security's (or portfolio of securities) sensitivity to changes in prevailing interest rates that is based on certain factors that may prove to be incorrect. It is therefore not an exact measurement and may not be able to reliably predict a particular security's price sensitivity to changes in interest rates.

Economic conditions and other factors, including a central bank's monetary policy, may result in changes in interest rates, which could have sudden and unpredictable effects on the markets and significantly impact the value of fixed-income securities in which the fund invests. Rising interest rates may decrease liquidity in the fixed-income securities markets, making it more difficult for the fund to sell its fixed-income

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securities holdings at a time when the investment adviser might wish to sell such securities. In addition, decreased market liquidity also may make it more difficult to value some or all of the fund's fixed-income securities holdings. Certain countries have experienced negative interest rates on certain fixed-income securities. Negative or very low interest rates could magnify the risks associated with changes in interest rates. In general, changing interest rates, including rates that fall below zero, could have unpredictable effects on markets and may expose fixed-income and related markets to heightened volatility. To the extent that the investment adviser of the fund anticipates interest rate trends imprecisely, the fund could miss yield opportunities or its share price could fall. Inflation-protected securities may react differently to interest rate changes than other types of fixed-income securities and tend to react to changes in "real" interest rates.

**Credit Risk.** A decline in the credit quality of an issuer, guarantor or liquidity provider of a portfolio investment or a counterparty could cause the fund to lose money or underperform. The fund could lose money if, due to a decline in credit quality, the issuer, guarantor or liquidity provider of a portfolio investment or a counterparty fails to make, or is perceived as being unable or unwilling to make, timely principal or interest payments or otherwise honor its obligations. The credit quality of the fund's portfolio holdings can change rapidly in certain market environments and any default on the part of a single portfolio investment could cause the fund's share price or yield to fall. Certain U.S. government securities that the fund invests in are not backed by the full faith and credit of the U.S. government, which means they are neither issued nor guaranteed by the U.S. Treasury. There can be no assurance that the U.S. government will provide financial support to securities of its agencies and instrumentalities if it is not obligated to do so under law. Also, any government guarantees on securities the fund owns do not extend to the shares of the fund itself.

**High-Yield Risk.** Funds that invest in high-yield securities and unrated securities of similar credit quality (junk bonds) may be subject to greater levels of credit and liquidity risk than funds that do not invest in such securities. These securities are considered predominately speculative with respect to the issuer's continuing ability to make principal and interest payments. High-yield securities may be more volatile than higher-rated securities. An economic downturn or period of rising interest rates could adversely affect the market for these securities and reduce the fund's ability to sell these securities (liquidity risk). If the issuer of a security is in default with respect to interest or principal payments, the fund may lose its entire investment. Because of the risks involved in investing in high-yield securities, an investment in a fund that invests in such securities should be considered speculative.

**Tracking Error Risk.** As an index fund, the fund seeks to track the performance of the index, although it may not be successful in doing so. The divergence between the performance of the fund and the index, positive or negative, is called "tracking error." Tracking error can be caused by many factors and it may be significant. For example, the fund may not invest in certain securities in the index, match the securities' weighting to the index, or the fund may invest in securities not in the index, due to regulatory, operational, custodial or liquidity constraints; corporate transactions; asset valuations; transaction costs and timing; tax considerations; and index rebalancing, which may result in tracking error. The fund may attempt to offset the effects of not being invested in certain index securities by making substitute investments, but these efforts may not be successful. In certain circumstances, the fund may value individual securities based on fair value prices developed using methods approved by the fund's Board of Trustees. To the extent the fund calculates its net asset value (NAV) based on fair value prices, the fund's performance may diverge from the index. In addition, cash flows into and out of the fund, operating expenses and trading costs all affect the ability of the fund to match the performance of the index, because the index does not have to manage cash flows and does not incur any costs.

**Non-U.S. Issuer Risk.** The fund may invest in U.S.-registered, dollar-denominated bonds of non-U.S. corporations, governments, agencies and supra-national entities. Investments in bonds of non-U.S. issuers involve certain risks that are more significant than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; the imposition of economic sanctions or other government restrictions; differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. In certain countries, non-U.S. issuers may be subject to less governmental regulation than U.S. issuers and legal remedies available to investors may be more limited than those available with respect to investments in the United States. The securities of some foreign companies may be less liquid and at times more volatile than securities of comparable U.S. companies. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position, and the prices of foreign bonds and the U.S. bonds have, at times, moved in opposite directions. Changes to the financial condition or credit rating of a non-U.S. issuer may also adversely affect the value of the non-U.S. issuer's securities held by the fund. These risks may be heightened in connection with bonds issued by non-U.S. corporations and entities in emerging markets.

**Portfolio Turnover Risk.** The fund may engage in frequent trading of its portfolio securities in connection with its tracking of the index. A portfolio turnover rate of 200%, for example, is equivalent to the fund buying and selling all of its securities two times during the course of the year. A high portfolio turnover rate (such as 100% or more) could result in high brokerage costs, though the brokerage costs. A high portfolio turnover rate also can result in an increase in taxable capital gains distributions to the fund's shareholders.

**Prepayment and Extension Risk.** Certain fixed-income securities are subject to the risk that the securities may be paid off earlier or later than expected, especially during periods of falling or rising interest rates, respectively. Rising interest rates tend to extend the duration of certain fixed-income securities, making them more sensitive to changes in interest rates. As a result, in a period of rising interest rates, the fund could exhibit additional volatility and hold securities paying lower-than-market rates of interest. This is known as extension

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risk. When interest rates decline, borrowers may pay off their fixed-income securities sooner than expected. This can reduce the fund's returns because the fund will have to reinvest that money at the lower prevailing interest rates. In addition, prepayments and subsequent reinvestments increase the fund's portfolio turnover rate. This is known as prepayment risk. Either situation could hurt the fund's performance.

**Derivatives Risk.** The fund may invest in derivative instruments. The principal types of derivatives used by the fund are futures contracts. A futures contract is an agreement to buy or sell a financial instrument at a specific price on a specific day. The fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Certain of these risks, such as market risk, credit risk, liquidity risk, leverage risk and operational risk, are discussed elsewhere in this prospectus. The fund's use of derivatives is also subject to lack of availability risk, valuation risk, correlation risk and tax risk. Lack of availability risk is the risk that suitable derivative transactions may not be available in all circumstances for risk management or other purposes. Valuation risk is the risk that a particular derivative may be valued incorrectly. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Tax risk is the risk that the use of derivatives may cause the fund to realize higher amounts of short-term capital gains. The fund's use of derivatives could reduce the fund's performance, increase the fund's volatility, and cause the fund to lose more than the initial amount invested. The fund's use of derivatives also could create a risk of counterparty default under certain transactions, risks that the fund would need to liquidate portfolio positions when it may not be advantageous to do so in order to meet margin and payment obligations, and legal risks relating to insufficient documentation, insufficient capacity or authority of a counterparty, or legality or enforceability of a contract. Furthermore, the use of derivatives subject to regulation by the Commodity Futures Trading Commission (CFTC) could cause the fund to become a commodity pool, which would require the fund to comply with certain CFTC rules.

**Liquidity Risk.** Liquidity risk exists when particular investments may be difficult to purchase, sell or value, especially during stressed market conditions. The market for certain investments may become illiquid due to specific adverse changes in the conditions of a particular issuer or under adverse market or economic conditions independent of the issuer. In addition, limited dealer inventories of certain securities could potentially lead to decreased liquidity. In such cases, the fund, due to limitations on investments in illiquid securities and the difficulty in readily purchasing and selling such securities at favorable times or prices, may decline in value, experience lower returns and/or be unable to achieve its desired level of exposure to a certain issuer or sector. Further, transactions in illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.

**Leverage Risk.** Certain fund transactions, such as derivatives transactions, may give rise to a form of leverage and may expose the fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of the fund's portfolio securities which means even a small amount of leverage can have a disproportionately large impact on the fund. The use of leverage may cause the fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations.

**Securities Lending Risk.** The fund may lend its portfolio securities to brokers, dealers, and other financial institutions provided a number of conditions are satisfied, including that the loan is fully collateralized. When the fund lends portfolio securities, its investment performance will continue to reflect changes in the value of the securities loaned, and the fund will also receive a fee or interest on the collateral. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent. The fund will also bear the risk of any decline in value of securities acquired with cash collateral. The fund may pay lending fees to a party arranging the loan.

**Operational Risk.** The fund is exposed to operational risk arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of the fund's service providers, counterparties or other third parties, failed or inadequate processes and technology or system failures. The fund seeks to reduce these operational risks through controls and procedures believed to be reasonably designed to address these risks. However, these controls and procedures cannot address every possible risk and may not fully mitigate the risks that they are intended to address.

**Market Trading Risk.** Although fund shares are listed on national securities exchanges, there can be no assurance that an active trading market for fund shares will develop or be maintained. If an active market is not maintained, investors may find it difficult to buy or sell fund shares. Trading of shares of the fund on a national securities exchange may be halted if exchange officials deem such action appropriate, if the fund is delisted, or if the activation of marketwide "circuit breakers" halts stock trading generally. If the fund's shares are delisted, the fund may seek to list its shares on another market, merge with another ETF, or redeem its shares at NAV.

**Shares of the Fund May Trade at Prices Other Than NAV.** As with all ETFs, fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of the fund will approximate the fund's NAV, there may be times when the market price and the NAV vary significantly. Thus, an investor may pay more than NAV when buying shares of the fund in the secondary market, and an investor may receive less than NAV when selling those shares in the secondary market. The investment adviser cannot predict whether shares will trade above (premium), below (discount) or at NAV. The fund may have a limited number of financial institutions that may act as "Authorized Participants" or market makers. Only Authorized Participants who have entered into agreements with the fund's distributor may engage in creation or redemption transactions directly with the fund (as discussed in the "Creation and Redemption" section below). If those Authorized Participants exit the business or are unable to process creation and/or redemption orders (including

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in situations where Authorized Participants have limited or diminished access to capital required to post collateral), and no other Authorized Participant is able to step forward to create and/or redeem, fund shares may trade at a premium or discount to NAV like closed-end fund shares (and may even face delisting). Similar effects may result if market makers exit the business or are unable to continue making markets in the fund's shares. More generally, market makers are not obligated to make a market in the fund's shares, and Authorized Participants are not obligated to submit purchase or redemption orders for Creation Units. Further, while the creation/ redemption feature is designed to make it likely that shares normally will trade close to the value of the fund's holdings, disruptions to creations and/or redemptions, including disruptions at market makers, Authorized Participants or market participants, or during periods of significant market volatility, may result in market prices that differ significantly from the value of the fund's holdings. In addition, transactions by large shareholders may account for a large percentage of trading volume on the fund's primary listing exchange and may, therefore, have a material effect on the market price of the fund's shares.

The market price of fund shares during the trading day, like the price of any exchange-traded security, may be impacted by a "bid/ask" spread. The bid/ask spread is the difference between what investors are willing to pay for fund shares (the "bid" price) and the price at which investors are willing to sell fund shares (the "ask" price). The spread may vary over time and is based on many factors including supply and demand for the underlying securities held by the fund, supply and demand for shares of the fund itself, and the historical and current magnitude of price fluctuation of the fund's asset class. The spread is generally narrower if the fund has higher trading volume and wider if the fund has lower trading volume (which may be the case for funds that are newly launched or small in size). Bid/ask spreads may also be wider during times of higher market volatility. At those times, fund shares are most likely to be traded at a discount to NAV, and the discount is likely to be greatest when the price of shares is falling fastest, which may be the time that investors most want to sell shares.

There are various methods by which investors can purchase and sell shares of the fund and various types of orders that may be placed. Investors should consult their financial intermediary before purchasing or selling shares of the fund.

**Money Market Fund Risk.** An investment by the fund in an underlying money market fund has risks. The fund may invest in underlying money market funds that either seek to maintain a stable $1.00 net asset value ("stable share price money market funds") or that have a share price that fluctuates ("variable share price money market funds"). Although an underlying stable share price money market fund seeks to maintain a stable $1.00 net asset value, it is possible to lose money by investing in such a money market fund. Because the share price of an underlying variable share price money market fund will fluctuate, when the fund sells the shares it owns they may be worth more or less than what the fund originally paid for them. In addition, neither type of money market fund is designed to offer capital appreciation. In exchange for their emphasis on stability and liquidity, money market investments may offer lower long-term performance than stock or bond investments. Certain underlying money market funds may impose a fee upon the sale of shares or may temporarily suspend the ability to sell shares if such fund's liquidity falls below required minimums.

Maturity and Duration: A Brief Explanation

 *"Maturity" and "duration" are concepts generally associated with fixed-income investments, such as bonds, and, as an investor or potential investor in a fixed-income fund, it is important that you have a basic understanding of each concept and how each relates to your investment. The following discussion about maturity and duration will also help you understand how bond prices – and, by extension, the share price of a fund that invests in bonds – can be expected to change given a change in interest rates.* 

#### Maturity and Duration – The Basics
A **BOND** is a loan between an issuer and a bondholder that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, over a specified period of time. More specifically, in exchange for the loan amount, or **PRINCIPAL**, a bondholder receives **INTEREST** – or **COUPON** – payments from the issuer as compensation for the use – or borrowing – of the bondholder's principal for a specific period of time. "ISSUERS" may include entities such as corporations, governments, government agencies and municipalities, while "BONDHOLDERS" may include, but are not limited to, mutual funds or ETFs, banks, insurance companies and individuals.

In addition to the coupon payments that an issuer is obligated to pay a bondholder, the issuer is also obligated to repay the principal amount at "maturity." A bond's **MATURITY** represents when the final principal payment of a bond is scheduled to be repaid. Simply, it is the period of time until a bondholder can expect to receive all of its money, or principal, back from the issuer. A bond's **MATURITY DATE** is the specific date by which the entire principal amount is to be repaid.

**DURATION** is a measure that estimates the sensitivity of a bond's price relative to interest rate changes. Duration is often expressed as a period of time (i.e., 6 months, 1 year, 2.5 years, etc.). Generally, a lower duration indicates a lower sensitivity to changes in interest rates, and a higher duration indicates a higher sensitivity to changes in interest rates. Unlike maturity, which only measures the time until final payment of principal, duration considers the timing and pattern of interest and principal payments. Because different factors are considered when calculating maturity and duration, a bond's duration is often shorter than its maturity and can at times be significantly shorter than the maturity. Another characteristic of duration is that as interest rates decline, duration tends to increase.

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When thinking about the concepts of maturity and duration, there are two common risks<sup>1</sup> generally associated with fixed-income investments that are important to consider. The first relates to maturity: **there is risk that an issuer may be unable to repay the principal due.** Usually, this risk increases with time. Bondholders typically have greater transparency with respect to an issuer's ability to repay a loan over shorter time horizons, while assessing the future becomes more difficult as the periods get longer. As a result, bonds with longer maturities tend to carry higher repayment risk than bonds with shorter maturities. This is one reason why longer-maturity bonds typically pay higher interest rates than shorter-maturity bonds. Similarly, funds that invest in bonds with longer maturities are subject to higher repayment risk, but will typically pay higher dividends than funds that invest in bonds with shorter maturities.

The second risk relates to the **impact of interest rates on a bond's price.** Interest rates generally fluctuate; meaning, they can increase or decrease prior to a bond's maturity date. This means that during an investor's holding period, a bond's coupon may be less than or greater than current market interest rates. To the extent a bond's coupon is different from current market interest rates, **a bond's price will fall or rise to align with current market interest rates.** Bond prices exhibit an inverse relationship relative to interest rates: when interest rates decline, bond prices increase and vice versa. For example, assume you purchased a new issue bond when interest rates were 4%. Now assume that since you purchased that bond interest rates increased by 1% to 5%. Keeping in mind that bond prices and interest rates have an inverse relationship – when interest rates increase, a bond's price declines – the price of the purchased 4% coupon bond in this example would decline because bonds can now be purchased with 5% coupons making the 4% coupon bond less valuable.

#### More on Duration
While having a basic understanding of both maturity and duration is important for any fixed-income investor, maturity tends to be more straightforward than the concept of duration, which requires a bit more discussion. In its simplest terms, duration attempts to quantify and estimate how much a bond's price can be expected to change in response to changing interest rates. Typically, duration increases as a bond's maturity increases and decreases as a bond's maturity decreases; meaning, longer-maturity bonds have higher durations than shorter-maturity bonds. With this in mind, remember that as duration increases, a bond's sensitivity to changes in interest rates increases. That means that when interest rates increase:

• 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.

So, when looking at the example above, where interest rates rose from 4% to 5%, the extent to which the 4% coupon bond would decline in price is dependent upon the bond's duration – the longer the duration, the more it would decline in price. For example, a 4% coupon bond with a duration of 2 years would decline less in price than a 4% coupon bond with a duration of 4 years. This is true when assessing the extent to which any bond's price may change when interest rates change.

Beyond providing a way to compare the relative interest rate sensitivity of bonds, duration attempts to estimate the expected change in a bond's value should interest rates change by 1%. Again, recall the example above, where interest rates rose from 4% to 5%. Under this scenario, a bond with a 6 year duration would generally be expected to decline in price by approximately 6% (1% price move for each year of duration), while a bond with a 7 year duration would generally be expected to decline in price by approximately 7%. If the example above were reversed and interest rates instead declined by 1%, from 4% to 3%, the opposite would occur:

• 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%.

It is important to understand that a bond's duration is not constant. As stated earlier, duration considers the timing and pattern of interest and principal payments. As time progresses, the period of time remaining until interest and principal payments are made changes, impacting the duration of a bond – as the time until those payments are made shortens, the duration also shortens. In addition, and as discussed previously, duration is also impacted by interest rate changes. As such, duration is a gauge of a bond's sensitivity to interest rate changes, but it should not be relied on as an exact measure of the price change if interest rates change.

#### Maturity and Duration – At the Fund Level
A fund that invests in bonds is impacted in the same way as the individual bond described in the examples above – as interest rates increase the value of fund shares will decline, and as interest rates decline the value of fund shares will increase. To provide investors with information about a fund's interest rate risk exposure, the fund typically provides the average maturity and duration of the portfolio,

<sup>1</sup> 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 fund.

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which take into consideration the maturity and duration of all the fund's fixed-income investments. A fund with a shorter portfolio average maturity and duration is expected to be less impacted by changing interest rates than a fund with a longer portfolio average maturity and duration. Simply stated, a fund with a shorter portfolio average maturity and duration is generally less volatile as a result of interest rate changes than a fund with a longer portfolio average maturity and duration.

In the same way that a bond's duration is not constant, a fund's portfolio average maturity and duration are not constant. A fund's portfolio average duration will change as a result of duration changes to the bonds the fund owns, as described above. Further, both the average maturity and duration may change as the fund's portfolio manager buys and/or sells bonds owned by the fund. To remain aware of the interest rate sensitivity of funds you own, it is helpful to periodically review the fund's reported average portfolio maturity and duration.

#### Maturity and Duration – Other Fixed-Income Securities
The above discussion provides a general overview of the concepts of maturity and duration. Application and calculation of these concepts may be slightly different or become more complex when applied to other types of fixed-income securities, which may require different assessments to determine and/or calculate maturity and duration. For example, to calculate the duration for securitized investments, such as mortgage-backed securities and certain asset-backed securities, an investor must look-through to the instruments underlying the securities and must account for the pace of repayment of the underlying instruments. To learn more about maturity and duration for the specific types of fixed-income investments that the fund may invest in, please refer to the SAI.

Portfolio Holdings

A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio securities is available in the SAI.

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## Financial Highlights
The fund is newly organized and therefore has not yet had any operations as of the date of this prospectus.

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## Fund Management

#### [To be updated by amendment]
The investment adviser for the fund is Charles Schwab Investment Management, Inc., dba Schwab Asset Management, 211 Main Street, San Francisco, CA 94105. The investment adviser was founded in 1989 and as of [ ], [ ], managed approximately $[ ] billion in assets.

The investment adviser oversees the asset management and administration of the fund. As compensation for these services, the investment adviser is entitled to receive a management fee from the fund of [ ]% of the fund's average daily net assets.

Pursuant to an Amended and Restated Advisory Agreement between the investment adviser and Schwab Strategic Trust, on behalf of the fund, the investment adviser pays the operating expenses of the fund, excluding taxes, any brokerage expenses, and extraordinary or non-routine expenses.

A discussion regarding the basis for the Board of Trustees' approval of the fund's Amended and Restated Advisory Agreement will be included in the fund's first annual or semiannual report to shareholders.

**Matthew Hastings, CFA,** Managing Director and Head of Taxable Bond Strategies for Schwab Asset Management, is responsible for the day-to-day co-management of the fund. Mr. Hastings leads the portfolio management team for the Schwab Taxable Bond Funds and Schwab Fixed-Income ETFs. He also has overall responsibility for all aspects of the management of the funds. Prior to joining Schwab in 1999, Mr. Hastings was in fixed-income sales and trading at Lehman Brothers. He has worked in the fixed-income securities industry since 1996.

**Ryan Hook,** [ ] for Schwab Asset Management, is responsible for the day-to-day co-management of the fund. [ ].

**Steven Hung,** Senior Portfolio Manager for Schwab Asset Management, is responsible for the day-to-day co-management of the fund. He is primarily responsible for the management and oversight of corporate bonds within the taxable bond strategies, with additional responsibility for managing municipal bond index strategies. Mr. Hung has been a portfolio manager with Schwab Asset Management since 2005 and prior to that, served in various roles as an associate portfolio manager and trader since 1999. In 1998, he joined Schwab's management training program and worked as a clerk on the options trading floor of the Pacific Coast Stock Exchange.

Additional information about the portfolio managers' compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the fund is available in the SAI.

**Distributor.** The fund's Distributor is SEI Investments Distribution Co. The Distributor, located at 1 Freedom Valley Drive, Oaks, PA 19456, is a broker-dealer registered with the SEC. The Distributor distributes Creation Units for the fund and does not maintain a secondary market in shares of the fund.

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## Investing in the Fund
On the following pages, you will find information on buying and selling shares. Most investors will invest in the fund by placing orders through their brokerage account at Charles Schwab & Co., Inc. (Schwab) or an account with another broker/dealer or other intermediary. Authorized Participants (as defined in "Purchase and Redemption of Creation Units," below) may invest directly in the fund by placing orders for Creation Units through the fund's transfer agent, State Street Bank and Trust Company (direct orders). Helpful information on taxes is included as well.

The fund generally is not registered for sale in jurisdictions outside the United States and is intended for purchase by persons residing in the United States. A person is considered resident in the United States if at the time of the investment (i) the account has an address of record in the United States or a U.S. territory (including APO/FPO/DPO) and (ii) all account owners are resident in the United States or a U.S. territory and have a valid U.S. taxpayer identification number. If an existing account is updated to reflect a non-U.S. address, the account may be restricted from making additional investments.

Shares of the fund trade on national securities exchanges and elsewhere during the trading day and can be bought and sold throughout the trading day like other shares of publicly traded securities. When buying or selling shares through a broker most investors will incur customary brokerage commissions and charges. In addition, you may incur the cost of the "spread" – that is, any difference between the bid price (the highest price a buyer is willing to pay for a share of a fund) and the ask price (the lowest price a seller is willing to accept for a share of a fund).

#### Shares of the fund trade under the following trading symbol:
Schwab High Yield Bond ETF SCYB

Shares of the fund may be acquired or redeemed directly from the fund only in Creation Units or multiples thereof, as discussed in the "Creation and Redemption" section below. Once created, shares of the fund trade in the secondary market in amounts less than a Creation Unit. The fund does not impose any minimum investment for shares of the fund purchased on an exchange or in the secondary market. Except when aggregated in Creation Units, shares are not redeemable by the fund.

Share Trading Prices

As with other types of securities, the trading prices of shares in the secondary market can be affected by market forces such as supply and demand, economic conditions and other factors. The price you pay or receive when you buy or sell your shares in the secondary market may be more (a premium) or less (a discount) than the NAV of such shares.

#### Premium/Discount Information
The fund is new. When available, information showing the number of days the market price of the fund's shares was greater than the fund's NAV per share (i.e., at a premium) and the number of days it was less than the fund's NAV per share (i.e., at a discount), for various time periods, will be available at the fund's website **www.schwabassetmanagement.com**.

Determination of Net Asset Value

The NAV of the fund's shares is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4:00 p.m. Eastern Time, on each day the NYSE is open for trading (each, a Business Day). NAV per share is calculated by dividing the fund's net assets by the number of the fund's shares outstanding. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a Business Day and accept purchase and redemption orders and calculate its NAV as of the normally scheduled close of regular trading on the NYSE for that day.

The fund's portfolio securities are valued using market quotations or official closing prices if they are readily available. In cases where market quotations are not readily available or the investment adviser deems them unreliable, the fund's portfolio securities are valued based on fair values developed following procedures approved by the fund's Board of Trustees. The Board of Trustees has designated the investment adviser as the valuation designee (Valuation Designee) for the fund to perform the fair value determination relating to all fund investments. When valuing fixed-income securities with remaining maturities of more than 60 days, the fund uses the value of the security

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provided by pricing services. The pricing services value most fixed-income securities at an evaluated price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Securities with remaining maturities of 60 days or less are generally valued at an evaluated price; however, such securities may be valued at their amortized cost if it approximates the security's market value.

The fund's Board of Trustees has approved procedures to fair value the fund's securities when market prices are not "readily available" or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security's primary pricing source is unable or unwilling to provide a price; when a security's primary trading market is closed during regular market hours; or when a security's value is materially affected by events occurring after the close of the security's primary trading market. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, the fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. The Valuation Designee's policies and procedures, which govern the selection and application of methodologies for determining the fair value of fund investments, seek to ensure that the prices at which the fund's shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. Generally, when fair valuing a security, the Valuation Designee will take into account all reasonably available information that may be relevant to a particular valuation including, but not limited to, fundamental analytical data regarding the issuer, information relating to the issuer's business, recent trades or offers of the security, general and specific market conditions and the specific facts giving rise to the need to fair value the security. The Valuation Designee makes fair value determinations in good faith and in accordance with the fair value procedures approved by the Board of Trustees. Due to the subjective and variable nature of fair value pricing, there can be no assurance that the fund could obtain the fair value assigned to the security upon the sale of such security.

Transactions in fund shares will be priced at NAV only if you purchase or redeem shares directly from the fund in Creation Units. Fund shares that are purchased or sold on the secondary market will be effected at prevailing market prices, which may be higher or lower than NAV, and may be subject to brokerage commissions and charges. As described below, purchases and redemptions of Creation Units will be priced at the NAV next determined after receipt of the purchase or redemption order.

Purchase and Redemption of Creation Units

#### Creation and Redemption
The shares that trade in the secondary market are "created" at NAV. The fund issues and redeems shares only in Creation Units, which are large blocks of shares. Only institutional investors who have entered into an authorized participant agreement (known as Authorized Participants) may purchase or redeem Creation Units. Creation Units generally are issued and redeemed in exchange for a specified basket of securities and/or a designated amount of cash. Each Business Day, prior to the opening of trading, the fund publishes the specific securities and designated amount of cash included in that day's basket for the fund through the National Securities Clearing Corporation (NSCC) or other method of public dissemination. The fund reserves the right to accept or pay out a basket of securities or cash that differs from the published basket. The prices at which creations and redemptions occur are based on the next calculation of NAV after an order is received and deemed acceptable by the transfer agent. Orders from Authorized Participants to create or redeem Creation Units will only be accepted on a Business Day and are also subject to acceptance by the fund and the transfer agent.

Creations and redemptions must be made by an Authorized Participant that has executed an agreement with the Distributor with respect to creations and redemptions of Creation Unit aggregations. Information about the procedures regarding creation and redemption of Creation Units is included in the SAI.

#### Authorized Participants and the Continuous Offering of Shares
Because new shares may be created and issued on an ongoing basis, at any point during the life of the fund, a "distribution," as such term is used in the Securities Act of 1933, as amended (the 1933 Act), may be occurring. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in them being deemed participants in a distribution in a manner that could render them statutory underwriters and subject to the prospectus-delivery and liability provisions of the 1933 Act. Nonetheless, any determination of whether one is an underwriter must take into account all the relevant facts and circumstances of each particular case.

Broker-dealers should also note that dealers who are not "underwriters," but are participating in a distribution (as contrasted to ordinary secondary transactions), and thus dealing with shares that are part of an "unsold allotment" within the meaning of Section 4(a)(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus delivery exemption provided by Section 4(a)(3) of the 1933 Act. For delivery of prospectuses to exchange members, the prospectus delivery mechanism of Rule 153 under the 1933 Act is only available with respect to transactions on a national securities exchange.

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#### Creation and Redemption Transaction Fees for Creation Units
The fund may impose a creation transaction fee and a redemption transaction fee to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. The creation and redemption transaction fees applicable to the fund are listed below. The standard creation transaction fee is charged to each purchaser on the day such purchaser creates a Creation Unit. The standard fee is a single charge and will be the amount indicated below regardless of the number of Creation Units purchased by an investor on the same day. Similarly, the standard redemption transaction fee will be the amount indicated below regardless of the number of Creation Units redeemed that day. In addition, purchasers and redeemers of shares in Creation Units are responsible for payment of the costs of transferring securities to or out of the fund. Purchasers and redeemers of Creation Units for cash may also be subject to an additional variable charge up to the maximum amount shown in the table below. This additional variable charge will offset the transaction costs to the fund of buying or selling portfolio securities. In certain circumstances, the cost of any standard transaction fees and/or additional variable charges may be waived by the fund when doing so is believed to be in the best interests of the fund. From time to time, the investment adviser may cover the cost of any transaction fees.

The following table shows, as of [ ], [ ], the approximate value of one Creation Unit of the fund, including the standard and maximum additional creation and redemption transaction fee. These fees are payable only by investors who purchase shares directly from the fund. Retail investors who purchase shares through their brokerage account will not pay these fees. Investors who use the services of a broker or other such intermediary may pay fees for such services.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Fund**  | **Approximate Value <br> of One Creation Unit**  | **Standard <br> Creation/Redemption <br> Transaction Fee**  | **Maximum <br> Additional Creation <br> Transaction Fee<sup>(1)</sup>**  | **Maximum <br> Additional Redemption <br> Transaction Fee<sup>(1)</sup>**  |
| Schwab High Yield Bond ETF  | $[] | $[] | [3.0]% | [2.0]% |

---

<sup>(1)</sup>

As a percentage of total amount invested or redeemed.

Additional Policies

#### Policy Regarding Short-term or Excessive Trading
The fund does not impose any restrictions on the frequency of purchases and redemptions of fund shares. When considering that a policy regarding short-term or excessive trading was not necessary for the fund, the Board of Trustees considered the structure of the fund as an ETF and that fund shares are purchased and redeemed directly with the fund only in large quantities (Creation Units) by Authorized Participants who are authorized to purchase and redeem shares directly with the fund. Because purchase and redemption transactions with Authorized Participants are an essential part of the ETF process and help keep ETF trading prices in line with NAV, the fund accommodates frequent purchases and redemptions by Authorized Participants. Frequent purchases and redemptions for cash may increase index tracking error and portfolio transaction costs and may lead to realization of capital gains. Frequent in-kind creations and redemptions do not give rise to these concerns. The fund reserves the right to reject or limit any purchase order at any time.

The fund reserves the right to impose restrictions on disruptive or abusive trading. Such trading is defined by the fund as purchases and sales of fund shares in amounts and frequency determined by the fund to be significant and in a pattern of activity that can potentially be detrimental to the fund and its shareholders. Such adverse effects can include diluting the value of the shareholders' holdings, increasing fund transaction costs, disrupting portfolio management strategy, incurring unwanted taxable gains or forcing the fund to hold excess levels of cash. The fund may reject purchase or redemption orders in such instances. The fund also imposes a transaction fee on Creation Unit transactions that is designed to offset the fund's transfer and other transaction costs associated with the issuance and redemption of the Creation Units. The Board of Trustees may determine that policies and procedures regarding the frequency of purchases and redemptions of fund shares are necessary in the future.

#### Investments by Registered Investment Companies
Section 12(d)(1) of the Investment Company Act of 1940, as amended, restricts investments by registered investment companies in the securities of other investment companies, including shares of the fund. Registered investment companies are permitted to invest in the fund beyond the limits set forth in section 12(d)(1), subject to certain terms and conditions including in some cases that such investment companies enter into an agreement with the fund.

#### Payments to Financial Intermediaries
The investment adviser or its affiliates make payments out of their own resources, or provide products and services at a discount, to certain brokerage firms, banks, insurance companies, retirement plan service providers and other financial intermediaries that perform shareholder, recordkeeping, sub-accounting and other administrative services in connection with investments in fund shares. The investment adviser or its affiliates also make payments out of their own resources, or provide products and services at a discount, to certain financial intermediaries

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in connection with certain activities or services which may facilitate, directly or indirectly, investment in the fund. These payments may relate to marketing and/or fund promotion activities and presentations, educational training programs, conferences, the development and support of technology platforms and/or reporting systems, data analytics and support, or making shares of the fund available to its customers. These payments, which may be significant, are paid by the investment adviser or its affiliates out of their own resources and not from the assets of the fund.

Payments to a financial intermediary may create potential conflicts of interest between the intermediary and its clients as the payments may provide such intermediary with an incentive to favor sales of shares of the fund over other investment options they make available to their customers. Please see the SAI for additional information.

Distributions and Taxes

Any investment in the fund typically involves several tax considerations. The information below is meant as a general summary for U.S. citizens and residents. Please see the SAI for additional information. Because each person's tax situation is different, you should consult your tax advisor about the tax implications of your investment in the fund. You also can visit the Internal Revenue Service (IRS) website at **www.irs.gov**.

As a shareholder, you are entitled to your share of the dividends and gains your fund earns. Dividends from net investment income, if any, are generally declared and paid monthly for the fund. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared. Dividend distributions are paid to shareholders on the payable date. Distributions of net realized capital gains, if any, generally are declared and paid once a year, although the fund may do so more frequently as determined by the Board of Trustees. Although it is not generally expected, if the fund's distributions exceed its realized taxable income and capital gains during a taxable year, then all or a portion of the distributions made during that year may be characterized as a return of capital to shareholders. A return of capital distribution generally will not be taxable but will reduce the shareholder's cost basis and result in a higher capital gain or lower capital loss when those shares on which the distribution was received are sold. To the extent that a return of capital distribution exceeds a shareholder's adjusted basis, the distribution will be treated as gain from the sale of shares. The fund reserves the right to declare special distributions if, in its reasonable discretion, such action is necessary or advisable to preserve its status as a regulated investment company or to avoid imposition of income or excise taxes on undistributed income or realized gains. Dividends and other distributions on shares of the fund are distributed on a pro rata basis to beneficial owners of such shares. During the fourth quarter of the year, typically in early November, an estimate of the fund's year-end distributions, if any, may be made available on the fund's website **www.schwabassetmanagement.com**.

Unless you are investing through an IRA, 401(k) or other tax-advantaged account, your fund distributions generally have tax consequences. The fund's taxable investment income and short-term capital gains are distributed as dividends and will be taxable as ordinary income. Other capital gains distributions are taxable as long-term capital gains, regardless of how long you have held your shares in the fund. The maximum individual rate applicable to long-term capital gains and qualified dividend income is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts. However, it is not expected that any of the fund's distributions will be eligible to be treated as qualified dividend income subject to the reduced rates. Distributions generally are taxable in the tax year in which they are declared, whether you reinvest them or take them in cash.

Generally, any sale of your shares is a taxable event. A sale of your shares may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than one year. Otherwise, the gain or loss on the taxable disposition of shares will be treated as short-term capital gain or loss. The maximum individual rate applicable to long-term capital gains is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts. Any loss realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gains distributions received (or deemed received) by you with respect to the shares. All or a portion of any loss realized upon a taxable disposition of shares will be disallowed if you purchase other substantially identical shares within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from the fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds certain threshold amounts.

At the beginning of every year, the fund provides shareholders with information detailing the tax status of any distributions the fund paid during the previous calendar year. Schwab customers also receive information on distributions and transactions in their monthly account statements.

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If you are investing through a taxable account and purchase shares of the fund just before it declares a distribution, you may receive a portion of your investment back as a taxable distribution. This is because when the fund makes a distribution, the share price is reduced by the amount of the distribution. You can avoid "buying a dividend," as it is often called, by finding out if a distribution is imminent and waiting until afterwards to invest. Of course, you may decide that the opportunity to gain a few days of investment performance outweighs the tax consequences of buying a dividend.

Foreign shareholders may be subject to different U.S. federal income tax treatment, including withholding tax at the rate of 30% on amounts treated as ordinary dividends from the fund, as discussed in more detail in the SAI. Furthermore, the fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the fund to enable the fund to determine whether withholding is required.

#### Taxes on Creation and Redemption of Creation Units
An Authorized Participant who exchanges securities for Creation Units generally will recognize a gain or a loss equal to the difference between the market value of the Creation Units at the time of the exchange and the sum of the exchanger's aggregate basis in the securities surrendered and the cash component paid. A person who redeems Creation Units will generally recognize a gain or loss equal to the difference between the exchanger's basis in the Creation Units and the sum of the aggregate market value of the securities and the amount of cash received for such Creation Units. The IRS, however, may assert that a loss realized upon an exchange of securities for Creation Units cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position. Persons exchanging securities for Creation Units should consult a tax advisor with respect to whether wash sale rules apply and when a loss might be deductible. Any capital gain or loss realized upon a redemption (or creation) of Creation Units is generally treated as long-term capital gain or loss if the fund's shares (or securities surrendered) have been held for more than one year and as short-term capital gain or loss if the shares (or securities surrendered) have been held for one year or less.

If you purchase or redeem Creation Units, you will be sent a confirmation statement showing how many shares you purchased or sold and at what price. Persons purchasing or redeeming Creation Units should consult their own tax advisors with respect to the tax treatment of any creation or redemption transaction.

Additional Information

#### Index Provider
Charles Schwab Investment Management, Inc., dba Schwab Asset Management, has entered into a license agreement with ICE Data Indices, LLC to use the ICE BofA US Cash Pay High Yield Constrained Index. Fees payable under the license agreement are paid by the investment adviser. ICE Data Indices, LLC has no obligation to continue to provide the ICE BofA US Cash Pay High Yield Constrained Index to Schwab Asset Management beyond the term of the license agreement.

#### Disclaimers
Source ICE Data Indices, LLC (ICE Data), is used with permission. "ICE<sup>®</sup>" is a registered trademark of ICE Data Indices, LLC or its affiliates and "BofA<sup>®</sup>" is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates ("BofA") and may not be used without BofA's prior written approval. These trademarks have been licensed, along with the ICE BofA US Cash Pay High Yield Constrained Index (Index) for use by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, in connection with the Schwab High Yield Bond ETF (the Fund). Neither Schwab Asset Management, Schwab Strategic Trust (the Trust) nor the Fund, as applicable, is sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers (ICE Data and its Suppliers). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the Fund particularly, the Trust or the ability of the Index to track general stock market performance. ICE Data's only relationship to Schwab Asset Management is the licensing of certain trademarks and trade names and the Index or components thereof. The Index is determined, composed and calculated by ICE Data without regard to Schwab Asset Management or the Fund or its holders. ICE Data has no obligation to take the needs of Schwab Asset Management or the holders of the Fund into consideration in determining, composing or calculating the Index. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the Fund to be issued or in the determination or calculation of the equation by which the Fund is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of Schwab Asset Management or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the Fund. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.

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ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (INDEX DATA). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN "AS IS" BASIS AND YOUR USE IS AT YOUR OWN RISK.

[Shares of the fund are not sponsored, endorsed or promoted by NYSE Arca, Inc. NYSE Arca makes no representation or warranty, express or implied, to the owners of the shares of the fund or any member of the public regarding the ability of the fund to track the total return performance of its underlying index or the ability of the underlying index to track stock or bond market performance. NYSE Arca is not responsible for, nor has it participated in, the determination of the compilation or the calculation of any underlying index, nor in the determination of the timing of, prices of, or quantities of shares of the fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. NYSE Arca has no obligation or liability to owners of the shares of the fund in connection with the administration, marketing or trading of the shares of the fund.

NYSE Arca shall have no liability for damages, claims, losses or expenses caused by any errors, omissions, or delays in calculating or disseminating any current index or portfolio value; the current value of the portfolio of securities required to be deposited to the fund; the amount of any dividend equivalent payment or cash distribution to holders of shares of the fund; net asset value; or other information relating to the creation, redemption or trading of shares of the fund, resulting from any negligent act or omission by NYSE Arca, or any act, condition or cause beyond the reasonable control of NYSE Arca, including, but not limited to, an act of God; fire; flood; extraordinary weather conditions; war; insurrection; riot; strike; accident; action of government; communications or power failure; equipment or software malfunction; or any error, omission or delay in the reporting of transactions in one or more underlying securities. NYSE Arca makes no warranty, express or implied, as to results to be obtained by any person or entity from the use of any underlying index or data included therein and NYSE Arca makes no express or implied warranties, and disclaims all warranties of merchantability or fitness for a particular purpose with respect to shares of the fund or any underlying index or data included therein.]

The fund and Schwab Asset Management do not guarantee the accuracy and/or the completeness of the index or any data included therein and shall have no liability for any errors, omissions, or interruptions therein. The fund and Schwab Asset Management make no warranty, express or implied, as to results to be obtained by the fund, or any other person or entity from the use of index or any data included therein. The fund and Schwab Asset Management make no express or implied warranties, and expressly disclaims all warranties, of merchantability or fitness for a particular purpose or use with respect to the index or any data included therein, without limiting any of the foregoing, in no event shall the fund and Schwab Asset Management have any liability for any lost profits or indirect, punitive, special or consequential damages (including lost profits), even if notified of the possibility of such damages.

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**Prospectus** \| [ ], [ ]

## Schwab High Yield Bond ETF

#### To Learn More
This prospectus contains important information on the fund and should be read and kept for reference. You also can obtain more information from the following sources:

When available, recent information regarding the fund's NAV, market price, premiums and discounts, and bid-ask spreads will be available at www.schwabassetmanagement.com.

**Annual and semiannual reports,** which are sent to current fund investors, contain more information about the fund's holdings and detailed financial information about the fund. Annual reports also contain information from the fund's manager(s) about strategies, recent market conditions and trends and their impact on fund performance during the fund's last fiscal period.

The **Statement of Additional Information (SAI)** includes a more detailed discussion of investment policies and the risks associated with various investments. The SAI is incorporated by reference into the prospectus, making it legally part of the prospectus.

For a free copy of any of these documents or to request other information or ask questions about the fund, call Schwab ETFs at 1-877-824-5615. In addition, you may visit the Schwab ETFs' website at **www.schwabassetmanagement.com/schwabetfs_prospectus** for a free copy of a prospectus, SAI or an annual or semiannual report.

The SAI, the fund's annual and semiannual reports and other related materials will be available from the EDGAR Database on the SEC's website (**www.sec.gov**). You can obtain copies of this information, after paying a duplicating fee, by sending a request by e-mail to publicinfo@sec.gov.

SEC File Number <br> Schwab Strategic Trust 811-22311 REG[ ]

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The information in this Statement of Additional Information is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

![[MISSING IMAGE: log-csamctr299c.jpg]](log-csamctr299c.jpg)

Schwab<sup>®</sup> ETFs

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| | |
|:---|:---|
| Schwab<sup>®</sup> High Yield Bond ETF | **SCYB**  |

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Principal U.S. Listing Exchange: [**NYSE Arca, Inc.**]

#### STATEMENT OF ADDITIONAL INFORMATION

#### [ ], [ ]
The Statement of Additional Information (SAI) is not a prospectus. It should be read in conjunction with the fund's prospectus dated [ ], [ ] (as amended from time to time).

The fund's audited financial statements, as they become available, will contain important information about the fund.

For a free copy of these documents or to request other information or ask questions about the fund, call Schwab ETFs at 1-877-824-5615. For TDD service, call 1-800-345-2550. In addition, you may visit the Schwab ETFs' website at **www.schwabassetmanagement.com/schwabetfs_prospectus** for a free copy of a prospectus, SAI or an annual or semiannual report, as they become available.

The fund is a series of Schwab Strategic Trust (the Trust). The fund is part of the Schwab complex of funds (Schwab Funds). Charles Schwab Investment Management, Inc., dba Schwab Asset Management™, is the investment adviser to the fund (investment adviser).

REG[00000]-[00]

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#### **TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **<u>Page</u>**  |
| [INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND LIMITATIONS](#idbaagigINVESTMENTO)  | [1](#idbaagigINVESTMENTO) |
| [CONTINUOUS OFFERING](#idcgaaCONTINUOUSO)  | [14](#idcgaaCONTINUOUSO) |
| [MANAGEMENT OF THE FUND](#idefggfMANAGEMENTO)  | [14](#idefggfMANAGEMENTO) |
| [CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES](#idiifCONTROLPERS)  | [20](#idiifCONTROLPERS) |
| [INVESTMENT ADVISORY AND OTHER SERVICES](#idbchabINVESTMENTA)  | [20](#idbchabINVESTMENTA) |
| [PORTFOLIO MANAGERS](#idbgdidPORTFOLIOMA)  | [22](#idbgdidPORTFOLIOMA) |
| [BROKERAGE ALLOCATION AND OTHER PRACTICES](#idbbafaBROKERAGEAL)  | [24](#idbbafaBROKERAGEAL) |
| [PROXY VOTING](#idiajPROXYVOTING)  | [25](#idiajPROXYVOTING) |
| [PORTFOLIO HOLDINGS DISCLOSURE](#idiedbPORTFOLIOHO)  | [25](#idiedbPORTFOLIOHO) |
| [DESCRIPTION OF THE TRUST](#ideahgDESCRIPTION)  | [27](#ideahgDESCRIPTION) |
| [PURCHASE, REDEMPTION AND PRICING OF SHARES](#iddaegjPURCHASERED)  | [27](#iddaegjPURCHASERED) |
| [TAXATION](#idccgfcTAXATION)  | [31](#idccgfcTAXATION) |
| APPENDIX – RATINGS OF INVESTMENT SECURITIES |  |
| APPENDIX – PROXY VOTING POLICY |  |

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#### INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND LIMITATIONS

#### Investment Objective
The fund's investment objective is not fundamental and therefore may be changed by the fund's Board of Trustees (the Board) without shareholder approval.

The **Schwab High Yield Bond ETF's** goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of U.S. dollar denominated below investment grade corporate debt.

There is no guarantee the fund will achieve its investment objective.

#### Description of Index
The **Schwab High Yield Bond ETF's** index, the ICE BofA US Cash Pay High Yield Constrained Index, tracks the performance of U.S. dollar denominated below investment grade corporate debt, currently in a coupon paying period, that is publicly issued in the U.S. domestic market.

#### Index Provider
Charles Schwab Investment Management, Inc., dba Schwab Asset Management, has entered into a license agreement with ICE Data Indices, LLC to use the ICE BofA US Cash Pay High Yield Constrained Index. Fees payable under the license agreement are paid by the investment adviser. ICE Data Indices, LLC has no obligation to continue to provide the ICE BofA US Cash Pay High Yield Constrained Index to Schwab Asset Management beyond the term of the license agreement.

#### Disclaimers
Source ICE Data Indices, LLC (ICE Data), is used with permission. "ICE<sup>®</sup>" is a registered trademark of ICE Data Indices, LLC or its affiliates and "BofA<sup>®</sup>" is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates ("BofA") and may not be used without BofA's prior written approval. These trademarks have been licensed, along with the ICE BofA US Cash Pay High Yield Constrained Index (Index) for use by Charles Schwab Investment Management, Inc., dba Schwab Asset Management, in connection with the Schwab High Yield Bond ETF (the Fund). Neither Schwab Asset Management, Schwab Strategic Trust (the Trust) nor the Fund, as applicable, is sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers (ICE Data and its Suppliers). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the Fund particularly, the Trust or the ability of the Index to track general stock market performance. ICE Data's only relationship to Schwab Asset Management is the licensing of certain trademarks and trade names and the Index or components thereof. The Index is determined, composed and calculated by ICE Data without regard to Schwab Asset Management or the Fund or its holders. ICE Data has no obligation to take the needs of Schwab Asset Management or the holders of the Fund into consideration in determining, composing or calculating the Index. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the Fund to be issued or in the determination or calculation of the equation by which the Fund is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of Schwab Asset Management or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the Fund. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.

ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (INDEX DATA). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN "AS IS" BASIS AND YOUR USE IS AT YOUR OWN RISK.

[Shares of the fund are not sponsored, endorsed or promoted by NYSE Arca, Inc. NYSE Arca makes no representation or warranty, express or implied, to the owners of the shares of the fund or any member of the public regarding the ability of the fund to track the total return performance of its underlying index or the ability of the underlying index to track stock or bond market performance. NYSE Arca is not responsible for, nor has it participated in, the determination of the compilation or the calculation of any underlying index, nor in the determination of the timing of, prices of, or quantities of shares of the fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. NYSE Arca has no obligation or liability to owners of the shares of the fund in connection with the administration, marketing or trading of the shares of the fund.

NYSE Arca shall have no liability for damages, claims, losses or expenses caused by any errors, omissions, or delays in calculating or disseminating any current index or portfolio value; the current value of the portfolio of securities required to be deposited to the fund; the amount of any dividend equivalent payment or cash distribution to holders of shares of the fund; net asset value; or other information relating to the creation, redemption or trading of shares of the fund, resulting from any negligent act or omission by NYSE Arca, or any act, condition or

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cause beyond the reasonable control of NYSE Arca, including, but not limited to, an act of God; fire; flood; extraordinary weather conditions; war; insurrection; riot; strike; accident; action of government; communications or power failure; equipment or software malfunction; or any error, omission or delay in the reporting of transactions in one or more underlying securities. NYSE Arca makes no warranty, express or implied, as to results to be obtained by any person or entity from the use of any underlying index or data included therein and NYSE Arca makes no express or implied warranties, and disclaims all warranties of merchantability or fitness for a particular purpose with respect to shares of the fund or any underlying index or data included therein.]

The fund and Schwab Asset Management do not guarantee the accuracy and/or the completeness of the index or any data included therein and shall have no liability for any errors, omissions, or interruptions therein. The fund and Schwab Asset Management make no warranty, express or implied, as to results to be obtained by the fund, or any other person or entity from the use of index or any data included therein. The fund and Schwab Asset Management make no express or implied warranties, and expressly disclaims all warranties, of merchantability or fitness for a particular purpose or use with respect to the index or any data included therein, without limiting any of the foregoing, in no event shall the fund and Schwab Asset Management have any liability for any lost profits or indirect, punitive, special or consequential damages (including lost profits), even if notified of the possibility of such damages.

#### Fund Investment Policies
The Schwab High Yield Bond ETF will, under normal circumstances, invest at least 80% of its net assets in below investment grade corporate bonds (based on an average of Moody's, S&P and Fitch). The fund will notify its shareholders at least 60 days before changing this policy. For purposes of this policy, net assets mean net assets plus the amount of any borrowings for investment purposes.

#### Investments, Risks and Limitations
The following investment strategies, risks and limitations supplement those set forth in the prospectus and may be changed without shareholder approval unless otherwise noted. Also, policies and limitations that state a maximum percentage of assets that may be invested in a security or other asset, or that set forth a quality standard, shall be measured immediately after and as a result of the fund's acquisition of such security or asset unless otherwise noted. Thus, except with respect to limitations on borrowing and futures and option contracts, any subsequent change in values, net assets or other circumstances does not require the fund to sell an investment if it could not then make the same investment.

From time to time the fund may hold certain securities not otherwise discussed in this SAI as a permissible investment for the fund. For example, the fund may invest in certain types of securities to the extent its index does even if the types of securities have not been identified as part of the fund's principal or non-principal investment strategy. To the extent an investment becomes part of the fund's principal or non-principal investment strategy, the fund will take the necessary steps to identify them as permissible investments. In addition, the fund may receive (i.e., not actively invest) such securities as a result of a corporate action, such as securities dividends, spin-offs or rights issues. In such cases, the fund will not actively add to its position and generally will dispose of the securities as soon as reasonably practicable.

#### Principal Investment Strategies

#### Unless otherwise indicated, the following investments may be used as part of the fund's principal investment strategy.
**Concentration** means that substantial amounts of assets are invested in a particular industry or group of industries. Concentration increases investment exposure to industry risk. For example, the automobile industry may have a greater exposure to a single factor, such as an increase in the price of oil, which may adversely affect the sale of automobiles and, as a result, the value of the industry's securities. As part of the fund's principal investment strategy, the fund will concentrate its investments in a particular industry or group of industries to approximately the same extent that its index concentrates in the securities of such particular industry or group of industries. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities), and repurchase agreements collateralized by U.S. government securities are not considered to be issued by members of any industry.

**Credit and Liquidity Supports** or enhancements may be employed by issuers to reduce the credit risk of their securities. Credit supports include letters of credit, insurance and guarantees provided by foreign and domestic entities. Liquidity supports include puts, demand features, and lines of credit. Most of these arrangements move the credit risk of an investment from the issuer of the security to the support provider. The investment adviser may rely on its evaluation of the credit and liquidity support provider in determining whether to purchase or hold a security enhanced by such a support. Changes in the credit quality of a support provider could cause losses to the fund.

**Cyber Security Risk.** As the fund increasingly relies on technology and information systems to operate, it becomes susceptible to operational risks linked to security breaches in those information systems. Both calculated attacks and unintentional events can cause failures in the fund's information systems. Cyber attacks can include acquiring unauthorized access to information systems, usually through hacking or the use of malicious software, for purposes of stealing assets or confidential information, corrupting data, or disrupting fund operations. Cyber attacks can also occur without direct access to information systems, for example by making network services unavailable to intended users. Cyber security failures by, or breaches of the information systems of, the investment adviser, distributors, broker-dealers, other service providers (including, but not limited to, index providers, fund accountants, custodians, transfer agents and administrators), or the issuers of securities the

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fund invests in may also cause disruptions and impact the fund's business operations. Breaches in information security may result in financial losses, interference with the fund's ability to calculate net asset value (NAV), impediments to trading, inability of fund shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. The fund has business continuity plans in the event of, and risk management systems to help prevent, such cyber attacks, but these plans and systems have limitations including the possibility that certain risks have not been identified. Moreover, the fund does not control the cyber security plans and systems of its service providers and other third party business partners. The fund and its shareholders could be negatively impacted as a result.

**Debt Securities** are obligations issued by domestic and foreign entities, including governments and corporations, in order to raise money. They are basically "IOUs," but are commonly referred to as bonds or money market securities. These securities normally require the issuer to pay a fixed-, variable- or floating-rate of interest on the amount of money borrowed (the principal) until it is paid back upon maturity.

Debt securities experience price changes when interest rates change. For example, when interest rates fall, the prices of debt securities generally rise. Conversely, when interest rates rise, the prices of debt securities generally fall. Certain debt securities have call features that allow issuers to redeem or "call" their outstanding debts prior to final maturity. Depending on the call feature, an issuer may pre-pay its outstanding debts and issue new ones paying lower interest rates. This is more likely to occur in a falling interest rate environment. When this happens, the fund may have to replace these securities with lower yielding securities, which could result in a lower return. In a rising interest rate environment, prepayment on outstanding debt securities is less likely to occur. This is known as extension risk and may cause the value of debt securities to depreciate as a result of the higher market interest rates. Typically, longer-maturity debt securities react to interest rate changes more severely than shorter-term debt securities (all things being equal), but generally offer greater rates of interest. If an issuer redeems its debt securities prior to final maturity, the fund may have to replace those securities with lower yielding securities, which could result in a lower return.

A change in a central bank's monetary policy or economic conditions may lead to a change in interest rates, which could have sudden and unpredictable effects on the markets and significantly impact the value of debt securities in which the fund invests. Some debt securities, such as bonds with longer durations, are more sensitive to interest rate changes than others and may experience an immediate and considerable reduction in value if interest rates rise. Longer duration securities tend to be more volatile than shorter duration securities. As the values of debt securities in the fund's portfolio adjust to a rise in interest rates, the fund's share price may fall. In the event that the fund holds a large portion of its portfolio in longer duration securities when interest rates increase, the share price of the fund may fall significantly.

Debt securities also are subject to the risk that the issuers will not make timely interest and/or principal payments or fail to make them at all. This is called credit risk. Corporate debt securities (bonds) tend to have higher credit risk generally than U.S. government debt securities. Debt securities also may be subject to price volatility due to market perception of future interest rates, the creditworthiness of the issuer and general market liquidity (market risk). Investment-grade debt securities are considered medium- and/or high-quality securities, although some still possess varying degrees of speculative characteristics and risks. Debt securities rated below investment-grade are riskier, but may offer higher yields. These securities are sometimes referred to as high-yield securities or "junk bonds." The market for these securities has historically been less liquid and more volatile than for investment-grade securities.

*<u>Corporate bonds</u>* are debt securities issued by corporations. Although a higher return is expected from corporate bonds, these securities, while subject to the same general risks as U.S. government securities, are subject to greater credit risk than U.S. government securities. Their prices may be affected by the perceived credit quality of their issuer.

*<u>High-Yield Bonds</u>* The fund will invest in debt securities rated below investment-grade, which are sometimes referred to as high-yield bonds or "junk bonds." High-yield bonds are frequently issued by companies without long track records of sales and earnings, or by those of questionable credit strength, and are more speculative and volatile (though typically higher yielding) than investment grade bonds. Adverse economic developments could disrupt the market for high-yield securities, and severely affect the ability of issuers, especially highly-leveraged issuers, to service their debt obligations or to repay their obligations upon maturity.

*<u>High-Yield Securities,</u>* also called lower quality bonds (junk bonds), are frequently issued by companies without long track records of sales and earnings, or by those of questionable credit strength, and are more speculative and volatile (though typically higher yielding) than investment grade bonds. Adverse economic developments could disrupt the market for high-yield securities, and severely affect the ability of issuers, especially highly-leveraged issuers, to service their debt obligations or to repay their obligations upon maturity.

Also, the secondary market for high-yield securities at times may not be as liquid as the secondary market for higher-quality debt securities. As a result, the investment adviser could find it difficult to sell these securities or experience difficulty in valuing certain high-yield securities at certain times. Prices realized upon the sale of such lower rated securities, under these circumstances, may be less than the prices at which the fund purchased them.

Thus, high-yield securities are more likely to react to developments affecting interest rates and market and credit risk than are more highly rated securities, which primarily react to movements in the general level of interest rates. When economic conditions appear to be deteriorating, medium- to lower-quality debt securities may decline in value more than higher-quality debt securities due to heightened concern over

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credit quality, regardless of prevailing interest rates. Prices for high-yield securities also could be affected by legislative and regulatory developments. These laws could adversely affect the fund's net asset value and investment practices, the secondary market value for high-yield securities, the financial condition of issuers of these securities and the value of outstanding high-yield securities.

**Delayed-Delivery and Forward Commitment Transactions** involve purchasing and selling securities on a delayed-delivery or forward basis. A delayed-delivery agreement is a contract for the purchase or sale of one or more securities to be delivered on an agreed future settlement date. A forward commitment agreement is a contract for the purchase or sale of one or more securities at a specified price, with delivery and cash settlement on an agreed specified future date. When purchasing securities on a delayed-delivery or forward basis, the fund assumes the rights and risks of ownership, including the risk of price and yield fluctuations. Typically, no interest will accrue to the fund until the security is delivered. When the fund sells a security on a delayed-delivery or forward basis, the fund does not participate in further gains or losses with respect to that security. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the fund could miss a favorable price or yield opportunity or suffer a loss. The fund may renegotiate a forward commitment transaction and may sell the underlying security before delivery, which may result in capital gains or losses for the fund.

**Demand Features,** which may include guarantees, are used to shorten a security's effective maturity and/or enhance its creditworthiness. The demand feature may be issued by the issuer of the underlying securities, a dealer in the securities or by another third party. If a demand feature provider were to refuse to permit the feature's exercise or otherwise terminate its obligations with respect to such feature, however, the security's effective maturity may be lengthened substantially, and/or its credit quality may be adversely impacted. In either event, the fund may experience an increase in share price volatility. This also could lengthen the fund's overall average effective maturity.

**Derivative Instruments** are commonly defined to include instruments or contracts whose values depend on (or "derive" from) the value of one or more other assets such as securities, currencies, or commodities. These "other assets" are commonly referred to as "underlying assets." The fund may use derivatives, principally futures contracts, primarily to seek returns on the fund's otherwise uninvested cash assets.

In addition to the derivative instruments and strategies described in this SAI, the investment adviser expects to discover additional derivative instruments and other investment, hedging or risk management techniques. The investment adviser may utilize these new derivative instruments and techniques to the extent that they are consistent with the fund's investment objective and permitted by the fund's investment limitations, operating policies and applicable regulatory authorities.

The fund's derivatives instruments can create (i) leverage risk, which generally refers to the risk that derivatives transactions can magnify the fund's gains and losses, (ii) market risk, which generally refers to the risk from potential adverse market movements in relation to the fund's derivatives positions, or the risk that markets could experience a change in volatility that adversely impacts fund returns and the fund's obligations and exposures, (iii) counterparty risk, which generally refers to the risk that a counterparty on a derivatives transaction may not be willing or able to perform its obligations under the derivatives contract, and the related risks of having concentrated exposure to such a counterparty, (iv) liquidity risk, which generally refers to the risk involving the liquidity demands that derivatives transactions can create to make payments of margin, collateral, or settlement payments to counterparties, (v) operational risk, which generally refers to the risk related to potential operational issues, including documentation issues, settlement issues, systems failures, inadequate controls, and human error and (vi) legal risk, which generally refers to insufficient documentation, insufficient capacity or authority of the counterparty, or legality or enforceability of a contract. Certain of these risks are described in more detail as they apply to specific derivatives instruments in the following sub-sections of this SAI.

*<u>Futures Contracts</u>* are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed-upon price on a stipulated future date. In the case of futures contracts relating to an index or otherwise not calling for physical delivery at the close of the transaction, the parties usually agree to deliver the final cash settlement price of the contract. The fund may purchase and sell futures contracts based on securities, securities indices, interest rates, or any other futures contracts traded on U.S. exchanges or boards of trade that the Commodity Futures Trading Commission (CFTC) licenses and regulates on foreign exchanges. Although positions are usually marked-to-market on a daily basis with an intermediary (executing broker), there remains a credit risk with the futures exchange.

The fund must maintain a small portion of its assets in cash to process certain shareholder transactions in and out of it and to pay its expenses. To reduce the effect this otherwise uninvested cash would have on its performance, the fund may purchase futures contracts. Such transactions allow the fund's cash balance to produce a return similar to that of the underlying security or index on which the futures contract is based. Also, the fund may purchase or sell futures contracts on a specified foreign currency to "fix" the price in U.S. dollars of the foreign security it has acquired or sold or expects to acquire or sell. The fund may enter into futures contracts for other reasons as well.

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When buying or selling futures contracts, the fund must place a deposit with its broker equal to a fraction of the contract amount. This amount is known as "initial margin" and must be in the form of liquid assets, including cash, cash-equivalents and U.S. government securities. Subsequent payments to and from the broker, known as "variation margin" may be made daily, if necessary, as the value of the futures contracts fluctuate. This process is known as "marking-to-market." The initial margin amount will be returned to the fund upon termination of the futures contracts assuming all contractual obligations are satisfied. Because margin requirements are normally only a fraction of the amount of the futures contracts in a given transaction, futures trading can involve a great deal of leverage.

While the fund may purchase and sell futures contracts to simulate full investment, there are risks associated with these transactions. Adverse market movements could cause the fund to experience substantial losses when buying and selling futures contracts. Of course, barring significant market distortions, similar results would have been expected if the fund had instead transacted in the underlying securities directly. There also is the risk of losing any margin payments held by a broker in the event of its bankruptcy. Additionally, the fund incurs transaction costs (e.g., brokerage fees) when engaging in futures trading. To the extent the fund also invests in futures to simulate full investment, these same risks apply.

When interest rates are rising or securities prices are falling, the fund may seek, through the sale of futures contracts, to offset a decline in the value of its current portfolio securities. When interest rates are falling or prices are rising, the fund, through the purchase of futures contracts, may attempt to secure better rates or prices than might later be available in the market when it effects anticipated purchases. Similarly, the fund may sell futures contracts on a specified currency to protect against a decline in the value of that currency and its portfolio securities that are denominated in that currency. The fund may purchase futures contracts on a foreign currency to fix the price in U.S. dollars of a security denominated in that currency that the fund has acquired or expects to acquire.

Futures contracts may require actual delivery or acquisition of an underlying security or cash value of an index on the expiration date of the contract. In most cases, however, the contractual obligation is fulfilled before the date of the contract by buying or selling, as the case may be, identical futures contracts. Such offsetting transactions terminate the original contracts and cancel the obligation to take or make delivery of the underlying securities or cash. There may not always be a liquid secondary market at the time the fund seeks to close out a futures position. If the fund is unable to close out its position and prices move adversely, the fund would have to continue to make daily cash payments to maintain its margin requirements. If the fund had insufficient cash to meet these requirements it may have to sell portfolio securities at a disadvantageous time or incur extra costs by borrowing the cash. Also, the fund may be required to make or take delivery and incur extra transaction costs buying or selling the underlying securities. The fund seeks to reduce the risks associated with futures transactions by buying and selling futures contracts that are traded on national exchanges or for which there appears to be a liquid secondary market.

*<u>Derivatives Regulatory Matters.</u>* In October 2020, the U.S. Securities and Exchange Commission (SEC) adopted a final rule related to the use of derivatives, reverse repurchase agreements and certain other transactions by registered investment companies that rescinded and withdrew the guidance of the SEC and its staff regarding asset segregation and cover transactions previously applicable to the fund's use of such transactions. The rule requires the fund to trade derivatives and other transactions that create future payment or delivery obligations (except reverse repurchase agreements and similar financing transactions) subject to value-at-risk (VaR) leverage limits and derivatives risk management program and reporting requirements. Generally, these requirements apply unless the fund satisfies a "limited derivatives users" exception that is included in the rule. Under the rule, when the fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the fund's asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether the fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The SEC also provided guidance in connection with the rule regarding the use of securities lending collateral that may limit the fund's securities lending activities. In addition, under the rule, the fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security (as defined under Section 18(g) of the Investment Company Act of 1940, as amended (the 1940 Act)), provided that, (i) the fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the Delayed-Settlement Securities Provision). The fund may otherwise engage in when-issued, forward-settling and non-standard settlement cycle securities transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the fund treats any such transaction as a "derivatives transaction" for purposes of compliance with the final rule. Furthermore, under the final rule, the fund will be permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the 1940 Act, if the fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due. These requirements may limit the ability of the fund to use derivatives, and reverse repurchase agreements and similar financing transactions, when-issued, delayed delivery and forward commitment transactions, and unfunded commitment agreements as part of its investment strategies. These requirements may increase the cost of the fund's investments and cost of doing business, which could adversely affect investors. The investment adviser cannot predict the effects of these regulations on the fund. The investment adviser intends to monitor developments and seeks to manage the fund in a manner consistent with achieving the fund's investment objectives, but there can be no assurance that it will be successful in doing so.

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The CFTC regulates the trading of commodity interests, including certain futures contracts, options, and swaps in which the fund may invest. A fund that invests in commodity interests will generally be subject to certain CFTC regulatory requirements if it is considered a "commodity pool." A notice of eligibility for exclusion from the definition of the term "commodity pool operator" (CPO) under the Commodity Exchange Act, as amended (CEA) has been filed, by the investment adviser, with respect to the fund's operation. Therefore, the fund and its investment adviser are not subject to registration or regulation as a CPO under the CEA. If the fund were no longer able to claim the exclusion, the fund's investment adviser may be required to register as a CPO and the fund and its investment adviser would be subject to regulation as a CPO under the CEA. If the fund or its investment adviser is subject to CFTC regulation, it may incur additional expenses and/or may choose to make changes to its investment strategies.

**Diversification** involves investing in a wide range of securities and thereby spreading and reducing the risks of investment. The fund is a series of an open-end investment management company with limited redeemability. The fund is a diversified fund.

**Exchange-Traded Funds** (ETFs) such as the fund, are investment companies that typically are registered under the 1940 Act as open-end funds (as is the fund's case) or unit investment trusts (UITs). ETFs are actively traded on national securities exchanges and are generally based on specific domestic and foreign market indices. Shares of an ETF may be bought and sold throughout the day at market prices, which may be higher or lower than the shares' net asset value. Market prices of ETF shares will fluctuate, sometimes rapidly and materially, in response to various factors including changes in the ETF's net asset value, the value of ETF holdings, and supply of and demand for ETF shares. Although the creation/redemption feature of ETFs generally makes it more likely that ETF shares will trade close to their net asset value, market volatility, lack of an active trading market for ETF shares, disruptions at market participants (such as Authorized Participants or market makers) and any disruptions in the ordinary functioning of the creation/redemption process may result in ETF shares trading significantly above (at a "premium") or below (at a "discount") their net asset value. An ETF's investment results are based on the ETF's daily net asset value. Investors transacting in ETF shares in the secondary market, where market prices may differ from net asset value, may experience investment results that differ from results based on the ETF's daily net asset value. An "index-based ETF" seeks to track the performance of an index by holding in its portfolio either the contents of the index or a representative sample of the securities in the index. Because ETFs are based on an underlying basket of securities, they are subject to the same market fluctuations as these types of securities in volatile market swings. ETFs, like mutual funds, have expenses associated with their operation, including advisory fees. When the fund invests in an ETF, in addition to directly bearing expenses associated with its own operations, it will bear a pro rata portion of the ETF's expenses. As with any exchange listed security, ETF shares purchased in the secondary market are subject to customary brokerage charges.

**Indexing Strategies** involve tracking the securities represented in, and therefore the performance of, an index. The fund normally will invest primarily in the securities of its index. Moreover, the fund seeks to invest so that its portfolio performs similarly to that of its index. Correlation for the fund is calculated using daily returns, according to a mathematical formula which measures correlation between the fund's portfolio and index returns. The fund may rebalance its holdings in order to track its index more closely. A perfect correlation of 1.0 is unlikely as the fund incurs operating and trading expenses unlike its index. In the event its intended correlation is not achieved, the Board will consider alternative arrangements for the fund.

There can be no guarantee that the performance of the fund will achieve a high degree of correlation with that of its index. A number of factors may affect the fund's ability to achieve a high correlation with its index, including the degree to which the fund utilizes a sampling technique. The correlation between the performance of the fund and its index may also diverge due to transaction costs, asset valuations, corporate actions (such as mergers and spin-offs), timing variances, and differences between the fund's portfolio and the index resulting from legal restrictions (such as diversification requirements) that apply to the fund but not to the index.

**Inflation/Deflation Risk.** The fund may be subject to inflation and deflation risk. Inflation risk is the risk that the present value of assets or income from the fund's investments will be less in the future as inflation decreases the value of money. As inflation increases, the present value of the fund's assets can decline. Deflation risk is the risk that prices throughout the economy decline over time. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the fund's assets.

**Interest Rates** may rise and fall over time, and debt securities will experience price changes when interest rates change. A change in interest rates may have sudden and unpredictable effects on the markets and the fund's investments. For example, when interest rates fall, the prices of debt securities generally rise. If interest rates rise, the value of the fund's debt securities could be adversely impacted and the fund could lose money. The value of debt securities in the fund can be expected to vary inversely with changes in prevailing interest rates. In general, debt securities with longer maturities will tend to react to interest rate changes more severely than shorter-term debt securities, but will generally offer greater rates of interest.

During periods of rising interest rates, the average life of certain debt securities is extended because of slower than expected principal payments. This may lock in below-market interest rates and extend the duration of these debt securities, making them more sensitive to changes in interest rates. This is known as extension risk and may cause the value of debt securities to depreciate as a result of the higher market interest rates.

When interest rates decline, borrowers may pay off their fixed-income securities sooner than expected. This is known as prepayment risk and may reduce the returns of the fund because the fund will have to reinvest that money at the lower prevailing interest rates.

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**Market Disruptions Risk.** The fund is subject to investment and operational risks associated with financial, economic and other global market developments and disruptions, including those arising from war, terrorism, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health emergencies (such as the spread of infectious diseases, epidemics and pandemics) and natural/environmental disasters, which can all negatively impact the securities markets and cause the fund to lose value. These events can also impair the technology and other operational systems upon which the fund's service providers, including Schwab Asset Management as the fund's investment adviser, rely, and could otherwise disrupt the fund's service providers' ability to fulfill their obligations to the fund.

The outbreak of COVID-19, a novel coronavirus disease, has caused volatility, severe market dislocations and liquidity constraints in many markets, including those in which the fund invests. The transmission of COVID-19 and efforts to contain its spread have resulted in travel restrictions and disruptions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, quarantines, event and service cancellations or interruptions, disruptions to business operations (including staff reductions), supply chains and consumer activity, as well as general concern and uncertainty that has negatively affected the global economic environment. These disruptions have led to instability in the marketplace, including losses and overall volatility. The impact of COVID-19, including variants of the underlying virus, and other infectious illness outbreaks, epidemics or pandemics that may arise in the future, could adversely affect the economies of many nations or the entire global economy, the financial performance of individual issuers, borrowers and sectors and the health of the markets generally in potentially significant and unforeseen ways.

Russia's military invasion of Ukraine in February 2022, responses by the United States and other countries to the invasion and the potential for wider conflict have increased and may continue to increase volatility and uncertainty in financial markets worldwide. The United States and other countries have imposed broad-ranging economic sanctions on Russia and Russian entities and individuals that, among other restrictions, prohibit companies from doing business with Russia and Russian issuers, and may adversely affect companies with economic or financial exposure to Russia and Russian issuers. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia's military invasion. These and potential similar future sanctions may limit the potential universe of securities in which the fund may invest and may require the fund to freeze or divest its existing investments in a company that becomes subject to such restrictions. A number of large corporations and U.S. states have also announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses. The extent and duration of Russia's military actions and the repercussions of such actions, including any retaliatory actions or countermeasures that may be taken by Russia or others subject to sanctions (such as cyberattacks on other governments, corporations or individuals) are unpredictable, but could result in significant market disruptions, including in the oil and natural gas markets, and may negatively affect global supply chains, inflation and global growth. These events could negatively affect the fund's performance.

The foregoing could lead to a significant economic downturn or recession, increased market volatility, market closures, changes in interest rates, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts, which may vary across asset classes, may adversely affect the performance of the fund. In certain cases, an exchange or market may close or issue trading halts on specific securities or even the entire market, which may result in the fund being, among other things, unable to buy or sell certain securities or financial instruments or to accurately price its investments.

**Quality of Fixed-Income Investments** refers to the quality of the securities purchased by the fund. The fund considers investment-grade securities to be those that have an ICE Composite Rating in one of the four highest rating categories (within which there may be sub-categories or gradations indicating relative standing) or have been determined to be of equivalent quality by the investment adviser pursuant to procedures adopted by the Board.

**Securities Lending** of portfolio securities is a common practice in the securities industry. The fund may engage in security lending arrangements. When the fund is lending portfolio securities, the fund may receive cash collateral and may invest it in short-term, interest-bearing obligations, including cash collateral funds, but will do so only to the extent that it will not lose the tax treatment available to regulated investment companies. Lending portfolio securities involves risks that the borrower may fail to return the securities or provide additional collateral. Also, voting rights with respect to the loaned securities may pass with the lending of the securities and efforts to recall such securities promptly may be unsuccessful, especially for foreign securities. Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities, if the borrower fails to return the security loaned or becomes insolvent. The fund will also bear the risk of any decline in value of securities acquired with cash collateral.

The fund may loan portfolio securities to qualified broker-dealers or other institutional investors provided: (1) the loan is secured continuously by collateral consisting of U.S. government securities, letters of credit, cash or cash equivalents or other permitted instruments maintained on a daily marked-to-market basis in an amount at least equal to the current market value of the securities loaned; (2) the fund may at any time call the loan and obtain the return of the securities loaned; (3) the fund will receive payments in lieu of any interest or dividends paid on the loaned securities; and (4) the aggregate market value of securities loaned will not at any time exceed one-third of the total assets of the fund, including collateral received from the loan (at market value computed at the time of the loan).

Although voting rights with respect to loaned securities pass to the borrower, the lender retains the right to recall a security (or terminate a loan) for the purpose of exercising the security's voting rights. Efforts to recall such securities promptly may be unsuccessful, especially for foreign securities or thinly traded securities such as small-cap stocks. In addition, because recalling a security may involve expenses to the fund, it is

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expected that the fund will do so only where the items being voted upon are, in the judgment of the investment adviser, either material to the economic value of the security or threaten to materially impact the issuer's corporate governance policies or structure.

To the extent the fund participates in securities lending under the current securities lending agreements with unaffiliated lending agents, costs and expenses, including agent fees, associated with securities lending activities under the securities lending program paid to the unaffiliated lending agents start at 9% of gross lending revenue, with subsequent breakpoints to a low of 5%. In this context, the gross lending revenue equals the income received from the investment of cash collateral and fees paid by borrowers less any rebates paid to borrowers. Any expenses charged by the cash collateral fund are in addition to these fees. All remaining revenue is retained by the fund, as applicable. No portion of the lending revenue is paid to or retained by Schwab Asset Management or any affiliate of Schwab Asset Management.

**Securities of Other Investment Companies.** Investment companies generally offer investors the advantages of diversification and professional investment management, by combining shareholders' money and investing it in securities such as stocks, bonds and money market instruments. Investment companies include: (1) open-end funds (for example mutual funds or ETFs) that issue and redeem their shares on a continuous basis; (2) closed-end funds that offer a fixed number of shares, and are usually listed on an exchange; (3) UITs that generally offer a fixed number of redeemable shares; and (4) money market funds that typically seek current income by investing in money market securities (see the section titled "Money Market Securities" for more information). Certain open-end funds, closed-end funds and UITs are traded on exchanges.

To the extent the fund invests, or has invested, in shares of other investment companies during its prior fiscal year, the fund, pursuant to SEC rules, must disclose any material fees and expenses indirectly incurred by the fund as a result of such investments. These indirect fees and expenses, to the extent incurred, will appear in the fee table of the fund's prospectus as a separate line item captioned "Acquired fund fees and expenses."

Investment companies may make investments and use techniques designed to enhance their performance. These may include delayed-delivery and when-issued securities transactions; swap agreements; buying and selling futures contracts, illiquid, and/or restricted securities and repurchase agreements; and borrowing or lending money and/or portfolio securities. The risks of investing in a particular investment company will generally reflect the risks of the securities in which it invests and the investment techniques it employs. Also, investment companies charge fees and incur expenses.

The fund may buy securities of other investment companies, including those of foreign issuers and money market funds, in compliance with the requirements of federal law or any SEC exemptive order. The fund may invest in investment companies that are not registered with the SEC or privately placed securities of investment companies (which may or may not be registered), such as unregistered money market funds. Unregistered funds are largely exempt from the regulatory requirements that apply to registered investment companies. As a result, unregistered funds may have a greater ability to make investments, or use investment techniques, that offer a higher potential investment return (for example, leveraging), but which may carry high risk. Unregistered funds, while not regulated by the SEC like registered funds, may be indirectly supervised by the financial institutions (e.g., commercial and investment banks) that may provide them with loans or other sources of capital. Investments in unregistered funds may be difficult to sell, which could cause the fund selling an interest in an unregistered fund to lose money. For example, many hedge funds require their investors to hold their investments for at least one year.

Federal law restricts the ability of one registered investment company to invest in another. As a result, the extent to which the fund may invest in another investment company may be limited. Except as described below, the 1940 Act currently requires that, as determined immediately after a purchase is made, (i) not more than 5% of the value of the fund's total assets will be invested in the securities of any one acquired investment company (acquired fund), (ii) not more than 10% of the value of its total assets will be invested in the aggregate in securities of acquired funds as a group and (iii) not more than 3% of the outstanding voting stock of any one acquired fund will be owned by the fund.

The limitations described above do not apply to investments in money market funds subject to certain conditions. The funds may invest in affiliated and unaffiliated money market funds without limit under Rule 12d1-1 under the 1940 Act subject to the fund's investment policies and restrictions and the conditions of the Rule.

Rule 12d1-4 allows the fund to acquire shares of an acquired fund in excess of the limitations currently imposed by the 1940 Act. Fund of funds arrangements relying on Rule 12d1-4 will be subject to several conditions, certain of which are specific to the fund's position in the arrangement (i.e., as an acquiring or acquired fund). Notable conditions include those relating to: (i) control and voting that prohibit an acquiring fund, its investment adviser (or a subadviser) and their respective affiliates from beneficially owning more than 25% of the outstanding voting securities of an unaffiliated acquired fund; (ii) certain required findings relating to complexity, fees and undue influence (among other things); (iii) fund of funds investment agreements; and (iv) general limitations on an acquired fund's investments in other investment companies and private funds to no more than 10% of the acquired fund's assets, except in certain circumstances. To the extent the fund is an acquired fund, the limitations placed on acquired funds under Rule 12d1-4 may impact the investments made by the fund.

**Zero-Coupon Securities** are debt securities that do not make cash interest payments throughout the period prior to maturity. Zero-coupon securities are sold at a deep discount to their face value. A zero-coupon security pays no interest to its holders during its life. High-yield securities structured as zero-coupon bonds tend to be especially volatile as they are especially sensitive to downward pricing pressures from rising interest rates and may require the fund to pay out imputed income without receiving the actual cash delivery. Thus, these types of high yield

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investments increase the chance that the fund may lose money. While these securities do not pay current cash income, federal income tax law requires the holders of zero-coupon securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accruing that year. In order to continue to qualify as a "regulated investment company" or "RIC" under the Internal Revenue Code of 1986, as amended (the Internal Revenue Code) and avoid a certain excise tax, the fund may be required to distribute a portion of such discount and income and may be required to dispose of other portfolio securities, which may occur in periods of adverse market prices, in order to generate cash to meet these distribution requirements.

#### Non-Principal Investment Strategies

#### The following investments may be used as part of the fund's non-principal investment strategy:
**Borrowing.** The fund may borrow money from banks or through the Schwab Funds interfund borrowing and lending facility (as described below) for any purpose in an amount up to ⅓ of the fund's total assets (not including temporary borrowings). The fund may also borrow for temporary or emergency purposes; for example, the fund may borrow at times to meet redemption requests rather than sell portfolio securities to raise the necessary cash. Provisions of the 1940 Act require the fund to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for certain temporary or emergency borrowings not exceeding 5% of the fund's total assets. If the 300% asset coverage should decline as a result of market fluctuations or other reasons, the fund may be required to sell some of its portfolio holdings within three days (not including Sundays and holidays) to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time.

The fund's borrowings will be subject to interest costs. Borrowing can also involve leveraging when securities are purchased with the borrowed money. Leveraging creates interest expenses that can exceed the income from the assets purchased with the borrowed money. In addition, leveraging may magnify changes in the net asset value of the fund's shares and in its portfolio yield. If assets used to secure a borrowing decrease in value, the fund may be required to pledge additional collateral to avoid liquidation of those assets.

The fund may establish lines-of-credit (lines) with certain banks by which it may borrow funds for temporary or emergency purposes. A borrowing is presumed to be for temporary or emergency purposes if it is repaid by the fund within 60 days and is not extended or renewed. The fund may use the lines to meet large or unexpected redemptions that would otherwise force the fund to liquidate securities under circumstances which are unfavorable to the fund's remaining shareholders. The fund will pay a fee to the bank for using the lines.

**Illiquid Securities or Investments** means any investment that the fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The liquidity of the fund's investments is monitored under the supervision and direction of the Board and is governed by the 1940 Act and rules promulgated thereunder, which provide that a fund may not acquire any illiquid investments if, immediately after the acquisition, the fund would have invested more than 15% of the fund's net assets in illiquid investments. Investments currently not considered liquid include, among others, repurchase agreements not maturing within seven days that are not subject to a demand feature of seven days or less and certain restricted securities. Any investment may become illiquid at times of market dislocation.

**Interfund Borrowing and Lending.** The fund may borrow money from and/or lend money to other funds in the Fund Complex, as defined under "Management of the Fund," including traditional mutual funds not discussed in this SAI or in the corresponding prospectus. All loans are for temporary or emergency purposes and the interest rates to be charged will be the average of the overnight repurchase agreement rate and the short-term bank loan rate. All loans are subject to numerous conditions designed to ensure fair and equitable treatment of all participating funds. These conditions include, for example, that the fund's participation in the credit facility must be consistent with its investment policies and limitations and organizational documents; no fund may lend to another fund through the interfund lending facility if the loan would cause the aggregate outstanding loans through the credit facility to exceed 15% of the lending fund's current net assets at the time of the loan; and that the fund's interfund loans to any one fund shall not exceed 5% of the lending fund's net assets. With respect to the fund discussed in this SAI, by lending to another fund the fund may forego gains which could have been made had those assets been invested in securities of its applicable underlying index. The interfund lending facility is subject to the oversight and periodic review of the Board.

**Money Market Securities** are high-quality, short term debt securities that may be issued by entities such as the U.S. government, corporations and financial institutions (like banks). Money market securities include commercial paper, certificates of deposit, banker's acceptances, notes and time deposits. Certificates of deposit and time deposits are issued against funds deposited in a banking institution for a specified period of time at a specified interest rate. Banker's acceptances are credit instruments evidencing a bank's obligation to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and of the drawer to pay the full amount of the instrument upon maturity. Commercial paper consists of short term, unsecured promissory notes issued to finance short term credit needs.

Money market securities pay fixed-, variable- or floating-rates of interest and are generally subject to credit and interest rate risks. The maturity date or price of and financial assets collateralizing a security may be structured in order to make it qualify as or act like a money market security. These securities may be subject to greater credit and interest rate risks than other money market securities because of their structure. Money market securities may be issued with puts or sold separately; these puts, which are sometimes called demand features or

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guarantees, are agreements that allow the buyer to sell a security at a specified price and time to the seller or "put provider." When the fund buys a put, losses could occur as a result of the costs of the put or if it exercises its rights under the put and the put provider does not perform as agreed. Standby commitments are types of puts.

The fund may keep a portion of its assets in cash for business operations. The fund may invest in money market securities to reduce the effect this otherwise uninvested cash would have on its performance. The fund may also invest in money market securities to the extent it is consistent with its investment objective.

*<u>Commercial Paper</u>* consists of short term, promissory notes issued by banks, corporations and other institutions to finance short-term credit needs. These securities generally are discounted but sometimes may be interest bearing. Commercial paper, which also may be unsecured, is subject to credit risk.

**Non-Publicly Traded Securities and Private Placements** are securities that are neither listed on a stock exchange nor traded over-the-counter, including privately placed securities. Such unlisted securities may involve a higher degree of business and financial risk that can result in substantial losses. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the fund or less than what may be considered the fair value of such securities. Furthermore, companies whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements which might be applicable if their securities were publicly traded. If such securities are required to be registered under the securities laws of one or more jurisdictions before being sold, the fund may be required to bear the expenses of registration.

**Puts** are agreements that allow the buyer to sell a security at a specified price and time to the seller or "put provider." When the fund buys a security with a put feature, losses could occur if the put provider does not perform as agreed. If a put provider fails to honor its commitment upon the fund's attempt to exercise the put, the fund may have to treat the security's final maturity as its effective maturity. If that occurs, the security's price may be negatively impacted, and its sensitivity to interest rate changes may be increased, possibly contributing to increased share price volatility for the fund. This also could lengthen the fund's overall average effective maturity. Standby commitments are types of puts.

**Restricted Securities** are securities that are subject to legal restrictions on their sale. Difficulty in selling restricted securities may result in a loss or be costly to a portfolio. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, as amended (the 1933 Act), or in a registered public offering. Where registration is required, the holder of a registered security may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time it may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the holder might obtain a less favorable price than prevailed when it decided to seek registration of the security. Certain restricted securities such as tender option bonds, commercial paper and other promissory notes may be issued under Section 4(a)(2) of the 1933 Act and may be sold only to qualified institutional buyers, such as the, under 1933 Act Rule 144A. Securities purchased through a private placement offering are also restricted securities. These securities may be considered to be liquid if they meet the criteria for liquidity established by the Board. To the extent (the 1933 fund invests in restricted securities that are deemed liquid, the general level of illiquidity in (the 1933 fund's portfolio may be increased if such securities become illiquid or if buyers in that market become unwilling to purchase the securities.

**Step-Coupon and Pay-in-Kind Securities** are debt securities that do not make cash interest payments throughout the period prior to maturity. Step-coupon securities are sold at a deep discount to their face value. Step-coupon securities are debt securities that, instead of having a fixed coupon for the life of the security, have coupon or interest payments that may increase or decrease to predetermined rates at future dates. Some step-coupon securities are issued with no coupon payments at all during an initial period, and only become interest-bearing at a future date; these securities are sold at a deep discount to their face value. Pay-in-kind securities pay interest through the issuance of additional securities. Because such securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. High-yield securities structured as pay-in-kind securities tend to be especially volatile as they are especially sensitive to downward pricing pressures from rising interest rates and may require the fund to pay out imputed income without receiving the actual cash delivery. Thus, these types of high yield investments increase the chance that the fund may lose money. While these securities do not pay current cash income, federal income tax law requires the holders of step-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accruing that year. In order to continue to qualify as a RIC under the Internal Revenue Code and avoid a certain excise tax, the fund may be required to distribute a portion of such discount and income and may be required to dispose of other portfolio securities, which may occur in periods of adverse market prices, in order to generate cash to meet these distribution requirements.

**U.S. Government Securities** are issued by the U.S. Treasury or issued or guaranteed by the U.S. government or any of its agencies or instrumentalities. Not all U.S. government securities are backed by the full faith and credit of the U.S. government. Some U.S. government securities, such as those issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Student Loan Marketing Association (Sallie Mae) and the Federal Home Loan Banks (FHLB), are supported by a line of credit the issuing entity has with the U.S. Treasury. Securities issued by other issuers are supported solely by the credit of the issuing agency or instrumentality such as obligations issued by the Federal Farm Credit Banks Funding Corporation. There can be no assurance that the U.S.

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government will provide financial support to U.S. government securities of its agencies and instrumentalities if it is not obligated to do so under law. U.S. government securities, including U.S. Treasury securities, are among the safest securities; however, not unlike other debt securities, they are still sensitive to interest rate changes, which will cause their yields and prices to fluctuate.

In September 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of Fannie Mae and Freddie Mac and of any stockholder, officer or director of Fannie Mae and Freddie Mac with respect to Fannie Mae and Freddie Mac and the assets of Fannie Mae and Freddie Mac. In connection with the conservatorship, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement (SPA) with each of Fannie Mae and Freddie Mac pursuant to which the U.S. Treasury agreed to purchase up to 1,000,000 shares of senior preferred stock with an aggregate initial liquidation preference of $1 billion and obtained warrants and options for the purchase of common stock of each of Fannie Mae and Freddie Mac. Under the SPAs as currently amended, the U.S. Treasury has pledged to provide financial support to a government-sponsored enterprise (GSE) in any quarter in which the GSE has a net worth deficit as defined in the respective SPA. Under the current arrangement, the GSEs have a maximum amount of funding available to them which will be reduced by any future draws. There is a risk that if a GSE experiences a loss in any fiscal quarter that results in the GSE having a negative net worth that is greater than the amount available under the U.S. Treasury's funding commitment that the FHFA could place the GSE in receivership. In addition, each GSE may only retain a certain amount of its profits at the end of each fiscal quarter and the U.S. Treasury's liquidation preference will increase in an amount equal to any increase in a GSE's net worth up to a certain amount. The SPAs contain various covenants that severely limit each enterprise's operations.

Fannie Mae and Freddie Mac are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The SPAs are intended to enhance each of Fannie Mae's and Freddie Mac's ability to meet its obligations. The FHFA has indicated that the conservatorship of each enterprise will end when the director of the FHFA determines that the FHFA's plan to restore the enterprise to a safe and solvent condition has been completed. Should Fannie Mae and Freddie Mac be taken out of conservatorship, it is unclear whether the U.S. Treasury would continue to enforce its rights or perform its obligations under the SPAs. It also is unclear how the capital structure of Fannie Mae and Freddie Mac would be constructed post-conservatorship, and what effects, if any, the privatization of Fannie Mae and Freddie Mac will have on their creditworthiness and guarantees of certain mortgage-backed securities. Accordingly, should the FHFA take Fannie Mae and Freddie Mac out of conservatorship, there could be an adverse impact on the value of their securities which could cause the fund's investments to lose value.

Although the risk of default with the U.S. government securities is considered unlikely, any default on the part of a portfolio investment could cause the fund's share price or yield to fall. The risk of default on U.S. government securities may be heightened when there is uncertainty relating to negotiations in the U.S. Congress over increasing the statutory debt ceiling. If the U.S. Congress is unable to negotiate an increase to the statutory debt ceiling, the U.S. government may default on certain U.S. government securities including those held by the fund, which could have an adverse impact on the fund. In August 2011, the long-term credit rating of the U.S. government was downgraded by a major rating agency as a result of concern about the U.S. government's budget deficit and rising debt burden. Similar downgrades in the future could increase volatility in domestic and foreign financial markets, result in higher interest rates, lower prices of U.S. Treasury securities and increase the costs of different kinds of debt. Although remote, it is at least theoretically possible that under certain scenarios the U.S. government could default on its debt, including U.S. Treasury securities.

**Variable- and Floating-Rate Debt Securities** pay an interest rate, which is adjusted either periodically or at specific intervals or which floats continuously according to a formula or benchmark. Although these structures generally are intended to minimize the fluctuations in value that occur when interest rates rise and fall, some structures may be linked to a benchmark in such a way as to cause greater volatility to the security's value.

Some variable-rate securities may be combined with a put or demand feature (variable-rate demand securities) that entitles the holder to the right to demand repayment in full or to resell at a specific price and/or time. While the demand feature is intended to reduce credit risks, it is not always unconditional and may be subject to termination if the issuer's credit rating falls below investment grade or if the issuer fails to make payments on other debt. While most variable-rate demand securities allow the fund to exercise its demand rights at any time, some such securities may only allow the fund to exercise its demand rights at certain times, which reduces the liquidity usually associated with this type of security. The fund could suffer losses in the event that the demand feature provider, usually a bank, fails to meet its obligation to pay the demand.

Variable- and floating-rate debt securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much, or as quickly, as interest rates in general. Conversely, floating-rate debt securities will not generally increase in value if interest rates decline. When the fund holds variable- or floating-rate debt securities, a decrease in market interest rates will adversely affect the income received from such securities, which may also impact the net asset value of the fund's shares.

Certain variable- and floating-rate debt securities are subject to rates that are tied to an interest rate, such as the London Interbank Offered Rate (LIBOR). On March 5, 2021, the UK Financial Conduct Authority (FCA) publicly announced that (i) immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease; (ii) immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and (iii) immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA's consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that

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representativeness will not be restored. There is no assurance that the dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published. In addition, certain regulated entities ceased entering into most new LIBOR contracts in connection with regulatory guidance or prohibitions. Public and private sector industry initiatives are currently underway to implement new or alternative reference rates to be used in place of LIBOR. There is no assurance that any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that it will have the same volume or liquidity as did LIBOR prior to its discontinuance, unavailability or replacement, all of which may affect the value, volatility, liquidity or return on certain of the fund's investments and result in costs incurred in connection with changing reference rates used for positions, closing out positions and entering into new trades. Certain of the fund's investments may transition from LIBOR prior to the dates announced by the FCA. The transition from LIBOR to alternative reference rates may result in operational issues for the fund or its investments. No assurances can be given as to the impact of the LIBOR transition (and the timing of any such impact) on the fund and its investments. These risks may also apply with respect to changes in connection with other interbank offering rates (e.g., Euribor) and a wide range of other index levels, rates and values that are treated as "benchmarks" and are the subject of recent regulatory reform.

#### Additional Investment Information
**Duration** was developed as a more precise alternative to the concept of "maturity." Traditionally, a debt obligation's maturity has been used as a proxy for the sensitivity of the security's price to changes in interest rates (which is the "interest rate risk" or "volatility" of the security). However, maturity measures only the time until a debt obligation provides its final payment, taking no account of the pattern of the security's payments prior to maturity. In contrast, duration incorporates a bond's yield, coupon interest payments, final maturity, call and put features and prepayment exposure into one measure. Duration is the magnitude of the change in the price of a bond relative to a given change in market interest rates. Duration management is one of the fundamental tools used by the investment adviser.

Duration is a measure of the expected life of a debt obligation on a present value basis. Duration takes the length of the time intervals between the present time and the time that the interest and principal payments are scheduled or, in the case of a callable bond, the time the principal payments are expected to be received, and weights them by the present values of the cash to be received at each future point in time. For debt obligations with interest payments occurring prior to the payment of principal, duration will usually be less than maturity. In general, all else being equal, the lower the stated or coupon rate of the interest of a fixed-income security, the higher the duration of the security; conversely, the higher the stated or coupon rate of a fixed-income security, the lower the duration of the security.

Holding long futures or call option positions will increase the duration of the fund's portfolio. Holding short futures or put options will lower the duration of the fund's portfolio.

A swap agreement on an asset or group of assets may affect the duration of the portfolio depending on the attributes of the swap. For example, if the swap agreement provides the fund with a floating rate of return in exchange for a fixed rate of return, the duration of the fund would be modified to reflect the duration attributes of a similar security that the fund is permitted to buy.

The above discussion provides a general overview of the concept of duration. Application and calculation of duration may be slightly different or become more complex when applied to other types of debt obligations, which may require different assessments to determine and/or calculate duration. For example, for floating- and variable-rate securities the interest rate exposure and duration correspond to the frequency of the coupon reset. For mortgage-backed securities and certain asset-backed securities, calculating duration requires projecting future interest rates and the associated pace of repayment of the underlying instruments. Finally, the duration of the debt obligation may vary over time in response to changes in interest rates and other market factors.

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

#### Investment Limitations
**The investment limitations below may be changed only by vote of a majority of the outstanding voting securities of the fund.** Under the 1940 Act, a "vote of a majority of the outstanding voting securities" of the fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund or (2) 67% or more of the shares present at a shareholders meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.

#### The fund may not:
(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.

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(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 the 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 the 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.

#### The following descriptions of the 1940 Act may assist investors in understanding the above policies and restrictions.
*<u>Borrowing.</u>* The 1940 Act restricts an investment company from borrowing (including pledging, mortgaging or hypothecating assets) in excess of 33 ⅓% of its total assets (not including temporary borrowings not in excess of 5% of its total assets). Transactions that are entered into in accordance with the conditions to applicable SEC requirements shall not be regarded as borrowings for the purposes of the fund's investment restriction.

*<u>Concentration.</u>* The SEC has defined concentration as investing 25% or more of an investment company's total assets in an industry or group of industries, with certain exceptions such as with respect to investments in obligations issued or guaranteed by the U.S. government or its agencies and instrumentalities, or tax-exempt obligations of state or municipal governments and their political subdivisions.

*<u>Diversification.</u>* Under the 1940 Act and the rules, regulations and interpretations thereunder, a "diversified company," as to 75% of its total assets, may not purchase securities of any issuer (other than obligations of, or guaranteed by, the U.S. government or its agencies, or instrumentalities or securities of other investment companies) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer, or more than 10% of the issuer's voting securities would be held by the fund.

*<u>Lending.</u>* Under the 1940 Act, an investment company may only make loans if expressly permitted by its investment policies.

*<u>Real Estate.</u>* The 1940 Act does not directly restrict an investment company's ability to invest in real estate, but does require that every investment company have a fundamental investment policy governing such investments. The fund has adopted a fundamental policy that would permit direct investment in real estate. However, the fund has a non-fundamental investment limitation that prohibits it from investing directly in real estate. This non-fundamental policy may be changed only by vote of the fund's Board.

*<u>Senior Securities.</u>* Senior securities may include any obligation or instrument issued by an investment company evidencing indebtedness. The 1940 Act generally prohibits the fund from issuing senior securities, although it provides allowances for certain borrowings and certain other investments, such as short sales, reverse repurchase agreements, and firm commitment agreements, when such investments are entered into in accordance with the conditions to applicable SEC requirements.

*<u>Underwriting.</u>* Under the 1940 Act, underwriting securities involves an investment company purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. Under the 1940 Act, a diversified fund may not make any commitment as underwriter, if immediately thereafter the amount of its outstanding underwriting commitments, plus the value of its investments in securities of issuers (other than investment companies) of which it owns more than 10% of the outstanding voting securities, exceeds 25% of the value of its total assets.

#### The following are non-fundamental investment policies and restrictions, and may be changed by the Board.

#### The fund may not:
(1) Sell securities short except as in accordance with current SEC rules and interpretations.

(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 the 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 ⅓% 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 ⅓% 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 the 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).

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(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 the 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.

Policies and investment limitations that state a maximum percentage of assets that may be invested in a security or other asset, or that set forth a quality standard shall be measured immediately after and as a result of the fund's acquisition of such security or asset, unless otherwise noted. Except with respect to limitations on borrowing and futures and option contracts, any subsequent change in total assets or net assets, as applicable, or other circumstances does not require the fund to sell an investment if it could not then make the same investment.

#### CONTINUOUS OFFERING
The fund offers and issues shares at its net asset value per share (NAV) only in aggregations of a specified number of shares (Creation Units). The method by which Creation Units are created and trade may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by the fund on an ongoing basis, at any point a "distribution," as such term is used in the 1933 Act, may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner that could render them statutory underwriters and subject them to the prospectus delivery requirement and liability provisions of the 1933 Act.

For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the fund's transfer agent, breaks them down into constituent shares, and sells such shares directly to customers, or if it chooses to couple the creation of a supply of new shares with an active selling effort involving solicitation of secondary market demand for shares. A determination of whether one is an underwriter for purposes of the 1933 Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.

Broker-dealer firms should also note that dealers who are not "underwriters" but are effecting transactions in shares, whether or not participating in the distribution of shares, generally are required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(a)(3) of the 1933 Act is not available in respect of such transactions as a result of Section 24(d) of the 1940 Act. Firms that incur a prospectus delivery obligation with respect to shares of the fund are reminded that, pursuant to Rule 153 under the 1933 Act, a prospectus delivery obligation under Section 5(b)(2) of the 1933 Act owed to an exchange member in connection with the sale on an exchange is satisfied by the fact that the prospectus is available at the exchange upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange.

#### MANAGEMENT OF THE FUND

#### [To be updated by amendment]
The fund is overseen by a Board. The trustees are responsible for protecting shareholder interests. The trustees regularly meet to review the investment activities, contractual arrangements and the investment performance of the fund. The trustees met [ ] times during the most recent fiscal year.

Certain trustees are "interested persons." A trustee is considered an interested person (Interested Trustee) of the Trust under the 1940 Act if he or she is an officer, director, or an employee of Schwab Asset Management. A trustee also may be considered an interested person of the Trust under the 1940 Act if he or she owns stock of The Charles Schwab Corporation (CSC), a publicly traded company and the parent company of Schwab Asset Management.

As used herein, the terms "Fund Complex" and "Family of Investment Companies" each refer collectively to The Charles Schwab Family of Funds, Schwab Investments, Schwab Annuity Portfolios, Schwab Capital Trust, Schwab Strategic Trust and Laudus Trust which, as of [ ], [ ], included [ ] funds. As used herein, the term "Schwab Funds" refers collectively to The Charles Schwab Family of Funds, Schwab Investments, Schwab Annuity Portfolios and Schwab Capital Trust; and the term "Schwab ETFs" refers to Schwab Strategic Trust.

Each of the officers and/or trustees serves in the same capacity, unless otherwise noted, for The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust. The tables below provide information about the trustees and officers for the Trust, which includes the fund in this SAI. The address of each individual listed below is 211 Main Street, San Francisco, CA 94105.

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| | | | |
|:---|:---|:---|:---|
| **Name, Year of Birth, and Position(s) with the Trust <br> (Term of Office and Length of Time Served<sup>(1)</sup>)**  | **Principal Occupations <br> During the Past Five Years**  | **Number of Portfolios <br> in Fund Complex <br> Overseen by the <br> Trustee**  | **Other Directorships During <br> the Past Five Years**  |
| **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  |
| Michael J. Beer<sup>(2)</sup> <br> 1961 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022) | Retired. Director, President and Chief Executive Officer (Dec. 2016-Sept. 2019), Principal Funds (investment management). | [ ]  | Director (2016-2019), <br> Principal Funds, Inc. |
| Robert W. Burns <br> 1959 <br> Trustee <br> (Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2016) | Retired/Private Investor. | [ ]  |  |
| Nancy F. Heller <br> 1956 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Retired. | [ ]  |  |
| David L. Mahoney <br> 1954 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2011; Schwab Strategic Trust since 2016) | Private Investor. | [ ]  | Director (2004-present), <br> Corcept Therapeutics Incorporated <br> Director (2009-2021), <br> Adamas Pharmaceuticals, Inc. <br> Director (2003-2019), <br> Symantec Corporation  |
| Jane P. Moncreiff <br> 1961 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2019) | Consultant (2018-present), Fulham Advisers LLC (management consulting); Chief Investment Officer (2009-2017), CareGroup Healthcare System, Inc. (healthcare). | [ ]  |  |
| Kimberly S. Patmore <br> 1956 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2016) | Consultant (2008-present), Patmore Management Consulting (management consulting). | [ ]  |  |
| **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  |
| J. Derek Penn <br> 1957 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Head of Equity Sales and Trading (2006-2018), BNY Mellon (financial services). | [ ]  |  |

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| | | | |
|:---|:---|:---|:---|
| **Name, Year of Birth, and Position(s) with the Trust <br> (Term of Office and Length of Time Served<sup>(1)</sup>)**  | **Principal Occupations <br> During the Past Five Years**  | **Number of Portfolios <br> in Fund Complex <br> Overseen by the <br> Trustee**  | **Other Directorships During <br> the Past Five Years**  |
| **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  |
| Walter W. Bettinger II<sup>(3)</sup> <br> 1960 <br> Chairman and Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust since 2010) | Co-Chairman of the Board (July 2022-present), Director and Chief Executive Officer (Oct. 2008-present) and President (Feb. 2007-Oct. 2021), The Charles Schwab Corporation; President and Chief Executive Officer (Oct. 2008-Oct. 2021 and Director (May 2008-Oct. 2021), Charles Schwab & Co., Inc.; Director (Apr. 2006-present), Charles Schwab Bank, SSB; Director (Nov. 2017-present), Charles Schwab Premier Bank, SSB; Director (July 2019-present), Charles Schwab Trust Bank; Director (May 2008-present), Chief Executive Officer (Aug. 2017-present) and President (Aug. 2017-Nov. 2021), Schwab Holdings, Inc.; Director (Oct. 2020-present), TD Ameritrade Holding Corporation; Director (July 2016-Oct. 2021), Charles Schwab Investment Management, Inc. | [ ]  | Director (2008-present), <br> The Charles Schwab Corporation |
| Richard A. Wurster<sup>(2)(3)</sup> <br> 1973 <br> Trustee <br> (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2022) | President (Oct. 2021-present) and Executive Vice President – Schwab Asset Management Solutions (Apr. 2019-Oct. 2021), The Charles Schwab Corporation; President, Director (Oct. 2021-present), Executive Vice President – Schwab Asset Management Solutions (July 2019-Oct. 2021) and Senior Vice President – Advisory (May 2016-July 2019), Charles Schwab & Co., Inc.; President (Nov. 2021-present), Schwab Holdings, Inc.; Director (Oct. 2021-present) and Chief Executive Officer (Nov. 2019-Jan. 2022), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Mar. 2018-Oct. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (July 2016-Apr. 2018) and President (Mar. 2017-Apr. 2018), ThomasPartners, Inc.; Chief Executive Officer (July 2016- Apr. 2018), Windhaven Investment Management, Inc. | [ ]  |  |

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| | |
|:---|:---|
| **Name, Year of Birth, and Position(s) with the Trust <br> (Term of Office and Length of Time Served<sup>(4)</sup>)**  | **Principal Occupations During the Past Five Years**  |
| **OFFICERS**  | **OFFICERS**  |
| Jonathan de St. Paer <br> 1973 <br> President and Chief Executive Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2018) | Director (Apr. 2019-present), President (Oct. 2018-present), Chief Operating Officer (Jan. 2021-present) and Chief Executive Officer (Apr. 2019-Nov. 2019), Charles Schwab Investment Management, Inc.; Senior Vice President (June 2020-Mar. 2022) and Chief Operating Officer (Jan. 2021-Mar. 2022), Charles Schwab Investment Advisory, Inc.; Chief Executive Officer (Apr. 2019-present), President (Nov. 2018-present) and Trustee (Apr. 2019-Dec. 2020), Schwab Funds, Laudus Trust and Schwab ETFs; Managing Director (May 2022-present), Senior Vice President (Apr. 2019-May 2022) and Senior Vice President – Strategy and Product Development (CSIM) (Jan. 2014-Mar. 2019), Charles Schwab & Co., Inc. |
| Mark Fischer <br> 1970 <br> Chief Operating Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2013) | Chief Operating Officer (Dec. 2020-present) and Treasurer and Chief Financial Officer (Jan. 2016-Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Chief Financial Officer (Mar. 2020-present) and Vice President (Oct. 2013-present), Charles Schwab Investment Management, Inc. |

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| | |
|:---|:---|
| **Name, Year of Birth, and Position(s) with the Trust <br> (Term of Office and Length of Time Served<sup>(4)</sup>)**  | **Principal Occupations During the Past Five Years**  |
| Dana Smith <br> 1965 <br> Treasurer and Chief Financial Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2023) | Treasurer and Chief Financial Officer (Jan. 2023-present) and Assistant Treasurer (Dec. 2015-Dec. 2022), Schwab Funds, Laudus Trust and Schwab ETFs; Vice President (Mar. 2022-present) and Director (Oct. 2015-Mar. 2022), Charles Schwab Investment Management, Inc. |
| Omar Aguilar <br> 1970 <br> Vice President and Chief Investment Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Chief Executive Officer (Jan. 2022-present), Chief Investment Officer (Apr. 2011-present) and Senior Vice President (Apr. 2011-Dec. 2021), Charles Schwab Investment Management, Inc.; Director, Chief Executive Officer and President (Oct. 2022-present), Charles Schwab Investment Advisory, Inc.; Vice President and Chief Investment Officer (June 2011-present), Schwab Funds, Laudus Trust and Schwab ETFs. |
| Brett Wander <br> 1961 <br> Vice President and Chief Investment Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2011) | Senior Vice President and Chief Investment Officer (Apr. 2011-present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2011-present), Schwab Funds, Laudus Trust and Schwab ETFs. |
| William P. McMahon, Jr. <br> 1972 <br> Vice President and Chief Investment Officer <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Schwab Strategic Trust and Laudus Trust since 2021) | Senior Vice President and Chief Investment Officer (Jan. 2020-present), Charles Schwab Investment Management, Inc.; Vice President and Chief Investment Officer (June 2021-present), Schwab Funds, Laudus Trust and Schwab ETFs; Senior Vice President and Chief Investment Officer – ThomasPartners Strategies (Apr. 2018-Dec. 2019), Charles Schwab Investment Advisory, Inc.; Senior Vice President and Chief Investment Officer (May 2001-Apr. 2018), ThomasPartners, Inc. |
| Catherine MacGregor <br> 1964 <br> Chief Legal Officer and Secretary, Schwab Funds and Schwab ETFs <br> Chief Legal Officer, Vice President and Clerk, Laudus Trust <br> (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust since 2005; Schwab Strategic Trust since 2009) | Chief Legal Officer (Mar. 2022-present) and Vice President (Sept. 2005-present), Charles Schwab Investment Management, Inc.; Managing Director (May 2022-present) and Vice President (July 2005-May 2022), Charles Schwab & Co., Inc.; Vice President (Dec. 2005-present) and Chief Legal Officer and Clerk (Mar. 2007-present), Laudus Trust; Chief Legal Officer and Secretary (Oct. 2021-present), Vice President (Nov. 2005-Oct. 2021) and Assistant Secretary (June 2007-Oct. 2021), Schwab Funds; Chief Legal Officer and Secretary (Oct. 2021-present), Vice President and Assistant Secretary (Oct. 2009-Oct. 2021), Schwab ETFs. |

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<sup>(1)</sup> <br>

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.

<sup>(2)</sup> <br>

Mr. Beer and Mr. Wurster joined the Board effective October 1, 2022.

<sup>(3)</sup> <br>

Mr. Bettinger and Mr. Wurster are Interested Trustees. Mr. Bettinger and Mr. Wurster are Interested Trustees because each owns stock of CSC, the parent company of Schwab Asset Management, the investment adviser for the trusts in the Fund Complex, and is an employee 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.

<sup>(4)</sup> <br>

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.

#### Board Leadership Structure
The Chairman of the Board, Walter W. Bettinger II, is Chief Executive Officer and a member of the Board of Directors of CSC and an interested person of the Trust as that term is defined in the 1940 Act. The Board is comprised of a super-majority (75 percent) of trustees who are not interested persons of the Trust (i.e., independent trustees). The Trust does not have a single lead independent trustee. There are three primary committees of the Board: the Audit, Compliance and Valuation Committee; the Governance Committee; and the Investment Oversight Committee. Each of the Committees is chaired by an independent trustee, and each Committee is currently comprised solely of independent trustees. The Committee chairs preside at Committee meetings, participate in formulating agendas for those meetings, and coordinate with management to serve as a liaison between the independent trustees and management on matters within the scope of the responsibilities of each Committee as set forth in its Board-approved charter. The Board has determined that this leadership structure is appropriate given the specific characteristics and circumstances of the Trust. The Board made this determination in consideration of, among other things, the fact that the independent trustees of the Trust constitute a super-majority of the Board, the fact that Committee chairs are independent trustees, the number of funds (and classes) overseen by the Board, and the total number of trustees on the Board.

#### Board Oversight of Risk Management
Like most investment companies, fund management and its other service providers have responsibility for day-to-day risk management for the fund. The Board's duties, as part of its risk oversight of the Trust, consist of monitoring risks identified during regular and special reports to the Committees of the Board, as well as regular and special reports to the full Board. In addition to monitoring such risks, the Committees and the Board oversee efforts of fund management and service providers to manage risks to which the funds of the Trust may be exposed. For example, the Investment Oversight Committee meets with portfolio managers and receives regular reports regarding investment risk and credit

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risk of the fund's portfolio. The Audit, Compliance and Valuation Committee meets with the fund's Chief Compliance Officer and Chief Financial Officer and receives regular reports regarding compliance risks, operational risks and risks related to the valuation and liquidity of portfolio securities. From its review of these reports and discussions with management, each Committee receives information about the material risks of the funds of the Trust and about how management and service providers mitigate those risks, enabling the independent Committee chairs and other independent members of the Committees to discuss these risks with the full Board.

The Board recognizes that not all risks that may affect the fund can be identified nor can processes and controls be developed to eliminate or mitigate the occurrence or effects of certain risks; some risks are simply beyond the reasonable control of the fund, its management, and service providers. Although the risk oversight functions of the Board, and the risk management policies of fund management and fund service providers, are designed to be effective, there is no guarantee that they will eliminate or mitigate all risks. In addition, it may be necessary to bear certain risks (such as investment-related risks) to achieve the fund's investment objective. As a result of the foregoing and other factors, the fund's ability to manage risk is subject to significant limitations.

#### Individual Trustee Qualifications
The Board has concluded that each of the trustees should initially and continue to serve on the Board because of (i) his or her ability to review and understand information about the Trust provided to them by management, to identify and request other information they may deem relevant to the performance of their duties, to question management regarding material factors bearing on the management of the Trust, and to exercise their business judgment in a manner that serves the best interests of the Trust's shareholders and (ii) the trustee's experience, qualifications, attributes or skills as described below.

The Board has concluded that Mr. Beer should serve as trustee of the Trust because of the experience he gained serving as director, president and chief executive officer of Principal Funds and his knowledge and experience in the investment management industry.

The Board has concluded that Mr. Bettinger should serve as trustee of the Trust because of the experience he gained as president and chief executive officer of The Charles Schwab Corporation, his knowledge of and experience in the financial services industry, and the experience he has gained serving as trustee of the Schwab Funds since 2008, the Schwab ETFs since 2009, and the Laudus Trust since 2010.

The Board has concluded that Mr. Burns should serve as trustee of the Trust because of the experience he gained as managing director of Pacific Investment Management Company, LLC (PIMCO) and president of PIMCO Funds as well as the experience he has gained serving as trustee of the Schwab ETFs since 2009, and the Schwab Funds and Laudus Trust since 2016.

The Board has concluded that Ms. Heller should serve as trustee of the Trust because of the experience she gained as president of TIAA Charitable and as senior managing director at TIAA, the experience she has gained serving on other non-public company boards, her knowledge of and experience in the financial services industry, as well as the experience she has gained serving as trustee of the Schwab Funds and Schwab ETFs since 2018.

The Board has concluded that Mr. Mahoney should serve as trustee of the Trust because of the experience he gained serving as trustee of the Schwab Funds and Laudus Trust since 2011 and Schwab ETFs since 2016, as co-chief executive officer of McKesson Corporation, and his service on other public company boards.

The Board has concluded that Ms. Moncreiff should serve as trustee of the Trust because of the experience she gained as chief investment officer of CareGroup Healthcare System, the experience she has gained serving on other non-public company boards, her knowledge of and experience in the financial services industry, as well as the experience she has gained serving as trustee of the Schwab Funds and Schwab ETFs since 2019.

The Board has concluded that Ms. Patmore should serve as trustee of the Trust because of the experience she gained serving as chief financial officer and executive vice president of First Data Corporation, her knowledge of and experience in management consulting, as well as the experience she has gained serving as trustee of the Schwab Funds and Schwab ETFs since 2016.

The Board has concluded that Mr. Penn should serve as trustee of the Trust because of the experience he gained as head of equity sales and trading of BNY Mellon and his knowledge of and experience in the financial services industry, as well as the experience he has gained serving as trustee of the Schwab Funds and Schwab ETFs since 2021.

The Board has concluded that Mr. Wurster should serve as trustee of the Trust because of the experience he gained leading investment advisory firms and organizations, including Schwab Asset Management, and his knowledge of and experience in the investment management industry.

#### Trustee Committees
The Board has established certain committees and adopted Committee charters with respect to those committees, each as described below:

<sup>●</sup>

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

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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: Kimberly S. Patmore (Chair), Michael J. Beer and J. Derek Penn. The Committee met [ ] times during the most recent fiscal year.

<sup>●</sup>

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: David L. Mahoney (Chair), Robert W. Burns, and Kimberly S. Patmore. The Committee met [ ] times during the most recent fiscal year.

<sup>●</sup>

The Investment Oversight Committee reviews the investment activities of the Trust and the performance of the fund's 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: Jane P. Moncreiff (Chair), Robert W. Burns, Nancy F. Heller and David L. Mahoney. The Committee met [ ] times during the most recent fiscal year.

#### Trustee Compensation
The following table provides estimated trustee compensation from the fund for the fiscal year ending [ ], [ ], and the actual total compensation from the Fund Complex for the fiscal year ended [ ], [ ]. Trustee compensation for the fund is paid by Schwab Asset Management. **[To be updated by amendment]**

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| | | | |
|:---|:---|:---|:---|
| **Name of Trustee**  | **Estimated Aggregate <br> Compensation from the Fund in <br> this SAI<sup>(1)</sup>**  | **Pension or Retirement Benefits <br> Accrued as Part of Fund Expenses**  | **Total Compensation from the Fund <br> and Fund Complex Paid to <br> Trustees<sup>(2)</sup>**  |
| **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  |
| Walter W. Bettinger II |  | N/A  |  |
| Richard A. Wurster<sup>(3)</sup> |  | N/A  |  |
| **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  |
| Michael J. Beer<sup>(3)</sup> | $[] | N/A  | $[] |
| Robert W. Burns | $[] | N/A  | $[] |
| John F. Cogan<sup>(4)</sup> | $[] | N/A  | $[] |
| Nancy F. Heller | $[] | N/A  | $[] |
| David L. Mahoney | $[] | N/A  | $[] |
| Jane P. Moncreiff | $[] | N/A  | $[] |
| Kiran M. Patel<sup>(5)</sup> | $[] | N/A  | $[] |
| Kimberly S. Patmore | $[] | N/A  | $[] |
| J. Derek Penn | $[] | N/A  | $[] |

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<sup>(1)</sup> <br>

Estimated aggregate compensation from the fund's commencement of operations to the fiscal year ended [ ], [ ]. The aggregate compensation paid to the trustees for the fund is estimated for its first full fiscal year, [ ], [ ] through [ ], [ ] as follows: Walter W. Bettinger II $0; Richard A. Wurster $0; Michael J. Beer $[ ]; Robert W. Burns $[ ]; Nancy F. Heller $[ ]; David L. Mahoney $[ ]; Jane P. Moncreiff $[ ]; Kimberly S. Patmore $[ ]; and J. Derek Penn $[ ].

<sup>(2)</sup> <br>

Actual total compensation from the Fund Complex for the fiscal year ended [ ], [ ].

<sup>(3)</sup> <br>

Mr. Beer and Mr. Wurster joined the Board effective October 1, 2022.

<sup>(4)</sup> <br>

Mr. Cogan retired from the Board effective December 31, 2021.

<sup>(5)</sup> <br>

Mr. Patel retired from the Board effective December 31, 2022.

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#### Securities Beneficially Owned By Each Trustee
The following table provides each Trustee's equity ownership of the fund and ownership of all registered investment companies overseen by each Trustee in the Family of Investment Companies as of [ ], [ ]. **[To be updated by amendment]**

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| | | |
|:---|:---|:---|
| **Name of Trustee**  | **Dollar Range of Trustee Ownership of the Fund Included in the SAI**  | **Aggregate Dollar Range <br> of Trustee Ownership in the Family <br> of Investment Companies**  |
| **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  | **INTERESTED TRUSTEES**  |
| **Walter W. Bettinger II**  | Schwab High Yield Bond ETF | [ ]  |
| **Richard A. Wurster<sup>(1)</sup>**  | Schwab High Yield Bond ETF | [ ]  |
| **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  | **INDEPENDENT TRUSTEES**  |
| **Michael J. Beer<sup>(1)</sup>**  | Schwab High Yield Bond ETF | [ ]  |
| **Robert W. Burns**  | Schwab High Yield Bond ETF | [ ]  |
| **Nancy F. Heller**  | Schwab High Yield Bond ETF | [ ]  |
| **David L. Mahoney**  | Schwab High Yield Bond ETF | [ ]  |
| **Jane P. Moncreiff**  | Schwab High Yield Bond ETF | [ ]  |
| **Kimberly S. Patmore**  | Schwab High Yield Bond ETF | [ ]  |
| J. Derek Penn  | Schwab High Yield Bond ETF |  |

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<sup>(1)</sup> <br>

Mr. Beer and Mr. Wurster joined the Board effective October 1, 2022.

As of December 31, 2022, [none of the independent trustees or their immediate family members owned beneficially or of record any securities of Schwab Asset Management or Schwab or any subadvisers or the distributor of the fund, or in a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with Schwab Asset Management or Schwab or any subadvisers or the distributor of the fund].

#### Code of Ethics
The fund, the investment adviser and the distributor have adopted Codes of Ethics as required under the 1940 Act. Subject to certain conditions or restrictions, the Codes of Ethics permit the trustees, directors, officers or advisory representatives of the fund or the investment adviser or the directors or officers of the distributor to buy or sell directly or indirectly securities for their own accounts. This includes securities that may be purchased or held by the fund. Securities transactions by some of these individuals may be subject to prior approval of the investment adviser's Chief Compliance Officer or alternate. Most securities transactions are subject to quarterly reporting and review requirements.

#### CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of [ ], [ ], the officers and trustees of the Trust, as a group owned, of record or beneficially, none of the outstanding voting securities of the fund.

As of [ ], [ ], no persons or entities owned, of record or beneficially, 5% or more of the outstanding voting securities of the fund.

Persons who beneficially own more than 25% of the fund may be deemed to control the fund. As a result, it may not be possible for matters subject to a vote of a majority of the outstanding voting securities of the fund to be approved without the affirmative vote of such shareholder, and it may be possible for such matters to be approved by such shareholder without the affirmative vote of any other shareholder.

#### INVESTMENT ADVISORY AND OTHER SERVICES

#### Investment Adviser
Charles Schwab Investment Management, Inc., dba Schwab Asset Management, a wholly owned subsidiary of CSC, 211 Main Street, San Francisco, CA 94105, serves as the fund's investment adviser pursuant to an Amended and Restated Advisory Agreement (Advisory Agreement) between it and the Trust. Charles R. Schwab is the founder, Chairman and Director of CSC. As a result of his ownership of and interests in CSC, Mr. Schwab may be deemed to be a controlling person of Schwab Asset Management.

#### Advisory Agreement
After an initial two-year term, the continuation of the fund's Advisory Agreement must be specifically approved at least annually (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or "interested persons" of any party (independent trustees), cast in person, except to the extent permitted under the 1940 Act, the rules or regulations thereunder or any exemption therefrom, at a meeting called for the purpose of voting on such approval.

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After the initial two-year term, each year, the Board will call and hold one or more meetings to decide whether to renew the Advisory Agreement between the Trust and Schwab Asset Management with respect to the fund. In preparation for the meetings, the Board requests and reviews a wide variety of materials provided by Schwab Asset Management, as well as extensive data provided by third parties, and the independent trustees receive advice from counsel to the independent trustees.

As described below, Schwab Asset Management is entitled to receive a fee from the fund, payable monthly, for its advisory and administrative services to the fund. As compensation for these services, Schwab Asset Management receives a management fee from the fund, expressed as a percentage of the fund's average daily net assets. **[To be updated by amendment]**

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| | |
|:---|:---|
| **Fund**  | **Fee**  |
| Schwab High Yield Bond ETF | []% |

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Pursuant to the Advisory Agreement, Schwab Asset Management pays the operating expenses of the fund, including the cost of transfer agency, custody, fund administration, legal, audit and other services, but excluding taxes, brokerage expenses and extraordinary or non-routine expenses.

#### Distributor
SEI Investments Distribution Co. (the Distributor), 1 Freedom Valley Drive, Oaks, PA 19456, is the principal underwriter and distributor of shares of the fund. The Distributor has entered into an agreement with the Trust pursuant to which it distributes shares of the fund (the Distribution Agreement). The Distributor continually distributes shares of the fund on a best effort basis. The Distributor has no obligation to sell any specific quantity of fund shares. The Distribution Agreement will continue for two years from its effective date and is renewable annually thereafter in accordance with the 1940 Act. Shares are continuously offered for sale by the fund through the Distributor only in Creation Units, as described in the fund's prospectus. Shares in less than Creation Units are not distributed by the Distributor. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the 1934 Act) and a member of the Financial Industry Regulatory Authority. The Distributor is not affiliated with the Trust, Schwab Asset Management, or any stock exchange.

The Distribution Agreement provides that it may be terminated at any time, without the payment of any penalty, on at least sixty (60) days prior written notice to the other party. The Distribution Agreement will terminate automatically in the event of its "assignment" (as defined in the 1940 Act).

#### Payments to Financial Intermediaries
Schwab Asset Management and its affiliates make payments to certain broker-dealers, banks, trust companies, insurance companies, retirement plan service providers, consultants and other financial intermediaries (Intermediaries) for services and expenses incurred in connection with certain activities or services which may educate financial advisors or facilitate, directly or indirectly, investment in the fund and other investment companies advised by Schwab Asset Management, including the Schwab ETFs. These payments are made by Schwab Asset Management or its affiliates at their own expense, and not from the assets of the fund. Although a portion of Schwab Asset Management's and its affiliates' revenue comes directly or indirectly in part from fees paid by the fund, these payments do not increase the expenses paid by investors for the purchase of fund shares, or the cost of owning the fund.

These payments may relate to educational efforts regarding the fund, or for other activities, such as marketing and/or fund promotion activities and presentations, educational training programs, conferences, data analytics and support, or the development and support of technology platforms and/or reporting systems. In addition, Schwab Asset Management or its affiliates make payments to certain Intermediaries that make shares of the fund available to their customers or otherwise promote the fund, which may include Intermediaries that allow customers to buy and sell fund shares without paying a commission or other transaction charge. Payments of this type are sometimes referred to as revenue-sharing or marketing support.

Payments made to Intermediaries may be significant and may cause an Intermediary to make decisions about which investment options it will recommend or make available to its clients or what services to provide for various products based on payments it receives or is eligible to receive. As a result, these payments could create conflicts of interest between an Intermediary and its clients and these financial incentives may cause the Intermediary to recommend the fund over other investments.

As of [ ], [ ], Schwab Asset Management anticipates that Envestnet Asset Management, Inc., E\*TRADE Securities LLC, Fidelity Brokerage Services LLC/National Financial Services LLC, Great-West Life & Annuity Insurance Company, Minnesota Life Insurance Company, Morgan Stanley Smith Barney LLC, Principal Life Insurance Company and Teachers Insurance and Annuity Association of America will receive these payments. Schwab Asset Management may enter into similar agreements with other FINRA member firms (or their affiliates) in the future. In addition to member firms of FINRA, Schwab Asset Management and its affiliates may also make these payments to certain other financial intermediaries, such as banks, trust companies, insurance companies, and plan administrators and consultants that sell fund shares or provide services to the fund and its shareholders. These firms may not be included in this list. You should ask your financial intermediary if it receives such payments.

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Schwab Asset Management also makes payments to Charles Schwab & Co., Inc. (Schwab) for certain administrative, professional and support services provided by Schwab, in its capacity as an affiliated financial intermediary of the fund. These payments reimburse Schwab for its charges, costs and expenses of providing Schwab personnel to perform marketing and sales activities under the direction of Schwab Asset Management, such as sales lead generation and sales support, assistance with public relations, marketing and/or advertising activities and presentations, educational training programs, conferences, and data analytics and support. Payments also are made by Schwab Asset Management to Schwab for Schwab Asset Management's allocated costs of general corporate services provided by Schwab, such as human resources, facilities, project management support and technology.

#### Transfer Agent
State Street Bank and Trust Company (State Street), One Lincoln Street, Boston, MA 02111, serves as the fund's transfer agent. As part of these services, the firm maintains records pertaining to the sale, redemption and transfer of the fund's shares.

The transfer agent is also responsible for the order-taking function for the fund's shares.

#### Custodian and Fund Accountant
State Street, One Lincoln Street, Boston, MA 02111, serves as custodian and accountant for the fund.

The custodian is responsible for the daily safekeeping of securities and cash held by the fund. The fund's accountant maintains all books and records related to the fund's transactions.

#### Independent Registered Public Accounting Firm

#### [To be udpated by amendment]
The fund's independent registered public accounting firm, [ ] ([ ]), [ ], audits and reports on the annual financial statements of the fund and reviews certain regulatory reports. [ ] or one of its affiliates also reviews the fund's federal income tax returns and performs other professional, accounting, auditing, tax and advisory services when engaged to do so by the Trust.

#### Securities Lending Activities
The fund is new and to-date has not entered into a contract with a securities lending agent and is not engaged in securities lending.

#### PORTFOLIO MANAGERS
**Other Accounts.** In addition to the fund, each portfolio manager (collectively, referred to as the Portfolio Managers) is responsible for the day-to-day management of certain other accounts, as listed below. The accounts listed below are not subject to a performance-based advisory fee. The information below is provided as of [ ], [ ]. **[To be updated by amendment]**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Registered Investment Companies <br> (this amount does not include the fund in this SAI)**  | **Registered Investment Companies <br> (this amount does not include the fund in this SAI)**  | **Other Pooled Investment Vehicles**  | **Other Pooled Investment Vehicles**  | **Other Accounts**  | **Other Accounts**  |
| <br> **Name**  | **Number of Accounts**  | **Total Assets**  | **Number of Accounts**  | **Total Assets**  | **Number of Accounts**  | **Total Assets**  |
| Matthew Hastings  | [] | $[] | [] | $[] | [] | $[] |
| Ryan Hook | [] | $[] | [] | $[] | [] | $[] |
| Steven Hung | [] | $[] | [] | $[] | [] | $[] |

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**Conflicts of Interest.** A Portfolio Manager's management of other accounts may give rise to potential conflicts of interest in connection with his or her management of the fund's investments, on the one hand, and the investments of the other accounts, on the other. These other accounts may include separate accounts and other mutual funds and ETFs advised by Schwab Asset Management (collectively, the Other Managed Accounts). The Other Managed Accounts might have similar investment objectives as the fund, track the same index the fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased, or sold by the fund. While the Portfolio Managers' management of Other Managed Accounts may give rise to the potential conflicts of interest listed below, Schwab Asset Management does not believe that the conflicts, if any, are material or, to the extent any such conflicts are material, Schwab Asset Management believes it has adopted policies and procedures that are designed to manage those conflicts in an appropriate way.

*<u>Knowledge of the Timing and Size of Fund Trades.</u>* A potential conflict of interest may arise as a result of the Portfolio Managers' day-to-day management of the fund. Because of their positions with the fund, the Portfolio Managers know the size, timing, and possible market impact of fund trades. It is theoretically possible that the Portfolio Managers could use this information to the advantage of the Other Managed Accounts they manage and to the possible detriment of the fund. However, Schwab Asset Management has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time. Moreover, with respect to an index fund, which seeks to track its index, much of this information is publicly available. When it is determined to be in the best interest of both accounts, the

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Portfolio Managers may aggregate trade orders for the Other Managed Accounts, excluding separate accounts, with those of the fund. All aggregated orders are subject to Schwab Asset Management's aggregation and allocation policy and procedures, which provide, among other things, that (i) a Portfolio Manager will not aggregate orders unless he or she believes such aggregation is consistent with his or her duty to seek best execution; (ii) no account will be favored over any other account; (iii) each account that participates in an aggregated order will participate at the average security price with all transaction costs shared on a pro-rata basis; and (iv) if the aggregated order cannot be executed in full, the partial execution is allocated pro-rata among the participating accounts in accordance with the size of each account's order.

*<u>Investment Opportunities.</u>* A potential conflict of interest may arise as a result of the Portfolio Managers' management of the fund and Other Managed Accounts which, in theory, may allow them to allocate investment opportunities in a way that favors the Other Managed Accounts over the fund, which conflict of interest may be exacerbated to the extent that Schwab Asset Management or the Portfolio Managers receive, or expect to receive, greater compensation from their management of the Other Managed Accounts than the fund. Notwithstanding this theoretical conflict of interest, it is Schwab Asset Management's policy to manage each account based on its investment objectives and related restrictions and, as discussed above, Schwab Asset Management has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time and in a manner consistent with each account's investment objectives and related restrictions. For example, while the Portfolio Managers may buy for an Other Managed Account securities that differ in identity or quantity from securities bought for the fund or refrain from purchasing securities for an Other Managed Account that they are otherwise buying for the fund in an effort to outperform its specific benchmark, such an approach might not be suitable for the fund given its investment objectives and related restrictions.

**Compensation.** During the most recent fiscal year, Portfolio Manager compensation consisted of a fixed annual (base) salary and a discretionary bonus. The base salary is determined considering compensation payable for a similar position across the investment management industry and an evaluation of the individual Portfolio Manager's overall performance such as the Portfolio Manager's contribution to the investment process, good corporate citizenship, risk management and mitigation, and functioning as an active contributor to the firm's success. The discretionary bonus is determined in accordance with the relevant Portfolio Manager Incentive Plan (the Plan) as follows:

There are two independent funding components for the Plan:

<sup>●</sup>

a portion based on weighting of Investment Fund Performance and Other Managed Account Performance (if applicable)

<sup>●</sup>

a portion based on Corporate results

#### Investment Fund Performance
At the close of the year, the fund's performance will be determined by its 1-year, 1- and 2-year, or 1- and 3-year percentile standing (based on pre-tax return before expenses) within its designated benchmark, peer group, or category, depending on the strategy of the fund (i.e., whether the fund is passively or actively managed) using standard statistical methods approved by Schwab Asset Management senior management. Investment Fund Performance measurements may be changed or modified at the discretion of the Schwab Asset Management President and Schwab Asset Management Chief Operating Officer. As each participant may be a member of a team that manages and/or supports a number of funds, there may be several funds and/or Other Managed Accounts considered in arriving at the incentive compensation funding.

Portfolio Managers who are chief investment officers of the investment adviser are covered by a Plan that specifically includes a risk mitigation component in the funding determination.

#### Corporate Performance
The Corporate Bonus Plan is an annual bonus plan that provides discretionary awards based on the financial performance of CSC during the annual performance period. Quarterly advances may be paid for the first three quarters. Allocations are discretionary and aligned with CSC and individual performance. Funding for the Plan is determined at the conclusion of the calendar year. Funding will be capped at 200% of target.

#### Allocation of Discretionary Bonus
At year-end, funding for both components of discretionary bonus is allocated to Plan participants by Schwab Asset Management senior management based on their assessment of a variety of performance factors.

Factors considered in Schwab Asset Management senior management's allocation process will include objective and subjective factors that will take into consideration total performance and will include, but are not limited to:

<sup>●</sup>

Fund performance relative to performance measure

<sup>●</sup>

Risk management and mitigation

<sup>●</sup>

Individual performance against key objectives

<sup>●</sup>

Contribution to overall group results

<sup>●</sup>

Functioning as an active contributor to the firm's success

<sup>●</sup>

Team work

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<sup>●</sup>

Collaboration between Analysts and Portfolio Managers

<sup>●</sup>

Regulatory/Compliance management

The Portfolio Managers' compensation is not based on the value of the assets held in the fund's portfolio or any Other Managed Account.

**Ownership of Fund Shares.** Because the fund had not commenced operations prior to the date of this SAI, no information regarding the Portfolio Managers' "beneficial ownership" of shares of the fund has been included. This information will appear in a future version of the SAI.

#### BROKERAGE ALLOCATION AND OTHER PRACTICES

#### Portfolio Turnover
For reporting purposes, the fund's portfolio turnover rate is calculated by dividing the value of purchases or sales of portfolio securities for the fiscal year, whichever is less, by the monthly average value of portfolio securities the fund owned during the fiscal year. When making the calculation, all securities whose maturities at the time of acquisition were one year or less (short-term securities) are excluded. Securities received or delivered in the processing of in-kind creation or redemption baskets are excluded from the calculation.

A 100% portfolio turnover rate would occur, for example, if all portfolio securities (aside from short-term securities) were sold and either repurchased or replaced once during the fiscal year. Typically, funds with high turnover (such as 100% or more) tend to generate higher capital gains and transaction costs, such as brokerage commissions. Because the fund is new, it does not have portfolio turnover rates to report.

#### Portfolio Transactions
The investment adviser makes decisions with respect to the purchase and sale of portfolio securities on behalf of the fund. The investment adviser is responsible for implementing these decisions, including the negotiation of commissions and the allocation of principal business and portfolio brokerage. The fund generally does not incur any commissions or sales charges when it invests in underlying Schwab Funds, but it may incur such costs if it invests directly in other types of securities or in unaffiliated funds. Purchases and sales of securities on a stock exchange, including ETF shares, or certain riskless principal transactions placed on NASDAQ are typically effected through brokers who charge a commission for their services. Exchange fees may also apply to transactions effected on an exchange. Purchases and sales of fixed income securities may be transacted with the issuer, the issuer's underwriter, or a dealer. The fund does not usually pay brokerage commissions on purchases and sales of fixed income securities, although the price of the securities generally includes compensation, in the form of a spread or a mark-up or mark-down, which is not disclosed separately. The prices the fund pays to underwriters of newly-issued securities usually include a commission paid by the issuer to the underwriter. Transactions placed through dealers who are serving as primary market makers reflect the spread between the bid and asked prices. The money market securities in which the fund may invest are traded primarily in the over-the-counter market on a net basis and do not normally involve either brokerage commissions or transfer taxes. It is expected that the cost of executing portfolio securities transactions of the fund will primarily consist of dealer spreads and brokerage commissions.

The investment adviser seeks to obtain the best execution for the fund's portfolio transactions. The investment adviser may take a number of factors into account in selecting brokers or dealers to execute these transactions. Such factors may include, without limitation, the following: execution price; brokerage commission or dealer spread; size or type of the transaction; nature or character of the markets; clearance or settlement capability; reputation; financial strength and stability of the broker or dealer; efficiency of execution and error resolution; block trading capabilities; willingness to execute related or unrelated difficult transactions in the future; order of call; ability to facilitate short selling; and provision of additional brokerage or research services or products; whether a broker guarantees that the fund will receive, on aggregate, prices at least as favorable as the closing prices on a given day when adherence to "market-on-close" pricing aligns with fund objectives; or whether a broker guarantees that the fund will receive the volume weighted average price (VWAP) for a security for a given trading day (or portion thereof) when the investment adviser believes that VWAP execution is in the fund's best interest. In addition, the investment adviser may have incentive sharing arrangements with certain unaffiliated brokers who guarantee market-on-close pricing: on a day when such a broker executes transactions at prices better, on aggregate, than market-on-close prices, that broker may receive, in addition to his or her standard commission, a portion of the net difference between the actual execution prices and corresponding market-on-close prices for that day.

The investment adviser may cause the fund to pay a higher commission than otherwise obtainable from other brokers or dealers in return for brokerage or research services or products if the investment adviser believes that such commission is reasonable in relation to the services provided. In addition to agency transactions, the investment adviser may receive brokerage and research services or products in connection with certain riskless principal transactions, in accordance with applicable SEC and other regulatory guidelines. In both instances, these services or products may include: economic, industry, or company research reports or investment recommendations; subscriptions to financial publications or research data compilations; compilations of securities prices, earnings, dividends, and similar data; computerized databases; quotation equipment and services; research or analytical computer software and services; products or services that assist in effecting transactions, including services of third-party computer systems developers directly related to research and brokerage activities; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). The investment adviser may use research services furnished by brokers or dealers in servicing all fund accounts, and not all services may necessarily be used in connection with the account that paid commissions or spreads to the broker or dealer providing such services.

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The investment adviser may receive a service from a broker or dealer that has both a "research" and a "non-research" use. When this occurs, the investment adviser will make a good faith allocation, under all the circumstances, between the research and non-research uses of the service. The percentage of the service that is used for research purposes may be paid for with fund commissions or spreads, while the investment adviser will use its own funds to pay for the percentage of the service that is used for non-research purposes. In making this good faith allocation, the investment adviser faces a potential conflict of interest, but the investment adviser believes that the costs of such services may be appropriately allocated to their anticipated research and non-research uses.

The investment adviser may purchase new issues of securities in a fixed price offering for the fund. In these situations, the seller may be a member of the selling group that will, in addition to selling securities, provide the investment adviser with research services, in accordance with applicable rules and regulations permitting these types of arrangements. Generally, the seller will provide research "credits" in these situations at a rate that is higher than that which is available for typical secondary market transactions. These arrangements may not fall within the safe harbor of Section 28(e) of the 1934 Act.

The investment adviser may place orders directly with electronic communications networks or other alternative trading systems. Placing orders with electronic communications networks or other alternative trading systems may enable the fund to trade directly with other institutional holders. At times, this may allow the fund to trade larger blocks than would be possible trading through a single market maker.

The investment adviser may aggregate securities sales or purchases among two or more funds. The investment adviser will not aggregate transactions unless it believes such aggregation is consistent with its duty to seek best execution for each affected fund and is consistent with the terms of the investment advisory agreement for such fund. In any single transaction in which purchases and/or sales of securities of any issuer for the account of the fund are aggregated with other accounts managed by the investment adviser, the actual prices applicable to the transaction will be averaged among the accounts for which the transaction is effected, including the account of the fund.

In determining when and to what extent to use Schwab or any other affiliated broker-dealer as its broker for executing orders for the fund on securities exchanges, the investment adviser follows procedures, adopted by the fund's Board, that are designed to ensure that affiliated brokerage commissions (if relevant) are reasonable and fair in comparison to unaffiliated brokerage commissions for comparable transactions. The Board reviews the procedures annually and approves and reviews transactions involving affiliated brokers quarterly.

#### Brokerage Commissions
The fund is new and, therefore, the fund paid no brokerage commissions for each of the last three fiscal years.

#### Regular Broker-Dealers
The fund is new and, therefore, has not purchased securities issued by any "regular broker-dealers" (as defined in Rule 10b-1 under the 1940 Act).

#### PROXY VOTING
The Board has delegated the responsibility for voting proxies to Schwab Asset Management, pursuant to the investment adviser's Proxy Voting Policy with respect to proxies voted on behalf of the various Schwab Funds' portfolios. A description of such Proxy Voting Policy is included in Appendix – Proxy Voting Policy.

The Trust is required to disclose annually the fund's complete proxy voting record on Form N-PX. The fund's proxy voting record for the most recent 12-month period ended June 30th will be available by visiting the Schwab ETFs' website at **www.schwabassetmanagement.com/schwabetfs_prospectus**. The fund's Form N-PX will also be available on the SEC's website at **www.sec.gov**.

#### PORTFOLIO HOLDINGS DISCLOSURE
 **For this section only, the following disclosure relates to The Charles Schwab Family of Funds, Schwab Investments, Schwab Annuity Portfolios, Schwab Capital Trust, Schwab Strategic Trust and Laudus Trust (collectively, the Trusts) and each series thereunder (each a fund and collectively, the funds).** 

The Trusts' Board has approved policies and procedures that govern the timing and circumstances regarding the disclosure of fund portfolio holdings information to shareholders and third parties. These policies and procedures are designed to ensure that disclosure of information regarding the funds' portfolio securities is in the best interests of fund shareholders, and include procedures to address conflicts between the interests of the funds' shareholders, on the one hand, and those of the funds' investment adviser, subadviser (if applicable), principal underwriter or any affiliated person of a fund, its investment adviser, subadviser or principal underwriter, on the other. Pursuant to such procedures, the Board has authorized one of the President, Chief Operating Officer or Chief Financial Officer of the Trusts (in consultation with a fund's subadviser, if applicable) to authorize the release of the funds' portfolio holdings prior to regular public disclosure (as outlined in the prospectus and below) or regular public filings, as necessary, in conformity with the foregoing principles.

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The Board exercises on-going oversight of the disclosure of fund portfolio holdings by overseeing the implementation and enforcement of the funds' policies and procedures by the Chief Compliance Officer and by considering reports and recommendations by the Chief Compliance Officer concerning any material compliance matters. The Board will receive periodic updates, at least annually, regarding entities which were authorized to be provided "early disclosure" of the funds' portfolio holdings information and will periodically review any agreements that the Trusts have entered into to selectively disclose portfolio holdings.

Portfolio holdings may be made available on a selective basis to ratings agencies, certain industry organizations, consultants and other qualified financial professionals when the appropriate officer of the Trusts determines such disclosure meets the requirements noted above and serves a legitimate business purpose. Agreements entered into with such entities will describe the permitted use of portfolio holdings and provide that, among other customary confidentiality provisions: (i) the portfolio holdings will be kept confidential; (ii) the person will not trade on the basis of any material non-public information; and (iii) the information will be used only for the purpose described in the agreement.

The funds' service providers including, without limitation, the investment adviser, subadvisers (if applicable), the distributor, the custodian, fund accountant, transfer agent, certain affiliates of the investment adviser, counsel, auditor, proxy voting service provider, pricing information vendors, trade execution measurement vendors, portfolio management system providers, cloud database providers, securities lending agents, publisher, printer and mailing agent may receive disclosure of portfolio holdings information as frequently as daily in connection with the services they perform for the funds. Schwab Asset Management, any subadviser to a fund as disclosed in the most current prospectus, Glass, Lewis & Co., LLC, State Street and/or Brown Brothers Harriman & Co., as service providers to the funds, are currently receiving this information on a daily basis. Donnelley Financial Solutions, as a service provider to the funds, is currently receiving this information on a quarterly basis. Deloitte, the Transfer Agent, and the Distributor, as service providers to the funds, receive this information on an as-needed basis. Service providers are subject to a duty of confidentiality with respect to any portfolio holdings information they receive whether imposed by the confidentiality provisions of the service providers' agreements with the Trusts or by the nature of its relationship with the Trusts. Although certain of the service providers are not under formal confidentiality obligations in connection with disclosure of portfolio holdings, a fund will not continue to conduct business with a service provider who the fund believes is misusing the disclosed information.

To the extent that a fund invests in an unaffiliated acquired fund, the Trusts will, when required by Rule 12d1-4, promptly notify the acquired fund, upon causing a fund to acquire more than 3% of the acquired fund's outstanding shares.

The funds' policies and procedures prohibit the funds, the funds' investment adviser or any related party from receiving any compensation or other consideration in connection with the disclosure of portfolio holdings information.

Generally, a complete list of a fund's portfolio holdings is published on the fund's website www.schwabassetmanagement.com on the "Prospectus & Reports" tab under "Portfolio Holdings" generally 60-80 days after a fund's fiscal quarter-end in-line with regulatory filings unless a different timing is outlined in the fund's prospectus.

Specifically for the Schwab ETFs (other than the Schwab Ariel ESG ETF), each Schwab ETF discloses its portfolio holdings each business day on its website before the opening of regular trading on the ETF's primary listing exchange in accordance with the requirements of Rule 6c-11 under the 1940 Act. Portfolio holdings information made available in connection with the process of purchasing or redeeming Creation Units for the Schwab ETFs may be provided to other entities that provided services to the funds in the ordinary course of business after it has been disseminated to the NSCC.

The Schwab Money Funds have an ongoing arrangement to make available information about the funds' portfolio holdings and information derived from the funds' portfolio holdings to iMoneyNet, a rating and ranking organization, which is subject to a confidentiality agreement. Under its arrangement with the funds, iMoneyNet, among other things, receives information concerning the funds' net assets, yields, maturities and portfolio compositions on a weekly basis, subject to a one business day lag.

On the website, the funds also may provide, on a monthly or quarterly basis, information regarding certain attributes of a fund's portfolio, such as a fund's top ten holdings, sector weightings, composition, credit quality and duration and maturity, as applicable. This information is generally updated within 5-25 days after the end of the period. This information on the website is publicly available to all categories of persons.

The funds may disclose non-material information including commentary and aggregate information about the characteristics of a fund in connection with or relating to a fund or its portfolio securities to any person if such disclosure is for a legitimate business purpose, such disclosure does not effectively result in the disclosure of the complete portfolio securities of any fund (which can only be disclosed in accordance with the above requirements), and such information does not constitute material non-public information. Such disclosure does not fall within the portfolio securities disclosure requirements outlined above.

Whether the information constitutes material non-public information will be made on a good faith determination, which involves an assessment of the particular facts and circumstances. In most cases, commentary or analysis would be immaterial and would not convey any advantage to a recipient in making a decision concerning a fund. Commentary and analysis include, but are not limited to, the allocation of a fund's portfolio securities and other investments among various asset classes, sectors, industries, countries or other relevant category, the characteristics of the stock components and other investments of a fund, the attribution of fund returns by asset class, sector, industry, country or other relevant category, and the volatility characteristics of a fund.

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#### DESCRIPTION OF THE TRUST
The fund is a series of Schwab Strategic Trust, an open-end investment management company organized as a Delaware statutory trust on January 27, 2009.

The Declaration of Trust provides for the perpetual existence of the Trust. The Trust may, however, be terminated at any time by vote of at least two-thirds of the outstanding shares of each series of the Trust or by the vote of the trustees.

Shareholders are entitled to one vote for each full share held (with fractional votes for fractional shares held) and will vote (to the extent provided on the Declaration of Trust) in the election of trustees and the termination of the Trust and on other matters submitted to the vote of shareholders. Shareholders will vote by individual series on all matters except (i) when required by the 1940 Act, shares shall be voted in the aggregate and not by individual series and (ii) when the trustees have determined that the matter affects only the interests of one or more series, then only shareholders of such series shall be entitled to vote thereon. Shareholders of one series shall not be entitled to vote on matters exclusively affecting another series, such matters including, without limitation, the adoption of or change in any fundamental policies or restrictions of the other series and the approval of the investment advisory contracts of the other series.

There will normally be no meetings of shareholders for the purpose of electing trustees, except that in accordance with the 1940 Act (i) the Trust will hold a shareholders' meeting for the election of trustees at such time as less than a majority of the trustees holding office have been elected by shareholders, and (ii) if, as a result of a vacancy in the Board, less than two-thirds of the trustees holding office have been elected by the shareholders, that vacancy may only be filled by a vote of the shareholders. In addition, trustees may be removed from office by a written consent signed by the holders of two-thirds of the outstanding shares and filed with the Trust's custodian or by a vote of the holders of two-thirds of the outstanding shares at a meeting duly called for the purpose, which meeting shall be held upon the written request of the holders of not less than 10% of the outstanding shares. Except as set forth above, the trustees shall continue to hold office and may appoint successor trustees. Voting rights are not cumulative.

The Trust may, without shareholder vote, restate, amend or otherwise supplement the Declaration of Trust. Shareholders shall have the right to vote on any amendment that could affect their right to vote, any amendment to the Amendments section, any amendment for which shareholder vote may be required by applicable law or by the Trust's registration statement filed with the SEC, and on any amendment submitted to them by the trustees.

Any series of the Trust may reorganize or merge with one or more other series of the Trust or another investment company. Any such reorganization or merger shall be pursuant to the terms and conditions specified in an agreement and plan of reorganization authorized and approved by the trustees and entered into by the relevant series in connection therewith. In addition, such reorganization or merger may be authorized by vote of a majority of the trustees then in office and, to the extent permitted by applicable law, without the approval of shareholders of any series.

Shareholders wishing to submit proposals for inclusion in a proxy statement for a future shareholder meeting should send their written submissions to the Trust at 1 Freedom Valley Drive, Oaks, PA 19456. Proposals must be received a reasonable time in advance of a proxy solicitation to be included. Submission of a proposal does not guarantee inclusion in a proxy statement because proposals must comply with certain federal securities regulations.

#### PURCHASE, REDEMPTION AND PRICING OF SHARES

#### Creation and Redemption of Creation Units
The fund is open each day that the New York Stock Exchange (NYSE) is open (Business Days). The NYSE's trading session is normally conducted from 9:30 a.m. Eastern Time until 4:00 p.m. Eastern Time, Monday through Friday, although some days, such as in advance of and following holidays, the NYSE's trading session closes early. The NYSE typically observes the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Although it is expected that the same holidays will be observed in the future, the NYSE may modify its holiday schedule or hours of operation at any time. Only orders that are received and deemed acceptable by the transfer agent no later than the time specified by the Trust will be executed that day at the fund's share price calculated that day. On any day that the NYSE closes early, the fund reserves the right to advance the time by which purchase and redemption orders must be received by the transfer agent that day to be executed that day at that day's share price. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a Business Day and accept purchase and redemption orders and calculate their NAV as of the normally scheduled close of regular trading on the NYSE for that day.

**Creation.** The Trust issues and sells shares of the fund only in Creation Units on a continuous basis through the Distributor, without a sales load, at the NAV next determined after receipt, on any Business Day, for an order received and deemed acceptable by the transfer agent.

**Fund Deposit.** The consideration for purchase of Creation Units of the fund may consist of (i) the in-kind deposit of a designated portfolio of securities (the Deposit Securities), and (ii) an amount of cash denominated in U.S. Dollars (the Cash Component) computed as described below.

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Together, the Deposit Securities and the Cash Component constitute the "Fund Deposit," which represents the minimum initial and subsequent investment amount for a Creation Unit of the fund.

The fund may accept a basket of money market instruments or cash that differs from the composition of the published basket. The fund may permit or require the consideration for Creation Units to consist solely of cash. The fund may permit or require the substitution of an amount of cash (i.e., a "cash in lieu" amount) to be added to the Cash Component to replace any Deposit Security. For example, the Trust reserves the right to permit or require a "cash in lieu" amount where the delivery of the Deposit Security by the Authorized Participant (as described below) would be restricted under the securities laws or where the delivery of the Deposit Security to the Authorized Participant would result in the disposition of the Deposit Security by the Authorized Participant becoming restricted under the securities laws, or in certain other situations.

The Cash Component is sometimes also referred to as the "Balancing Amount." The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit and the value of the Deposit Securities. If the Cash Component is a positive number (i.e., the NAV per Creation Unit exceeds the value of the Deposit Securities), the creator will deliver the Cash Component. If the Cash Component is a negative number (i.e., the NAV per Creation Unit is less than the value of the Deposit Securities), the creator will receive the Cash Component. Computation of the Cash Component excludes any stamp duty tax or other similar fees and expenses payable upon transfer of beneficial ownership of the Deposit Securities, which shall be the sole responsibility of the Authorized Participant.

The identity and amount of Deposit Securities and Cash Component for the fund changes as the composition of the fund's portfolio changes and as rebalancing adjustments and corporate action events are reflected from time to time by Schwab Asset Management with a view to the investment objective of the fund. The composition of the Deposit Securities may also change in response to adjustments to the weighting or composition of the component securities of the fund's index. The fund also reserves the right to include or remove Deposit Securities from the basket in contemplation of index rebalancing changes.

The fund or its agent, through the NSCC or otherwise, makes available on each Business Day, prior to the opening of business on the NYSE Arca, Inc. Exchange (currently 9:30 a.m., Eastern Time), the current Fund Deposit for the fund. Such Deposit Securities are applicable, subject to any adjustments, in order to effect creations of Creation Units of the fund until such time as the next-announced composition of the Deposit Securities is made available.

**Procedures for Creation of Creation Units.** To be eligible to place orders with the transfer agent and to create a Creation Unit of the fund, an entity must be a Depository Trust Company (DTC) participant, such as a broker-dealer, bank, trust company, clearing corporation or certain other organization, some of whom (and/or their representatives) own DTC (each a DTC Participant). DTC acts as securities depositary for the shares. The DTC Participant must have executed an agreement with the Distributor with respect to creations and redemptions of Creation Units (Participant Agreement). A DTC Participant that has executed a Participant Agreement is referred to as an Authorized Participant. Investors should contact the Distributor for the names of Authorized Participants that have signed a Participant Agreement. All shares of the fund, however created, will be entered on the records of DTC in the name of DTC or its nominee and deposited with, or on behalf of, DTC.

All orders to create shares must be placed for one or more Creation Units. Orders must be transmitted by an Authorized Participant pursuant to procedures set forth in the Participant Agreement. The date on which an order to create Creation Units (or an order to redeem Creation Units, as discussed below) is placed is referred to as the Transmittal Date. Orders must be transmitted by an Authorized Participant by telephone or other transmission method acceptable to the transfer agent pursuant to procedures set forth in the Participant Agreement, as described below. Economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the transfer agent or an Authorized Participant.

On days when the New York Stock Exchange or U.S. bond markets close earlier than normal, the fund may require purchase orders to be placed earlier in the day. All questions as to the number of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding.

If the fund does not receive both the required Deposit Securities and the Cash Component by the specified time on the settlement date, the Trust may cancel or revoke acceptance of such order. Upon written notice to the transfer agent, such canceled or revoked order may be resubmitted the following Business Day using the Fund Deposit as newly constituted to reflect the then current NAV of the fund. The delivery of Creation Units so created generally will occur no later than the settlement date.

Creation Units may be created in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities as described below. In these circumstances, the initial deposit will have a value greater than the NAV of the shares on the date the order is placed since, in addition to available Deposit Securities, U.S. cash (or an equivalent amount of non-U.S. currency) must be deposited in an amount equal to the sum of (i) the Cash Component, plus (ii) at least 110%, which the Trust may change from time to time, of the market value of the undelivered Deposit Securities (the Additional Cash Deposit) with a fund pending delivery of any missing Deposit Securities. The Authorized Participant must deposit with the custodian the appropriate amount of federal funds by 10:00 a.m. New York time (or such other time as specified by the Trust) on the settlement date. If the fund does not receive the Additional Cash Deposit in the appropriate amount by such time, then the order may be deemed to be rejected and the Authorized Participant shall be liable to the fund for losses, if any, resulting therefrom. An additional amount of U.S. cash (or an equivalent amount of non-U.S. currency) shall be required to be deposited with the fund, pending delivery of the missing Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to 110%, which the Trust may change

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from time to time, of the daily marked to market value of the missing Deposit Securities. To the extent that missing Deposit Securities are not received by the specified time on the settlement date, or in the event a marked-to-market payment is not made within one Business Day following notification by the fund that such a payment is required, the Trust may use the cash on deposit to purchase the missing Deposit Securities. The Authorized Participant will be liable to the Trust for the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the market value of such Deposit Securities on the transmittal date plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the missing Deposit Securities have been properly received by the fund or purchased by the Trust and deposited into the Trust. In addition, a transaction fee, as listed below, will be charged in all cases.

**Acceptance of Orders for Creation Units.** The Trust reserves the right to reject or revoke acceptance of an individual creation order transmitted to it by the transfer agent in respect of the fund if, including, but not limited to, the following conditions are present: (i) the order does not conform to the procedures set forth in the Participant Agreement; (ii) the investor(s), upon obtaining the shares ordered, would own 80% or more of the currently outstanding shares of the fund; (iii) the Deposit Securities delivered are not as disseminated through the facilities of the NSCC for that date by the fund as described above; (iv) acceptance of the Deposit Securities would have certain adverse tax consequences to the fund; (v) acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; (vi) acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or Schwab Asset Management, have an adverse effect on the Trust or the rights of beneficial owners; or (vii) in the event that circumstances outside the control of the Trust, the custodian, the transfer agent, the Distributor or Schwab Asset Management make it for all practical purposes impossible to process creation orders. Examples of such circumstances include natural disaster, war, revolution; public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, Schwab Asset Management, the transfer agent, the Distributor, DTC, NSCC, custodian (or sub-custodian) or any other participant in the creation process, and similar extraordinary events. The transfer agent shall notify a prospective creator of a Creation Unit and/or the Authorized Participant acting on behalf of the creator of a Creation Unit of its rejection of the order of such person. The Trust, custodian (or sub-custodian), transfer agent and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits nor shall any of them incur any liability for the failure to give any such notification.

**Creation/Redemption Transaction Fee.** The fund may impose a transaction fee on investors purchasing or redeeming Creation Units. The transaction fee will be limited to amounts that have been determined by Schwab Asset Management to be appropriate. The purpose of the transaction fee is to protect the existing shareholders of the fund from the dilutive costs associated with the purchase and redemption of Creation Units. Where the fund permits cash creations (or redemptions) or cash in lieu of depositing one or more Deposit Securities, the purchaser (or redeemer) may be assessed a higher transaction fee (which may, in certain instances, be based on a good faith estimate of transaction costs) to offset the transaction cost to the fund of buying (or selling) those particular Deposit Securities. Every purchaser of a Creation Unit will receive a prospectus that contains disclosure about the transaction fee, including the maximum amount of the additional variable transaction fee charged by the fund. In certain circumstances, the cost of any standard transaction fees and/or variable transaction fees may be waived by the fund when doing so is believed to be in the best interests of the fund. From time to time, the investment adviser may cover the cost of any transaction fees.

The following table shows, as of [ ], [ ], the approximate value of one Creation Unit of the fund and sets forth the standard and additional creation/redemption transaction fee for the fund.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Fund**  | **Approximate Value of <br> One Creation Unit**  | **Standard Creation/<br>Redemption <br>Transaction Fee** | **Maximum Additional Creation <br> Transaction Fee<sup>(1)</sup>**  | **Maximum Additional <br> Redemption Transaction <br> Fee<sup>(1)</sup>**  |
| Schwab High Yield Bond ETF  | $[] | $[] | [3.0]% | [2.0]% |

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<sup>(1)</sup> <br>

As a percentage of the total amount invested or redeemed.

**Placement of Redemption Orders.** The process to redeem Creation Units works much like the process to purchase Creation Units, but in reverse. Orders to redeem Creation Units of the fund must be delivered through an Authorized Participant. Investors other than Authorized Participants are responsible for making arrangements for a redemption request to be made through an Authorized Participant. Orders must be accompanied or followed by the requisite number of shares of the fund specified in such order, which delivery must be made to the Distributor no later than 10:00 a.m. New York time on the next Business Day following the Transmittal Date. All other procedures set forth in the Participant Agreement must be properly followed.

Fund securities received on redemption may not be identical to Deposit Securities that are applicable to creations of Creation Units. The fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the basket of fund securities generally applicable to redemption requests. An Authorized Participant submitting a redemption request is deemed to represent to the Trust that it (or its client) (i) owns outright or has full legal authority and legal beneficial right to tender for redemption the requisite number of fund shares to be redeemed and can receive the entire proceeds of the redemption, and (ii) the fund shares to be redeemed have not been loaned or pledged to another party nor are they the subject of a repurchase agreement, securities lending agreement or such other arrangement that would preclude the delivery of such fund shares to the Trust. The Trust reserves the right to verify these representations at its discretion, but will typically require

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verification with respect to a redemption request from the fund in connection with higher levels of redemption activity and/or short interest in the fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trust, the redemption request will not be considered to have been received in proper form and may be rejected by the Trust.

To the extent contemplated by an Authorized Participant's agreement, in the event the Authorized Participant has submitted a redemption request but is unable to transfer all or part of the Creation Units to be redeemed to the fund, the transfer agent will nonetheless accept the redemption request in reliance on the undertaking by the Authorized Participant to deliver the missing shares as soon as possible. Such undertaking shall be secured by the Authorized Participant's delivery and maintenance of collateral consisting of cash having a value (marked-to-market daily) at least equal to 110%, which Schwab Asset Management may change from time to time, of the value of the missing shares.

The current procedures for collateralization of missing shares require, among other things, that any cash collateral shall be in the form of U.S. dollars (or, at the discretion of the Trust, non-U.S. currency in an equivalent amount) in immediately-available funds and shall be held by the custodian and marked-to-market daily. The fees of the custodian (and any sub-custodians) in respect of the delivery, maintenance and redelivery of the cash collateral shall be payable by the Authorized Participant. The Trust, on behalf of the fund, is permitted to purchase the missing shares or acquire the Deposit Securities and the Cash Component underlying such shares at any time and will subject the Authorized Participant to liability for any shortfall between the cost to the Trust of purchasing such shares, Deposit Securities or Cash Component and the value of the collateral.

If the requisite number of shares of the fund are not delivered on the Transmittal Date as described above, the fund may reject or revoke acceptance of the redemption request. If it is not possible to effect deliveries of the fund securities, the Trust may in its discretion exercise its option to redeem such shares in U.S. cash and the redeeming Authorized Participant will be required to receive its redemption proceeds in cash. In addition, an investor may request a redemption in cash that the fund may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the NAV of its shares based on the NAV of shares of the fund next determined after the redemption request is received (minus a redemption transaction fee and additional charge for requested cash redemptions specified above, to offset the Trust's brokerage and other transaction costs associated with the disposition of fund securities).

Redemptions of shares for fund securities will be subject to compliance with applicable federal and state securities laws and the fund (whether or not it otherwise permits cash redemptions) reserves the right to redeem Creation Units for cash to the extent that the Trust could not lawfully deliver specific fund securities upon redemptions or could not do so without first registering the fund securities under such laws.

The ability of the Trust to effect in-kind creations and redemptions is subject, among other things, to the condition that, within the time period from the date of the order to the date of delivery of the securities, there are no days that are holidays in the applicable foreign market. Non-U.S. market holiday schedules, coupled with standard settlement cycles, may require that the fund extend settlement longer than seven, but not greater than fifteen, calendar days. For every occurrence of one or more intervening holidays in the applicable foreign market that are not holidays observed in the U.S. equity market, the redemption settlement cycle may be extended by the number of such intervening holidays.

**Large Shareholder Redemptions.** Certain accounts or Schwab affiliates may from time to time own (beneficially or of record) or control a significant percentage of the fund's shares. Redemptions by these shareholders of their holdings in the fund or large redemptions by several shareholders resulting from events affecting investor demand, to the extent such redemptions are not executed in the secondary market but rather directly with the fund through an Authorized Participant, may impact the fund's liquidity and NAV. These redemptions if made in cash, rather than in-kind, may also force the fund to sell securities, which may negatively impact the fund's brokerage costs. To the extent the fund effects redemptions in cash, this activity could also accelerate the realization of capital gains. Large purchases of shares, if made in cash rather than in-kind, may adversely affect the fund's performance to the extent that the fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would.

#### Pricing of Shares
Each business day, the fund calculates its share price, net asset value per share or NAV, as of the close of the NYSE (generally 4:00 p.m. Eastern Time). This means that NAVs are calculated using the values of the fund's portfolio securities as of the close of the NYSE. Such values are required to be determined in one of two ways: securities for which market quotations are readily available are required to be valued at current market value; and securities for which market quotations are not readily available or that the investment adviser deems to be unreliable are required to be valued at fair value using procedures approved by the Board. If the NYSE is closed due to weather or other extenuating circumstances on a day it would typically be open for business, or the NYSE has an unscheduled early closing on a day it has opened for business, the fund reserves the right to treat such day as a business day and accept purchase and redemption orders and calculate its share price as of the normally scheduled close of regular trading on the NYSE for that day.

To the extent the fund invests in foreign securities, shareholders should be aware that because foreign markets are often open on weekends and other days when the fund is closed, the value of some of the fund's securities may change on days when it is not possible to buy or sell shares of the fund.

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The fund uses approved pricing sources (including pricing services) to provide values for its portfolio securities. Values are generally determined by the approved pricing sources as follows: generally, securities traded on stock exchanges, excluding the NASDAQ National Market System, are valued at the last-quoted sales price on the exchange on which such securities are primarily traded (closing values), or, lacking any sales, at the mean between the bid and ask prices; securities traded in the over-the-counter market are generally valued at an evaluated price using a mid-price supplied by an approved, independent pricing service. The mid-price is the mean of the bid and ask prices as calculated by the pricing service. Generally, securities listed on the NASDAQ National Market System are valued in accordance with the NASDAQ Official Closing Price. In addition, securities that are primarily traded on foreign exchanges are generally valued at the official closing price or last sales price on the exchange where the securities are primarily traded with these values then translated into U.S. dollars at the current exchange rate. Fixed-income securities normally are valued based on valuations provided by approved pricing services. Securities will be fair valued pursuant to procedures approved by the fund's Board when market quotations are not "readily available" or the investment adviser deems them unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security's primary pricing source is unable or unwilling to provide a price; when a security's primary trading market is closed during regular market hours; or when a security's value is materially affected by events occurring after the close of the security's primary trading market. The Board has designated the investment adviser as the valuation designee (Valuation Designee) for the fund to perform the fair value determination relating to all fund investments. The Valuation Designee periodically provides reports to the Board on items related to its fair value of fund investments.

NOTE: Transactions in fund shares will be priced at NAV only if you purchase or redeem shares directly from the fund in Creation Units. Fund shares are purchased or sold on a national securities exchange at market prices, which may be higher (premium) or lower (discount) than NAV.

#### TAXATION
This discussion of federal income tax consequences is based on the Internal Revenue Code and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.

#### Federal Tax Information for the Fund
It is the fund's policy to qualify for taxation as a "regulated investment company" (RIC) by meeting the requirements of Subchapter M of the Internal Revenue Code. By qualifying as a RIC, the fund expects to eliminate or reduce to a nominal amount the federal income tax to which it is subject. If the fund does not qualify as a RIC under the Internal Revenue Code, it will be subject to federal income tax on its net investment income and any net realized capital gains. In addition, the fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make substantial distributions before requalifying as a RIC.

The fund is treated as a separate entity for federal income tax purposes and is not combined with the Trust's other funds. The fund intends to qualify as a RIC so that it will be relieved of federal income tax on that part of its income that is distributed to shareholders. In order to qualify for treatment as a RIC, the fund must, among other requirements, distribute annually to its shareholders at least the sum of 90% of its investment company taxable income (generally, net investment income plus the excess, if any, of net short-term capital gain over net long-term capital losses) and 90% of its net tax-exempt income. Among these requirements are the following: (i) at least 90% of the fund's gross income each taxable year must be derived from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to its business of investing in such stock or securities or currencies and net income derived from an interest in a qualified publicly traded partnership; (ii) at the close of each quarter of the fund's taxable year, at least 50% of the value of its total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with such other securities limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the fund's assets and that does not represent more than 10% of the outstanding voting securities of such issuer; and (iii) at the close of each quarter of the fund's taxable year, not more than 25% of the value of its assets may be invested in securities (other than U.S. government securities or the securities of other RICs) of any one issuer or of two or more issuers and which are engaged in the same, similar, or related trades or businesses if the fund owns at least 20% of the voting power of such issuers, or the securities of one or more qualified publicly traded partnerships.

The Internal Revenue Code imposes a non-deductible excise tax on RICs that do not distribute in a calendar year (regardless of whether they otherwise have a non-calendar taxable year) an amount equal to 98% of their "ordinary income" (as defined in the Internal Revenue Code) for the calendar year plus 98.2% of their net capital gain for the one-year period ending on October 31 of such calendar year, plus any undistributed amounts from prior years. The non-deductible excise tax is equal to 4% of the deficiency. For the foregoing purposes, the fund is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year and certain amounts with respect to which estimated taxes are paid in such calendar year. The fund may in certain circumstances be required to liquidate fund investments to make sufficient distributions to avoid federal excise tax liability at a time when the investment adviser might not otherwise have chosen to do so, and liquidation of investments in such circumstances may affect the ability of the fund to satisfy the requirements for qualification as a RIC.

The fund's transactions in futures contracts, forward contracts, options and certain other investment and hedging activities may be restricted by the Internal Revenue Code and are subject to special tax rules. In a given case, these rules may accelerate income to the fund, defer its losses, cause adjustments in the holding periods of the fund's assets, convert short-term capital losses into long-term capital losses or otherwise

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affect the character of the fund's income. These rules could therefore affect the amount, timing and character of distributions to shareholders. The fund will endeavor to make any available elections pertaining to these transactions in a manner believed to be in the best interest of the fund and its shareholders.

The fund is required for federal income tax purposes to mark-to-market and recognize as income for each taxable year its net unrealized gains and losses on certain futures contracts as of the end of the year as well as those actually realized during the year. Gain or loss from futures and options contracts on broad-based indexes required to be marked-to-market will be 60% long-term and 40% short-term capital gain or loss. Application of this rule may alter the timing and character of distributions to shareholders. The fund may be required to defer the recognition of losses on futures contracts, options contracts and swaps to the extent of any unrecognized gains on offsetting positions held by the fund. It is anticipated that any net gain realized from the closing out of futures or options contracts will be considered gain from the sale of securities and therefore will be qualifying income for purposes of the 90% requirement described above. The fund distributes to shareholders at least annually any net capital gains which have been recognized for federal income tax purposes, including unrealized gains at the end of the fund's fiscal year on futures or options transactions. Such distributions are combined with distributions of capital gains realized on the fund's other investments and shareholders are advised on the nature of the distributions.

#### Federal Income Tax Information for Shareholders
The discussion of federal income taxation presented below supplements the discussion in the fund's prospectus and only summarizes some of the important federal tax considerations generally affecting shareholders of the fund. Accordingly, prospective investors (particularly those not residing or domiciled in the United States) should consult their own tax advisors regarding the consequences of investing in the fund.

Any dividends declared by the fund in October, November or December and paid the following January are treated, for tax purposes, as if they were received by shareholders on December 31 of the year in which they were declared. In general, distributions by the fund of investment company taxable income (including net short-term capital gains), if any, whether received in cash or additional shares, will be taxable to you as ordinary income. It is not expected that any portion of these distributions will be eligible for the dividends-received deduction for corporate shareholders or to be treated as qualified dividend income which is eligible in certain circumstances for reduced maximum tax rates to individuals.

Distributions from net capital gain (if any) that are reported as capital gain dividends are taxable as long-term capital gains without regard to the length of time the shareholder has held shares of the fund. However, if you receive a capital gain dividend with respect to fund shares held for six months or less, any loss on the sale or exchange of those shares shall, to the extent of the capital gain dividend, be treated as a long-term capital loss. The maximum individual rate applicable to "qualified dividend income" and long-term capital gains is generally either 15% or 20% depending on whether the individual's income exceeds certain threshold amounts.

An additional 3.8% Medicare tax is imposed on certain net investment income (including ordinary dividends and capital gains distributions received from the fund and net gains from redemptions or other taxable dispositions of fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds a threshold amount.

The fund will inform you of the amount of your ordinary income dividends and capital gains distributions, if any, at the time they are paid and will advise you of their tax status for federal income tax purposes, including what portion of the distributions will be qualified dividend income, shortly after the close of each calendar year.

If the fund makes a distribution to a shareholder in excess of the fund's current and accumulated earnings and profits in any taxable year, the excess distribution will be treated as a return of capital to the extent of the shareholder's tax basis in its shares, and thereafter, as capital gain. A return of capital is not taxable, but reduces a shareholder's tax basis in its shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of its shares. To the extent that a return of capital distribution exceeds a shareholder's adjusted basis, the distribution will be treated as gain from the sale of shares.

For corporate investors in the fund, dividend distributions the fund reports as dividends received from qualifying domestic corporations will be eligible for the 50% corporate dividends-received deduction to the extent they would qualify if the fund were a regular corporation. Distributions by the fund also may be subject to state, local and foreign taxes, which may differ from the federal income tax treatment described above.

A sale of shares in the fund may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than one year. Otherwise, the gain or loss on the taxable disposition of shares will be treated as short-term capital gain or loss. The maximum individual tax rate applicable to long-term capital gains is generally either 15% or 20%, depending on whether the individual's income exceeds certain threshold amounts. Any loss realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gains distributions received (or deemed received) by the shareholder with respect to the shares. All or a portion of any loss realized upon a taxable disposition of shares will be disallowed if other substantially identical shares of the fund are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

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For taxable years beginning after 2017 and before 2026, non-corporate taxpayers generally may deduct 20% of "qualified business income" derived either directly or through partnerships or S corporations. For this purpose, "qualified business income" generally includes ordinary REIT dividends and income derived from MLP investments. The fund is permitted to pass through to shareholders the character of ordinary REIT dividends so as to allow non-corporate shareholders to claim this deduction. There currently is no mechanism for the fund to pass through to non-corporate shareholders the character of income derived from MLP investments. It is uncertain whether future legislation or other guidance will enable the fund to pass through to non-corporate shareholders the ability to claim this deduction with respect to income derived from MLP investments.

An Authorized Participant who exchanges securities for Creation Units generally will recognize a gain or a loss. The gain or loss will be equal to the difference between the market value of the Creation Units at the time and the sum of the exchanger's aggregate basis in the securities surrendered plus the amount of cash paid for such Creation Units. A person who redeems Creation Units will generally recognize a gain or loss equal to the difference between the exchanger's basis in the Creation Units and the sum of the aggregate market value of any securities received plus the amount of any cash received for such Creation Units. The IRS, however, may assert that a loss realized upon an exchange of securities for Creation Units cannot be deducted currently under the rules governing "wash sales," or on the basis that there has been no significant change in economic position.

Any capital gain or loss realized upon the creation of Creation Units will generally be treated as long-term capital gain or loss if the securities exchanged for such Creation Units have been held for more than one year. Any capital gain or loss realized upon the redemption of Creation Units will generally be treated as long-term capital gain or loss if the shares comprising the Creation Units have been held for more than one year. Otherwise, such capital gains or losses will be treated as short-term capital gains or losses.

The fund has the right to reject an order for Creation Units if the purchaser (or group of purchasers) would, upon obtaining the shares so ordered, own 80% or more of the outstanding shares of the fund and if, pursuant to section 351 of the Internal Revenue Code, the fund would have a basis in the deposit securities different from the market value of such securities on the date of deposit. The fund also has the right to require information necessary to determine beneficial Share ownership for purposes of the 80% determination.

Certain tax-exempt shareholders, including qualified pension plans, individual retirement accounts, salary deferral arrangements, 401(k)s, and other tax-exempt entities, generally are exempt from federal income taxation except with respect to their "unrelated business taxable income" (UBTI). Under current law, the fund generally serves to block UBTI from being realized by their tax-exempt shareholders. However, notwithstanding the foregoing, a tax-exempt shareholder could realize UBTI by virtue of its investment in the fund where, for example, (i) the fund invests in REITs that hold residual interests in real estate mortgage investment conduits (REMICs) or (ii) its shares in the fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of section 514(b) of the Internal Revenue Code. Charitable remainder trusts are subject to special rules and should consult their tax advisors. There are no restrictions preventing the fund from holding investments in REITs that hold residual interests in REMICs, and the fund may do so. The IRS has issued recent guidance with respect to these issues and prospective shareholders, especially charitable remainder trusts, are strongly encouraged to consult with their tax advisors regarding these issues.

For non-corporate taxpayers and, for taxable years beginning after 2022, certain large corporate taxpayers, exempt-interest dividends may nevertheless be subject to the federal alternative minimum tax (AMT) imposed by Section 55 of the Internal Revenue Code. In particular, exempt-interest dividends derived from certain private activity bonds issued after August 7, 1986, will generally be an item of tax preference (and, therefore, potentially subject to AMT) for non-corporate taxpayers. For taxable years beginning after 2022, in the case of certain large corporate shareholders, all exempt-interest dividends, regardless of when the bonds from which they are derived were issued or whether they are derived from private activity bonds, to the extent included in such corporate taxpayers' "adjusted financial statement income," as defined in Section 56A of the Internal Revenue Code, will be included in calculating the corporate alternative minimum taxable income for purposes of determining the AMT.

**Backup Withholding –** The fund will be required in certain cases to withhold at the applicable withholding rate and remit to the U.S. Treasury the withheld amount of taxable dividends and redemption proceeds paid to any shareholder who (1) fails to provide a correct taxpayer identification number certified under penalty of perjury; (2) is subject to withholding by the IRS for failure to properly report all payments of interest or dividends; (3) fails to provide a certified statement that he or she is not subject to "backup withholding;" or (4) fails to provide a certified statement that he or she is a U.S. person (including a U.S. resident alien). Backup withholding is not an additional tax and any amounts withheld may be credited against the shareholder's ultimate U.S. tax liability.

**Disclosure for Non-U.S. Shareholders –** Foreign shareholders (i.e., nonresident alien individuals and foreign corporations, partnerships, trusts and estates) are generally subject to U.S. withholding tax at the rate of 30% (or a lower tax treaty rate) on distributions derived from net investment income and short-term capital gains; provided, however, U.S. source interest related dividends and short-term capital gain dividends generally are not subject to U.S. withholding tax if the fund elects to report such dividends in a written notice. Distributions to foreign shareholders of such short-term capital gain, of long-term capital gains, and any gains from the sale or other disposition of shares of the fund, generally are not subject to U.S. taxation, unless the recipient is an individual who either (1) meets the Internal Revenue Code's definition of "resident alien" or (2) is physically present in the U.S. for 183 days or more per year. Foreign shareholders may also be subject to U.S. estate taxes with respect to shares in the fund. Different tax consequences may result if the foreign shareholder is engaged in a trade or business within the United States. In addition, the tax consequences to a foreign shareholder entitled to claim the benefits of a tax treaty may be different

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than those described above. Notwithstanding the foregoing, a portion of the income, if any, derived by a fund from investments in REITs that hold residual interests in REMICs may be classified as "excess inclusion income." In respect of foreign shareholders, no exemption or reduction in withholding tax will apply to such excess inclusion income.

The fund is required to withhold U.S. tax (at a 30% rate) on payments of taxable dividends made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the fund to enable the fund to determine whether withholding is required.

**Reportable Transactions –** Under U.S. Treasury regulations, if a shareholder recognizes a loss of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC such as the fund are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

Shareholders are urged to consult their tax advisors as to the state and local tax rules affecting investments in the fund.

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#### APPENDIX – RATINGS OF INVESTMENT SECURITIES
From time to time, the fund may report the percentage of its assets that fall into the rating categories set forth below, as defined by the ratings agencies.

#### MOODY'S INVESTORS SERVICE

#### Global Long-Term Rating Scale
Aaa: <br>

Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.

Aa: <br>

Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.

A: <br>

Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.

Baa: <br>

Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.

Ba: <br>

Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

B: <br>

Obligations rated B are considered speculative and are subject to high credit risk.

Caa: <br>

Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.

Ca: <br>

Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.

C: <br>

Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

#### Global Short-Term Rating Scale
P-1: <br>

Ratings of Prime-1 reflect a superior ability to repay short-term debt obligations.

P-2: <br>

Ratings of Prime-2 reflect a strong ability to repay short-term debt obligations.

P-3: <br>

Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.

#### STANDARD & POOR'S FINANCIAL SERVICES LLC

#### Long-Term Issue Credit Ratings
AAA: <br>

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: <br>

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: <br>

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: <br>

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: <br>

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: <br>

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: <br>

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.

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CC: <br>

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: <br>

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: <br>

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 the next five business days in the absence of a stated grace period or within the earlier of the stated grace period or the next 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. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.

#### Short-Term Issue Credit Ratings
A-1: <br>

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: <br>

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: <br>

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.

#### FITCH, INC.

#### Long-Term Ratings Scales
AAA: <br>

'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: <br>

'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: <br>

'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: <br>

'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: <br>

'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: <br>

'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: <br>

Very low margin for safety. Default is a real possibility.

CC: <br>

Default of some kind appears probable.

C: <br>

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:

i. the issuer has entered into a grace or cure period following non-payment of a material financial obligation;

ii. the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation;

iii. the formal announcement by the issuer or their agent of a distressed debt exchange;

iv. 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.

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RD: <br>

'RD' ratings indicate an issuer that in Fitch's opinion has experienced an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and has not otherwise ceased operating.

This would include:

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: <br>

'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.

#### Short-Term Ratings
F1: <br>

Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country or monetary union. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

F2: <br>

Indicates a good capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary union. However, the margin of safety is not as great as in the case of the higher ratings.

F3: <br>

Indicates an adequate capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary union.

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#### APPENDIX – PROXY VOTING POLICY
The Charles Schwab Family of Funds Schwab Investments Schwab Capital Trust Schwab Annuity Portfolios Laudus Trust Schwab Strategic Trust

#### PROXY VOTING POLICY <br> AS OF MARCH 2022
The Boards of Trustees (the "Board") of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, and Schwab Annuity Portfolios ("Schwab Funds"), Laudus Trust ("Laudus Funds") and Schwab Strategic Trust ("Schwab ETFs"; collectively with Schwab Funds and Laudus Funds, the "Funds") have delegated to the Funds' investment adviser, Charles Schwab Investment Management, Inc. ("CSIM"), the responsibility to vote proxies relating to the Funds' portfolio securities pursuant to CSIM's Proxy Voting Policy ("CSIM Proxy Policy"). On an annual basis, CSIM will report to the Board on any changes to the CSIM Proxy Policy and on the implementation of the CSIM Proxy Policy.

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Charles Schwab Investment Management, Inc.

I. <br>

### INTRODUCTION
Charles Schwab Investment Management, Inc. ("CSIM"), as an investment adviser, is responsible for voting proxies with respect to the securities held in accounts of investment companies and other clients that have delegated the authority to vote proxies to CSIM. CSIM's Proxy Committee exercises and documents CSIM's responsibility with regard to voting of client proxies, including the review and approval of the Proxy Voting Policy (the "Proxy Policy"). CSIM's Investment Stewardship team has the primary responsibility to oversee that voting is carried out consistent with the Proxy Policy. The Investment Stewardship Team also conducts research into proxy issues and carries out engagement activities with companies. The Proxy Committee receives reports from the Investment Stewardship Team on these activities.

II. <br>

### PHILOSOPHY
As a leading asset manager, it is CSIM's responsibility to use its proxy votes to encourage transparency, corporate governance structures, and the management of environmental, social and governance (ESG) issues that it believes protect and promote shareholder value.

Just as the investors in CSIM's equity funds generally have a long-term investment horizon, CSIM takes a long-term, measured approach to investment stewardship. CSIM's client-first philosophy drives all of its efforts, including its approach to decision making. In the investment stewardship context, that unfolds through CSIM's efforts to appropriately manage risk by encouraging transparency and focusing on corporate governance structures that will help protect or promote shareholder value. CSIM also recognizes that companies can conduct themselves in ways that have important environmental and social consequences. Therefore, CSIM's focus on maximizing long-term shareholder value includes consideration of potential environmental and social impacts that we believe are relevant to individual companies.

In general, CSIM believes corporate directors, as the elected representatives of all shareholders, are best positioned to oversee the management of their companies. Accordingly, CSIM typically supports a board of directors' and management's recommendations on proxy matters. However, CSIM will vote against management's recommendations when it believes doing so will protect or promote long-term shareholder value.

III. <br>

### USE OF PROXY ADVISORS
To assist CSIM in its responsibility for voting proxies and the overall proxy voting process, CSIM has retained Glass, Lewis & Co., LLC ("Glass Lewis") as an expert in the proxy voting and corporate governance area. The services provided by Glass Lewis include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and record keeping. CSIM has also retained Institutional Shareholder Services Inc. to conduct research and provide voting recommendations on certain topics and may retain additional experts in the proxy voting, corporate governance, and ESG areas in the future.

To support CSIM in efficiently executing its votes, Glass Lewis, simultaneously with issuing its voting recommendations, also automatically populates votes based on CSIM's custom voting guidelines, except for certain ballot items which CSIM elects to vote manually. CSIM's votes are executed just prior to the vote deadline, which allows CSIM the opportunity to incorporate changes in Glass Lewis voting recommendations or the receipt of additional information from the company or other parties.

IV. <br>

### PROXY VOTING PRINCIPLES
CSIM invests on behalf of its clients in companies domiciled all over the world. Since corporate governance standards and best practices differ by country and jurisdiction, the market context is taken into account in the analysis of proposals. Furthermore, there are instances where CSIM may determine that voting is not in the best interests of its clients (typically due to costs or to trading restrictions) and will refrain from submitting votes.

The Proxy Committee reviews Glass Lewis' proxy voting guidelines ("Glass Lewis' Guidelines") with input from the Investment Stewardship (IS) team and evaluates them in light of the long-term best interests of shareholders. CSIM generally utilizes Glass Lewis' Guidelines to inform its vote while also setting custom voting guidelines. In addition, for U.S. companies, contested director elections, mergers and acquisitions, some executive compensation proposals and many ESG-related proposals, including most shareholder proposals requesting additional environmental and social disclosures, are voted on a case-by-case basis by the IS team.

The following is a summary of CSIM's proxy voting principles which are grouped according to types of proposals usually presented to shareholders in proxy statements.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A. <br>

DIRECTORS AND AUDITORS

i. <u>Directors</u>

As a starting point, CSIM expects the board to be composed of a majority of independent directors and to be responsive to shareholders. CSIM also expects directors that serve on a company's nominating, compensation or audit committee to be independent. CSIM believes that diversity of background, experience and skills, and personal characteristics, including gender, race, ethnicity and age, meaningfully contribute to a board's ability to make effective decisions on behalf of shareholders.

Factors that may result in a vote against one or more directors:

<sup>●</sup>

The board is not majority independent

<sup>●</sup>

A large cap company board does not have at least two female directors, or a mid- or small-cap company does not have any female directors, and the board has not provided a reasonable explanation for its lack of gender diversity

<sup>●</sup>

Non-independent directors serve on the nominating, compensation or audit committees

<sup>●</sup>

A director recently failed to attend at least 75% of meetings or serves on an excessive number of publicly traded company boards

<sup>●</sup>

The directors approved executive compensation schemes that appear misaligned with shareholders' interests

<sup>●</sup>

A director recently acted in a manner inconsistent with this Proxy Policy or failed to be responsive to concerns of shareholders

<sup>●</sup>

The board has failed to oversee and/or manage ESG issues that are relevant to the company

ii. <u>Contested Director Elections</u>

Directors are sometimes forced to compete against outside nominees proposed by a dissident shareholder (or group of shareholders). CSIM evaluates these situations on a case-by-case basis and votes for the outcome it believes will maximize long-term shareholder value. CSIM considers numerous factors when making its voting decision, including but not limited to the qualifications of director nominees, long-term company performance compared to peers, and the dissident's and management's strategic plans for driving improvements.

iii. <u>Auditors</u>

CSIM typically supports the ratification of auditors unless CSIM believes that the auditors' independence may have been compromised.

Factors that may result in a vote against the ratification of auditors:

<sup>●</sup>

Audit-related fees are less than half of the total fees paid by the company to the audit firm

<sup>●</sup>

A recent material restatement of annual financial statements

<sup>●</sup>

A pattern of inaccurate audits or other behavior that may call into question an auditor's effectiveness

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B. <br>

BOARD MATTERS

i. <u>Classified Boards</u>

CSIM generally does not support classified board proposals unless management has provided valid reasoning for the structure.

ii. <u>Majority Voting</u>

CSIM generally supports majority voting proposals when they call for plurality voting standards in contested elections.

iii. <u>Proxy Access</u>

CSIM typically does not support proxy access proposals unless CSIM has specific concerns regarding the board's accountability or responsiveness to shareholders.

Factors that may result in a vote supporting proxy access:

<sup>●</sup>

The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings

<sup>●</sup>

The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting

<sup>●</sup>

The company had material financial statement restatements

<sup>●</sup>

The company's board adopted a Shareholder Rights Plan during the past year and did not submit it to shareholders for approval

iv. <u>Separation of Chair and CEO role</u>

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CSIM believes that the board is typically best positioned to determine its leadership structure. Therefore, CSIM will typically not support proposals requiring the separation of these roles unless certain circumstances are in place.

Factors that may result in a vote supporting a shareholder proposal requiring the separation of the Chair and CEO roles:

<sup>●</sup>

The board does not have a lead independent director

<sup>●</sup>

The board is not two-thirds independent

<sup>●</sup>

The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings

<sup>●</sup>

The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting

<sup>●</sup>

The company had material financial statement restatements

<sup>●</sup>

The company's board adopted a Shareholder Rights Plan during the past year and did not submit it to shareholders for approval

v. <u>Independent Chair</u>

CSIM believes that the board is typically best positioned to determine its leadership structure. Therefore, CSIM will typically not support proposals requiring an independent chair unless CSIM has concerns regarding the board's accountability or responsiveness to shareholders.

Factors that may result in a vote supporting a shareholder proposal requiring an independent chair:

<sup>●</sup>

The board does not have a lead independent director

<sup>●</sup>

The board is not two-thirds independent

<sup>●</sup>

The company did not implement a shareholder proposal that was passed by shareholders at two previous shareholder meetings

<sup>●</sup>

The company nominated directors for election that did not receive a majority of shareholder support at the previous shareholder meeting

<sup>●</sup>

The company had material financial statement restatements

<sup>●</sup>

The company's board adopted a Shareholder Rights Plan during the past year and did not submit it to shareholders for approval

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; C. <br>

COMPENSATION

i. <u>Advisory Vote on Executive Compensation and Frequency</u>

CSIM generally supports advisory votes on executive compensation (which are proposed by management and are known as "Say-On-Pay") when the compensation scheme appears aligned with shareholder economic interests and lacks problematic features.

Factors that may result in a vote against a company's Say-On-Pay proposal:

<sup>●</sup>

Executive compensation is out of line with industry peers considering the company's performance over time

<sup>●</sup>

Executive compensation plan includes significant guaranteed bonuses or has a low amount of compensation at risk

<sup>●</sup>

Executive compensation plan offers excessive one-time payments, perquisites, tax-gross up provisions, or golden parachutes

<sup>●</sup>

Compensation amounts are increased, or goals are lowered without providing a valid explanation

<sup>●</sup>

Executive compensation plan lacks adequate disclosure or rationale for decisions related to goals and amounts

CSIM typically supports annual advisory votes on executive compensation.

ii. <u>Equity Compensation Plans</u>

CSIM generally supports stock-based compensation plans when they do not overly dilute shareholders by providing participants with excessive awards and lack problematic features.

Factors that may result in a vote against Equity Compensation Plans:

<sup>●</sup>

Plan's total potential dilution appears excessive

<sup>●</sup>

Plan's burn rate appears excessive compared to industry peers

<sup>●</sup>

Plan allows for the re-pricing of options without shareholder approval

<sup>●</sup>

Plan has an evergreen feature

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

iii. <u>Employee Stock Purchase Plans</u>

CSIM supports the concept of broad employee participation in a company's equity. Therefore, CSIM typically supports employee stock purchase plans when the shares can be purchased at 85% or more of the shares' market value.

iv. <u>Re-price/Exchange Option Plans</u>

CSIM generally only supports management's proposals to re-price options when the plan excludes senior management and directors, does not excessively dilute shareholders, and the company has not significantly underperformed its industry peers over time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; D. <br>

ANTI-TAKEOVER

i. <u>Shareholder Rights Plans</u>

Shareholder Rights Plans constrain a potential acquirer's ability to buy shares in a company above a certain threshold without the approval of the company's board of directors. While such a plan may help a company in achieving a higher bid, it may also entrench the incumbent management and board. CSIM believes that shareholders should have the right to approve a Shareholder Rights Plan within a year of its adoption. CSIM generally votes against such plans if they do not have safeguards to protect shareholder interests.

Factors that may result in a vote against a Shareholder Rights Plan proposal:

<sup>●</sup>

Plan does not expire in a relatively short time horizon

<sup>●</sup>

Plan does not have a well-crafted permitted bid or qualified offer feature that mandates shareholder votes in certain situations

<sup>●</sup>

Plan automatically renews without shareholder approval

<sup>●</sup>

Company's corporate governance profile

ii. <u>Right to Call Special Meeting</u>

CSIM generally votes against shareholder proposals asking for shareholders to be given the right to call a special meeting unless the threshold to call a special meeting is 25% or more of shares outstanding to avoid wasting corporate resources.

iii. <u>Right to Act by Written Consent</u>

CSIM generally votes against shareholder proposals asking for shareholders to be given the right to act by written consent if the company already offers shareholders the right to call special meetings. CSIM expects appropriate mechanisms for implementation.

iv. <u>Supermajority Voting</u>

CSIM generally supports the concept of simple majority standards to pass proposals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; E. <br>

CAPITAL STRUCTURE, MERGERS AND ACQUISITIONS

i. <u>Increase in Authorized Common Shares</u>

CSIM typically supports proposals to increase the authorized shares unless the company does not sufficiently justify the need for the use of the proposed shares.

ii. <u>Preferred Shares</u>

CSIM generally supports proposals to create a class of preferred shares with specific voting, dividend, conversion and other rights.

iii. <u>Mergers and Acquisitions</u>

CSIM generally supports transactions that appear to maximize shareholder value. CSIM assesses these proposals on a case-by-case basis and considers the proposed transaction's strategic rationale, the offer premium, the board's oversight of the sales process, and other pertinent factors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F. <br>

ENVIRONMENTAL AND SOCIAL PROPOSALS

Effective oversight of material ESG risks relevant to a company and its business is an essential board function. In CSIM's view, appropriate risk oversight of environmental and social issues contributes to sustainable long-term value and companies should provide pertinent information on material risks common to their industry and specific to their business. CSIM evaluates, on a case-by-case basis, shareholder proposals calling for additional disclosure on material risks to a company, with emphasis placed on those risks identified within the framework of the Sustainability Accounting Standards Board (SASB).

CSIM recognizes that financial performance can be impacted by a company's environmental, social and human capital management policies. CSIM's case-by-case evaluation of these proposals takes into consideration a company's current level of reporting, disclosures by its peers, and the existence of controversies or litigation related to the issue.

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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.

i. <u>Climate Change Proposals</u>

CSIM believes that companies should provide pertinent information on the management of potential climate change-related risks and opportunities, with the understanding that the relevance of this disclosure for any specific company will vary depending on its industry and operations. For companies operating in carbon-intensive industries, we believe boards should be considering a range of energy demand scenarios. We generally support proposals requesting additional disclosure on climate change-related impacts when the company's current reporting is inadequate.

ii. <u>Corporate Political Activity Proposals</u>

CSIM expects the board of directors to have a stated oversight process for political contributions and lobbying activities. CSIM evaluates proposals asking for disclosure of a company's political contributions and lobbying activities and generally supports them if there is no evidence of board oversight or a company's disclosure lags that of its peers.

V. <br>

### ADMINISTRATION
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A. <br>

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 mutual fund or exchange-traded fund managed by CSIM ("Affiliated Fund") , an affiliate of such Fund, or a CSIM employee. The Proxy Committee has directed that Glass Lewis be instructed to vote any such proxies in the same proportion as the votes of all other shareholders in the fund (i.e., "echo vote").

With respect to proxies of an underlying Affiliated Fund, the IS team will ensure that such proxies are "echo voted", unless otherwise required by law. When required by law or applicable exemptive order, the IS team will also ensure the "echo voting" of an unaffiliated mutual fund or exchange traded fund. For example, certain exemptive orders issued to a fund by the Securities and Exchange Commission and Section 12(d)(1)(F) of the Investment Company Act of 1940, as amended, require the fund, under certain circumstances, to "echo vote" proxies of registered investment companies that serve as underlying investments of the fund.

In addition, with respect to holdings of The Charles Schwab Corporation ("CSC") (ticker symbol: SCHW), the IS team will ensure such proxies are echo-voted, unless otherwise required by law.

Where the Proxy Committee has delegated an item to the Investment Stewardship Team, CSIM has taken certain steps to mitigate perceived or potential conflicts of interest, including, but not limited to, the following:

<sup>●</sup>

maintaining a reporting structure that separates employees with voting authority from those with sales or business relationship authority,

<sup>●</sup>

reporting of potential conflicts to the Proxy Committee to review the conflict and provide final vote determination,

<sup>●</sup>

defaulting to the standard CSIM Proxy Voting Policy.

In all other cases, proxy issues that present material conflicts of interest between CSIM, and/or any of its affiliates, and CSIM's clients, will be delegated to Glass Lewis to be voted in accordance with CSIM's Proxy Voting Guidelines which are set each year based on governance criteria and not influenced by any individual issuer or ballot item.

Where CSIM's Investment Stewardship Team conducts an engagement meeting with a company, CSIM has taken certain steps to mitigate perceived or potential conflicts of interest, including, but not limited to, the following:

<sup>●</sup>

ensuring that no members of the Board of (i) CSC or (ii) an Affiliated Fund, that are affiliated with such company, are participants in such meetings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B. <br>

FOREIGN SECURITIES/SHAREBLOCKING

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:

<sup>●</sup>

proxy statements and ballots written in a foreign language,

<sup>●</sup>

untimely and/or inadequate notice of shareholder meetings,

<sup>●</sup>

restrictions of foreigner's ability to exercise votes,

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[**TABLE OF CONTENTS**](#toc-0)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

<sup>●</sup>

requirements to vote proxies in person,

<sup>●</sup>

requirements to provide local agents with power of attorney to facilitate CSIM's voting instructions.

In consideration of the foregoing issues, Glass Lewis uses its best efforts to vote foreign proxies. As part of its ongoing oversight, the Proxy Committee will monitor the voting of foreign proxies to determine whether all reasonable steps are taken to vote foreign proxies. If the Proxy Committee determines that the cost associated with the attempt to vote outweighs the potential benefits clients may derive from voting, the Proxy Committee may decide not to attempt to vote. In addition, certain foreign countries impose restrictions on the sale of securities for a period of time before and/or after the shareholder meeting. To avoid these trading restrictions, the Proxy Committee instructs Glass Lewis not to vote such foreign proxies (share-blocking).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; C. <br>

SECURITIES LENDING

Certain of the funds managed by CSIM 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 when deemed appropriate and in the best interest of shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; D. <br>

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. In addition, CSIM may share proxy voting with an 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 make voting decisions in the best interest of each investment company and its shareholders, or other client associated with the securities it has been allocated. Each sub-adviser to whom proxy voting has been delegated must inform CSIM of its voting decisions to allow CSIM to implement the votes or in the case of shared voting responsibility, potentially override the sub-adviser's vote recommendation. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; E. <br>

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.

------

#### Schwab Strategic Trust <br> PEA No. 154

#### Part C: Other Information

#### ITEM 28. <br>

#### EXHIBITS.

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| | |
|:---|:---|
| (a)(1) | [Certificate of Trust, dated January 27, 2009, of Schwab Strategic Trust (the Registrant or the Trust) is incorporated by reference to Exhibit (a)(1) of the Registrant's Registration Statement, filed July 15, 2009.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309022452/f52956exv99wxayx1y.htm) |
| (a)(2) | [Registrant's Amended and Restated Agreement and Declaration of Trust, dated October 12, 2009, is incorporated by reference to Exhibit (a)(3) of Pre-Effective Amendment No. 2 of the Registrant's Registration Statement, filed October 27, 2009.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309053288/f53813exv99wxayx3y.htm) |
| (b) | [Registrant's By-Laws, dated January 26, 2009, is incorporated by reference to Exhibit (b) of the Registrant's Registration Statement, filed July 15, 2009.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309022452/f52956exv99wxby.htm) |
| (c) | [Reference is made to Article 5 of the Registrant's Agreement and Declaration of Trust.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309053288/f53813exv99wxayx3y.htm) |
| (d)(1) | [Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(1) of Post-Effective Amendment No. 95 of the Registrant's Registration Statement, filed April 28, 2017 (hereinafter referred to as PEA No. 95).](https://www.sec.gov/Archives/edgar/data/1454889/000119312517147018/d335567dex99d1.htm) |
| (d)(2) | [Amendment No. 1, dated October 5, 2017, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(2) of Post-Effective Amendment No. 101 of the Registrant's Registration Statement, filed October 5, 2017 (hereinafter referred to as PEA No. 101).](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99d2.htm) |
| (d)(3) | [Amendment No. 2, dated March 11, 2019, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(3) of Post-Effective Amendment No. 111 of the Registrant's Registration Statement, filed April 26, 2019 (hereinafter referred to as PEA No. 111).](https://www.sec.gov/Archives/edgar/data/1454889/000119312519119993/d694890dex99d3.htm) |
| (d)(4) | [Amendment No. 3, dated October 3, 2019, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(4) of Post-Effective Amendment No. 116 of the Registrant's Registration Statement, filed October 3, 2019 (hereinafter referred to as PEA No. 116).](https://www.sec.gov/Archives/edgar/data/1454889/000119312519260897/d744093dex99d4.htm) |
| (d)(5) | [Amendment No. 4, dated December 13, 2019, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(5) of Post-Effective Amendment No. 120 of the Registrant's Registration Statement, filed February 24, 2020 (hereinafter referred to as PEA No. 120).](https://www.sec.gov/Archives/edgar/data/1454889/000119312520044893/d884546dex99d5.htm) |
| (d)(6) | [Amendment No. 5, dated February 25, 2020, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(6) of Post-Effective Amendment No. 121 of the Registrant's Registration Statement, filed April 17, 2020 (hereinafter referred to as PEA No. 121).](https://www.sec.gov/Archives/edgar/data/1454889/000119312520109469/d903064dex99d6.htm) |
| (d)(7) | [Amendment No. 6, dated February 24, 2021, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(7) of Post-Effective Amendment No. 130 of the Registrant's Registration Statement, filed March 23, 2021 (hereinafter referred to as PEA No. 130).](https://www.sec.gov/Archives/edgar/data/1454889/000110465921040158/tm219225-1_exd7.htm) |
| (d)(8) | [Amendment No. 7, dated February 24, 2021, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(8) of Post-Effective Amendment No. 139 of the Registrant's Registration Statement, filed November 2, 2021 (hereinafter referred to as PEA No. 139).](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exd8.htm) |
| (d)(9) | [Amendment No. 8, dated December 20, 2021, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(9) of Post-Effective Amendment No. 142 of the Registrant's Registration Statement, filed April 28, 2022.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922051351/tm2212149d1_ex99-d9.htm) |
| (d)(10) | [Amendment No. 9, dated July 1, 2022, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1 2017, is incorporated by reference to Exhibit (d)(10) of Post-Effective Amendment No. 148 of the Registrant's Registration Statement, filed July 15, 2022.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922079921/tm2220948d1_ex99-d10.htm) |
| (d)(11) | [Amendment No. 10, dated July 29, 2022, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(11) of Post-Effective Amendment No. 150 of the Registration Statement, filed July 29, 2022 (hereinafter referred to as PEA No. 150).](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-d11.htm) |

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| | |
|:---|:---|
| (d)(12) | [Amendment No. 11, dated September 28, 2022, to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, is incorporated by reference to Exhibit (d)(12) of Post-Effective Amendment No. 151 of the Registration Statement, filed September 28, 2022 (hereinafter referred to as PEA No. 151).](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-d12.htm) |
| (d)(13) | Amendment No. 12, dated [ ], to the Amended and Restated Advisory Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated March 1, 2017, to be filed by amendment. |
| (d)(14) | [Investment Sub-Advisory Agreement between Charles Schwab Investment Management, Inc. and Ariel Investments, LLC, dated February 24, 2021, is incorporated by reference to Exhibit (d)(9) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exd9.htm) |
| (e)(1) | [Distribution Agreement between the Registrant and SEI Investments Distribution Co. is incorporated by reference to Exhibit (e) of Post-Effective Amendment No. 1 of the Registrant's Registration Statement, filed April 21, 2010 (hereinafter referred to as PEA No. 1).](https://www.sec.gov/Archives/edgar/data/1454889/000095012310036635/f55539exv99we.htm) |
| (e)(2) | [Amendment No. 1, dated July 26, 2010, to Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(2) of Post-Effective Amendment No. 3 of the Registrant's Registration Statement, filed July 23, 2010 (hereinafter referred to as PEA No. 3).](https://www.sec.gov/Archives/edgar/data/1454889/000095012310067669/f55594exv99wew2.htm) |
| (e)(3) | [Amendment No. 2, dated December 17, 2010, to Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(3) of Post-Effective Amendment No. 7 of the Registrant's Registration Statement, filed April 15, 2011 (hereinafter referred to as PEA No. 7).](https://www.sec.gov/Archives/edgar/data/1454889/000095012311035743/f58931aexv99wew3.htm) |
| (e)(4) | [Amendment No. 3, dated July 1, 2011, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(4) of Post-Effective Amendment No. 12 of the Registrant's Registration Statement, filed July 8, 2011 (hereinafter referred to as PEA No. 12).](https://www.sec.gov/Archives/edgar/data/1454889/000095012311064649/f59163bexv99wxeyx4y.htm) |
| (e)(5) | [Amendment No. 4, dated October 1, 2011, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(5) of Post-Effective Amendment No. 17 of the Registrant's Registration Statement, filed October 14, 2011 (hereinafter referred to as PEA No. 17).](https://www.sec.gov/Archives/edgar/data/1454889/000095012311089989/f59832bexv99wew5.htm) |
| (e)(6) | [Amendment No. 5, dated August 8, 2013, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(6) of Post-Effective Amendment No. 46 to the Registrant's Registration Statement, filed August 8, 2013 (hereinafter referred to as PEA No. 46).](https://www.sec.gov/Archives/edgar/data/1454889/000119312513324936/d566144dex99e6.htm) |
| (e)(7) | [Amendment No. 6, dated October 5, 2017, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(7) of PEA No. 101.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99e7.htm) |
| (e)(8) | [Amendment No. 7, dated October 3, 2019, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(8) of Post-Effective Amendment No. 118 to the Registrant's Registration Statement, filed December 18, 2019 (hereinafter referred to as PEA No. 118).](https://www.sec.gov/Archives/edgar/data/1454889/000119312519316390/d732119dex99e8.htm) |
| (e)(9) | [Amendment No. 8, dated December 12, 2019, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(9) of PEA No. 120.](https://www.sec.gov/Archives/edgar/data/1454889/000119312520044893/d884546dex99e9.htm) |
| (e)(10) | [Amendment No. 9, dated February 24, 2021, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(10) of PEA No. 130.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921040158/tm219225-1_exe10.htm) |
| (e)(11) | [Amendment No. 10, dated November 2, 2021, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(11) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exe11.htm) |
| (e)(12) | [Amendment No. 11, dated July 29, 2022, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference to Exhibit (e)(12) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-e12.htm) |
| (e)(13) | [Amendment No. 12, dated September 28, 2022, to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, is incorporated by reference toExhibit (e)(13) of PEA No. 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-e13.htm) |
| (e)(14) | Amendment No. 13, dated [ ], to the Distribution Agreement between the Registrant and SEI Investments Distribution Co., dated October 12, 2009, to be filed by amendment. |
| (f) | Not applicable. |
| (g)(1) | [Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(1) of Pre-Effective Amendment No. 1 of Registrant's Registration Statement, filed October 7, 2009 (hereinafter referred to as Pre-Effective Amendment No. 1).](https://www.sec.gov/Archives/edgar/data/1454889/000095012309049056/f53698a1exv99wgw1.htm) |
| (g)(2) | [Amendment, dated October 8, 2009, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(2) of PEA No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012310036635/f55539exv99wgw2.htm) |
| (g)(3) | [Amendment, dated July 26, 2010, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(3) of Post-Effective Amendment No. 4 of the Registrant's Registration Statement, filed September 24, 2010 (hereinafter referred to as PEA No. 4).](https://www.sec.gov/Archives/edgar/data/1454889/000095012310088781/f56918exv99wgw3.htm) |
| (g)(4) | [Amendment, dated December 17, 2010, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(4) of PEA No. 7.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311035743/f58931aexv99wgw4.htm) |

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| | |
|:---|:---|
| (g)(5) | [Amendment, dated July 1, 2011, to the Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(5) of PEA No. 12.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311064649/f59163bexv99wxgyx5y.htm) |
| (g)(6) | [Amendment, dated October 1, 2011, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(6) of PEA No. 17.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311089989/f59832bexv99wgw6.htm) |
| (g)(7) | [Amendment, dated July 8, 2013, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(7) of Post-Effective Amendment No. 56 of the Registrant's Registration Statement, filed December 26, 2013, (hereinafter referred to as PEA No. 56).](https://www.sec.gov/Archives/edgar/data/1454889/000119312513484681/d595811dex99g7.htm) |
| (g)(8) | [Amendment, dated October 5, 2017, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(8) of PEA No. 101.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99g8.htm) |
| (g)(9) | [Amendment, dated November 16, 2017, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(9) of Post-Effective Amendment No. 103 of the Registrant's Registration Statement, filed December 28, 2017, (hereinafter referred to as PEA No. 103).](https://www.sec.gov/Archives/edgar/data/1454889/000119312517381734/d483814dex99g9.htm) |
| (g)(10) | [Amendment, dated October 3, 2019, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(10) of PEA No. 116.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519260897/d744093dex99g10.htm) |
| (g)(11) | [Amendment, dated February 24, 2021, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(11) of PEA No. 130.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921040158/tm219225-1_exg11.htm) |
| (g)(12) | [Amendment, dated November 2, 2021, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(12) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exg12.htm) |
| (g)(13) | [Amendment, dated July 29, 2022, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(13) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-g13.htm) |
| (g)(14) | [Amendment, dated September 28, 2022, to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, is incorporated by reference to Exhibit (g)(14) of PEA No. 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-g14.htm) |
| (g)(15) | Amendment, dated [ ], to the Amended and Restated Master Custodian Agreement between the Registrant and State Street Bank and Trust Company, dated October 17, 2005, to be filed by amendment. |
| (h)(1) | [Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated October 12, 2009, is incorporated by reference to Exhibit (h)(1) of PEA No. 118.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519316390/d732119dex99h1.htm) |
| (h)(1)(a) | [Amendment No. 8, dated February 24, 2021, to the Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated October 12, 2009, is incorporated by reference to Exhibit (h)(1)(h) of PEA No. 130.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921040158/tm219225-1_exh1h.htm) |
| (h)(1)(b) | [Amendment No. 9, dated November 2, 2021, to the Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated October 12, 2009, is incorporated by reference to Exhibit (h)(1)(b) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exh1b.htm) |
| (h)(1)(c) | [Amendment No. 10, dated July 29, 2022, to the Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated October 12, 2009, is incorporated by reference to Exhibit (h)(1)(c) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-h1c.htm) |
| (h)(1)(d) | [Amendment No. 11, dated September 28, 2022, to the Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc., dated October 12, 2009, is incorporated by reference to Exhibit (h)(1)(d) of PEA No. 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-h1d.htm) |
| (h)(1)(e) | Amendment No. 12, dated [ ], to the Administration Agreement between the Registrant and Charles Schwab Investment Management, Inc. dated October 12, 2009, to be filed by amendment. |
| (h)(2) | [Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2) of PEA No. 118.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519316390/d732119dex99h2.htm) |
| (h)(2)(a) | [Amendment, dated October 9, 2020, to the Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2)(h) of Post-Effective Amendment No. 126 of the Registrant's Registration Statement, filed December 18, 2020 (hereinafter referred to as PEA No. 126).](https://www.sec.gov/Archives/edgar/data/1454889/000119312520320284/d882759dex99h2h.htm) |
| (h)(2)(b) | [Amendment, dated February 24, 2021, to the Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2)(i) of PEA No. 130.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921040158/tm219225-1_exh2i.htm) |
| (h)(2)(c) | [Amendment, dated November 2, 2021, to the Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2)(c) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exh2c.htm) |
| (h)(2)(d) | [Amendment, dated July 29, 2022, to the Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2)(d) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-h2d.htm) |
| (h)(2)(e) | [Amendment, dated September 28, 2022, to the Transfer Agency and Service Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, is incorporated by reference to Exhibit (h)(2)(e) of PEA 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-h2e.htm) |
| (h)(2)(f) | Amendment, dated [ ], to the Transfer Agency and Service Agreement between the Registrant and State Street Bank and Trust Company, dated October 8, 2009, to be filed by amendment. |
| (h)(3) | [Form of Authorized Participant Agreement is incorporated by reference to Exhibit (h)(3) of Pre-Effective Amendment No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309049056/f53698a1exv99whw3.htm) |

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| | |
|:---|:---|
| (h)(4) | [Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4) of Pre-Effective Amendment No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309049056/f53698a1exv99whw4.htm) |
| (h)(4)(a) | [Amendment, dated October 8, 2009, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5) of PEA No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012310036635/f55539exv99whw5.htm) |
| (h)(4)(b) | [Amendment, dated July 26, 2010, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, filed September 24, 2010 is incorporated by reference to Exhibit (h)(10) of PEA No. 4.](https://www.sec.gov/Archives/edgar/data/1454889/000095012310088781/f56918exv99whw10.htm) |
| (h)(4)(c) | [Amendment, dated December 17, 2010, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(c) of PEA No. 7.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311035743/f58931aexv99whw4wc.htm) |
| (h)(4)(d) | [Amendment, dated July 1, 2011, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(d) of PEA No. 12.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311064649/f59163bexv99wxhyx4yxdy.htm) |
| (h)(4)(e) | [Amendment, dated October 1, 2011, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(e) of PEA No. 17.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311089989/f59832bexv99whw4we.htm) |
| (h)(4)(f) | [Amendment, dated July 8, 2013, to the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(f) of PEA No. 56.](https://www.sec.gov/Archives/edgar/data/1454889/000119312513484681/d595811dex99h4f.htm) |
| (h)(4)(g) | [Amendment, dated January 20, 2016, to Appendix A of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(g) of Post-Effective Amendment No. 92 of the Registrant's Registration Statement, filed December 28, 2016 (hereinafter referred to as PEA No. 92).](https://www.sec.gov/Archives/edgar/data/1454889/000119312516805632/d278560dex99h4g.htm) |
| (h)(4)(h) | [Amendment, dated August 18, 2016, to Appendix A of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(h) of PEA No. 92.](https://www.sec.gov/Archives/edgar/data/1454889/000119312516805632/d278560dex99h4h.htm) |
| (h)(4)(i) | [Amendment, dated February 2, 2017, to Appendix A of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(i) of PEA No. 95.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517147018/d335567dex99h4i.htm) |
| (h)(4)(j) | [Amendment, dated October 5, 2017, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(j) of PEA No. 101.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99h4j.htm) |
| (h)(4)(k) | [Amendment, dated November 16, 2017, to Appendix A of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(k) of PEA No. 103.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517381734/d483814dex99h4k.htm) |
| (h)(4)(l) | [Amendment, modified March 11, 2019, to Appendix A of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(l) of PEA No. 111.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519119993/d694890dex99h4l.htm) |
| (h)(4)(m) | [Amendment, dated October 3, 2019, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(m) of PEA No. 118.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519316390/d732119dex99h4m.htm) |
| (h)(4)(n) | [Amendment, dated March 23, 2021, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(n) of PEA No. 131.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921046532/tm2110163d1_exh4n.htm) |
| (h)(4)(o) | [Amendment, dated November 2, 2021, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(o) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exh4o.htm) |
| (h)(4)(p) | [Amendment, dated July 29, 2022, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(p) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-h4p.htm) |
| (h)(4)(q) | [Amendment, dated September 28, 2022, to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(4)(q) of PEA 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-h4q.htm) |
| (h)(4)(r) | Amendment, dated [ ], to Appendix A and Appendix B of the Master Fund Accounting and Services Agreement between the Registrant and State Street Bank and Trust Company, dated October 1, 2005, to be filed by amendment. |
| (h)(5) | [Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(6) of Pre-Effective Amendment No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012309049056/f53698a1exv99whw6.htm) |

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| | |
|:---|:---|
| (h)(5)(a) | [Amendment, dated October 8, 2009, to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(7) of PEA No. 1.](https://www.sec.gov/Archives/edgar/data/1454889/000095012310036635/f55539exv99whw7.htm) |
| (h)(5)(b) | [Amendment, dated July 26, 2010 to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, filed September 24, 2010 is incorporated by reference to Exhibit (h)(11) of PEA No. 4.](https://www.sec.gov/Archives/edgar/data/1454889/000095012310088781/f56918exv99whw11.htm) |
| (h)(5)(c) | [Amendment, dated December 17, 2010, to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(c) of PEA No. 7.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311035743/f58931aexv99whw5wc.htm) |
| (h)(5)(d) | [Amendment, dated July 1, 2011, to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(d) of PEA No. 12.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311064649/f59163bexv99wxhyx5yxdy.htm) |
| (h)(5)(e) | [Amendment, dated October 1, 2011, to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(e) of PEA No. 17.](https://www.sec.gov/Archives/edgar/data/1454889/000095012311089989/f59832bexv99whw5we.htm) |
| (h)(5)(f) | [Amendment, dated August 8, 2013, to the Sub-Administration Agreement between the Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(f) of PEA No. 56.](https://www.sec.gov/Archives/edgar/data/1454889/000119312513484681/d595811dex99h5f.htm) |
| (h)(5)(g) | [Amendment, dated October 5, 2017, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(g) of PEA No. 101.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99h5g.htm) |
| (h)(5)(h) | [Amendment, dated October 3, 2019, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(h) of PEA No. 118.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519316390/d732119dex99h5h.htm) |
| (h)(5)(i) | [Amendment, dated March 23, 2021, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(i) of PEA No. 131.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921046532/tm2110163d1_exh5i.htm) |
| (h)(5)(j) | [Amendment, dated November 2, 2021, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(j) of PEA No. 139.](https://www.sec.gov/Archives/edgar/data/1454889/000110465921132780/tm2125003d6_exh5j.htm) |
| (h)(5)(k) | [Amendment, dated July 29, 2022, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(k) of PEA No. 150.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922083806/tm226059d4_ex99-h5k.htm) |
| (h)(5)(l) | [Amendment, dated September 28, 2022, to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, is incorporated by reference to Exhibit (h)(5)(l) of PEA 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-h5l.htm) |
| (h)(5)(m) | Amendment, dated [ ], to the Sub-Administration Agreement between Charles Schwab Investment Management, Inc. and State Street Bank and Trust Company, dated October 1, 2005, to be filed by amendment. |
| (h)(6) | [Sublicense Agreement between the Registrant, Schwab Investments and Charles Schwab Investment Management, Inc., dated October 5, 2017, is incorporated by reference to Exhibit (h)(6) of PEA No. 101.](https://www.sec.gov/Archives/edgar/data/1454889/000119312517304048/d461818dex99h6.htm) |
| (h)(7) | [Form of Fund of Funds Investment Agreement, is incorporated by reference to Exhibit (h)(7) of Post-Effective Amendment No. 141 of the Registrant's Registration Statement, filed March 2, 2022.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922029220/tm226059d1_ex99-h7.htm) |
| (i) | Opinion and Consent of Counsel to be filed by amendment. |
| (j)(1) | Not applicable. |
| (j)(2) | [Power of Attorney executed by Walter W. Bettinger II, dated January 1, 2016, is incorporated by reference to Exhibit (j)(2) of Post-Effective Amendment No. 86 of the Registrant's Registration Statement, filed January 12, 2016 (hereinafter referred to as PEA No. 86).](https://www.sec.gov/Archives/edgar/data/1454889/000119312516427703/d121819dex99j2.htm) |
| (j)(3) | [Power of Attorney executed by Jonathan de St. Paer, dated April 1, 2019, is incorporated by reference to Exhibit (j)(3) of PEA No. 111.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519119993/d694890dex99j3.htm) |
| (j)(4) | [Power of Attorney executed by Robert W. Burns, dated January 1, 2016, is incorporated by reference to Exhibit (j)(5) of PEA No. 86.](https://www.sec.gov/Archives/edgar/data/1454889/000119312516427703/d121819dex99j5.htm) |
| (j)(5) | [Power of Attorney executed by David L. Mahoney, dated January 1, 2016, is incorporated by reference to Exhibit (j)(8) of PEA No. 86.](https://www.sec.gov/Archives/edgar/data/1454889/000119312516427703/d121819dex99j8.htm) |

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| | |
|:---|:---|
| (j)(6) | [Power of Attorney executed by Kimberly S. Patmore, dated January 1, 2016, is incorporated by reference to Exhibit (j)(10) of PEA No. 86.](https://www.sec.gov/Archives/edgar/data/1454889/000119312516427703/d121819dex99j10.htm)  |
| (j)(7) | [Power of Attorney executed by Nancy F. Heller, dated June 1, 2018, is incorporated by reference to Exhibit (j)(11) of Post-Effective Amendment No. 107 of the Registrant's Registration Statement, filed June 26, 2018.](https://www.sec.gov/Archives/edgar/data/1454889/000119312518204075/d570536dex99j11.htm)  |
| (j)(8) | [Power of Attorney executed by Jane P. Moncreiff, dated January 28, 2019, is incorporated by reference to Exhibit (j)(13) of PEA No. 111.](https://www.sec.gov/Archives/edgar/data/1454889/000119312519119993/d694890dex99j13.htm)  |
| (j)(9) | [Power of Attorney executed by Dana S. Smith, dated January 11, 2023, is filed herein as Exhibit (j)(9).](tm232526d1_ex99-j9.htm) |
| (j)(10) | [Registrant, Certified Resolution regarding Powers of Attorney, dated June 10, 2020 is incorporated by reference to Exhibit (j)(15) of Post-Effective Amendment No. 124 of the Registrant's Registration Statement, filed June 26, 2020.](https://www.sec.gov/Archives/edgar/data/1454889/000119312520179355/d796817dex99j15.htm)  |
| (j)(11) | [Power of Attorney executed by Jean Derek Penn, dated June 1, 2021, is incorporated by reference to Exhibit (j)(15) of Post-Effective Amendment No. 133 of the Registrant's Registration Statement, filed June 25, 2021 (hereinafter referred to as PEA No. 133).](https://www.sec.gov/Archives/edgar/data/1454889/000110465921085245/tm2117263d1_exj15.htm) |
| (j)(12) | [Power of Attorney executed by Michael J. Beer, dated September 26, 2022, is incorporated by reference to Exhibit (j)(13) of Post-Effective Amendment No. 152 of the Registrant's Registration Statement, filed November 7, 2022, (hereinafter referred to as PEA No. 152).](https://www.sec.gov/Archives/edgar/data/1454889/000110465922115353/tm2228763-2_exj13.htm) |
| (j)(13) | [Power of Attorney executed by Richard A. Wurster, dated September 19, 2022, is incorporated by reference to Exhibit (j)(14) of PEA No. 152.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922115353/tm2228763-2_exj14.htm)  |
| (k) | Not applicable. |
| (l) | None. |
| (m) | Not applicable. |
| (n) | Not applicable. |
| (o) | Not applicable. |
| (p)(1) | [Joint Code of Ethics for the Registrant, Charles Schwab Investment Management, Inc. and Charles Schwab & Co., Inc., dated June 8, 2022, is incorporated by reference to Exhibit (p)(1) of Post-Effective Amendment No. 146 of the Registrant's Registration Statement, filed June 27, 2022 (hereinafter referred to as PEA No. 146).](https://www.sec.gov/Archives/edgar/data/0001454889/000110465922074382/tm2218930d1_exp1.htm) |
| (p)(2) | [Code of Ethics of SEI Investments Distribution Corporation, dated June 30, 2022, is incorporated by reference to Exhibit (p)(2) of PEA No. 151.](https://www.sec.gov/Archives/edgar/data/1454889/000110465922103375/tm2220948d4_ex99-p2.htm) |
| (p)(3) | [Code of Ethics of Ariel Investments, LLC, dated December 31, 2022, is filed herein as Exhibit (p)(3).](tm232526d1_ex99-p3.htm) |

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#### ITEM 29. <br>

#### PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Board of Trustees of the Registrant is identical to the boards of trustees of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust. Each such trust has Charles Schwab Investment Management, Inc. as its investment adviser. In addition, the officers of the Registrant are also identical to those of each such other trust, with the exception of the Chief Legal Officer and Secretary/Clerk. As a result, the above-named trusts may be deemed to be under common control with the Registrant. Nonetheless, the Registrant takes the position that it is not under common control with such other trusts because the power residing in the respective trusts' boards and officers arises as a result of an official position with each such trust.

#### ITEM 30. <br>

#### INDEMNIFICATION.
Reference is made to Article VII of Registrant's Amended and Restated Agreement and Declaration of Trust (Exhibit (a)(2) filed October 27, 2009) and Article 11 of Registrant's By-Laws (Exhibit (b) filed July 15, 2009).

Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the Act), may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

#### ITEM 31. <br>

#### BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Registrant's investment adviser, Charles Schwab Investment Management, Inc., dba Schwab Asset Management, a Delaware corporation, organized in October 1989, also serves as the investment manager to Laudus Trust, Schwab Capital Trust, The Charles Schwab Family of Funds, Schwab Investments, and Schwab Annuity Portfolios, each an open-end, management investment company. The principal place of business of the investment adviser is 211 Main Street, San Francisco, CA 94105. The only business in which the investment adviser engages is

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that of investment adviser and administrator to Schwab Capital Trust, The Charles Schwab Family of Funds, Schwab Investments, Schwab Annuity Portfolios and any other investment companies that Schwab may sponsor in the future, investment adviser to the Registrant and Laudus Trust and an investment adviser to certain non-investment company clients.

The business, profession, vocation or employment of a substantial nature in which each director and/or senior or executive officer of CSIM is or has been engaged during the past two fiscal years is listed below. The name of any company for which any director and/or senior or executive officer of the investment adviser serves as director, officer, employee, partner or trustee is also listed below.

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| | | |
|:---|:---|:---|
| **Name and Position with Adviser**  | **Name of Other Company**  | **Capacity**  |
| Peter B. Crawford, Director | The Charles Schwab Corporation | Managing Director and Chief Financial Officer |
|  | Charles Schwab & Co., Inc. | Director, Managing Director and Chief Financial Officer |
|  | Forte Acquisition Company, Inc. | Chief Financial Officer |
|  | TD Ameritrade Holding Corporation | Director |
|  | Schwab Holdings, Inc. | Director, Executive Vice President and Chief Financial Officer |
|  | Charles Schwab Global 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, Director | The Charles Schwab Corporation | President |
|  | Schwab Holdings, Inc. | President |
|  | Charles Schwab & Co., Inc. | Director and President |
| Omar Aguilar, Chief Executive Officer and Chief Investment Officer | Schwab Funds | Vice President and Chief Investment Officer |
|  | Laudus Trust | Vice President and Chief Investment Officer |
|  | Schwab ETFs | Vice President and Chief Investment Officer |
|  | Charles Schwab Investment Advisory, Inc. | Director, President and Chief Executive Officer |
| Jonathan de St. Paer, Director, President and Chief Operating Officer | Charles Schwab & Co., Inc. | Managing Director |
|  | Schwab Funds | President and Chief Executive Officer |
|  | Laudus Trust | President and Chief Executive Officer |
|  | Schwab ETFs | President and Chief Executive Officer |
|  | Financial Passport, Inc. | Director and President |
|  | TD Ameritrade Investment Management, LLC | Manager |
| Brett Wander, Senior Vice President and Chief Investment Officer | Schwab Funds | Vice President and Chief Investment Officer |
|  | Laudus Trust | Vice President and Chief Investment Officer |
|  | Schwab ETFs | Vice President and Chief Investment Officer |
| William P. McMahon, Jr., Senior Vice President and Chief Investment Officer | Schwab Funds | Vice President and Chief Investment Officer |
|  | Laudus Trust | Vice President and Chief Investment Officer |
|  | Schwab ETFs | Vice President and Chief Investment Officer |
| Michael Hogan, Senior Vice President and Chief Compliance Officer | Schwab Funds | Chief Compliance Officer |
|  | Schwab ETFs | Chief Compliance Officer |
|  | Laudus Trust | Chief Compliance Officer |

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| | | |
|:---|:---|:---|
| **Name and Position with Adviser**  | **Name of Other Company**  | **Capacity**  |
|  | Charles Schwab & Co., Inc. | Managing Director and Chief Compliance Officer – Asset Management Compliance |
| Mark D. Fischer, Vice President and Chief Financial Officer | Schwab Funds | Chief Operating Officer |
|  | Laudus Trust | Chief Operating Officer |
|  | Schwab ETFs | Chief Operating Officer |
| Catherine MacGregor, Vice President and Chief Legal Officer | Charles Schwab & Co., Inc. | Managing Director |
|  | Schwab Funds | Secretary and Chief Legal Officer |
|  | Laudus Trust | Vice President, Chief Legal Officer and Clerk |
| | Schwab ETFs | Secretary and Chief Legal Officer |

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#### ITEM 32. <br>

#### PRINCIPAL UNDERWRITER:
(a) SEI Investments Distribution Co. (the Distributor) is the principal underwriter of the Trust.

The Distributor acts as distributor for:

SEI Daily Income Trust

SEI Tax Exempt Trust

SEI Institutional Managed Trust

SEI Institutional International Trust

The Advisors' Inner Circle Fund

The Advisors' Inner Circle Fund II

Bishop Street Funds

SEI Asset Allocation Trust

SEI Institutional Investments Trust

City National Rochdale Funds (f/k/a CNI Charter Funds)

Causeway Capital Management Trust

SEI Offshore Opportunity Fund II

ProShares Trust

Community Capital Trust (f/k/a Community Reinvestment Act Qualified Investment Fund)

SEI Offshore Advanced Strategy Series SPC

SEI Structured Credit Fund, LP

Global X Funds

ProShares Trust II

SEI Special Situations Fund

Exchange Traded Concepts Trust (f/k/a FaithShares Trust)

Schwab Strategic Trust

RiverPark Funds Trust

Adviser Managed Trust

SEI Core Property Fund

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New Covenant Funds

Highland Funds I (f/k/a Pyxis Funds I)

KraneShares Trust

The Advisors' Inner Circle Fund III

SEI Catholic Values Trust

SEI Hedge Fund SPC

SEI Energy Debt Fund

Gallery Trust

City National Rochdale Select Strategies Fund

Metaurus Equity Component Trust

Impact Shares Trust

City National Rochdale Strategic Credit Fund

Symmetry Panoramic Trust

Frost Family of Funds

SEI Vista Fund, Ltd.

Delaware Wilshire Private Markets Fund

Catholic Responsible Investments Funds

SEI Exchange Traded Funds

(b) Information with respect to each director, officer or partner of each principal underwriter is as follows. Unless otherwise noted, the business address of each director or officer is 1 Freedom Valley Drive, Oaks, PA 19456.

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| | | |
|:---|:---|:---|
| **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 P. Barr | Director, President & Chief Executive Officer | None |
| Maxine J. 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 |
| Mark J. Held | Senior Vice President | None |
| John P. Coary | Vice President & Assistant Secretary | None |
| Lori L. White | Vice President & Assistant Secretary | None |
| Judith A. Rager | Vice President | None |
| Jason McGhin | Vice President | None |
| Gary Michael Reese | Vice President | None |
| Robert M. Silvestri | Vice President | None |

---

(c) None.

#### ITEM 33. <br>

#### LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained pursuant to Section 31(a) of the 1940 Act, as amended, and the Rules thereunder are maintained at the offices of: Registrant and Registrant's investment adviser and administrator, Charles Schwab Investment Management, Inc., 211 Main Street, San Francisco, California 94105; Registrant's principal underwriter, SEI Investments Distribution Co., 1

------

Freedom Valley Drive, Oaks, PA 19456; Registrant's custodian and fund accountant, State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111; Registrant's transfer agent, State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111; and Registrant's subadviser: Ariel Investments, LLC, 200 East Randolph Street, Chicago, IL 60601.

#### ITEM 34. <br>

#### MANAGEMENT SERVICES.
None.

#### ITEM 35. <br>

#### UNDERTAKINGS.
Not applicable.

------

#### SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as amended, Registrant has duly caused this Post-Effective Amendment No. 154 to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Washington in the District of Columbia, on the 17th day of January, 2023.

---

| |
|:---|
| **SCHWAB STRATEGIC TRUST <br> Registrant** |
| Jonathan de St. Paer\* <br>Jonathan de St. Paer, President and Chief Executive Officer  |

---

Pursuant to the requirements of the 1933 Act, this Post-Effective Amendment No. 154 to Registrant's Registration Statement on Form N-1A has been signed below by the following persons in the capacities indicated this 17th day of January, 2023.

---

| | |
|:---|:---|
| **Signature**  | **Title**  |
| Walter W. Bettinger II\* <br>Walter W. Bettinger II  | Chairman and Trustee |
| Michael J. Beer\* <br>Michael J. Beer  | Trustee |
| Robert W. Burns\* <br>Robert W. Burns  | Trustee |
| Nancy F. Heller\* <br>Nancy F. Heller  | Trustee |
| David L. Mahoney\* <br>David L. Mahoney  | Trustee |
| Jane P. Moncreiff\* <br>Jane P. Moncreiff  | Trustee |
| Kimberly S. Patmore\* <br>Kimberly S. Patmore  | Trustee |
| J. Derek Penn\* <br>J. Derek Penn  | Trustee |
| Richard A. Wurster\* <br>Richard A. Wurster  | Trustee |
| Dana S. Smith\* <br>Dana S. Smith  | Treasurer and Chief Financial Officer |

---

---

| | |
|:---|:---|
| \*By: | /s/ Douglas P. Dick <br>Douglas P. Dick, Attorney-in-Fact <br> Pursuant to Power of Attorney  |

---

------

## Ex-99.(J)(9)

**Exhibit (j)(9)**

THE CHARLES SCHWAB FAMILY OF FUNDS

SCHWAB ANNUITY PORTFOLIOS

SCHWAB INVESTMENTS

SCHWAB CAPITAL TRUST

LAUDUS TRUST

SCHWAB STRATEGIC TRUST

POWER OF ATTORNEY

I, the undersigned trustee and/or officer of The Charles Schwab Family of Funds, Schwab Annuity Portfolios, Schwab Investments, Schwab Capital Trust and Laudus Trust, each a Massachusetts business trust, and Schwab Strategic Trust, a Delaware statutory trust (each a "Trust"), do hereby constitute and appoint Catherine M. MacGregor, Alexandra O. Riedel, Robin R. Nesbitt, Douglas P. Dick, Adam T. Teufel, and Stephen T. Cohen, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me and in my name and the capacity listed below, any and all amendments to the Registration Statement on Form N-1A of each Trust, and to file the same with all exhibits thereto, and other documents in connection thereunder, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them, acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof.

WITNESS my hand on the date set forth below.

---

| | |
|:---|:---|
| &nbsp;&nbsp;/s/ Dana S. Smith | &nbsp;&nbsp;Date: January 11, 2023 |

---

Dana S. Smith

Chief Financial Officer and Treasurer

## Ex-99.(P)(3)

**Exhibit (p)(3)**

![](tm222526d1_ex99p3img001.jpg)

**CODE OF ETHICS**

Ariel Investment Trust, Ariel Investments, LLC, Ariel Distributors, LLC, Ariel <br> Alternatives, LLC, and Project Black Management Company, LLC

As amended December 31, 2022

&nbsp;&nbsp;&nbsp;&nbsp;**A. <u>Applicability</u>**

<u>Ariel Personnel</u> – You are subject to this Code of Ethics ("Code") if you are an employee or officer of Ariel Investments, LLC ("Ariel Investments"), Ariel Distributors, LLC ("Distributor"), Ariel Capital Management Holdings, Inc. ("ACM Holdings"), Ariel Alternatives, LLC ("Ariel Alternatives") or Project Black Management Company, LLC ("Project Black ManCo"). Consultants or interns for these entities may be subject to this Code as determined by these entity's respective Chief Compliance Officer.

<u>Disinterested Trustees</u> – Disinterested Trustees of Ariel Investment Trust ("Trust") are access persons of each series of the Trust ("Trust Fund"). If you are a Disinterested Trustee, you are subject to Code Section B "Governing Principles" with respect to the Trust Funds. You are not subject to Code Sections D, F, G and H. You are also not subject to Code Section E except for Section E.8, which sets forth your Code reporting obligations.

<u>Disinterested Directors</u> – Disinterested Directors of Ariel Investments are access persons of all Ariel Investments Clients. If you are a Disinterested Director, you are subject to Code Section B "Governing Principles" with respect to all Clients. You are not subject to Code Sections D, F, G and H. You are also not subject to Code Section E except for Section E.9, which sets forth your Code reporting obligations.

<u>Outside Board Members</u> – Outside Board Members as used herein is any member of the board of managers or advisory board of Ariel Alternatives and/or Project Black ManCo that is not an employee of Ariel Alternatives, Ariel Investments or Project Black Manco and will not receive any MNPI. As a result, Outside Board Members are not deemed to be access persons. If you are an Outside Board Member, you are subject to Code Section B "Governing Principles" with respect to all Clients. You are not subject to Code Sections D, F, G and H. You are also not subject to Code Section E except for Section E.10, which sets forth your Code reporting obligations.

<u>Ariel Entities</u> – Ariel Investments, the Distributor, ACM Holdings, Ariel Alternatives and Project Black ManCo are subject to all sections of the Code pertaining to their respective investments in securities.

&nbsp;&nbsp;&nbsp;&nbsp;**B. <u>Governing Principles</u>**

At all times, the interests of our Clients/Trust Funds must come first. To that end, you must:

&nbsp;&nbsp;&nbsp;&nbsp;· Be vigilant in maintaining the integrity of our business by promoting ethical conduct, creating a culture of compliance and avoiding
any actual or potential conflicts of interest or any abuse of our position of trust and responsibility in our activities;

&nbsp;&nbsp;&nbsp;&nbsp;· Comply
 with applicable securities laws and regulations; <sup>1
</sup> and

&nbsp;&nbsp;&nbsp;&nbsp;· Conduct your personal securities transactions and other activities in a manner consistent with, and in
compliance with, this Code, which includes our Insider Trading Policy and Procedures set forth in Exhibit A.

In connection with a purchase or sale, directly or indirectly, of a Security Held or to Be Acquired by any Client/Trust Fund, you may not:

&nbsp;&nbsp;&nbsp;&nbsp;· Employ any device, scheme or artifice to defraud any Client/Trust Fund;

&nbsp;&nbsp;&nbsp;&nbsp;· Make any untrue statement of a material fact to, or omit to state a material fact to, any Client/Trust
Fund;

&nbsp;&nbsp;&nbsp;&nbsp;· Engage in any act, practice or course of business that operates or would operate as a fraud or deceit
on any Client/Trust Fund; or

&nbsp;&nbsp;&nbsp;&nbsp;· Engage in any manipulative practice with respect to any Client/Trust Fund.

&nbsp;&nbsp;&nbsp;&nbsp;**C. <u>Definitions</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Reportable Security</u>. The term "Reportable Security" means any:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Share of any mutual fund advised or sub-advised by Ariel Investments ("Ariel-advised mutual funds" which include the following
Trust Funds: Ariel Fund, Ariel Appreciation Fund, Ariel Focus Fund, Ariel International Fund and Ariel Global Fund);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Share of any closed-end fund (a limited structured fund that raises a fixed amount of capital through an initial public offering traded
on a stock exchange) or exchange-traded fund ("ETF");

<sup>1</sup> These securities laws and regulations include the Securities Act of 1933 (the "Securities Act"), the Securities Exchange Act of 1934, the Investment Company Act of 1940 (the "1940 Act"), and the Investment Advisers Act of 1940 (the "Advisers Act"), each, as amended, and the rules and regulations promulgated thereunder, and all other applicable Federal securities laws (as defined under Rule 38a-1 of the 1940 Act and Rule 204A-1 of the Advisers Act), and applicable rules of the Financial Industry Regulatory Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Share issued in any "Limited Offering" (as defined in Section C.14), including any limited partnership interests
in a private fund advised by Ariel Investments, Ariel Alternatives, and/or Project Black ManCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Interest in limited partnerships and limited liability companies, generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Treasury stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Security future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Bond, debenture or evidence of indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Municipal bond or interest in a Section 529 plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Certificate of interest or participation in any profit-sharing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Collateral-trust certificate, voting-trust certificate, pre-organization certificate, or subscription;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Transferable share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Investment contract (which may include an interest in a limited partnership or a limited liability company);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Certificate of deposit for a security versus a certificate of deposit offered by a bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Fractional undivided interest in oil, gas or other mineral rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities
(including any interest therein or based on the value thereof), including those entered into on a national securities exchange relating
to foreign currencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· In general, any interest or instrument commonly known as a "security;"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to
subscribe to or purchase any of the foregoing; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Initial coin offering, which is an offering involving the exchange of currency for a digital asset, such as bitcoin. These offerings
can be structured as either an "initial public offering" or a "limited offering." Which of these two terms applies
to an individual initial coin offering will be based upon the definitions of those terms as written in this Code.

***Reportable Security does not include***:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Direct obligations of the U.S. Government, such as U.S. bonds or treasuries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Bankers' acceptances, bank certificates of deposit, commercial paper, and high-quality short-term debt instruments (including
repurchase agreements);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Shares issued by unit investment trusts that are invested exclusively in one or more open-end investment companies (such as some variable
annuities or other variable life insurance products) where none of the open-end investment companies are advised or sub-advised by Ariel
Investments, Ariel Alternatives, and/or Project Black ManCo; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Shares of registered open-end investment companies or series where Ariel Investments, Ariel Alternatives and/or Project Black ManCo
does not act as an investment adviser or sub-adviser.

***Special Note:*** *"Open-end investment companies" are commonly referred to as "mutual funds" and can be distinguished from closed-end funds and ETFs based*

*on the fact that open-end investment companies, unlike closed-end funds and ETFs, stand ready to redeem their shares and typically do not trade on a stock exchange.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Reportable Account</u>. A Reportable Account is an account at a broker, dealer, bank or other financial institution in which transactions in Reportable Securities may be executed. These accounts include Section 529 plans and retirement plan accounts, such as 401(k) and 403(b) plans, if the account is self-directed and can execute transactions in a Reportable Security.

***Special Note****: A Reportable Account does not include an account held directly with an open-end investment company that is not advised or sub-advised by Ariel Investments (e.g., a direct account with the Longleaf Funds).*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Advisory Person</u> or <u>You</u>. An Advisory Person or You refers to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any director, trustee, officer or employee of Ariel Investments, ACM Holdings, the Trust, the Distributor, Ariel Alternatives or Project
Black ManCo;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any Outside Board Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any natural person in a control relationship to Ariel Investments, the Trust, the Distributor, ACM Holdings, Ariel Alternatives or
Project Black ManCo who obtains information concerning purchases or sales of a Security Held or to Be Acquired (as defined in Section C.16
below) by a Client; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· ACM Holdings, Ariel Investments, the Distributor, Ariel Alternatives and Project Black ManCo.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Ariel Investments Separate Account</u>. Ariel Investments Separate Account refers to accounts that are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Separately managed by Ariel Investments on your behalf as a Client (or on behalf of your "Immediate Family Member" or
 "Domestic Partner" living in the same household, as defined in Code Sections C.12 and C.13 below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Traded and managed in accordance with Ariel Investments' investment strategies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Subject to Ariel Investments' trading procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Beneficial Ownership</u>. You have a "Beneficial Ownership" of a Reportable Security or Reportable Account when you, or an "Immediate Family Member" or "Domestic Partner" living in the same household (as defined in Code Sections C.12 and C.13 below), directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Investment power or discretion in respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Reportable Security (the power or discretion to direct the purchase or sale of a Reportable Security)
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Reportable Account; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The opportunity, directly or indirectly, to profit or share in the gains, losses, dividends, or interest
obtained from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Reportable Security transaction or holding or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Transactions or holdings in a Reportable Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Client</u>. A "Client" refers to any person or entity for which Ariel Investments, Ariel Alternatives or Project Black ManCo manages investments or otherwise acts as investment adviser, including all Ariel-advised mutual funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Chief Compliance Officer</u>. "Chief Compliance Officer" refers to Ariel Investments', Ariel Alternatives' and/or Project Black ManCo's Chief Compliance Officer, as applicable.<sup>2</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Control</u>. "Control" means the power to exercise a controlling influence over a company's management or policies, unless such power is solely the result of an official position with that company. Any person who beneficially owns more than 25% of the voting securities of a company is presumed to control such company, unless the Chief Compliance Officer decides otherwise.<sup>3</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Directly or Indirectly</u>. For purposes of the prohibition in Section B on purchases or sales of Reportable Securities, "directly or indirectly" refers to any transaction involving

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any other security of the same issuer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any derivative security or other instrument relating to the same security or any other security of the same issuer, including any
option to purchase or sell the security, any security convertible into or exchangeable into the security, and any related futures contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Discretionary Account</u>. "Discretionary Account" means a Reportable Account over which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You or an Immediate Family Member or Domestic Partner has no direct or indirect influence or control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You or an Immediate Family Member or Domestic Partner does not receive notice of transactions prior to
execution; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A person or entity not subject to the Code has sole investment power.

<sup>2</sup> In the event that Ariel Investments', Ariel Alternatives' or Project Black ManCo's Chief Compliance Officer has a conflict, is unavailable or unable to act, then the following people, in the following order, will assume the role of "Chief Compliance Officer": Ariel Investments', Ariel Alternatives' and/or Project Black ManCo's General Counsel; Ariel Investments' President, Ariel Alternatives' Chief Executive Officer and/or Project Black ManCo's Executive Chairman; or any Ariel Investments Executive Vice President, Ariel Alternatives Senior Managing Director and/or Project Black ManCo Senior Managing Director not involved in the proposed transaction.

<sup>3</sup> Please note that beneficial ownership may be either direct or through one or more controlled companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Disinterested Trustee, Disinterested Director or Outside Board Member</u>. The term "Disinterested Trustee, Disinterested Director or Outside Board Member" includes an independent Trustee of the Trust, an independent Director of Ariel Investments or Outside Board Member of Ariel Alternatives and/or Project Black ManCo.<sup>4</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Domestic Partner</u>. The term "Domestic partner" means a person, 18 years of age or older:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· To whom you are neither married nor related;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· With whom you live in the same residence and intend to do so indefinitely; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· With whom you have an exclusive committed relationship.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Immediate Family Member</u>. The term "Immediate Family Member" means a member of your immediate family sharing your household. "Immediate family" means son, daughter (including a legally adopted child) or any descendants of either, stepson or stepdaughter, son-in-law, daughter-in-law, father or mother or any ancestor of either, stepfather or stepmother, mother-in-law or father-in-law, siblings or siblings-in-law, and spouse.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Limited Offering</u>. The term "Limited Offering" means an offering that is exempt from registration with the Securities and Exchange Commission. Examples of limited offerings include private placements and interests in limited partnerships and limited liability companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Purchase or Sale of a Reportable Security</u>. The term "Purchase or Sale of a Reportable Security" includes, among other things, the writing of an option to purchase or sell a Reportable Security, and the exercise of that option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Security Held or to Be Acquired</u>. "Security Held or to Be Acquired" by any Client means:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any Reportable Security which, within the most recent 15-day period\* is or has been:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Held by any Client in any Ariel Investments or Ariel Alternatives strategy (as applicable); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Considered by Ariel Investments or Ariel Alternatives for purchase or sale by any Client in any Ariel
Investments or Ariel Alternatives strategy; and

<sup>4</sup> An independent Trustee is a trustee who is not an "interested person" of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. An independent Director is a director (i) who is not an "interested person" of Ariel Investments within the meaning of Section 2(a)(19)(B) of the 1940 Act for any reason other than as a director of Ariel Investments and as an owner of direct or beneficial interests in ACM Holdings or Ariel Investments (but owner of no more than 5% of ACM Holdings' or Ariel's outstanding voting securities), and (ii) who has no involvement with the day-to-day operations of Ariel Investments, ACM Holdings, the Distributor or the Trust. An Outside Board Member is any member of the board of managers or advisory board of Ariel Alternatives and/or Project Black Manco that is not an employee of Ariel Alternatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any option to purchase or sell, and any security convertible into or exchangeable for, any Reportable Security described in the bullet
point above.

A Reportable Security is or has been considered for purchase or sale when, within the most recent 15-day period, a recommendation to purchase or sell a Reportable Security has been made and communicated and remains in effect and, with respect to the person making the recommendation, the point in time when such person seriously considers making such a recommendation.

\*The "most recent 15-day period" when analyzing actual purchases or sales of Reportable Securities is the seven calendar days before or after the transaction.

**D. <u>Prohibited Actions Relating to Reportable Securities Applicable to Ariel Personnel and Entities</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. These prohibitions apply to all Reportable Securities in which you have Beneficial Ownership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Purchases or Sales by Advisory Persons of a Security Held or to Be Acquired by or for Any Client</u>. Advisory Persons associated with Ariel Investments may not purchase or sell any Security Held or to be Acquired by or for any Ariel Investments Client and Advisory Persons associated with Ariel Alternatives may not purchase or sell any Security Held or to be Acquired by or for any Ariel Alternatives Client unless the Chief Compliance Officer has determined that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The purchase or sale of such security is *de minimis*; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· There are no pending client orders for the same security.

A transaction generally will be deemed *de minimis* if the transaction, aggregated with all your transactions in the same (or equivalent) security during the thirty (30) days prior to the request, involves fewer than 500 shares with a total cost of $25,000 or less in an issuer with a market capitalization of $5 billion or more.

Ariel Investments Chief Compliance Officer will maintain:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A restricted list consisting of those securities held for any Ariel Investments Client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A watch list consisting of those securities to be acquired by or for any Ariel Investments Client.

Ariel Alternatives Chief Compliance Officer will maintain:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A restricted list consisting of those securities held for any Ariel Alternatives Client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A watch list consisting of those securities to be acquired by or for any Ariel Alternatives Client, or with respect to which Ariel
Alternatives, its personnel or such Ariel Alternatives Client has material non-public information, e.g., securities with respect to which
Ariel Alternatives or such Ariel Alternatives Client has entered into a non-disclosure or similar agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Inducing a Client to Take Action</u>. You may not intentionally induce or cause any Client to take action or to fail to take action, in order to obtain a personal benefit. For example, you may neither have a Client purchase a Reportable Security you own in order to support or drive up the security's price, nor stop a Client from selling a Reportable Security in order to protect the value of your investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Personal Profit from Knowledge of Client Transactions</u>. You may not use actual knowledge of Client transactions to profit from such transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Failure to Make Recommendations</u>. You may not intentionally fail to consider the purchase of, or fail to purchase, a Reportable Security for a Client in order to avoid the appearance of a conflict arising from a personal transaction in that security.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Prohibition of Certain Short-Term Trading</u>. <sup>5</sup> You may not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Profit from the purchase and sale, or sale and purchase, of the same (or equivalent) Reportable Securities (excluding Ariel-advised
mutual fund shares) within sixty (60) calendar days after the trade date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Sell, redeem or exchange shares of Ariel-advised mutual funds within sixty (60) calendar days after buying
such shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Write an option on a Reportable Security if the option will expire in less than sixty (60) calendar days;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Exercise an option on a Reportable Security within sixty (60) calendar days of purchase of the option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Insider Trading Prohibition</u>. You may not engage in insider trading which includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Transacting in any security, either personally or on behalf of others, when in possession of material, nonpublic information regarding
the security and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Communicating material, nonpublic information regarding a security to others who then transact in the
security.

See the Insider Trading Policy and Procedures set forth in Exhibit A for more details.

The Chief Compliance Officer for Ariel Investments and Ariel Alternatives will maintain a separate MNPI list for each entity that identifies all securities for which that entity's employees have material nonpublic information.

<sup>5</sup> With respect to short term trades, the Code looks to the last transaction you made in the same (or equivalent) Reportable Security in any of your reportable accounts.

**E.**  **<u>Reporting and Prior Approvals</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. These reporting and prior approval provisions apply to all Reportable Securities and Reportable Accounts in which you have Beneficial Ownership.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Initial and Annual Disclosure</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Within ten (10) days of becoming an Advisory Person, you
must:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Report all your Reportable Accounts and holdings of Reportable Securities as of a date no more than 45 days prior to the date on which
you became an Advisory Person; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Execute the Code of Ethics Certification (Exhibit C).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· On an annual basis, you must:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Report no later than January 30 all your Reportable Accounts and holdings of Reportable Securities
as of December 31; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Execute the Code of Ethics Certification (Exhibit C).

***Special Note****: As indicated in Section E.6 below, you are limited to having Reportable Accounts at only certain firms acceptable to the Chief Compliance Officer.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Duplicate Transaction Confirmations and Account Statements</u>. You must provide, or direct your broker to supply to, the Chief Compliance Officer with duplicate copies of transaction confirmations and account statements pertaining to all your Reportable Accounts. These confirmations and account statements are due no more than thirty (30) days after they become available to you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Quarterly Reporting</u>. You must report no later than thirty (30) days after the end of each calendar quarter to the Chief Compliance Officer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· All your transactions in Reportable Securities that took place during the prior calendar quarter; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· If no such transactions took place, the fact that no such transactions took place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Prior Approval of the Purchase and Sale of Reportable Securities</u>. You must obtain prior written approval of the Chief Compliance Officer before executing the purchase or sale of any Reportable Security. The Chief Compliance Officer has discretion to place conditions on such approvals. Unless otherwise determined by the Chief Compliance Officer, all approvals expire at the close of the business day following the date of approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Prior Approval of Initial Public Offerings and Limited Offerings</u>. In reviewing requests for approval of a transaction involving
an initial public offering or Limited Offering, the Chief Compliance Officer will take into account, among other factors, whether the
investment opportunity should be reserved for Clients and whether the opportunity is being offered to you by virtue of your position with
the Trust, Ariel Investments, Ariel Alternatives or Project Black ManCo. If you have received approval to acquire these Reportable Securities,
you must disclose such investments

whenever you are involved in an Ariel entity's subsequent consideration of these investments for any Client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Exemption for Purchases, Sales, Redemptions, or Exchanges of Ariel Investments-Advised Open End Mutual Fund Shares and Municipal Securities (including Section 529 Plan Interests)</u>. Your purchase, sale, redemption, or exchange of Ariel Investments-advised
open end mutual fund shares or municipal securities (including Section 529 Plan Interests) does not require the prior approval of
the Chief Compliance Officer, provided that you report such transaction in your quarterly transaction report, as required by Section E.4
above.

***Special Note:*** *Ariel Investments-advised ETFs are not exempted from this requirement.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Opening Reportable Accounts – Prior Approval and Immediate Reporting</u>.

<u>Accounts Requiring Immediate Reporting</u>. For the following Reportable Accounts, you must report the account opening to the Chief Compliance Officer on the same day as the account's inception (you do not need to obtain prior approval):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Reportable Accounts at firms identified as acceptable to the Chief Compliance Officer, all of which are identified within Ariel's
code of ethics compliance system and either currently provide such system employee trading feeds or are 529 plan accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A direct account with any Ariel-advised mutual fund (i.e., an account in which you can buy, sell, redeem or exchange shares of the
Ariel-advised open end mutual funds only);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any account in which only transactions in municipal securities are permitted (such as Section 529
plans);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A compensation or retirement plan connected with employment (such as 401(k) and stock option plans) in which you could own a
Reportable Security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· IRA account transfers (within the same firm, or to a firm that has been identified as acceptable to the
Chief Compliance Officer as referenced in the first bullet point directly above);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Changes to the registered name on an account; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Transfers to a living trust for the benefit of a shareowner or your spouse (within the same firm).

<u>Accounts Requiring Prior Approval</u>. You must obtain prior written approval of the Chief Compliance Officer before opening any other Reportable Account. **Note:** generally, you are limited to Reportable Accounts at only certain firms acceptable to the Chief Compliance Officer all of which are identified within the Ariel entities' code of ethics compliance system and either currently provide such system employee trading feeds or are 529 plan accounts.

***Special Note****: The only compensation or retirement plans that need to be reported are those plans in which the plan participant has the option of investing*

*in any Reportable Security. For example, if your spouse has a 401(k) plan that can only invest in open-end mutual funds excluding Ariel-advised mutual funds, then you do not need to report that account.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Reporting Code Violations</u>. You must report promptly to the Chief Compliance Officer any and all Code violations, regardless of whether you are responsible for the violation. Failure to report any Code violation is itself a Code violation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Reporting Obligations of Disinterested Trustees</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Code of Ethics Certification</u> – Within ten (10) days of being designated a Disinterested Trustee, and thereafter
on an annual basis, each Disinterested Trustee must execute the Code of Ethics Certification for Disinterested Trustees, including the
affirmation that he or she has read the Code and understands that it applies to him or her (Exhibit C).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Transaction Reporting Requirements</u> – No later than 30 days after the end of each calendar quarter, each Disinterested
Trustee must report to the Chief Compliance Officer any transaction executed during such calendar quarter in a Reportable Security in
which such Disinterested Trustee had a Beneficial Interest if the Disinterested Trustee knew, or in the ordinary course of fulfilling
his or her official duties as an Disinterested Trustee should have known, that during the 15-day period immediately before or after the
date of such transaction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Trust Fund purchased or sold such Reportable Security, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Ariel considered purchasing or selling such Reportable Security for a Trust Fund.

No reporting requirement exists if a Disinterested Trustee purchases a security and then subsequently learns that Ariel, within the 15-day reporting period, purchased, sold or considered a purchase or sale of the same security for a Trust Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Reporting Obligations of Disinterested Directors</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Code of Ethics Certification</u> – Within ten (10) days of being designated a Disinterested Director, and thereafter
on an annual basis, each Disinterested Director must execute the Code of Ethics Certification for Disinterested Directors, including the
affirmation that he or she has read the Code and understands that it applies to him or her (Exhibit C).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Transaction Reporting Requirements</u> – No later than 30 days after the end of each calendar quarter, each Disinterested
Director must report to the Chief Compliance Officer any transaction executed during such calendar quarter in a Reportable Security in
which such Disinterested Director had a Beneficial Interest if the Disinterested Director knew, or in the ordinary course of fulfilling
his or her official duties as a Disinterested Director should have known, that during the 15-day period immediately before or after the
date of such transaction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Client purchased or sold such Reportable Security, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Ariel considered purchasing or selling such Reportable Security for a Client.

No reporting requirement exists if a Disinterested Director purchases a security and then subsequently learns that Ariel Investments, within the 15-day reporting period, purchased, sold or considered a purchase or sale of the same security for a Client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10. <u>Reporting Obligations of Outside Board Members</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Code of Ethics Certification</u> – Within ten (10) days of being designated an Outside Board Member, and thereafter
on an annual basis, each Outside Board Member must execute the Code of Ethics Certification for Outside Board Member, including the affirmation
that he or she has read the Code and understands that it applies to him or her (Exhibit C).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Transaction Reporting Requirements</u> – Each Outside Board Member should consult with the Chief Compliance Officer prior
to executing any transaction in which such Outside Board Member knows, or in the ordinary course of fulfilling his or her official duties
as an Outside Board Member should know, that **[during the 15-day period immediately before or after the date of such transaction]**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o A Client has purchased or sold or is expected to purchase or sell such Reportable Security, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Ariel has considered or is considering purchasing or selling such Reportable Security for a Client.

**F.**  **<u>Exempt Transactions</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The prohibitions of Section D and the obligations imposed by Sections E.4 and E.5 do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Involuntary Transactions</u>. Purchases or sales of securities that are non-volitional on the part
of either the Advisory Person or a Client;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Dividend Reinvestments</u>. Purchases that are part of an automatic dividend reinvestment plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Pro Rata Rights</u>. Purchases effected upon the exercise of rights issued by the issuer proportionately to all holders of a class of its
securities and sales of such rights so acquired; <sup>6</sup> or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Systematic Investment Plans</u>. Purchases or sales transacted through a systematic (or automatic) plan involving predetermined
amounts on predetermined dates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Exemption for Discretionary Accounts and Ariel Investments Separate Accounts</u>. The prohibitions of Section D, the reporting obligations imposed by

<sup>6</sup> This exemption applies only to the extent such rights were acquired from such issuer.

Sections E.3, E.4 and E.5, and the reporting obligations imposed by Section E.2 relating only to Reportable Securities do not apply to any Discretionary Account or Ariel Investments Separate Account. To qualify for this exemption:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You must report your Discretionary Account(s) or Ariel Investments Separate Account as required by Section E.2 of the Code,
but need not report the securities held in these accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You must request the Chief Compliance Officer's written approval to open any new Discretionary Account(s) or
Ariel Investments Separate Account as required by Section E.6 of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· With respect to Discretionary Accounts only, you must provide initial and annual certifications as described in the Supplemental Procedures
for "Blind" Trusts and Discretionary Accounts attached as Exhibit B; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· With respect to Ariel Investments Separate Accounts for which you serve as a portfolio manager, you must
obtain prior written approval of the Chief Compliance Officer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o To make any transactions in your Ariel Investments Separate Account that are different from transactions made for other Clients invested in the same strategy; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o To refrain from making transactions in your Ariel Investments Separate Account that you are making for other Clients invested in the
same strategy.

***Special Note***: *The Chief Compliance Officer has authority under this Code to determine at any time whether a particular account qualifies or continues to qualify as a Discretionary Account, whether additional information should be provided by the relevant person(s) or whether additional steps must be taken by the relevant person(s) in order to maintain Discretionary Account status for the relevant account.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Exemption for Purchases and Sales of Units of Ariel Investments and Shares of ACM Holdings</u>. The reporting obligations imposed by Sections E.2 through E.6 do not apply to the purchase or sale of Ariel Investments units and shares of ACM Holdings. Nevertheless, within 30 days after each quarter end, Ariel Investments' Finance Department will provide the Chief Compliance Officer with a list of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Your transactions in Ariel Investments units and ACM Holdings shares during the prior quarter; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Your holdings in Ariel Investments units and ACM Holdings shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Exemption for Purchases and Sales of Reportable Securities in Ariel Employees' Profit Sharing and Savings Plan & Trust</u>. The reporting obligations imposed by Sections E.2 through E.6 do not apply to the purchase or sale of Reportable Securities in Ariel Investments, Ariel Alternatives, and/or Project Black ManCo Employees' Profit Sharing and Savings Plan & Trust (the "Profit Sharing Plan"). Nevertheless, within 30 days after each quarter end, Ariel Investments' and Ariel Alternatives' Finance Department will provide the Chief Compliance Officer with a list of all the Profit Sharing Plan's transactions in Reportable Securities during the prior quarter. Additionally, within 30 days after

each year end, Ariel Investments', Ariel Alternatives' and/or Project Black ManCo's Finance Department will provide the Chief Compliance Officer with a list of all employees' Profit Sharing Plan holdings in Reportable Securities as of December 31.

***Special Note:*** *The Profit Sharing Plan is Ariel Investments, Ariel Alternatives and/or Project Black ManCo's U.S. based employees' 401(k) plan. This exemption is applicable **only** to Ariel Investments', Ariel Alternatives' and/or Project Black ManCo's U.S. based employees.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Limited Exemption for Exercise of Options Received as Compensation Followed by Sale of Resulting Shares</u>. The prohibitions of Section D.6 (short-term trading's 60 day rule) do not apply to the exercise of a company's options received as compensation followed by the sale of the resulting company shares within sixty calendar days after exercising the options so long as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The company shares at issue are currently not a Security Held or to Be Acquired by any Client; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You obtain prior written approval of the Chief Compliance Officer pertaining to these transactions in
accordance with Section E.5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Exemption for the Distributors' Outsourced Financial Operations Professional</u>. The following sections do not apply to the Distributor's Outsourced Financial Operations Professional ("FINOP"):<sup>7</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The prohibitions of Code Section D.1 through Section D.6;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Code Section E.2's annual reporting of Reportable Accounts and holdings of Reportable Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The quarterly reporting obligations of Code Section E.4; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The prior approval obligations of Code Section E.5  ***except*** that the FINOP must obtain
prior written approval of Limited Offerings.

***Special Note:*** *For Outside Employment, the FINOP need only obtain prior written approval from the Chief Compliance Officer.*

**G.**  **<u>Gifts and Entertainment</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The giving or receiving of gifts or business entertainment could give rise to a potential or actual conflict of interest, such that the gift or entertainment is provided as a kickback or *quid pro quo*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2. Definitions for the purposes of this section:

<sup>7</sup> The Distributors' FINOP is not an employee of any other Ariel entity and therefore, with respect to personal securities trading, is subject to the obligations of FINRA Rules 3210 and 3280 only. FINRA Rule 3210 requires, among other things, that this employee obtain the Distributors' prior approval to open any account in which the employee has a beneficial interest and securities transactions can be effected. FINRA Rule 3280 requires that this employee obtain prior written approval of any participation in a private securities transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· "Ariel Business Partner" is a Client, prospective Client or any person or entity that does or seeks to do business with
or on behalf of Ariel Investments, Ariel Alternatives, Project Black ManCo, or the Distributor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· "Gift" is any item, service or accommodation of value. A gift can include meals, refreshments, goods, services, and tickets
to entertainment or sporting events. Promotional items of nominal value that are widely distributed and display a gift giver's logo,
such as golf balls, shirts, towels, and pens, do not fall within the definition of "gift."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· "Business entertainment" is generally in the form of a social event, hospitality event, meal, leisure activity or event
of like nature or purpose in which an Ariel Investments, Ariel Alternatives or Project Black ManCo employee is in attendance as the host
and an Ariel Business Partner is in attendance as the guest, or vice versa. This includes virtual entertainment and includes food or beverages
provided for a meeting held by video conference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. No Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employee may accept gifts, favors, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to any person or firm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. No Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employee may give or accept:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Any cash gifts or cash equivalent gifts (e.g., an American Express gift certificate) to or from any Ariel
Business Partner; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Extravagant or excessive business entertainment to or from any Ariel Business Partner. Ariel or Distributor employees may provide
or accept a business entertainment event, such as dinner or a sporting event, of reasonable value, if the person or entity providing the
entertainment is present. If you have questions as to whether entertainment is extravagant or excessive, please consult with the Chief
Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5. With respect to non-cash gifts, the following rules apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Ariel Investments or Distributor employees cannot give or accept any non-cash gift having a value of more than $100 to or from any
Ariel Business Partner, noting that Distributor registered representatives and principals cannot give non-cash gifts totaling more than
$100 per person per year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Ariel Alternatives and Project Black ManCo employees cannot give or accept any non-cash gift having a value of more than $250 to or
from any Ariel Business Partner. If such an employee is also employed by Ariel Investments or the Distributor, the employee is subject
to the $100 gift limit described directly above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. No Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employee may provide any gifts or entertainment to any member of the United States Congress or their staff unless the entertainment falls under one of three categories:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Receptions</u>. "Finger food" and/ or drinks offered at a reception, but not part of a
meal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Widely-attended event (25 or more attendees from more than one company)</u> if the United States congressperson or staffer is a
speaker or panel participant presenting information related to congress, a matter before congress or performing a ceremonial function
appropriate to the person's official position;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Official Duty-Attendance</u> is appropriate to the person's official duties, such as meeting
with constituents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Unsolicited
 free attendance to a charitable event. <sup>8</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. The provision of gratuities to service providers to whom providing gratuities is customary is excluded from these gift-giving prohibitions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Foreign, federal, state, and local laws and clients may limit or prohibit Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employees from giving gifts, entertainment, or other payments. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· State and local ethics laws, regulations or rules may limit or prohibit the giving of gifts, entertainment
or other payments to various state or local governmental entities, agencies and employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The U.S. Department of Labor's ERISA law limits gifts, entertainment or payments to ERISA plans, or certain persons associated
with such plans to not more than $250 per person per year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The U.S. and some foreign governments prohibit gifts, entertainment or payments to foreign government
officials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A Client may have supplied the applicable Ariel entity with its internal policy relating to the giving of gifts or entertainment to
their employees, agents or representatives.

Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employees should consult with the Chief Compliance Officer before giving gifts, entertainment or other payments to these persons or entities.<sup>9</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **Reporting:** All Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employees are required to report gifts and business entertainment received and given as outlined in guidelines provided by separate memorandum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Prior to giving gifts or business entertainment to the Trust's independent trustees, Ariel Investments, the Distributor or these entities' employees must obtain the prior written approval of the Trust's Chief Compliance Officer.

<sup>8</sup> This prohibition is required for firms that hire an outside federal lobbying firm to work on its behalf.

<sup>9</sup> In connection with the provision of anything of value to foreign governmental officials and others, please also reference the anticorruption guidelines for Ariel Investments, Ariel Alternatives, Project Black Management Company and Ariel Distributors.

**H.**  **<u>Outside Employment</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1. Before accepting outside employment, which includes any business activity for which the employee receives compensation ("Outside Employment"), all Ariel Investments, Ariel Alternatives, Project Black ManCo or Distributor employees must obtain prior written approval from their supervisor, the Chief Talent Officer and the Chief Compliance Officer. In evaluating requests for Outside Employment, the supervisor, Chief Talent Officer and Chief Compliance Officer will consider the following, among other, factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Whether the Outside Employment creates an actual or potential conflict of interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Whether the purpose and duties of the Outside Employment is consistent with the Ariel entity(ies) for
which the employee works;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Whether there is a risk that Ariel Investments, Ariel Alternatives, Project Black ManCo or the Distributor will be seen as associated
with the Outside Employment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Whether employee will be involved in the financial decisions of the outside employer and the resulting risks to Ariel Investments,
Ariel Alternatives, Project Black ManCo and the Distributor.

Initially (upon hire) and annually, all Ariel Investments, Ariel Alternatives, Project Black ManCo, and Distributor employees must report all such outside business activities via a certification process initiated by the compliance team.

This requirement does not extend to Ariel Alternatives and/or Project Black ManCo employees who are appointed to serve as directors of the privately held companies purchased by these advisers for their clients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Service as a Director of a Publicly Traded Company</u>. Ariel Investments, Ariel Alternatives, Project Black ManCo, and Distributor employees may serve on the board of directors of any publicly traded company only if the employee obtains prior written approval from the Chief Compliance Officer. The Chief Compliance Officer's approval will be based upon a determination that such service is not inconsistent with the interests of any Client.

***Special Note:*** *Ariel Investments' policy is to prohibit the purchase, on behalf of its clients, of those securities issued by a company for which an Ariel Investments employee serves as a director. Ariel Investments' Chief Compliance Officer will provide relevant Ariel Investments staff with a list identifying those securities subject to this prohibition.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Board Reporting</u>. The Chief Compliance Officer will provide the following quarterly reporting to the following Boards:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Ariel Investments Board of Directors and Ariel Investment Trust Board of Trustees</u> - All outside employment involving service
as a director of a publicly or privately held company by an Ariel Investments and/or Ariel Distributors employee approved by the Chief
Compliance Officer during the prior quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· <u>Ariel Alternatives Board of Managers</u> – All outside employment involving service as a director of publicly or privately
held company by an Ariel Alternatives employee approved by the Chief Compliance Officer during the prior quarter, exclusive of service
as a director of a company owned by Ariel Alternatives clients.

&nbsp;&nbsp;&nbsp;&nbsp;**I.**  **<u>Enforcement and Sanctions</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Penalties for Violations of this Code</u>. The Chief Compliance Officer will take any action he/she deems appropriate against any Advisory Person who violates any provision of this Code. Such action may include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· An oral reprimand, a written censure, fines (imposed in accordance with the Code's penalty floor
guidelines detailed by separate memorandum), the disgorgement of profits or the payment of avoided losses, requiring the sale of an improperly
purchased security; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· A recommendation to the appropriate executive officer(s), the Trust's Board of Trustees, the Ariel Investments Board of Directors
and/or the Ariel Alternatives Board of Managers that the Advisory Person's duties be limited or that the Advisory Person be suspended
or removed from office or have his employment terminated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Reporting Code Violations to the Trust's Board of Trustee's, Ariel Investments' Board of Directors and/or Ariel Alternatives Board of Managers</u>. Each violation of this Code by Advisory Persons associated with the Trust and Ariel Investments will be reported to the Trust's Board of Trustees and Ariel Investments' Board of Directors at or before the respective Board's next regular meeting. Violations of this Code by Advisory Persons associated with Ariel Alternatives will be reported to Ariel Alternatives Board of Managers. The Trust's Board of Trustees, Ariel Investments Board of Directors and Ariel Alternatives Board of Managers may impose sanctions in addition to those imposed by the Chief Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Safe Harbor from Sections E.5 and D.2 Violations</u>. The Chief Compliance Officer may make a written determination that an Advisory Person who sold a *de minimis* position of a Reportable Security without obtaining prior approval did not violate Section E.5 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Safe Harbor from Section E.6 Violations</u>. The Chief Compliance Officer may make a written determination that an Advisory Person who opened a Reportable Account without reporting it on the same day as the account's inception or obtaining prior approval did not violate Section E.6 of the Code if such person had not yet made any transactions in the applicable Reportable Account.

&nbsp;&nbsp;&nbsp;&nbsp;**J.**  **<u>Administration of the Code</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Administration of the Code</u>. The Chief Compliance Officer will administer the Code, using reasonable diligence and instituting procedures reasonably necessary to prevent Code violations. Among other things, the Chief Compliance Officer will review reports submitted by Advisory Persons against pre-clearance

requests, transaction confirmations and account statements on a quarterly basis, and look for unusual or very large trades, which may indicate insider trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Recordkeeping</u>. The Chief Compliance Officer will maintain a record of all Code violations, and of any action taken as a result of the violation. The record of violations will be maintained for five years in an easily accessible place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>List of Advisory Persons</u>. The Chief Compliance Officer will prepare a list of the Advisory Persons, update the list as necessary, and maintain former lists.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Notice of Amendments to the Code</u>. The Chief Compliance Officer will provide you with all Code amendments, and you will acknowledge receipt of all amendments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Exceptions and Exemptions</u>. The Chief Compliance Officer may grant an exception to or exemption from this Code to any person, transaction or series of transactions, provided that the exception or exemption is not contrary to the mandatory requirements of the 1940 Act or the Advisers Act. Exceptions or exemptions must be in writing and specify the Code section(s) from which the person, transaction or series of transactions is excepted or exempted, the reasons for the exception or exemption and any conditions related to the exception or exemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Annual Report for the Trust, Ariel Investments, Ariel Alternatives and Project Black ManCo</u>. At least once a year, the Chief Compliance Officer will furnish to the Trust's Board of Trustees, Ariel Investments' Board of Directors, and Ariel Alternatives Board of Managers, and the respective Boards will consider, a written report that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Considers the Code's adequacy and the effectiveness of its implementation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Describes any issues arising under the Code since the last annual report that are relevant to the respective Boards including, but
not limited to, information about material violations of the Code and sanctions imposed in response to the material violations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· For the Trust and Ariel Investments, certifies that the Trust, Ariel Investments and the Distributor have adopted procedures reasonably
necessary to prevent violations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· For Ariel Alternatives and Project Black ManCo, certifies that Ariel Alternatives and Project Black ManCo have adopted procedures
reasonably necessary to prevent violations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Changes to the Code</u>. The Trust's Board of Trustees (including a majority of the Disinterested Trustees voting separately) will consider and determine whether to approve any material change to this Code at its next regular Board meeting after such change, and in no event more than six (6) months thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Maintaining Copies of Versions of the Code</u>. A copy of each version of the Code will be maintained for five (5) years in an easily accessible place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Disclosure</u>. The Code will be described in the applicable Ariel entity's Form ADV, Part 2A, and a copy of the Code will be provided to any Client or prospective Client upon request.

**EXHIBIT A**

**INSIDER TRADING POLICY AND PROCEDURES**

**1. <u>Insider Trading Policy</u>**

As set forth in Code Section D.7, all directors, trustees, officers, board of manager members, advisory board members or employees of the Trust, Ariel Investments, Ariel Alternatives, Project Black ManCo and the Distributor are prohibited from trading in any security, either personally or on behalf of others, including Ariel Investments' Clients such as the Trust and Ariel Alternatives' and Project Black ManCo's Clients, on the basis of material nonpublic information or communicating material nonpublic information to others in violation of the law. This conduct is frequently referred to as "insider trading." Federal securities laws prohibit insider trading and such laws may extend to activities within and outside your duties at the Trust, Ariel Investments, Ariel Alternatives, Project Black ManCo, or the Distributor.

Ariel Investments, Ariel Alternatives, Project Black ManCo, and Distributor employees must notify the Chief Compliance Officer immediately if they have any reason to believe that a violation of this policy has occurred or is about to occur. Employee questions regarding this policy should be referred to the Chief Compliance Officer.

The term "insider trading" generally is used to refer to the use of material nonpublic information to trade in securities (whether or not one is an "insider") or to communication of material nonpublic information to others.

The law concerning insider trading is generally understood to prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;· Trading by an insider, while in possession of material, nonpublic information; or

&nbsp;&nbsp;&nbsp;&nbsp;· Trading by a non-insider, while in possession of material, nonpublic information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential or was misappropriated; or

&nbsp;&nbsp;&nbsp;&nbsp;· Communicating material nonpublic information to others.

**Who is an Insider?**

The concept of "insider" is broad, and includes a company's officers, directors, trustees, and employees. Each director, trustee, officer, manager, or employee of the Trust, Ariel Investments, Ariel Alternatives, Project Black ManCo and the Distributor is considered an insider of his or her respective company or companies.

A person can be a "temporary insider" if he enters into a special confidential relationship in the conduct of a company's affairs and as a result is given access to information solely for the company's purposes. A temporary insider can include, among others, a company's attorneys, accountants, consultants, bank lending officers, and the employees of such organizations. Additionally, Ariel Investments, Ariel Alternatives, Project Black ManCo or the Distributor may become a temporary insider of a company they advise or for which they perform other services. To be an insider, the company must expect the outsider to keep the disclosed nonpublic

information confidential, and the company's relationship with an insider must at least imply such a duty.

**What is Material Information?**

Trading on inside information is not a basis for liability unless the information is material. "Material Information" generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company's securities.

Information that should be considered as material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.

Material Information also may relate to the market for a company's securities. Information about a significant order to purchase or sell securities may, in some contexts, be deemed material. Similarly, prepublication information regarding reports in the financial press also may be deemed material. Moreover, advance reports of securities to be bought or sold by a large, influential institutional investor, such as the Trust, may be deemed material to an investment in those portfolio securities.

Advance knowledge of important proposed government regulation, for example, could also be deemed material information regarding companies in regulated industries.

**What is Nonpublic Information?**

Information is nonpublic until it has been broadly distributed to the public marketplace. For example, information is public after it has become available to the general public through a public filing with the Securities and Exchange Commission or some other governmental agency, the Dow Jones "tape" or *The Wall Street Journal* or some other publication of general circulation or the internet, and after sufficient time has passed so that the information has been widely distributed.

**Penalties for Insider Trading**.

Civil and criminal penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in such unlawful conduct and their employers. A person can be subject to some or all of the penalties below ***even if he or she does not personally benefit from the violation***. Penalties include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Civil injunctions;

· Treble damages;

· Disgorgement of profits;

· Jail sentences;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Civil fines for the person who committed the violation of up to three times the profit gained, or loss avoided, whether or not the
person actually benefited;

· Civil fines for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit
gained or loss avoided; and

· Criminal fines of up to $5,000,000 for individuals or $25,000,000 for non-natural persons.

In addition, employee violations of this policy can be expected to result in serious sanctions by Ariel Investments, Ariel Alternatives, Project Black ManCo and/or the Distributor, including dismissal.

**2. <u>Identifying Inside Information</u>**

Before any Ariel entity employee covered by this policy executes any trade for the employee or on the behalf of others, including the Trust, in the securities of a company about which the employee may have potential inside information, the following questions should be considered:

&nbsp;&nbsp;&nbsp;&nbsp;· Is the information material? Is this information that an investor would consider important in making his or her investment decisions?
Is this information that would substantially affect the market price of the securities if generally disclosed?

&nbsp;&nbsp;&nbsp;&nbsp;· Is the information nonpublic? How was the information obtained? To whom has this information been provided? Has the information been
disseminated broadly to investors in the marketplace by being published in Reuters, *The Wall Street Journal* or other publications
of general circulation? Is it on file with the Securities and Exchange Commission?

If, after consideration of the above, it is found that the information is material and nonpublic, or if the person has questions as to whether the information is material and nonpublic, Ariel entity employees should take the following steps before any trade is executed:

&nbsp;&nbsp;&nbsp;&nbsp;· Report the matter immediately to the Chief Compliance Officer;

&nbsp;&nbsp;&nbsp;&nbsp;· The securities should not be purchased or sold by the person or on behalf of others, including a Client;

&nbsp;&nbsp;&nbsp;&nbsp;· The information should not be communicated inside or outside any Ariel entity, other than to the Chief
Compliance Officer; and

&nbsp;&nbsp;&nbsp;&nbsp;· After the issue has been reviewed, the Chief Compliance Officer will instruct the person as to whether to continue the prohibitions
against trading and communication, or allowing the trade and communication of the information.

Disinterested Trustees, Disinterested Directors and Outside Board Members are encouraged to discuss any questions regarding potential inside information relating to Ariel Investments, the Trust, Ariel Alternatives or Project Black ManCo with counsel for Ariel Investments, Ariel Alternatives, Project Black ManCo, the Trust or Independent Trustees.

**3. <u>Contacts with Public Companies</u>**

Contacts with public companies represent an important part of Ariel Investments', Ariel Alternatives', and Project Black ManCo's research efforts. Ariel Investments, Ariel Alternatives and Project Black ManCo may make investment decisions on the basis of the firm's conclusions formed through such contacts and analysis of publicly available information. Difficult legal issues arise, however, when, in the course of these contacts, an Ariel Investments, Ariel Alternatives or Project Black ManCo employee or other person subject to this policy becomes aware of material, nonpublic information. This could happen, for example, if a company's Chief Financial Officer prematurely discloses quarterly results to the analyst or an investor relations representative makes a selective disclosure of adverse news to a handful of investors. In such a situation, Ariel Investments, Ariel Alternatives and/or Project Black ManCo (as applicable) must make a judgment as to its further conduct. For the protection of the company and its employees, the Chief Compliance Officer should be contacted if an employee believes that Ariel Investments, Ariel Alternatives, Project Black ManCo or its employees have received material, nonpublic information.

**4. <u>Expert Networks</u>**

**Ariel Investments' policy** is not to utilize expert network firms in connection with its investment research. This policy is set forth in Section 8.8 of Ariel Investments' compliance manual (pertaining to portfolio management). If an Ariel Investments' research team employee would like to utilize such a firm, the procedures therein require, among other things, prior written approval by the team's Director of Research and the Chief Compliance Officer.

**Ariel Alternatives' and Project Black ManCo's policy** allows for the utilization of expert network firms in connection with its investment research so long as such utilization is approved, in advance, by the Chief Compliance Officer, and controls imposed by the Chief Compliance Officer are followed by the business.

**5. <u>Tender Offers</u>**

Tender offers represent a particular concern in the law of insider trading for two reasons. First, tender offer activity often produces extraordinary gyrations in the price of the target company's securities. Trading during this time period is more likely to attract regulatory attention (and produces a disproportionate percentage of insider trading cases). Second, the Securities and Exchange Commission has adopted a rule which expressly forbids trading and "tipping" while in possession of material, nonpublic information regarding a tender offer received from the tender offeror, the target company or anyone acting on behalf of either. Persons subject to this policy should exercise particular caution any time they become aware of nonpublic information relating to a tender offer.

**6. <u>Service on Company and Non-Profit Boards of Directors and Other Outside Business Activities</u>**

Ariel Investments does not buy for its clients securities of privately held companies or securities issued by a public company for which an Ariel Investments employee serves as a director. Ariel Alternatives and Project Black ManCo do not buy for its clients

securities issued by a public company for which an Ariel Alternatives or Project Black ManCo employee serves as a director. That said, employees serving on company or non-profit boards of directors may receive material, nonpublic inside information about other public companies. Additionally, employees engaged in other outside business activities may also receive such information. If an employee believes they have received material, nonpublic information about a public company, they should contact the Chief Compliance Officer in accordance with the procedures set forth in Section 2 "Identifying Inside Information" above.

**7. <u>Prior Employment Arrangements</u>**

A new employee's prior employment may raise concerns specific to the employee possessing material, nonpublic information regarding a public company. New employees possessing such information should meet with the Chief Compliance Officer who will develop information barriers in consultation with the employee and the employee's supervisor.

**EXHIBIT B**

**SUPPLEMENTAL PROCEDURES FOR DISCRETIONARY ACCOUNTS**

The following procedures govern the Code's requirements for Discretionary Accounts.

1. <u>Accounts qualifying as Discretionary</u>. To qualify as a Discretionary Account, you and the trustee, broker or adviser ("third party manager") for the account will agree that you or your Immediate Family Member or Domestic Partner will not have any direct or indirect influence or control over the account. You or your Immediate Family Member or Domestic Partner may, however: (a) inform the third party manager of general investment objectives, such as a need for income, the degree of risk tolerance, and general mix and asset allocation guidelines; and (b) receive confirmation statements or monthly statements in regular course after transactions are effected. You or your Immediate Family Member or Domestic Partner may not either direct or suggest to the third party manager any purchases or sales of investments, or consult with the third party manager as to the particular allocation of investments to be made in the account.

2. <u>Prior Approval of these Accounts Required</u>. In order to be exempt from the provisions outlined in paragraph 3 below, you must obtain prior written approval of the Chief Compliance Officer before opening a Discretionary Account. You should discuss the proposed account with the Chief Compliance Officer, who will review the identity of the account holder; the identity of the trustee, broker or adviser having investment discretion; and the written terms of the arrangement.

3. <u>Code Exemptions for Approved Discretionary Accounts</u>. An approved Discretionary Account relieves you ONLY from the prohibitions of Section D (other than the prohibitions of D.7) and the reporting obligations imposed by Sections E.3, E.4 and E.5, and the reporting obligations imposed by Section E.2 relating only to Reportable Securities. You are still subject at all times to general insider trading restrictions as well as the high fiduciary standards expected from all Advisory Persons.

4. <u>Initial and Annual Certifications</u>. You will initially and annually certify, in substantially the following form:

The undersigned certifies that, as of this day and for the period since the last certification or the establishment of the Discretionary Account, you or your Immediate Family Member or Domestic Partner has had no direct or indirect influence or control over any particular transaction made or to be made in the account and the third party manager has made all investment decisions without informing you or your Immediate Family Member or Domestic Partner as to the transaction until after the transaction has been effected.

5. <u>Termination of Arrangements</u>. If at any time you or your Immediate Family Member or Domestic Partner determines to exercise any influence or control over the account, including consulting with respect to any particular transaction, you must give prior notice to the Chief Compliance Officer. The account will then be subject to all provisions of the Code, and the exemptions in paragraph 3 of these procedures will be revoked.

6. <u>Chief Compliance Officer Discretion</u>. The Chief Compliance Officer has discretion to withhold approval of blind trust or discretionary accounts arrangements, or at any time to impose additional or different conditions on such accounts.

**EXHIBIT C**

CODE OF ETHICS CERTIFICATION FOR EMPLOYEES

I acknowledge that I have received and read a copy of the Code of Ethics, as amended December 31, 2022, for Ariel Investment Trust, Ariel Investments, LLC, Ariel Distributors, LLC, Ariel Alternatives, LLC and Project Black Management Company, LLC. I understand my responsibilities under the Code of Ethics and agree to comply with all of its terms and conditions. I further agree that my adherence to the Code of Ethics is a condition of employment with Ariel Investments, LLC, Ariel Alternatives, LLC, and/or Project Black Management Company, LLC, as applicable. I will retain a copy of this Code of Ethics for future reference.

I further certify that I have complied with the requirements of the Code of Ethics, as amended December 31, 2022, and I have disclosed or reported all personal securities transactions and accounts required to be disclosed or reported pursuant to such Code of Ethics.

CODE OF ETHICS CERTIFICATION FOR DISINTERESTED TRUSTEES, <br> DISINTERESTED DIRECTORS OR OUTSIDE BOARD MEMBERS

I acknowledge that I have received and read a copy of the Code of Ethics, as amended December 31, 2022. I understand my responsibilities under the Code of Ethics and agree to comply with all of its terms and conditions. I will retain a copy of this Code of Ethics for future reference.

I further certify that I have complied with the requirements of the Code of Ethics, as amended December 31, 2022, and I have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to such Code of Ethics.

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| ![](tm222526d1_coverimg01.jpg) | 1900 K Street, NW<br> Washington, DC 20006<br> +1 202 261 3300 Main<br> +1 202 261 3333 Fax<br> www.dechert.com<br>|

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January 17, 2023

<u>VIA EDGAR</u>

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

Re: <u>Schwab Strategic Trust Post-Effective Amendment No. 154 to Registration Statement on Form N-1A (File Nos. 333-160595 and 811-22311)</u> 

Ladies and Gentlemen:

Our client, Schwab Strategic Trust (the "Trust"), has enclosed, pursuant to Rule 485(a) under the Securities Act of 1933, as amended ("1933 Act"), Post-Effective Amendment ("PEA") No. 154 to the Trust's registration statement on Form N-1A, together with all Exhibits thereto ("Registration Statement"), under the 1933 Act and Amendment No. 156 to the Registration Statement under the Investment Company Act of 1940, as amended. This filing is made for the purpose of adding Schwab High Yield Bond ETF as an additional series of the Trust.

The Trust undertakes to make an additional filing of the Registration Statement in order to respond to any comments you might have with respect to this filing, add any additional non-material disclosure that may be required in order to complete the Registration Statement and file the appropriate exhibits.

No fee is required in connection with this filing. Please contact me at (202) 261-3464 with any questions or comments.

Sincerely,

<u>/s/ Adam T. Teufel</u>

Adam T. Teufel