Definitive Materials Filed by Investment Companies. (497)
April 03 2020 - 12:24PM
Edgar (US Regulatory)
SCHWAB STRATEGIC TRUST
(the Trust)
Schwab® U.S. REIT ETF
(the fund)
Supplement dated April 3, 2020 to the fund’s currently effective Summary Prospectus, Statutory
Prospectus and Statement of Additional Information (SAI)
This supplement provides
new and additional information beyond that contained
in the Summary Prospectus, Statutory Prospectus and SAI and should be read in
conjunction with the Summary Prospectus, Statutory Prospectus and SAI.
At a meeting held on March 20, 2020, the Board of Trustees of the Trust approved a change to the fund’s index from the Dow Jones U.S. Select REIT Index to the
Dow Jones Equity All REIT Capped Index as well as changes to (1) the fund’s investment objective, which is non-fundamental, and (2) the fund’s investment strategy. These changes, which are
summarized below, will be effective on or about June 22, 2020. Please note that no shareholder action is required. The index is new and therefore does not have historical performance.
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1.
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Summary Prospectus and Statutory Prospectus – Under the “Investment Objective” section:
The paragraph is deleted and replaced in its entirety with the following:
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The fund’s goal is to track as closely as
possible, before fees and expenses, the total return of an index composed of U.S. real estate investment trusts classified as equities.
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2.
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Statutory Prospectus – Under “Investment Objective” in the “Fund Details – Investment
Objective and More About Principal Risks” section: The paragraph is deleted and replaced in its entirety with the following:
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The fund’s goal is to track as closely as possible, before fees and expenses, the total return of an index composed of U.S. real estate investment
trusts classified as equities. The fund’s investment objective is not fundamental and therefore may be changed by the fund’s Board of Trustees without shareholder approval.
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3.
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Summary Prospectus and Statutory Prospectus – Under the “Principal Investment Strategies”
section: The first paragraph and its associated footnote are deleted and replaced in their entirety with the following:
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To pursue its goal, the fund generally invests in securities that are included in the Dow Jones Equity All REIT Capped Index†. The index is float-adjusted market capitalization weighted index that is subject to capping constraints at each quarterly
rebalancing. The index generally includes all publicly traded equity real estate investment trusts (REITs) with a minimum float-adjusted market capitalization of $200 million and a three-month median daily value traded of at least
$5 million. A security becomes ineligible if its float-adjusted market capitalization falls below $100 million for two consecutive quarters. The index excludes mortgage REITs, defined as REITs that lend money directly to real estate owners
and/or operators or indirectly through the purchase of mortgages or mortgage-backed securities, and hybrid REITs, defined as REITs that participate both in equity and mortgage investing.
The index uses a capping methodology to limit the weight of the securities of any single issuer (as determined by the index provider) to a maximum of 10%
of the index. Additionally, the capping methodology limits the sum of the weights of the securities of all issuers that individually constitute more than 4.5% of the weight of the index to a maximum of 22.5% of the weight of the index in the
aggregate. In order to implement this capping methodology, the index constrains at quarterly rebalance: (i) the weight of any single issuer to a maximum of 10%, and (ii) the aggregate weight of all issuers that individually exceed 4.50% of
the index weight to a maximum of 22.50%. Between scheduled quarterly index reviews, the index is reviewed daily to assess whether the sum of all individual constituents with more than 5% of the weight of the index exceeds more than 25% of the weight
of the index in the aggregate. When daily capping is necessary, the changes are announced after the close of the business day on which the daily weight caps are exceeded, with the reference date after the close of that same business day, and changes
are effective after the close of the next trading day.
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†
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Index ownership — Dow Jones® is a registered trademark of
Dow Jones Trademark Holdings LLC (Dow Jones). The Dow Jones Equity All REIT Capped Index (the Index) is a product of S&P Dow Jones Indices LLC, and the trademark and Index have been licensed for use by Charles Schwab Investment Management, Inc.
The Schwab U.S. REIT ETF is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, or any of their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, nor any of their respective affiliates
make any representation regarding the advisability of investing in such product.
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1
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4.
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Statutory Prospectus – Under “Disclaimers” in the “Investing in the Fund – Additional
Information” section: The first 2 sentences of the first paragraph are deleted and replaced in their entirety with the following:
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“Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC. The Dow
Jones Equity All REIT Capped Index (the Index) is a product of S&P Dow Jones Indices LLC, and the trademark and Index have been licensed for use by CSIM.
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a.
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Under “Investment Objective” in the “Investment Objective, Strategies, Risks and Limitations”
section: The paragraph is deleted and replaced in its entirety with the following:
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The Schwab U.S. REIT
ETF’s goal is to track as closely as possible, before fees and expenses, the total return of an index composed of U.S. real estate investment trusts classified as equities. 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. There is no guarantee the fund will achieve its investment objectives.
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b.
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Under “Description of Benchmark Index” in the “Investment Objective, Strategies, Risks and
Limitations” section: The paragraph is deleted and replaced in its entirety with the following:
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The Schwab
U.S. REIT ETF’s index, the Dow Jones Equity All REIT Capped Index, is a float-adjusted market capitalization weighted index that is subject to capping constraints at each quarterly rebalancing. The index generally includes all publicly
traded equity real estate investment trusts (REITs) with a minimum float-adjusted market capitalization of $200 million and a three-month median daily value traded of at least $5 million. A security becomes ineligible if its float-adjusted
market capitalization falls below $100 million for two consecutive quarters. The index excludes mortgage REITs, defined as REITs that lend money directly to real estate owners and/or operators or indirectly through the purchase of mortgages or
mortgage-backed securities, and hybrid REITs, defined as REITs that participate both in equity and mortgage investing.
The index uses a capping
methodology to limit the weight of the securities of any single issuer (as determined by the index provider) to a maximum of 10% of the index. Additionally, the capping methodology limits the sum of the weights of the securities of all issuers that
individually constitute more than 4.5% of the weight of the index to a maximum of 22.5% of the weight of the index in the aggregate. In order to implement this capping methodology, the index constrains at quarterly rebalance: (i) the weight of
any single issuer to a maximum of 10%, and (ii) the aggregate weight of all issuers that individually exceed 4.50% of the index weight to a maximum of 22.50%. Between scheduled quarterly index reviews, the index is reviewed daily to assess
whether the sum of all individual constituents with more than 5% of the weight of the index exceeds more than 25% of the weight of the index in the aggregate. When daily capping is necessary, the changes are announced after the close of the business
day on which the daily weight caps are exceeded, with the reference date after the close of that same business day, and changes are effective after the close of the next trading day.
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c.
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Under “Index Providers and Disclaimers” in the “Investment Objective, Strategies, Risks and
Limitations” section: The first 2 sentences of the second paragraph are deleted and replaced in their entirety with the following:
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“Dow Jones®” is a registered trademark of Dow Jones Trademark Holdings LLC (Dow
Jones). The Dow Jones Equity All REIT Capped Index (the Index) is a product of S&P Dow Jones Indices LLC, and the trademark and Index have been licensed for use by CSIM.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
REG110667-00 (04/20)
00244015
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