Subject: My Mutual Funds Performance Summary for September 2006 (RegIRA 4134-7376)

From: Schwab Alerts <[email-masked]>
Date: Fri, 20 Oct 2006 15:24:30 -0600

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September 2006

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Performance Review and Perspectives

September marked another good month for both equity and fixed income mutual funds as global markets extended their rallies. Here are some highlights:

Large Caps lead
With hopes that the U.S. economy will stage a soft landing and with oil prices dipping below $60 per barrel for the first time since March, all of the diversified domestic equity categories achieved positive results. Large-cap funds outperformed their small-cap peers, with Large-Cap Growth (2.55%) posting the strongest returns. Communications (3.63%) and Financials (3.34%) led the specialty categories but Precious Metals (-10.24%) was down as plunging energy costs reduced its appeal as an inflation hedge.

Fixed income funds rose as the Fed held rates steady and economic data pointed to a moderate slowdown in overall economic growth. Funds holding longer maturities showed the strongest advances with Long Government up 1.61%.

Internationally, results were mixed. Pacific/Asia ex-Japan Stock gained 2.83% while Japan Stock fell 1.42% due in part to continued weakness in the yen, concerns of slowing growth and cautiousness towards the incoming Prime Minister.

Continued caution for the long-term (as of 10/13/06)
Although stocks are hovering near cyclical highs, we are not convinced that the "goldilocks" economy that the market seems to be currently pricing is likely, due to the various risks. Further equity market strength is possible given the current momentum and easing energy prices, but we believe waning forward-looking earnings momentum may become a more pronounced concern in the quarters to come. The possibility of the Federal Reserve Board resuming its tightening campaign with still-elevated inflation remains. And with a very weak housing market, we see an increased potential for a hard landing in the U.S. economy. Consequently, the currently supportive valuation and earnings growth environment may be vulnerable. As a result, we continue to recommend investors maintain a slight underweight position in both domestic and international equities while overweighting cash.

For Schwab's current market perspectives and the view over the next six to 12 months, please visit the "Market Insight" section of schwab.com.

Prepared by the Schwab Center for Investment Research®

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Data as of 09/30/2006

Actual Return

Average Annual Total Return

Symbol - Fund Name
(Inception Date)

1 Mo

1 Yr

3 Yr

5 Yr

10 Yr

Since Inception

Morningstar Category: Large Blend

Category Average

0.64

7.55

11.20

6.37

7.51

N/A

Standard&Poor's 500 TR

2.58

10.79

12.30

6.97

8.59

11.55

FMAGX - Fidelity Magellan
(05/02/1963)

1.12

6.18

8.98

4.34

7.17

18.31

Morningstar Category: Large Growth

Category Average

0.86

2.89

8.12

4.23

5.51

N/A

Standard&Poor's 500 TR

2.58

10.79

12.30

6.97

8.59

11.55

FDGRX - Fidelity Growth Company
(01/17/1983)

1.94

7.17

12.08

8.21

9.01

14.01

Morningstar Category: Specialty-Health

Category Average

-1.88

1.22

8.95

4.37

9.31

N/A

Standard&Poor's 500 TR

2.58

10.79

12.30

6.97

8.59

11.55

FBIOX - Fidelity Select Biotechnology
(12/16/1985)

0.65

1.84

7.27

2.03

9.74

12.87

Morningstar Category: Small Value

Category Average

-0.70

6.57

16.20

15.44

12.03

N/A

Russell 2000

0.83

9.92

15.48

13.78

9.06

13.12

TMVSX - Tamarack Micro Cap Value S
(09/10/1987)

1.09

12.97

19.46

17.41

14.54

11.20

Morningstar Category: Foreign Large Blend

Category Average

-1.91

16.35

20.21

12.42

6.70

N/A

MSCI EAFE NDTR_D

0.15

19.16

22.32

14.26

6.82

10.63

UMBWX - UMB Scout WorldWide
(09/14/1993)

-1.62

13.17

20.93

13.80

10.81

10.95

Performance data not available for the following funds:
SHSTX

Total returns are adjusted for sales charges and assume reinvestment of dividends and capital gains.

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S&P500® Index: Includes common stocks of the largest publicly traded U.S. companies. (S&P is a registered trademark of McGraw-Hill Co., Inc.)

Russell 2000® Index: The Russell 2000 Index is designed to measure the performance of the small-cap market. It consists of the 2,000 smallest companies in the Russell 3000® Index, which measures the performance of the 3,000 largest U.S. companies based on total market capitalization.

Morgan Stanley Capital International EAFE® Index: An index of foreign stock prices of the Europe, Australasia, and Far East exchanges. Total return is calculated in US dollars.

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Investment risks: Note that small cap funds, healthcare funds, and technology funds may be subject to greater volatility than those in other asset categories with a greater degree of diversification. International investments are subject to additional risks such as currency fluctuation, political instability and the potential for illiquid markets. Some funds may have achieved high returns in the past, which may have been a result of investments in IPOs and the funds may not be able to maintain such returns.

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