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

From: Schwab Alerts <[email-masked]>
Date: Mon, 18 Sep 2006 18:10:33 -0600

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August 2006

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Performance Review and Perspectives

Equity and fixed income mutual funds rallied in August supported by European equity strength, declining oil prices and hope that the U.S. economy may avoid a recession. Here are some highlights:

Solid results across categories
All diversified domestic equity categories gained in August. Large-Cap Growth (2.40%) advanced followed by Mid-Cap Value (2.22%). Increases in Japanese business and consumer spending, microchip sales, gold and silver prices, and commercial real estate growth pushed gains in Technology (6.25%), Precious Metals (4.24%), and Real Estate (3.50%).

Fixed income funds advanced on hopes that inflation may be contained and the Fed's rate-hike campaign may be over. Long Government (2.93%) and Long-Term Bond (2.27%) posted the strongest returns.

The majority of international fund categories saw gains of more than 2%, mainly attributed to strength in European equities, which have benefited from a healthy financials sector.

Continued caution for the long-term (as of 9/8/06)
Despite the recent strength in the stock market, we caution investors from becoming too complacent as we are not yet convinced that the market has begun a new sustainable upward move. Although further market strength is possible given still-bearish short-term sentiment (a contrarian indicator), we believe waning forward-looking earnings momentum may continue to weigh on stocks. The pause in the Federal Reserve Board's tightening cycle will likely be less of a positive influence to the market longer-term given the potential for a weaker economic outcome. Uncertainties surrounding inflation and the unwinding of global liquidity, thanks to manifold central bank tightenings, may keep the volatility (risk) in equities on the high side. Add the possibility of still more rate hikes by the Fed and a very weak housing market and 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.

Because the monetary and economic headwinds remain intense, we continue to recommend investors maintain slightly underweight positions 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 08/31/2006

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

0.48

6.27

9.92

3.98

7.81

N/A

Standard&Poor's 500 TR

2.38

8.88

10.95

4.65

8.91

11.50

FMAGX - Fidelity Magellan
(05/02/1963)

2.40

5.75

8.04

2.37

7.47

18.32

Morningstar Category: Large Growth

Category Average

0.68

1.39

6.50

1.43

5.90

N/A

Standard&Poor's 500 TR

2.38

8.88

10.95

4.65

8.91

11.50

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

1.50

8.26

11.05

3.81

9.52

13.97

Morningstar Category: Specialty-Health

Category Average

0.34

1.51

9.01

3.23

10.01

N/A

Standard&Poor's 500 TR

2.38

8.88

10.95

4.65

8.91

11.50

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

0.77

0.70

6.09

-0.82

10.29

12.88

Morningstar Category: Small Value

Category Average

0.47

5.96

15.37

12.51

12.29

N/A

Russell 2000

2.96

9.36

14.45

10.35

9.39

13.12

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

2.66

11.91

19.00

15.10

14.55

11.19

Morningstar Category: Foreign Large Blend

Category Average

0.66

20.71

21.00

9.92

6.87

N/A

MSCI EAFE NDTR_D

2.75

24.28

23.50

11.82

7.08

10.66

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

0.56

17.43

21.02

11.69

10.91

10.99

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.

Indices are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.

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.

The monthly Performance Review was compiled from sources believed to be reliable; however, Charles Schwab & Co., Inc. makes no representations or guarantees that the information is accurate, complete or timely. Additionally, Schwab makes no warranties to you regarding any results from using the information. Charles Schwab & Co., Inc. member NASD/SIPC & certain regional exchanges. The Schwab Center for Investment Research ("SCIR") is a part of Charles Schwab & Co., Inc. The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. Schwab does not assess the suitability or the potential value of any particular investment. The Charles Schwab Corporation and its officers, directors, employees, consultants and/or members of their families may have a position in, and may from time to time, purchase or sell any of the mentioned or related securities including derivatives in such securities. Additionally, Schwab (or persons related thereto) or consultants may perform or solicit investment banking or other business from any company mentioned in this report. ©2006 Charles Schwab & Co., Inc.

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