Schwab Independent Investing - Charles Schwab

Schwab Independent Investing | Signature™ SCHWAB QUARTERLY PORTFOLIO PROFILE™

Prepared on February 28, 2006 for Dana JonesData as of December 31, 2005

Important SER rating details and disclosures are available at the back of this report.

Please refer to the back of this report for important information.

©2006 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0705-8265)

Dana JonesSpecially Prepared for: Dana JonesFor questions call 1-800-435-9050

Dana Jones

123 Main Street

Anytown

NY 12345

Your Portfolio includes the following Accounts

Account # Account Title as of 12/31/05Net Portfolio Value

1111-1111 Dana Jones $31,936

3333-3333 Dana Jones $112,675

6666-6666 Dana Jones $138,946

7777-7777 Dana Jones $52,243

Total Portfolio Value $335,800

Your Schwab Quarterly Portfolio Profile™ featuresinformation that provides insight into your portfolio’sperformance and identifies areas where you may wish totake action. The QPP helps you:

• Compare your portfolio’s asset allocation with a targetmodel

• Pinpoint sectors and individual equities where youmight be over-concentrated

• View Schwab Equity Ratings® for the stocks in yourportfolio

• Identify areas that may require immediate action

As always, this report is a great first step. If you’d like helpinterpreting your report or want to discuss portfolio issuesthat may require action, call us.

If you wish to modify your subscription, you can access it atwww.schwab.com/QPP

Some of your accounts may not be included in this report,such as Managed Accounts.

Table of Contents (Click on the blue links below andyou will be taken to the corresponding QPP page.)

Portfolio Summary-Executive Summary 2 . . . . . . . . . . . . . . . . . . . . . . .

Portfolio Summary-Asset Allocation 3 . . . . . . . . . . . . . . . . . . . . . . . . . .

Portfolio Summary-Sector Diversification 4 . . . . . . . . . . . . . . . . . . . . . .

Portfolio Summary-Equity Concentration 5 . . . . . . . . . . . . . . . . . . . . . .

Portfolio Summary-Schwab Equity Ratings® and Morningstar Ratings6

Equity Performance Profile 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mutual Fund Performance Profile 10 . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed Income Performance Summary 13 . . . . . . . . . . . . . . . . . . . . . . . .

Fixed Income Performance Profile 14 . . . . . . . . . . . . . . . . . . . . . . . . . . .

Account Summary 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Important Information 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page 1 of 26

Schwab Independent Investing | Signature™ PORTFOLIO SUMMARY


¹Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies participating in the Mutual Fund OneSource® services.²Schwab’s short-term redemption fee will be charged on redemptions of funds bought through Schwab’s Mutual Fund OneSource® service with no transaction fees. For each of these tradeorders placed through a broker, a $25 service charge applies.³The Schwab Center for Investment Research is a division of Charles Schwab & Co. Inc. †See Asset Allocation page for description of Cash.

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by callingSchwab at 1-800-435-9050. Please read the prospectus carefully before investing.

Please refer to the back of this report for important information. Important SER rating details and disclosures are available at the back of this report.


Executive Summary

This summary page provides an overview of yourportfolio’s current asset allocation and highlights areasof your portfolio that may require action.

Looking for new ideas?

Use the weekly Schwab Stock Lists® to generatenew stock ideas to rebalance your portfolio. Based onSchwab Equity Ratings®, these lists reflect our toprated stocks for a particular sector, size or style thatmight be right for your portfolio.www.schwab.com/schwabstocklists

With the Signature Select List™¹, you can quicklynarrow your search to an exclusive list of no-load,no-transaction-fee² funds that have been handpickedonly for our Signature clients by the experts at theSchwab Center for Investment Research³.www.schwab.com/signatureselectlist

If you’re looking for a one-stop solution to meet yourasset allocation needs, see how Schwab Portfolioscan help you create a well diversified portfolio.www.schwab.com/schwabportfolios

Current Allocation

Large Cap Equity 49.9%

Small Cap Equity 19.0%

International Equity 3.7%

Fixed Income 16.9%

Cash† 8.0%

Other 2.5%

Portfolio Alerts

We have identified the following potential issues within your portfolio that could impact the likelihood ofachieving your investment goals and objectives. If you would like to discuss these alerts, please call yourFinancial Consultant or call 1-800-435-9050.

! Asset Allocation Your Portfolio is underweight in one or more asset classes, consider rebalancing and increasingholdings in the highlighted asset class.

! Equity Quality One or more of this portfolio’s individual equities is rated D or F.

Page 2 of 26



† The category ‘Cash’ reflects the aggregate of your money market mutual funds, money market sweep funds, certificates of deposit, commercial paper, and treasury bills. The Cash

values shown in the Quarterly Portfolio Profile report are exclusive of any holdings associated with the bank deposit feature of some Schwab accounts. This may underreport the amount

of cash reflected in tables and graphs found in this report. Non-deposit investment products are held by Charles Schwab & Co., Inc., member SIPC, and its affiliates and are not FDIC

insured, may lose value, and are not bank guaranteed. See your account statement, or representative for more details.

‡ Portfolio analysis excludes short positions, margin balances, options, warrants, rights and futures.



Asset Allocation

This page highlights the differences between your

portfolio’s current asset allocation and the Schwab target

asset allocation model you have chosen. The target asset

allocation is a general guideline. If certain asset classes in

your portfolio differ from the target allocation by 5% or

more, you may want to consider rebalancing to bring your

portfolio more in line with the target allocation.

You may want to over or underweight certain styles in your

portfolio at various times. For Schwab’s latest viewpoint,

see Schwab’s Market Perspective.

Current Allocation




Fixed Income 16.9%

Cash† 8.0%

Other 2.5%

Target Allocation: Moderately Aggressive




Fixed Income 15.0%

Cash 5.0%

Other 0.0%

Current

Asset Class Value ($) (%)

Target

Value ($) (%)

Rebalancing Guidelines

Value ($) (%)

! !

Large Cap Equity $263,260 49.9% $237,146 45.0% ($26,114) -4.9%

Small Cap Equity 100,187 19.0% 79,049 15.0% (21,138) -4.0%

International Equity 19,463 3.7% 105,398 20.0% 85,935 16.3%

Fixed Income 89,218 16.9% 79,049 15.0% (10,169) -1.9%

Cash† 41,917 8.0% 26,350 5.0% (15,567) -3.0%

Other 12,945 2.5% 0 0.0% (12,945) -2.5%

Total $526,990 ‡ 100% 100%

Portfolio Alerts

! International Equity

Your portfolio is underweight in International Equity.

Page 3 of 26



‡ Portfolio analysis excludes short positions, margin balances, options, warrants, rights and futures.*The Dow Jones Wilshire 5000 Index is a broad-market index of approximately 7,200 U.S. publicly traded equities frequently used as a proxy for the overall equity market. Indices are unmanaged, do not incur management fees, costs andexpenses and cannot be invested in directly. Data was last updated on 01/11/2006. The sector weightings are subject to change. Sectors are provided by Global Industry Classification Standard (GICS) by MSCI and S&P. Sectors may not beavailable for all securities.



Sector Diversification

This page helps you review your domestic portfolio’sdiversification across individual sectors. Economic eventswill often affect certain sectors more than others. If youspread your investments across many different sectors,your portfolio will be less impacted by a downturn in anyindividual sector.

The graph to the right shows the 10 sector components forthe domestic stock and mutual fund holdings in yourportfolio and compares it to the market overall, representedby the Dow Jones Wilshire 5000 Index*. The dark barsshow your domestic portfolio’s concentration in eachsector. The light bars indicate the percentage of the marketrepresented by each sector.

We recommend that your domestic portfolio’sconcentration in an individual sector not vary from that ofthe market by more than 20%.

Sector Diversification as a Percent of Portfolio

0%

5%

10%

15%

20%

25%

30%

10.0

14.8

2.8

22.1

13.8

5.1

25.2

1.7 0.8

3.7

12.6

8.6 8.8

22.0

12.710.8

15.6

3.2 2.6 3.1

ConsumerDiscretionary

ConsumerStaples Energy Financials Health Care Industrials

InformationTechnology Materials

TelecomServices Utilities

10.0% 14.8% 2.8% 22.1% 13.8% 5.1% 25.2% 1.7% 0.8% 3.7%

12.6% 8.6% 8.8% 22.0% 12.7% 10.8% 15.6% 3.2% 2.6% 3.1%

-2.6% 6.2% -6.0% 0.1% 1.1% -5.7% 9.6% -1.5% -1.8% 0.6%

Your Domestic Portfolio‡

Market (Dow JonesWilshire 5000*)

Difference

Page 4 of 26



Equity Concentration

This page shows your top five stock positions and the

percentage of your portfolio they represent. According to

studies conducted by the Schwab Center for Investment

Research†, if your largest individual stock holding accounts

for more than 20% of your portfolio, this will most likely

increase the volatility of your portfolio as a whole. You may

want to take a second look at these holdings to make sure

you are comfortable with the risk.

Equity Concentration as a Percent of Total Portfolio

5.5% 4.8%2.9% 2.8% 2.4%

Stock

Schwab Equity Ratingas of 12/30/05

Value ($)

% of Total Portfolio‡

BAC

BANK OF AMERICACORP

B

$28,754

5.5%

MOT

MOTOROLA INC

A

$25,435

4.8%

CSCO

CISCO SYSTEMS INC

B

$15,232

2.9%

EL

LAUDER ESTEE COINC CL A - CL A

D

$14,801

2.8%

PEP

PEPSICOINCORPORATED

B

$12,896

2.4%

40%

30%

20%

10%

0%

Very High

Moderately High

Relatively Low

Note: Your mutual funds may also hold the individual stocks you own. If so, your effective concentration in these stocks will be even greater.


† The Schwab Center for Investment Research is a Division of Charles Schwab & Co. Inc.


©2006 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0705-8265) Page 5 of 26






Schwab Equity Ratings®

This page gives you a snapshot of your equity holdings and

Schwab’s performance outlook for them over the next 12

months. Schwab’s outlook is that “A” rated stocks, on average,

will strongly outperform and “F” rated stocks, on average, will

strongly underperform the equities market over the next 12

months. If you hold “D” or “F” rated stocks, you may wish to

consider reevaluating whether your reasons for holding them are

still valid — especially if they represent a meaningful percentage

of your total portfolio. Some stocks you own may not be rated.

!

!

Schwab EquityRating

as of 12/30/05

Stocks Held with a Schwab Equity Rating

Number of Stocks 12/31/05 Value ($) (%)

A 2 $30,360 13%

B 10 87,592 38%

C 10 44,597 19%

D 5 40,491 17%

F 1 5,484 2%

Unrated 3 24,666 11%

Total 31 $233,190 ‡ 100%

A

B

C

D

F

Unrated

13%

38%

19%

17%

2%

11%

Portfolio Alerts

! Equity Quality

One or more of this portfolio’s individual equities is

rated D or F.

View Schwab Stock Lists for rebalancing ideas.

Morningstar Ratings

You can view the Morningstar ratings of each of your mutual

fund positions from 5 stars (highest) to 1 star (lowest). If

you have 1 or 2 star rated mutual funds that are not on our

Mutual Fund Select List, you may want to consider

reevaluating your reasons for holding these mutual funds.

MorningStarRating

as of 12/30/05

Funds Held with a Morningstar Rating

Number of Funds 12/31/05 Value ($) (%)

�� 4 $26,190 15%

�� 5 28,636 16%

�� 5 37,432 21%

�� 3 42,138 24%

� 0 0 0%

Unrated 4 41,463 24%

Total 21 $175,859 100%

5�

4�

3�

2�

1�

Unrated

15%

16%

21%

24%

0%

24%

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by callingSchwab at 1-800-435-9050. Please read the prospectus carefully before investing.

Page 6 of 26

Schwab Independent Investing | Signature™ EQUITY PERFORMANCE PROFILE


Ratings Performance Earnings

SectorTickerSymbol

(12/31/05)Value ($)

Schwab EquityRating

as of 12/30/05 S&P Opinion

Reuters AnalystConsensus

(# of analysts)

Previous QTR Return

Company Sector

Past 12 Months

Company Sector

PreviousQuarter

Earnings ($)

QuarterGrowth

vs 2004

Large Cap Equities (Fiscal Year)

AMGEN INCORPORATED (12/31) Health Care AMGN $3,984 C ��Outperform(35)

-1.0% 1.2% 22.9% 6.0% $0.77 327.8%

BANK OF AMERICA CORP (12/31) Financials BAC 28,754 B ��Outperform(27)

10.8% 7.1% 2.4% 3.8% 1.02 12.1%

CISCO SYSTEMS INC (07/31) Information Technology CSCO 15,232 B ��Outperform(39)

-4.5% 1.5% -11.4% 1.0% 0.20 -4.8%

COMCAST CORP NEW CL A (12/31) Consumer Discretionary CMCSA 2,350 C ��Outperform(29)

-11.8% 1.3% -22.1% -5.7% 0.10 --

CORNING INC (12/31) Information Technology GLW 3,866 B ��Outperform(14)

1.7% 1.5% 67.0% 1.0% 0.13 107.3%

DUKE ENERGY CORPORATION (12/31) Utilities DUK 3,674 C�

��Hold(22)

-4.8% -6.8% 13.1% 11.2% 0.96 128.6%

EQUITY RESIDENTIAL (12/31) Financials EQR 11,976 NC ��Hold(19)

4.5% 7.1% 13.4% 3.8% 0.04 -42.9%

GENERAL ELECTRIC COMPANY(12/31) Industrials GE 7,546 C ��

Outperform(23)4.8% 4.5% -1.4% 2.0% 0.44 15.8%

KROGER COMPANY (01/31) Consumer Staples KR 8,401 B ��Outperform(15)

-8.3% -0.2% 7.6% 1.7% 0.25 31.6%

LUCENT TECHNOLOGIES INC (09/30) Information Technology LU 866 B ��Hold(37)

-18.2% 1.5% -29.3% 1.0% 0.07 -69.6%

MOTOROLA INC (12/31) Information Technology MOT 25,435 A ��Outperform(37)

2.7% 1.5% 32.4% 1.0% 0.69 283.3%

! NORTH FORK BANCORP INC (12/31) Financials NFB 4,600 D ��Outperform(24)

8.3% 7.1% -2.0% 3.8% 0.50 7.1%

ORACLE CORPORATION (05/31) Information Technology ORCL 6,200 C ��Outperform(35)

-1.5% 1.5% -11.0% 1.0% 0.15 -6.3%

PEPSICO INCORPORATED (12/31) Consumer Staples PEP 12,896 B ��Outperform(18)

4.6% -0.2% 15.2% 1.7% 0.51 -35.4%

SUN MICROSYSTEMS INC (06/30) Information Technology SUNW 758 C ��Hold(24)

6.6% 1.5% -22.3% 1.0% (0.04) --

YAHOO INC (12/31) Information Technology YHOO 8,460 C ��Outperform(36)

15.8% 1.5% 4.0% 1.0% 0.17 --

YUM BRANDS INC (12/31) Consumer Discretionary YUM 9,722 C ��Hold(19)

-2.9% 1.3% 0.2% -5.7% 0.72 18.0%

Legend: ! One or more of your individual equities is rated D or F. O (Option) As of the quarter end, there was an open option position for this security. S (Short) As of the quarter end, there was a short position in this security.

* A significant event has been announced. Please check current news.





Ratings Performance Earnings

SectorTickerSymbol

(12/31/05)Value ($)

Schwab EquityRating

as of 12/30/05 S&P Opinion

Reuters AnalystConsensus

(# of analysts)

Previous QTR Return

Company Sector

Past 12 Months

Company Sector

PreviousQuarter

Earnings ($)

QuarterGrowth

vs 2004

Large Cap Equities (Fiscal Year)

Benchmark: S&P 500 Index 2.1% 4.9%

Small Cap Equities (Fiscal Year)

AVAYA INC (09/30) Information Technology AV $227 B ��Outperform(21)

3.6% 1.5% -38.0% 1.0% $0.36 71.4%

! BIOMET INCORPORATED (05/31) Health Care BMET 8,678 D ��Outperform(25)

5.4% 1.2% -15.1% 6.0% 0.41 13.9%

E-TRADE FINANCIAL CORP (12/31) Financials ET 12,320 B ��Outperform(12)

18.5% 7.1% 39.5% 3.8% 0.28 33.3%

FREESCALE SEMICOND CL B - CLASSB (12/31) Information Technology FSLB 1,651 B ��

Outperform(12)6.7% 1.5% 37.1% 1.0% 0.38 153.3%

! I FLOW CORP (12/31) Health Care IFLO 5,484 F --Buy(6)

6.6% 1.2% -19.8% 6.0% (0.02) 75.0%

JDS UNIPHASE CORPORATION (06/30) Information Technology JDSU 1,110 C ��Hold(16)

6.3% 1.5% -25.6% 1.0% (0.04) -100.0%

! LAUDER ESTEE CO INC CL A - CL A(06/30) Consumer Staples EL 14,801 D ��

Outperform(14)-2.7% -0.2% -26.0% 1.7% 0.28 -31.7%

LSI LOGIC CORP (12/31) Information Technology LSI 4,925 A ��Hold(14)

-18.8% 1.5% 46.0% 1.0% (0.19) 74.0%

OLIN CORP (12/31) Materials OLN 3,380 B ��Hold(5)

4.7% 8.7% -6.9% 2.3% 0.44 63.0%

! PIER ONE IMPORTS INC (02/29) Consumer Discretionary PIR 4,931 D ��Hold(21)

-21.8% 1.3% -54.4% -5.7% (0.08) -136.4%

POORE BROTHERS INC (12/31) Consumer Staples SNAK 10,900 NC --Buy(2)

-48.3% -0.2% -19.2% 1.7% (0.01) -120.0%

RITE AID CORPORATION (02/29) Consumer Staples RAD 793 C ��Hold(9)

-10.3% -0.2% -4.9% 1.7% (0.02) --

! SOUTHWEST GAS CORP COM (12/31) Utilities SWX 7,482 D --Hold(4)

-2.9% -6.8% 7.3% 11.2% (0.43) 6.5%

Benchmark: Russell 2000 Index 1.1% 4.6%






Equities Not Classified

SCHWAB TEN TRUST ST65R * - UNIT 2005 SER B SEMI ANNUAL REINVEST




Schwab Independent Investing | Signature™ MUTUAL FUND PERFORMANCE PROFILE


Morningstar Ratings Avg. Total Return as of Qtr. End12/31/05 Expense 3-Month Since 5 Year Growth

Symbol Value ($) Overall Historical Risk Ratio Return 1 Year 5 Year 10 Year Inception of $10,000Low High

Large Cap Mutual Funds (Inception)

! AIM FINANCIAL SERVICES F - UND INV CLASS (06/1986) FSFSX $6,023 �� 1.28% 9.3% 5.3% 2.3% 11.9% 14.0% $11,226

AIM GLOBAL HEALTH CARE - FUND INV CL (07/2005) GTHIX 15,368 -- NA -- 2.0% -- -- -- 6.8% --

AMERICAN CENTURY INCOME - & GROWTH FUND (12/1990) BIGRX 11,670 �� 0.68% 0.2% 4.8% 2.5% 9.8% 12.5% 11,336

AMERICAN CENTURY ULTRA - FUND INV (11/1981) TWCUX 4,310 �� 0.99% 4.2% 2.1% -1.4% 7.2% 13.2% 9,334

! C FIDELITY MAGELLAN FUND (05/1963) FMG3Z 30,591 �� 0.62% 4.0% 6.4% -0.7% 7.4% 18.6% 9,631

PARNASSUS EQUITY INCOME - FUND (09/1992) PRBLX 8,746 �� 1.04% 1.6% 2.6% 6.6% 9.9% 11.0% 13,746

RS GROWTH FUND (05/1992) RSGRX 3,332 �� 1.49% 2.0% 11.3% 0.7% 7.0% 11.9% 10,365

SCHWAB S&P 500 INDEX FUN - D - INVESTOR SHARES (05/1996) SWPIX 4,643 �� 0.37% 2.0% 4.7% 0.2% -- 8.3% 10,121

VANGUARD GROWTH & INCOME - FUND INVESTOR SHARES(12/1986) VQNPX 5,403 �� 0.37% 2.8% 5.8% 1.2% 9.7% 11.7% 10,620

Benchmark: S&P 500 Index 2.1% 4.9% 0.5% 9.1%

Average Total Market Return Average Total NAV Return

SinceAs Of Quarter EndSinceAs Of Quarter EndPrice ($)Inception10 Year5 Year1 YearInception10 Year5 Year1 YearPer Unit ValueSymbolLarge Cap Exchange Traded Funds (Inception)

ISHARES KLD SEL SOC FD (01/2005) KLD $53 -- -- -- 8.3% -- -- -- 8.2%

NASDAQ 100 SHARES - UNIT SER 1 (03/1999) QQQQ 40 1.5% -6.9% -- -3.2% 1.5% -6.8% -- -3.2%

Legend: ! One or more of your mutual funds has a Morningstar rating of 1 or 2 stars, and is not on the Mutual Fund Select List®. C Denotes a change in fund management during the 3 months ending December 31, 2005







Small Cap Mutual Funds (Inception)

BARON GROWTH FUND (12/1994) BGRFX $10,048 �� 1.31% 3.2% 5.7% 11.8% 15.0% 18.0% $17,428

FEDERATED MID CAP GROWTH - STRATEGIES FUND CL A(08/1984) FGSAX 5,817 �� 1.21% -3.3% 6.6% -0.5% 9.4% 12.5% 9,762

SCHWAB SMALL-CAP EQUITY - FUND INVESTOR SHARES(06/2003) SWSIX 7,640 -- NA 1.30% 3.4% 16.9% -- -- 27.8% --

Benchmark: Russell 2000 Index 1.1% 4.6% 8.2% 9.3%

International Mutual Funds (Inception)

FIDELITY DIVERSIFIED - INTERNATIONAL FUND (12/1991) FDIVX $11,060 �� 1.07% 5.2% 17.2% 9.5% 12.9% 11.8% $15,750

LAUDUS INTL MKTMSTRS - INVESTOR SHARES (10/1996) SWOIX 2,879 �� 1.65% 4.9% 19.3% 7.5% -- 11.3% 14,376

NB INTL FUND INV CLASS - NEUBERGER BERMAN (06/1994) NBISX 5,523 �� 1.40% 3.3% 24.0% 10.5% 11.3% 10.4% 16,497

Benchmark: MSCI EAFE Index 4.1% 13.5% 4.6% 5.8%

Taxable Bond Mutual Funds (Inception)

COLUMBIA STRATEGIC - INCOME FD CL A (04/1977) COS3Z $10,992 �� 1.09% -4.6% -3.5% 7.1% 5.9% 8.8% $14,091

VANGUARD GNMA FUND - INVESTOR SHARE (06/1980) VFIIX 2,202 �� 0.20% 1.1% 3.3% 5.5% 6.1% 8.7% 13,057

Benchmark: Lehman Aggregate Bonds Index 0.6% 2.4% 5.9% 6.2%

Other Mutual Funds (Inception)

PAX WORLD BALANCED FUND (11/1971) PAXWX $8,407 �� 0.95% 0.5% 5.4% 3.0% 9.5% -- $11,610








Other Mutual Funds (Inception)

VANGUARD CONVERTIBLE - SECURITIES FUND (06/1986) VCVSX $2,748 �� 0.68% 4.7% 6.6% 5.7% 9.3% 8.9% $13,206


Investment Value will fluctuate and shares when redeemed may be worth more or less than original cost. Performance data quoted is past performance and no guarantee offuture results. Current performance may be higher or lower. Please go to Schwab.com for more up-to-date month-end performance information.

Morningstar 3-, 5-, and 10-year ratings for AIM FINANCIAL SERVICES F - UND INV CLASS are 2,1,3. Ratings for AIM GLOBAL HEALTH CARE - FUND INV CL are --,--,--. Ratings for AMERICAN CENTURY INCOME - & GROWTH FUND are3,2,3. Ratings for AMERICAN CENTURY ULTRA - FUND INV are 3,4,3. Ratings for FIDELITY MAGELLAN FUND are 2,2,2. Ratings for PARNASSUS EQUITY INCOME - FUND are 1,5,5. Ratings for RS GROWTH FUND are 5,4,3. Ratings forSCHWAB S&P 500 INDEX FUN - D - INVESTOR SHARES are 3,3,--. Ratings for VANGUARD GROWTH & INCOME - FUND INVESTOR SHARES are 4,3,4. Ratings for BARON GROWTH FUND are 4,5,5. Ratings for FEDERATED MID CAPGROWTH - STRATEGIES FUND CL A are 3,3,3. Ratings for SCHWAB SMALL-CAP EQUITY - FUND INVESTOR SHARES are --,--,--. Ratings for FIDELITY DIVERSIFIED - INTERNATIONAL FUND are 4,5,5. Ratings for LAUDUS INTLMKTMSTRS - INVESTOR SHARES are 4,5,--. Ratings for NB INTL FUND INV CLASS - NEUBERGER BERMAN are 3,4,1. Ratings for COLUMBIA STRATEGIC - INCOME FD CL A are 3,3,3. Ratings for VANGUARD GNMA FUND - INVESTORSHARE are 4,4,5. Ratings for PAX WORLD BALANCED FUND are 3,3,4. Ratings for VANGUARD CONVERTIBLE - SECURITIES FUND are 4,4,3. Data and ratings provided by Morningstar. Morningstar proprietary ratings reflect historicalrisk-adjusted performance as of December 31, 2005. These ratings are subject to change every month. Morningstar ratings are calculated from the fund's 3-, 5-, and 10 year average annual returns in excess of the 90 day Treasury bill returnswith appropriate fee adjustments and a risk factor that reflects fund performance below 90-day T-bill returns. Domestic Stock, International Stock, and Bond funds were rated: the bottom 10% of funds in each category receive 1 star, 22.5%receive 2 stars, 35% receive 3 stars, 22.5% receive 4 stars, and the top 10% receive 5 stars.



Schwab Independent Investing | Signature™ FIXED INCOME PERFORMANCE SUMMARY




Summary 12/31/05Value ($)

Treasury Securities $15,870 21%

Municipal Securities 0 0%

Agency/MortgageSecurities 0 0%

Corporate Securities 39,076 51%

Preferred Securities 21,079 28%

Other Fixed Income 0 0%

Total $76,025 100%

Credit Quality 12/31/05Value ($)

Govt/AAA $15,870 29%

AA 19,634 36%

A 0 0%

BBB 0 0%

Non-Invest Grade 19,442 35%

Not Rated 0 0%

Total $54,946 100%

Maturity 12/31/05Value ($)

Reserves(0-1 year) $10,162 18%

Short Term(1-5 years) 0 0%

Intermediate(5-10 years) 28,914 53%

Long Term(10+ years) 15,870 29%

Total $54,946 100%

Cash Flow Illustration

0

100

200

300

400

$500

Jan 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Interest $363 $444 $363 -- -- -- $363 $444 $363 -- -- --

Principal -- -- -- -- -- -- $10,000 -- -- -- -- --

MonthlyTotal $363 $444 $363 -- -- -- $10,363 $444 $363 -- -- --

Maturity Schedule

0

5,000

10,000

15,000

$20,000

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34

For pie chart definitions, please consult the User Guide.

Cash Flow Illustration

The cash flow represents your expected monthly interest payments and return of principal for the next 12 months. Additional redemption features may apply to the securities included.Mortgage backed securities are not included in this illustration.

Maturity Schedule

This schedule illustrates the sum of the market values of your fixed income holdings that mature in the same year. Years until maturity are calculated from the latest quarter end date.

Mortgage backed securities are not included in this illustration due to the possibility that they may have a shorter than stated maturity due to mortgage prepayments.

List of Fixed Income Holdings used on this page

Please note that mortgage backed securities have not been included in the Cash Flow Illustration or the Maturity Schedule, with the exception of Government-based mortgage backedsecurities. Preferred securities are issued with no stated maturity dates or perpetual maturities are not included in this illustration.

Treasury Securities

U S TREAS BOND 8.75%8/20 - DUE 08/15/20 US TREAS BD 7.125%02/23 - DUE 02/15/23

Corporate Securities

GENL MOTORS ACC 7.25%11 - NOTES DUE 03/02/11LUCENT TECH INC 7.25%06 - NOTES DUE 07/15/06

PROTECTIVE LIFE VAR 2012 - INTERNOTES DUE 07/10/12

Page 13 of 26

Schwab Independent Investing | Signature™ FIXED INCOME PERFORMANCE PROFILE


Legend: ! You have one or more bonds maturing in the next 90 days.

No performance or ratings data are currently available for certain fixed income positions you may hold, such as Unit Investment Trusts, Strip Securities, Preferred Debt, and other miscellaneous or unique debt offerings. Bonds with 'NC' in the CallDate field are not callable.



Ratings Characteristics Payments

Approximate Approximate Payment Expected DateS&P Moody's Par Value Market Value Coupon Rate Current Yield Maturity Date Call Date Amount of Next Pymnt.

Treasury Securities

U S TREAS BOND 8.75%8/20 - DUE 08/15/20 AAA Aaa $1,000 $1,447 8.75% 6.05% 08/15/20 -- $44 02/15/06

U S TREAS BOND 8.75%8/20 - DUE 08/15/20 AAA Aaa 1,000 1,447 8.75% 6.05% 08/15/20 -- 44 02/15/06

US TREAS BD 7.125%02/23 - DUE 02/15/23 AAA Aaa 5,000 6,488 7.125% 5.49% 02/15/23 -- 178 02/15/06

US TREAS BD 7.125%02/23 - DUE 02/15/23 AAA Aaa 5,000 6,488 7.125% 5.49% 02/15/23 -- 178 02/15/06

Corporate Securities

GENL MOTORS ACC 7.25%11 - NOTES DUE 03/02/11 BB Ba1 $5,000 $4,640 7.25% 7.81% 03/02/11 -- $181 03/02/06

GENL MOTORS ACC 7.25%11 - NOTES DUE 03/02/11 BB Ba1 5,000 4,640 7.25% 7.81% 03/02/11 -- 181 03/02/06

LUCENT TECH INC 7.25%06 - NOTES DUE 07/15/06 B B1 5,000 5,081 7.25% 7.13% 07/15/06 -- 181 01/15/06

LUCENT TECH INC 7.25%06 - NOTES DUE 07/15/06 B B1 5,000 5,081 7.25% 7.13% 07/15/06 -- 181 01/15/06

PROTECTIVE LIFE VAR 2012 - INTERNOTES DUE 07/10/12 AA Aa3 10,000 9,817 0.00% 0.00% 07/10/12 -- 0 10/10/05

PROTECTIVE LIFE VAR 2012 - INTERNOTES DUE 07/10/12 AA Aa3 10,000 9,817 0.00% 0.00% 07/10/12 -- 0 10/10/05

Preferred Securities

Performance data not available for Preferred Stocks:

TENN VLY AUTH D 5.952%28 - PUTBLE AUTO DUE 06/01/28RATE RESET SECS (PAR TOLEDO ED CO ADJ PFD B - PFD SER B ADJ RATE

Page 14 of 26

Schwab Independent Investing | Signature™ FIXED INCOME PERFORMANCE PROFILE


Legend: ! You have one or more bonds maturing in the next 90 days.

No performance or ratings data are currently available for certain fixed income positions you may hold, such as Unit Investment Trusts, Strip Securities, Preferred Debt, and other miscellaneous or unique debt offerings. Bonds with 'NC' in the CallDate field are not callable.



Benchmarks (Treasury Yields as of 12/31/05)

5-Year US Treasury Note 4.35%

10-Year US Treasury Note 4.39%

30-Year US Treasury Bond 4.53%

Page 15 of 26

Schwab Independent Investing | Signature™ ACCOUNT SUMMARY


Legend: ! Within the Account Summary section of your QPP, the alert symbol will call your attention to one of three things: for equities a D or F rated equity, for mutual funds a 1 or 2 stars Morningstar rated fund, and for fixed income a bond maturing in the next 90 days. O (Option) As of the quarter end, there was an open option position for this security. S (Short) As of the quarter end, there was a short position in this security. C Denotes a change in fund management duringthe 3-months ending December 31, 2005.‡ Portfolio analysis excludes short positions, margin balances, options, warrants, rights and futures.



1111-1111 Dana Jones

Security Symbol Rating Quantity Price ($)12/31/05Value ($) Asset Class




Fixed Income 22.1%

Cash <0.1%

Other 0.0%

Total‡ 100%

Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- $13.87 Cash

EquitiesSchwab Equity Ratingas of 12/30/05

AMGEN INCORPORATED AMGN C 50 $79.67 $3,983.50 Large Cap Equity

DUKE ENERGY CORPORATION DUK C� 125.94 29.17 3,673.55 Large Cap Equity

! NORTH FORK BANCORP INC NFB D 180.4 25.50 4,600.28 Large Cap Equity

OLIN CORP OLN B 177.99 18.99 3,380.11 Small Cap Equity

SUN MICROSYSTEMS INC SUNW C 193 3.93 758.49 Large Cap Equity

YAHOO INC YHOO C 250 33.84 8,460.00 Large Cap Equity

Mutual Funds Morningstar Overall

VANGUARD GNMA FUND - INVESTOR SHARE VFIIX �� 213.61 $10.31 $2,202.29 Fixed Income

Fixed Income S&P

TENN VLY AUTH D 5.952%28 - PUTBLE AUTO DUE06/01/28RATE RESET SECS (PARRS) -- -- 193 25.20 $4,863.60 Fixed Income%

Total Account Value $31,935.69

Page 16 of 26











Fixed Income 0.0%

Cash 13.3%

Other 0.0%

Total‡ 100%

Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- $15,014.30 Cash


! BIOMET INCORPORATED BMET D 250 $34.71 $8,677.50 Small Cap Equity

CISCO SYSTEMS INC CSCO B 850 17.92 15,232.00 Large Cap Equity

E-TRADE FINANCIAL CORP ET B 700 17.60 12,320.00 Small Cap Equity

JDS UNIPHASE CORPORATION JDSU C 500 2.22 1,110.00 Small Cap Equity

LSI LOGIC CORP LSI A 500 9.85 4,925.00 Small Cap Equity

MOTOROLA INC MOT A 500 22.03 11,015.00 Large Cap Equity

ORACLE CORPORATION ORCL C 500 12.40 6,200.00 Large Cap Equity


AMERICAN CENTURY INCOME - & GROWTH FUND BIGRX �� 368.25 $31.69 $11,669.68 Large Cap Equity

BARON GROWTH FUND BGRFX �� 218.63 45.96 10,048.33 Small Cap Equity

FIDELITY DIVERSIFIED - INTERNATIONAL FUND FDIVX �� 346.5 31.92 11,060.31 International

VANGUARD GROWTH & INCOME - FUND INVESTOR SHARES VQNPX �� 172.68 31.29 5,403.09 Large Cap Equity


Page 17 of 26











Fixed Income 20.7%

Cash 0.7%

Other 4.0%

Total‡ 100%

Cash

CASH -- -- -- $29.56 Cash

CASH -- -- -- 29.56 Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- 1,006.27 Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- 1,006.27 Cash


AVAYA INC AV B 11 $10.30 $113.30 Small Cap Equity

AVAYA INC AV B 11 10.30 113.30 Small Cap Equity

BANK OF AMERICA CORP BAC B 341.49 42.10 14,376.86 Large Cap Equity

BANK OF AMERICA CORP BAC B 341.49 42.10 14,376.86 Large Cap Equity

COMCAST CORP NEW CL A CMCSA C 40 29.38 1,175.20 Large Cap Equity

COMCAST CORP NEW CL A CMCSA C 40 29.38 1,175.20 Large Cap Equity

EQUITY RESIDENTIAL EQR NC 158.2 37.85 5,987.81 Large Cap Equity

EQUITY RESIDENTIAL EQR NC 158.2 37.85 5,987.81 Large Cap Equity

FREESCALE SEMICOND CL B - CLASS B FSLB B 35 23.58 825.30 Small Cap Equity

FREESCALE SEMICOND CL B - CLASS B FSLB B 35 23.58 825.30 Small Cap Equity

GENERAL ELECTRIC COMPANY GE C 112.05 33.67 3,772.88 Large Cap Equity

Page 18 of 26






6666-6666 Dana Jones (Continued)



GENERAL ELECTRIC COMPANY GE C 112.05 $33.67 $3,772.88 Large Cap Equity

! I FLOW CORP IFLO F 200 13.71 2,742.00 Small Cap Equity

! I FLOW CORP IFLO F 200 13.71 2,742.00 Small Cap Equity

KROGER COMPANY KR B 204 20.59 4,200.36 Large Cap Equity

KROGER COMPANY KR B 204 20.59 4,200.36 Large Cap Equity

! LAUDER ESTEE CO INC CL A - CL A EL D 212.47 34.83 7,400.30 Small Cap Equity

! LAUDER ESTEE CO INC CL A - CL A EL D 212.47 34.83 7,400.30 Small Cap Equity

LUCENT TECHNOLOGIES INC LU B 133.29 3.25 433.21 Large Cap Equity

LUCENT TECHNOLOGIES INC LU B 133.29 3.25 433.21 Large Cap Equity

MOTOROLA INC MOT A 327.29 22.03 7,210.14 Large Cap Equity

MOTOROLA INC MOT A 327.29 22.03 7,210.14 Large Cap Equity

PEPSICO INCORPORATED PEP B 113.7 56.71 6,447.82 Large Cap Equity

PEPSICO INCORPORATED PEP B 113.7 56.71 6,447.82 Large Cap Equity

! PIER ONE IMPORTS INC PIR D 218.75 11.27 2,465.36 Small Cap Equity

! PIER ONE IMPORTS INC PIR D 218.75 11.27 2,465.36 Small Cap Equity

POORE BROTHERS INC SNAK NC 1,000 5.45 5,450.00 Small Cap Equity

POORE BROTHERS INC SNAK NC 1,000 5.45 5,450.00 Small Cap Equity

Page 19 of 26









RITE AID CORPORATION RAD C 102.24 $3.88 $396.67 Small Cap Equity

RITE AID CORPORATION RAD C 102.24 3.88 396.67 Small Cap Equity

! SOUTHWEST GAS CORP COM SWX D 136.59 27.39 3,741.16 Small Cap Equity

! SOUTHWEST GAS CORP COM SWX D 136.59 27.39 3,741.16 Small Cap Equity

YUM BRANDS INC YUM C 100.41 48.41 4,860.87 Large Cap Equity

YUM BRANDS INC YUM C 100.41 48.41 4,860.87 Large Cap Equity


! AIM FINANCIAL SERVICES F - UND INV CLASS FSFSX �� 106.84 $28.19 $3,011.74 Large Cap Equity

! AIM FINANCIAL SERVICES F - UND INV CLASS FSFSX �� 106.84 28.19 3,011.74 Large Cap Equity

AIM GLOBAL HEALTH CARE - FUND INV CL GTHIX -- 252.27 30.46 7,684.17 Large Cap Equity

AIM GLOBAL HEALTH CARE - FUND INV CL GTHIX -- 252.27 30.46 7,684.17 Large Cap Equity

AMERICAN CENTURY ULTRA - FUND INV TWCUX �� 74.58 28.90 2,155.22 Large Cap Equity

AMERICAN CENTURY ULTRA - FUND INV TWCUX �� 74.58 28.90 2,155.22 Large Cap Equity

COLUMBIA STRATEGIC - INCOME FD CL A COS3Z �� 895.12 6.14 5,496.01 Fixed Income

COLUMBIA STRATEGIC - INCOME FD CL A COS3Z �� 895.12 6.14 5,496.01 Fixed Income

! C FIDELITY MAGELLAN FUND FMG3Z �� 64.45 105.87 6,823.22 Large Cap Equity

Page 20 of 26









! C FIDELITY MAGELLAN FUND FMG3Z �� 64.45 $105.87 $6,823.22 Large Cap Equity

ISHARES KLD SEL SOC FD KLD -- 100.85 51.95 5,238.98 Large Cap Equity

ISHARES KLD SEL SOC FD KLD -- 100.85 51.95 5,238.98 Large Cap Equity

LAUDUS INTL MKTMSTRS - INVESTOR SHARES SWOIX �� 83.41 17.26 1,439.66 International

LAUDUS INTL MKTMSTRS - INVESTOR SHARES SWOIX �� 83.41 17.26 1,439.66 International

NASDAQ 100 SHARES - UNIT SER 1 QQQQ -- 101.07 39.46 3,988.22 Large Cap Equity

NASDAQ 100 SHARES - UNIT SER 1 QQQQ -- 101.07 39.46 3,988.22 Large Cap Equity

PAX WORLD BALANCED FUND PAXWX �� 173.7 24.20 4,203.52 Other

PAX WORLD BALANCED FUND PAXWX �� 173.7 24.20 4,203.52 Other

RS GROWTH FUND RSGRX �� 91.58 18.19 1,665.86 Large Cap Equity

RS GROWTH FUND RSGRX �� 91.58 18.19 1,665.86 Large Cap Equity

VANGUARD CONVERTIBLE - SECURITIES FUND VCVSX �� 103.22 13.31 1,373.87 Other

VANGUARD CONVERTIBLE - SECURITIES FUND VCVSX �� 103.22 13.31 1,373.87 Other

Fixed Income S&P

GENL MOTORS ACC 7.25%11 - NOTES DUE 03/02/11 -- BB 5,000 92.80 $4,640.03 Fixed Income%

GENL MOTORS ACC 7.25%11 - NOTES DUE 03/02/11 -- BB 5,000 92.80 4,640.03 Fixed Income

Page 21 of 26








Fixed Income S&P

LUCENT TECH INC 7.25%06 - NOTES DUE 07/15/06 -- B 5,000 101.62 $5,081.00 Fixed Income%

LUCENT TECH INC 7.25%06 - NOTES DUE 07/15/06 -- B 5,000 101.62 5,081.00 Fixed Income

TOLEDO ED CO ADJ PFD B - PFD SER B ADJ RATE -- -- 220.2 25.32 5,575.34 Fixed Income

TOLEDO ED CO ADJ PFD B - PFD SER B ADJ RATE -- -- 220.2 25.32 5,575.34 Fixed Income

U S TREAS BOND 8.75%8/20 - DUE 08/15/20 -- AAA 1,000 144.69 1,446.88 Fixed Income

U S TREAS BOND 8.75%8/20 - DUE 08/15/20 -- AAA 1,000 144.69 1,446.88 Fixed Income

US TREAS BD 7.125%02/23 - DUE 02/15/23 -- AAA 5,000 129.75 6,487.50 Fixed Income

US TREAS BD 7.125%02/23 - DUE 02/15/23 -- AAA 5,000 129.75 6,487.50 Fixed Income


Page 22 of 26











Fixed Income 23.6%

Cash 23.8%

Other 1.7%

Total‡ 100%

Cash

NY COMMUNITY BANK 3.6%06 - CD FDIC INS DUE04/06/06PAYS INT @MATURITY -- -- -- $11,959.32 Cash

NY COMMUNITY BANK 3.6%06 - CD FDIC INS DUE04/06/06PAYS INT @MATURITY -- -- -- 11,959.32 Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- 449.44 Cash

SCHWAB MONEY MARKET FUND SWMXX -- -- 449.44 Cash


CORNING INC GLW B 100 $19.33 $1,933.00 Large Cap Equity

CORNING INC GLW B 100 19.33 1,933.00 Large Cap Equity

SCHWAB TEN TRUST ST65R * - UNIT 2005 SER B SEMIANNUAL REINVEST -- NC 96 9.32 895.10 Other

SCHWAB TEN TRUST ST65R * - UNIT 2005 SER B SEMIANNUAL REINVEST -- NC 96 9.32 895.10 Other


FEDERATED MID CAP GROWTH - STRATEGIES FUND CL A FGSAX �� 87.19 $33.36 $2,908.63 Small Cap Equity

FEDERATED MID CAP GROWTH - STRATEGIES FUND CL A FGSAX �� 87.19 33.36 2,908.63 Small Cap Equity



Page 23 of 26









NB INTL FUND INV CLASS - NEUBERGER BERMAN NBISX �� 126.45 $21.84 $2,761.67 International

NB INTL FUND INV CLASS - NEUBERGER BERMAN NBISX �� 126.45 21.84 2,761.67 International

PARNASSUS EQUITY INCOME - FUND PRBLX �� 175.41 24.93 4,372.97 Large Cap Equity

PARNASSUS EQUITY INCOME - FUND PRBLX �� 175.41 24.93 4,372.97 Large Cap Equity

SCHWAB S&P 500 INDEX FUN - D - INVESTOR SHARES SWPIX �� 121.47 19.11 2,321.35 Large Cap Equity

SCHWAB S&P 500 INDEX FUN - D - INVESTOR SHARES SWPIX �� 121.47 19.11 2,321.35 Large Cap Equity

SCHWAB SMALL-CAP EQUITY - FUND INVESTOR SHARES SWSIX -- 241.78 15.80 3,820.19 Small Cap Equity

SCHWAB SMALL-CAP EQUITY - FUND INVESTOR SHARES SWSIX -- 241.78 15.80 3,820.19 Small Cap Equity

Fixed Income S&P

PROTECTIVE LIFE VAR 2012 - INTERNOTES DUE 07/10/12 -- AA 10,000 98.17 $9,817.44 Fixed Income%

PROTECTIVE LIFE VAR 2012 - INTERNOTES DUE 07/10/12 -- AA 10,000 98.17 9,817.44 Fixed Income

TOLEDO ED CO ADJ PFD B - PFD SER B ADJ RATE -- -- 100 25.32 2,532.00 Fixed Income

TOLEDO ED CO ADJ PFD B - PFD SER B ADJ RATE -- -- 100 25.32 2,532.00 Fixed Income


Page 24 of 26

Schwab Independent Investing | Signature™ IMPORTANT INFORMATION



Important Information about Your Quarterly Portfolio Profile

Introduction

Your Quarterly Portfolio Profile reflects your account positions held at Charles Schwab & Co., Inc. as of the last businessday of the quarter reflected. The supplemental material in the report is provided for informational purposes only andshould not be considered an individualized recommendation or personalized investment advice. The Quarterly PortfolioProfile should not be substituted for, or considered, your account statement. Please consult your Schwab accountstatement for information of record regarding your account’s balance, positions and transactions.

Transactions that were pending settlement as of the end of the calendar quarter may not be included in this report. Forpresentation purposes, Net Portfolio Values listed on the first page of this report are rounded to the nearest whole dollar.

Third-Party Information

Third parties provide certain information in your report. Schwab believes that such third-party information is reliable, butdoes not guarantee its accuracy, timeliness or completeness, and it is subject to change without notice.

Data providers, such as Standard & Poor’s, Inc (S&P) and Reuters may not make information available on all companies.Mutual Fund rating information is provided by Morningstar, Inc. Ratings data for fixed income is provided by Moody’s andS&P. Fixed income fundamental and performance data is provided by S&P. The Global Industry Classification Standard(GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard &Poor’s. GICS is a service mark of MSCI and S&P and Schwab has licensed its use.

Market Cap as of 12/31/05:

Large Cap U.S. Stocks have a market capitalization of $10.581 billion or greater.

Small Cap U.S. Stocks have a market capitalization of less than $10.581 billion.

Ratings

Schwab Equity Ratings®Schwab Equity Ratings are assigned to approximately 3000 of the largest (by market capitalization) U.S. headquarteredstocks using a scale of "A", "B", "C", "D", and "F." The explanation and table below are included to assist you in usingSchwab Equity Ratings as one component of your own research to evaluate stocks and investment opportunities.

Charles Schwab & Co. ("Schwab") rates stocks "A" to "F." Schwab's outlook is that "A" rated stocks, on average, willstrongly outperform and "F" rated stocks, on average, will strongly underperform the equities market over the next 12months. Schwab Equity Ratings are based upon a disciplined, systematic approach that evaluates each stock on thebasis of a wide variety of investment criteria from four broad categories: Fundamentals, Valuation, Momentum, and Risk.This approach attempts to gauge investor expectations since stock prices tend to move in the same direction aschanges in investor expectations. Stocks with low and potentially improving investor expectations tend to receive thebest Schwab Equity Ratings ("A" or "B" ratings), while stocks with high and potentially falling investor expectations tendto receive the worst Schwab Equity Ratings ("D" or "F" ratings). From time to time, Schwab may update the SchwabEquity Ratings methodology.

Schwab Equity Ratings Distribution

Schwab Percentile Ranking Schwab Equity 12 Month Return General Buy/Hold/Sell

Equity Rating Distribution Rating Distribution Outlook Guidance†

A 1-5 Top 5% Strongly Outperform Buy

B 6-30 Next 25% Outperform Buy

C 31-70 Next 40% Marketperform Hold

D 71-95 Next 25% Underperform Sell

F 96-100 Bottom 5% Strongly Underperform Sell

†The general buy/hold/sell guidance is relative to other rated equities only. Before considering whether to take anyaction, an investor should consider whether equities generally are performing well in comparison to other asset classesand whether other equities in the same sector or category with the same or better rating may be more appropriate.

This material is for informational purposes only and is not an offer to sell or the solicitation of an offer to buy. Additionally,Schwab Equity Ratings, Percentile Rankings, and the general guidance are not personal recommendations for anyparticular investor or client and do not take into account the financial, investment or other objectives or needs of, andmay not be suitable for any particular investor or client. Before buying, investors and clients should consider whether theinvestment is suitable. Investors and clients should consider Schwab Equity Ratings as only a single factor in making

their investment decision while taking into account the current market environment. Accordingly, Charles Schwab & Co.,Inc. ("Schwab") does not assess the suitability (or the potential value) of any particular investment. Schwab also does notprovide tax advice and the views in the material do not take into account any client's or investor's tax situation. Clientsand investors should consult their tax advisers before investing. Schwab Equity Ratings utilize third-party data in theforming of a rating. While Schwab believes such third-party information is reliable, we do not guarantee its accuracy,timeliness or completeness. Schwab Equity Ratings are generally updated weekly, so you should review and consider anyrecent market or company news before taking any action. Stocks may go down as well as up and investors (includingclients) may lose money, including their original investment. Past history is no indication of future performance andreturns are not guaranteed. For individual advice, please call Schwab using the number on the first page of this report.

Descriptions for Non-Rated Stocks

Category Definition Description

NR Not Rated Schwab has decided not to publish a rating on this stock due to unusual orextraordinary business circumstances related to this company.

NA Not Available A Schwab Equity Rating is not available on this stock due to insufficientinformation about the stock.

NC Not Covered This stock is not currently in the Schwab Equity Rating universe or is prohibitedfrom coverage for regulatory reasons.

* Check News Check current news because a potentially significant event has beenannounced for an A or B rated stock. Although Schwab generally does notmonitor C, D, and F rated stocks for current news, from time to time, asterisksmay appear on a particular stock due to certain circumstances (e.g. thedowngrade of a stock from a B to a C-rating). In any event, you should alwayscheck news on a stock before placing a trade.

Schwab Equity Ratings Explanation

A (Strongly Outperform): If an investor is looking to add a stock to his or her portfolio, “A” rated stocks may be thebest candidates for consideration.

B (Outperform): An investor looking to add a stock to his or her portfolio should also consider a “B” rated stock,though preference should be given to “A” rated stocks.

C (Marketperform): An investor would not usually consider a “C” rated stock for purchase. An investor that has a “C”rated stock in his or her portfolio should consider continuing to hold the stock, and might monitor the stock’s ongoingperformance and compare the potential benefits of owning a stock with higher ratings.

D (Underperform): An investor holding a “D” rated stock should consider whether it is appropriate to continue to holdthat stock in his or her portfolio. An investor would not usually consider a “D” rated stock for purchase.

F (Strongly Underperform): An investor holding an “F” rated stock should consider whether it is appropriate toeliminate that stock from his or her portfolio. An investor would not usually consider an “F” rated stock for purchase.

S&P OpinionThe Standard & Poor’s STAR (Stock Appreciation Ranking System) rating provides S&P’s recommendations for action(e.g. buy, hold, or sell), based on their opinion of a stock’s potential to outperform the S&P 500 over the next six to twelvemonths. Rankings are as follows:

�� Buy Expected to be among the best performers of the S&P 500 stocks over the next 12 months.

�� Accumulate Expected to be an above average performer.

�� Hold Expected to be an average performer.

�� Avoid Likely to be a below average performer.

� Sell Expected to be a well below average performer and to fall in price.

Reuters Analyst Consensus:Averages the opinions of third-party analysts tracked by Reuters who follow the company. Five boxes are listed, withdegrees of opinion moving out from the center “Hold” box. From left to right, the boxes represent: Sell (far left),Underperform (2nd from left), Hold (center), Outperform (2nd from right), Buy (far right). The number of analysts withopinions on the stock is listed with the appropriate number in parentheses. Analyst consensus ratings in the QPP report

Page 25 of 26

Schwab Independent Investing | Signature™ IMPORTANT INFORMATION



are as of the calendar quarter end.

Reuters updates analyst consensus on a daily basis. For the most recent consensus rating, please refer to the SchwabEarnings Report on the Schwab website.

Morningstar RatingsThe Morningstar star ratings evaluate how well a mutual fund has performed compared to other funds in the same broadinvestment class. (The investment classes are domestic stock, international stock, taxable bond and municipal bond). TheMorningstar ratings take into account the fund’s historical return, with an adjustment for the fund’s historical risk. Fundsare rated from 5 stars (highest) to 1 star (lowest). Funds with higher star ratings generally have higher historicalrisk-adjusted returns.

Overall: In determining the overall rating, the 3-, 5-, and 10-year time periods are combined as a weighted average, withlonger time periods weighted more heavily. If the fund scores in the top 10%, it receives 5 stars (highest); the next22.5%, it receives 4 stars (above average); the middle 35%, 3 stars (neutral or average); the next 22%, 2 stars (belowaverage); and the bottom 10%, 1 star (lowest). Ratings are recalculated monthly.

Historical Risk: Evaluates the weighted average of a fund’s downside volatility (i.e., how often it has underperformedTreasury bills) relative to that of other funds in its broad investment category. To calculate risk, Morningstar adds up theamounts by which the fund trails the T-bill return each month and divides that sum by the number of months in the ratingperiod.

S&P Fixed Income Rating Explanation

AAA Highest quality B Speculative

AA High quality CCC, CC Default possible

A Upper medium grade C Default, partial recovery possible

BBB Medium grade D Default, recovery not likely

BB Speculative elements NA Not Applicable

S&P may modify ratings from AA to CCC by the addition of a plus (+) or minus (-) to show relative standing within themajor rating category.

Moody’s Fixed Income Rating Explained

Aaa Highest quality Caa Default possible

Aa High quality Ca Default, partial recovery possible

A Upper medium grade C Default, recovery not likely

Baa Medium grade NR Not rated

Ba Speculative elements NA Not Applicable

B Speculative

MIG Short-term obligation, Moody’s Investment Grade (1-3, where 1 denotes best quality, 2 denotes high quality,and 3 denotes favorable quality)

SG Short-term obligation, speculative quality

Moody’s applies numerical modifiers 1, 2, and 3 in each generic category rating classification from Aa to B. The modifier1 indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-rangeranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.

Benchmark Data

Performance of indices is provided in your report for comparison purposes. Indexes are unmanaged, do not incurmanagement fees, costs and expenses (or transaction fees or other related expenses) and cannot be invested in directly.Past performance of any index should not be considered indication of future return. The indexes included are:

• The S&P 500® Index for large-capitalization stocks and/or funds. The S&P 500 includes common stocks of 500widely held companies. S&P 500 is a registered mark of The McGraw Hill Co., Inc.

• Russell 2000® Index for small-capitalization stocks and/or funds. This index consists of the 2,000 smallestcompanies in the Russell 3000® Index, which represents approximately 98% of the total market value of publiclyavailable domestic equities.

• The Morgan Stanley Capital International Europe, Australasia, Far East (MSCI-EAFE) Index is an index of foreign

stocks returns of selected exchanges in these markets. Its total return is calculated in U.S. dollars.

• The Lehman Brothers Aggregate Bond Index is used for comparing taxable bonds or bond funds. It tracks the totalU.S. bond market, which includes U.S. Treasury, government agency, investment-grade corporate bond, andmortgage-backed securities with maturities of at least one year. The index includes reinvestment of interest.

• The Lehman Brothers Municipal Bond Index is a total return performance benchmark for the long-terminvestment-grade tax-exempt bond market (used for municipal bond or bond fund comparisons). It also includesreinvestment of interest.

• The Dow Jones Wilshire 5000 Index is a broad-market index of approximately 7,200 U.S. publicly traded equitiesfrequently used as a proxy for the overall equity market. The sector weightings are subject to change. Sectors areprovided by Global Industry Classification Standard (GICS) by MSCI and S&P. Sectors may not be available for allsecurities.

Performance and Growth Information

Returns are adjusted for management, administrative and 12b-1 fees and other costs automatically deducted from fundassets. Total returns are also adjusted for sales loads and assume the reinvestment of capital gains and dividends.

Information on Investments

• Bond: Income on tax-free bonds may be subject to the Alternative Minimum Tax. Government bond prices are notguaranteed; their price and investment return will fluctuate with market conditions and interest rate movements.Investors may experience a loss or may, due to prepayment obligations, receive back part of their investment beforeredemption.

• High Yield Bond Fund: Investments in high yield bond funds are subject to greater risk of loss of principal andinterest than other bond funds. Purchasers should carefully assess the risks associated with an investment in thisfund.

• International: International investments are subject to additional risk such as currency fluctuations, political instability,foreign regulations, and the potential for illiquid markets.

• Mutual Fund: Managers may occasionally waive all or a portion of fund fees at any given period. Waived fees wouldhave the effect of increasing the fund’s reported performance and may not necessarily recur; review any prospectusfor details.

Principal value and investment return will fluctuate with changes in market conditions so an investor’sshares, when redeemed, may be worth more or less than their original cost.

Schwab’s short-term redemption fee will be charged on redemption of funds (except certain SchwabFunds) boughtthrough Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fee) and held for 180days or less. If you pay a transaction fee to purchase a fund, you will pay a transaction fee when you sell it as well.Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees onany funds. Schwab receives remuneration from funds companies participating in Mutual Fund OneSource.

• Schwab Money Market Fund: An investment in the Fund is not insured or guaranteed by the Federal DepositInsurance Corporation or any other government agency. Although the Fund seeks to preserve the value of yourinvestment at $1.00 per share, it is possible to lose money by investing in a money market fund.

• Sector Fund: Since the fund focuses its investments on companies involved in a single sector, the fund may involve agreater degree of risk than an investment in other mutual funds with greater diversification.

• Small Cap: Small cap investments are subject to greater volatility than investments in other asset categories.

Additional Information

For additional details about your Quarterly Portfolio Profile, please consult the User Guide available on the Schwabwebsite or please call us at the phone number on the top of the first page of this report.

• Go to www.schwab.com/QPP

• Click “Quarterly Portfolio Profile”

• Enter the last 4 digits of your Social Security Number

• Select “All Reports” under View Reports

• Select “View Quarterly Portfolio Profile User Guide”

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