INSTITUTIONAL SELECT-TM- FUNDS
SEMIANNUAL REPORT
APRIL 30, 1999
INSTITUTIONAL SELECT
S&P 500 FUND
INSTITUTIONAL SELECT
LARGE-CAP VALUE INDEX FUND
INSTITUTIONAL SELECT
SMALL-CAP VALUE INDEX FUND
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
We are pleased to bring you this semiannual report for the Institutional Select
Funds (the Funds) for the period since the Funds' inception on February 1, 1999,
through April 30, 1999. This report includes the following Funds:
- Institutional Select S&P 500 Fund
- Institutional Select Large-Cap Value
Index Fund
- Institutional Select Small-Cap Value Index Fund
As covered in their respective sections of this report,
all the Funds achieved their primary objectives of tracking the price and
dividend performance of their benchmark indices during the reporting period. In
addition, the Funds also succeeded in maintaining
the tax efficiencies and low costs designed to help maximize long-term
performance results.
FUND LISTINGS
The Funds are listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY and most local newspapers as follows under the heading INSTITUTIONAL
SELECT:
<TABLE>
<CAPTION>
NEWSPAPER
LISTING SYMBOL
<S> <C>
InstSel 500 ISLCX
InstSel LCV ISLVX
InstSel SCV ISSVX
</TABLE>
S&P 500-REGISTERED TRADEMARK- IS A TRADEMARK OF THE MCGRAW-HILL COMPANIES, INC.,
AND HAS BEEN LICENSED FOR USE BY SCHWAB CAPITAL TRUST. THE INSTITUTIONAL SELECT
S&P 500 FUND IS NOT SPONSORED, SOLD OR PROMOTED BY STANDARD &
POOR'S,-REGISTERED TRADEMARK- AND THEY MAKE NO REPRESENTATIONS REGARDING THE
ADVISABILITY OF INVESTING IN THE FUND.
CONTENTS
<TABLE>
<S> <C>
- ----------------------------------------------------
A Message from the Chairman 1
- ----------------------------------------------------
Market Overview 2
- ----------------------------------------------------
Institutional Select S&P 500 Fund
FUND PERFORMANCE 5
PORTFOLIO SNAPSHOT 7
- ----------------------------------------------------
Institutional Select Large-Cap Value
Index Fund
FUND PERFORMANCE 9
PORTFOLIO SNAPSHOT 11
- ----------------------------------------------------
Institutional Select Small-Cap Value
Index Fund
FUND PERFORMANCE 13
PORTFOLIO SNAPSHOT 15
- ----------------------------------------------------
The Portfolio Management Team 17
- ----------------------------------------------------
Fund Discussion 18
- ----------------------------------------------------
Glossary 21
- ----------------------------------------------------
Financial Statements and Notes 22
- ----------------------------------------------------
</TABLE>
<PAGE>
A MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
[PHOTO]
During the past several years, the benefits of investing have been readily
apparent, while the risks have been somewhat less obvious. Over the past six
months, however, investors have been subject to sharp drops and big recoveries,
sometimes within the same day. After enjoying near-perfect market conditions for
years, investors have had to adjust to significant economic and political
developments, both here and abroad, that have contributed to rapid sentiment
swings and market turbulence. These developments have been accentuated by the
lingering expectation that stock prices are long overdue for a correction
according to several traditional, widely followed indicators. In spite of this
recent volatility, however, the markets continue to flourish, boosted by low
inflation, solid economic growth, low interest rates, a strong dollar and an
influx of money from investors.
All this serves to remind us that although the market's extreme ups and downs
can be harrowing, they are a natural part of market dynamics. That's why we
think it's a good time to reaffirm one of our primary investment
principles: Regardless of short-term market trends, our philosophy has always
been that REGULAR INVESTING is the best strategy over the long term. You've
already taken an important step in building a portfolio that can help you meet
your future goals. On the following pages, we've provided guidelines to help
ensure that you can reach your goals by establishing--or maintaining--an ongoing
investment program.
NEW INVESTMENT OPPORTUNITY TO CONSIDER
If you're looking for an investment that covers all the corners of the U.S.
stock market, consider Schwab's newest offering, the Schwab Total Stock Market
Index Fund.-TM- The Fund seeks to track the performance of the U.S. stock market
as measured by the Wilshire 5000 Index, the broadest measure of domestic stock
market performance available. The end result: Fund investors can benefit from
exposure to U.S. companies of all types and all sizes--all in a single, low-cost
investment. For more information, including a prospectus that details the Fund's
management fees and expenses, please call us at 800-435-4000. Please read the
prospectus carefully before investing.
The support of investors like you has helped Charles Schwab Investment
Management, Inc. (CSIM) become one of the largest and fastest-growing mutual
fund Investment Advisers in the nation. CSIM now manages more than $90 billion
in assets on behalf of approximately 3.5 million shareholders. We offer a broad
spectrum of 39 mutual funds for investors with varying financial situations and
goals.
Once again, thank you for your investment. We will do everything we can to
warrant the trust you have placed in us.
Sincerely,
/s/ Charles R. Schwab
Charles R. Schwab
April 30, 1999
THE YEAR 2000 AND EURO CONVERSION ISSUES
Two issues with the potential to disrupt portfolio operations and affect
performance are the inability of some computers to recognize the year 2000,
and the conversion of certain European currencies to the euro, which began on
January 1, 1999. The Investment Adviser will continue to take steps to enable
its systems to handle these changes. With regard to the year 2000 problem,
the Investment Adviser is also seeking assurances that its service providers
and business partners are taking similar steps as well. It is impossible to
know in advance however, exactly how either of these issues will affect
portfolio administration, portfolio performance (particularly for portfolios
with European exposure) or securities markets in general.
1
<PAGE>
MARKET OVERVIEW
U.S. ECONOMIC GROWTH
The U.S. economy, as measured by gross domestic product (GDP), continued its
remarkable expansion with a strong real growth rate of 4.3% during 1998 and 4.1%
during the first quarter of 1999--a rate well in excess of the Federal Reserve's
estimate of the long-term maximum sustainable non-inflationary growth rate. The
first quarter marked the thirty-second consecutive quarter of positive
growth--the longest peacetime expansion ever. Strong consumer spending leveraged
by record domestic stock market levels and its associated wealth effect
continued to provide momentum for this historic expansion.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
REAL GDP GROWTH RATE
QUARTERLY PERCENTAGE CHANGE
(ANNUALIZED RATE)
<S> <C>
Q1 1990 3.9%
Q2 1990 1.2%
Q3 1990 -1.9%
Q4 1990 -4.0%
Q1 1991 -2.1%
Q2 1991 1.8%
Q3 1991 1.0%
Q4 1991 1.0%
Q1 1992 4.7%
Q2 1992 2.5%
Q3 1992 3.0%
Q4 1992 4.3%
Q1 1993 0.1%
Q2 1993 2.0%
Q3 1993 2.1%
Q4 1993 5.3%
Q1 1994 3.0%
Q2 1994 4.7%
Q3 1994 1.8%
Q4 1994 3.6%
Q1 1995 1.7%
Q2 1995 0.4%
Q3 1995 3.3%
Q4 1995 2.8%
Q1 1996 3.3%
Q2 1996 6.1%
Q3 1996 2.1%
Q4 1996 4.2%
Q1 1997 4.2%
Q2 1997 4.0%
Q3 1997 4.2%
Q4 1997 3.0%
Q1 1998 5.5%
Q2 1998 1.8%
Q3 1998 3.7%
Q4 1998 6.0%
Q1 1999 4.1%
Source: BLOOMBERG L.P.
</TABLE>
At the time of this writing, the consensus of most economists is that the U.S.
economy appears poised for continued growth, but at a more moderate rate than
during 1998. High levels of consumer spending and confidence, low interest
rates, rising real wages and strong gains in stock prices have been the
principal factors continuing this lengthy expansion. Although an ongoing
concern, the impact of international economic problems on the U.S. economy has
been less severe than many originally predicted. Going forward, the behavior of
domestic consumers in response to continued stock market volatility may also be
a key determinant of whether the economy continues on its current course or
softens throughout the remainder of 1999.
UNEMPLOYMENT
After declining to 4.2% in March--the lowest level in 28 years--the U.S.
unemployment rate stood at 4.3% in April. Labor markets continue to be extremely
tight, growth in the labor force has slowed, and there continues to be concern
that wage increases may begin to put more pressure on labor costs (refer to
Employment Cost Index on the facing page).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. UNEMPLOYMENT RATE SOURCE: BLOOMBERG L.P.
<S> <C> <C> <C> <C>
Jan-90 5.4%
Feb-90 5.3%
Mar-90 5.2%
Apr-90 5.4%
May-90 5.4%
Jun-90 5.2%
Jul-90 5.5%
Aug-90 5.7%
Sep-90 5.9%
Oct-90 5.9%
Nov-90 6.2%
Dec-90 6.3%
Jan-91 6.4%
Feb-91 6.6%
Mar-91 6.8%
Apr-91 6.7%
May-91 6.9%
Jun-91 6.9%
Jul-91 6.8%
Aug-91 6.9%
Sep-91 6.9%
Oct-91 7.0%
Nov-91 7.0%
Dec-91 7.3%
Jan-92 7.3%
Feb-92 7.4%
Mar-92 7.4%
Apr-92 7.4%
May-92 7.6%
Jun-92 7.8%
Jul-92 7.7%
Aug-92 7.6%
Sep-92 7.6%
Oct-92 7.3%
Nov-92 7.4%
Dec-92 7.4%
Jan-93 7.3%
Feb-93 7.1%
Mar-93 7.0%
Apr-93 7.1%
May-93 7.1%
Jun-93 7.0%
Jul-93 6.9%
Aug-93 6.8%
Sep-93 6.7%
Oct-93 6.8%
Nov-93 6.6%
Dec-93 6.5%
Jan-94 6.6%
Feb-94 6.6%
Mar-94 6.5%
Apr-94 6.4%
May-94 6.1%
Jun-94 6.1%
Jul-94 6.3%
Aug-94 6.0%
Sep-94 5.8%
Oct-94 5.8%
Nov-94 5.6%
Dec-94 5.5%
Jan-95 5.6%
Feb-95 5.4%
Mar-95 5.3%
Apr-95 5.8%
May-95 5.8%
Jun-95 5.6%
Jul-95 5.6%
Aug-95 5.7%
Sep-95 5.6%
Oct-95 5.5%
Nov-95 5.7%
Dec-95 5.6%
Jan-96 5.6%
Feb-96 5.5%
Mar-96 5.6%
Apr-96 5.5%
May-96 5.6%
Jun-96 5.3%
Jul-96 5.5%
Aug-96 5.1%
Sep-96 5.2%
Oct-96 5.2%
Nov-96 5.3%
Dec-96 5.4%
Jan-97 5.3%
Feb-97 5.3%
Mar-97 5.1%
Apr-97 5.0%
May-97 4.7%
Jun-97 5.0%
Jul-97 4.7%
Aug-97 4.9%
Sep-97 4.7%
Oct-97 4.7%
Nov-97 4.6%
Dec-97 4.7%
Jan-98 4.5%
Feb-98 4.6%
Mar-98 4.6%
Apr-98 4.3%
May-98 4.3%
Jun-98 4.5%
Jul-98 4.5%
Aug-98 4.5%
Sep-98 4.5%
Oct-98 4.5%
Nov-98 4.4%
Dec-98 4.3%
Jan-99 4.3%
Feb-99 4.4%
Mar-99 4.2%
Apr-99 4.3%
</TABLE>
INFLATION
Despite a surprisingly high Consumer Price Index (CPI) report for April (a 0.7%
increase for the month), price inflation continued to remain well contained. The
CPI rose just 2.3% for the year ended April 1999. Its core rate (which excludes
the more volatile food
2
<PAGE>
and energy components) rose 2.2%. For all of 1998, overall producer prices fell
0.1% after dropping 1.2% in 1997, marking the first time that the index, which
was created in 1947, has fallen for two consecutive years. The markets reacted
nervously following the April CPI report, not knowing whether it represented an
aberration or the beginning of a trend.
The Employment Cost Index, which measures inflation in wages, salaries and
benefits, was also well contained, increasing 3.0% for the year ended March
1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MEASURES OF INFLATION
QUARTERLY EMPLOYMENT COST INDEX MONTHLY CONSUMER PRICE INDEX
<S> <C> <C>
Jan-90 5.5% 5.2%
Feb-90 5.5% 5.3%
Mar-90 5.5% 5.2%
Apr-90 5.4% 4.7%
May-90 5.4% 4.4%
Jun-90 5.4% 4.7%
Jul-90 5.2% 4.8%
Aug-90 5.2% 5.6%
Sep-90 5.2% 6.2%
Oct-90 4.9% 6.3%
Nov-90 4.9% 6.3%
Dec-90 4.9% 6.1%
Jan-91 4.6% 5.7%
Feb-91 4.6% 5.3%
Mar-91 4.6% 4.9%
Apr-91 4.6% 4.9%
May-91 4.6% 5.0%
Jun-91 4.6% 4.7%
Jul-91 4.3% 4.4%
Aug-91 4.3% 3.8%
Sep-91 4.3% 3.4%
Oct-91 4.3% 2.9%
Nov-91 4.3% 3.0%
Dec-91 4.3% 3.1%
Jan-92 4.0% 2.6%
Feb-92 4.0% 2.8%
Mar-92 4.0% 3.2%
Apr-92 3.6% 3.2%
May-92 3.6% 3.0%
Jun-92 3.6% 3.1%
Jul-92 3.5% 3.2%
Aug-92 3.5% 3.1%
Sep-92 3.5% 3.0%
Oct-92 3.5% 3.2%
Nov-92 3.5% 3.0%
Dec-92 3.5% 2.9%
Jan-93 3.5% 3.3%
Feb-93 3.5% 3.2%
Mar-93 3.5% 3.1%
Apr-93 3.6% 3.2%
May-93 3.6% 3.2%
Jun-93 3.6% 3.0%
Jul-93 3.6% 2.8%
Aug-93 3.6% 2.8%
Sep-93 3.6% 2.7%
Oct-93 3.5% 2.8%
Nov-93 3.5% 2.7%
Dec-93 3.5% 2.7%
Jan-94 3.2% 2.5%
Feb-94 3.2% 2.5%
Mar-94 3.2% 2.5%
Apr-94 3.2% 2.4%
May-94 3.2% 2.3%
Jun-94 3.2% 2.5%
Jul-94 3.2% 2.8%
Aug-94 3.2% 2.9%
Sep-94 3.2% 3.0%
Oct-94 3.0% 2.6%
Nov-94 3.0% 2.7%
Dec-94 3.0% 2.7%
Jan-95 2.9% 2.8%
Feb-95 2.9% 2.9%
Mar-95 2.9% 2.9%
Apr-95 2.9% 3.1%
May-95 2.9% 3.2%
Jun-95 2.9% 3.0%
Jul-95 2.7% 2.8%
Aug-95 2.7% 2.6%
Sep-95 2.7% 2.5%
Oct-95 2.7% 2.8%
Nov-95 2.7% 2.6%
Dec-95 2.7% 2.5%
Jan-96 2.8% 2.7%
Feb-96 2.8% 2.7%
Mar-96 2.8% 2.8%
Apr-96 2.9% 2.9%
May-96 2.9% 2.9%
Jun-96 2.9% 2.8%
Jul-96 2.8% 3.0%
Aug-96 2.8% 2.9%
Sep-96 2.8% 3.0%
Oct-96 2.9% 3.0%
Nov-96 2.9% 3.3%
Dec-96 2.9% 3.3%
Jan-97 2.9% 3.0%
Feb-97 2.9% 3.0%
Mar-97 2.9% 2.8%
Apr-97 2.8% 2.5%
May-97 2.8% 2.2%
Jun-97 2.8% 2.3%
Jul-97 3.0% 2.2%
Aug-97 3.0% 2.2%
Sep-97 3.0% 2.2%
Oct-97 3.3% 2.1%
Nov-97 3.3% 1.8%
Dec-97 3.3% 1.7%
Jan-98 3.3% 1.6%
Feb-98 3.3% 1.4%
Mar-98 3.3% 1.4%
Apr-98 3.5% 1.4%
May-98 3.5% 1.7%
Jun-98 3.5% 1.7%
Jul-98 3.5% 1.7%
Aug-98 3.7% 1.6%
Sep-98 3.7% 1.5%
Oct-98 3.4% 1.5%
Nov-98 3.4% 1.5%
Dec-98 3.4% 1.6%
Jan-99 3.0% 1.7%
Feb-99 3.0% 1.6%
Mar-99 3.0% 1.7%
Apr-99 2.3%
Source: BLOOMBERG L.P.
</TABLE>
Although price inflation has been well contained, the combination of a tight
labor market (as evidenced by low unemployment rates) and strong economic growth
typically leads to inflationary pressures on wages and, ultimately, prices. In
this environment productivity growth becomes particularly important. Strong
productivity gains allow companies to pay higher wages without raising prices.
Non-farm productivity grew 2.2% in 1998 and a strong 3.5% annualized rate in the
first quarter of 1999,
continuing a healthy trend that began in 1996.
ASSET CLASS PERFORMANCE
Following a sharp correction in July and August, the domestic equities market
rallied strongly during the six-month reporting period ended April 30, 1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN PERFORMANCE GROWTH OF A HYPOTHETICAL $1 INVESTMENT
MSCI-EAFE (ND) INDEX
OCT-98 $1.000
<S> <C> <C> <C>
Nov-98 $1.051
Dec-98 $1.093
Jan-99 $1.089
Feb-99 $1.064
Mar-99 $1.108
Apr-99 $1.153
<CAPTION>
TOTAL RETURN PERFORMANCE GROWTH OF A HYPOTHETICAL $1 INVESTMENT
RUSSELL 2000 SMALL-CAP INDEX S&P 500 INDEX
OCT-98 $1.000 $1.000
<S> <C>
Nov-98 $1.052 $1.061
Dec-98 $1.118 $1.122
Jan-99 $1.132 $1.169
Feb-99 $1.041 $1.132
Mar-99 $1.057 $1.178
Apr-99 $1.152 $1.223
<CAPTION>
TOTAL RETURN PERFORMANCE GROWTH OF A HYPOTHETICAL $1 INVESTMENT
LEHMAN AGGREGATE BOND INDEX
OCT-98 $1.000
Nov-98 $1.006
Dec-98 $1.009
Jan-99 $1.016
Feb-99 $0.998
Mar-99 $1.004
Apr-99 $1.007
</TABLE>
COMPILED BY CHARLES SCHWAB & CO., INC.
Large-cap domestic stocks, as represented by the S&P 500-Registered Trademark-
Index, continued to be the strongest-performing asset class, achieving a total
return of 22.31% for the six-month period. Even within the S&P 500, the
strongest performance was concentrated in the very largest stocks. Small-cap
stocks, as represented by the Russell 2000-Registered Trademark- Index, also
experienced a strong total return of 15.16%.
Assisted by the rebound in Asian markets, international stock returns, as
represented by the Morgan Stanley Capital International Europe, Australasia, Far
East (MSCI-EAFE)-Registered Trademark- Index, experienced a positive
3
<PAGE>
MARKET OVERVIEW (continued)
total return of 15.28% for the six-month reporting period.
Reflecting the moderate rise in intermediate and long-term interest rates, fixed
income returns were generally weak for the period. Bond returns, as represented
by the Lehman Brothers Aggregate Bond Index, were 0.69% for the six-month
reporting period.
U.S. EQUITY VALUATION
The price/earnings (P/E) ratio for the S&P 500-Registered Trademark- Index
reached new record highs during the reporting period and ended the period at a
lofty 33.9 times earnings, more than twice its long-term average. The P/E ratio,
also known as a multiple, is the price of a stock divided by its earnings per
share, and generally indicates how much investors are willing to pay for a
company's earnings potential. Based on other traditional market valuation
measures, such as price/book (P/B) ratio or dividend yield, the U.S. stock
market continues to remain at record high valuation levels.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 PRICE/EARNINGS RATIO
<S> <C>
Jan-90 14.37
Feb-90 14.21
Mar-90 14.77
Apr-90 14.82
May-90 15.84
Jun-90 16.66
Jul-90 16.65
Aug-90 15.57
Sep-90 14.9
Oct-90 14.36
Nov-90 14.59
Dec-90 15.19
Jan-91 14.95
Feb-91 16.82
Mar-91 17.48
Apr-91 17.85
May-91 17.92
Jun-91 17.96
Jul-91 18.07
Aug-91 19.72
Sep-91 19.88
Oct-91 19.92
Nov-91 21.02
Dec-91 21.85
Jan-92 23.35
Feb-92 23.83
Mar-92 25.45
Apr-92 25.51
May-92 25.71
Jun-92 25.08
Jul-92 25.61
Aug-92 25.5
Sep-92 24.37
Oct-92 23.94
Nov-92 24.08
Dec-92 24.01
Jan-93 24.2
Feb-93 24.25
Mar-93 24.22
Apr-93 23.2
May-93 23.21
Jun-93 22.58
Jul-93 22.52
Aug-93 23.02
Sep-93 23.74
Oct-93 23.97
Nov-93 22.55
Dec-93 23.55
Jan-94 22.98
Feb-94 21.17
Mar-94 20.34
Apr-94 20.1
May-94 20.16
Jun-94 19.76
Jul-94 18.64
Aug-94 18.9
Sep-94 18.26
Oct-94 17.55
Nov-94 16.58
Dec-94 16.98
Jan-95 16.23
Feb-95 16.2
Mar-95 16.5
Apr-95 16.02
May-95 16.43
Jun-95 16.82
Jul-95 16.55
Aug-95 16.18
Sep-95 16.86
Oct-95 16.18
Nov-95 17.14
Dec-95 17.41
Jan-96 18.11
Feb-96 18.56
Mar-96 18.94
Apr-96 19.16
May-96 19.48
Jun-96 19.3
Jul-96 18.31
Aug-96 18.62
Sep-96 19.75
Oct-96 19.6
Nov-96 21.05
Dec-96 20.7
Jan-97 20.55
Feb-97 20.98
Mar-97 19.87
Apr-97 20.24
May-97 21.43
Jun-97 22.45
Jul-97 23.92
Aug-97 22.64
Sep-97 24
Oct-97 22.84
Nov-97 24.02
Dec-97 24.51
Jan-98 24.99
Feb-98 26.44
Mar-98 27.76
Apr-98 26.51
May-98 26.12
Jun-98 27.09
Jul-98 26.78
Aug-98 22.77
Sep-98 24.23
Oct-98 27.58
Nov-98 30.14
Dec-98 31.97
Jan-99 33.29
Feb-99 32.65
Mar-99 33.78
Apr-99 33.9
30-Year Average 15.26
Source: BLOOMBERG L.P.
</TABLE>
TREASURY YIELDS
Following an extended period of falling interest rates that began with the
market's response to developing international economic problems in the second
quarter of 1997, both long-term and intermediate-term rates reversed course and
began to trend upward in October 1998. Scaled-back concerns about the impact of
international economic problems and continued strong growth of the domestic
economy, with no evidence that it will slow soon, were the primary drivers of
the reversal of the downward trend in rates.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30-YEAR AND FIVE-YEAR TREASURY BOND YIELDS
SOURCE: BLOOMBERG L.P.
30-YEAR TREASURY FIVE-YEAR TREASURY
BOND YIELD NOTE YIELD
<S> <C> <C>
11/2/98 5.24% 4.40%
11/3/98 5.22% 4.37%
11/4/98 5.33% 4.48%
11/5/98 5.36% 4.49%
11/6/98 5.39% 4.59%
11/9/98 5.29% 4.54%
11/10/98 5.29% 4.50%
11/11/98 5.29% 4.50%
11/12/98 5.25% 4.47%
11/13/98 5.25% 4.50%
11/16/98 5.29% 4.57%
11/17/98 5.29% 4.57%
11/18/98 5.25% 4.58%
11/19/98 5.24% 4.62%
11/20/98 5.22% 4.60%
11/23/98 5.25% 4.62%
11/24/98 5.22% 4.62%
11/25/98 5.19% 4.63%
11/26/98 5.19% 4.63%
11/27/98 5.16% 4.59%
11/30/98 5.06% 4.48%
12/1/98 5.04% 4.41%
12/2/98 5.02% 4.32%
12/3/98 5.00% 4.26%
12/4/98 5.04% 4.39%
12/7/98 5.03% 4.44%
12/8/98 4.99% 4.38%
12/9/98 4.98% 4.36%
12/10/98 4.96% 4.32%
12/11/98 5.02% 4.39%
12/14/98 4.99% 4.33%
12/15/98 5.03% 4.39%
12/16/98 4.99% 4.29%
12/17/98 5.01% 4.35%
12/18/98 5.00% 4.36%
12/21/98 5.06% 4.44%
12/22/98 5.14% 4.51%
12/23/98 5.18% 4.64%
12/24/98 5.21% 4.71%
12/25/98 5.22% 4.71%
12/28/98 5.15% 4.63%
12/29/98 5.10% 4.57%
12/30/98 5.09% 4.53%
12/31/98 5.10% 4.54%
1/1/99 5.10% 4.54%
1/4/99 5.15% 4.56%
1/5/99 5.21% 4.62%
1/6/99 5.16% 4.57%
1/7/99 5.22% 4.63%
1/8/99 5.27% 4.73%
1/11/99 5.31% 4.79%
1/12/99 5.22% 4.67%
1/13/99 5.13% 4.56%
1/14/99 5.06% 4.46%
1/15/99 5.11% 4.55%
1/18/99 5.12% 4.55%
1/19/99 5.15% 4.61%
1/20/99 5.17% 4.64%
1/21/99 5.13% 4.56%
1/22/99 5.08% 4.52%
1/25/99 5.12% 4.55%
1/26/99 5.13% 4.58%
1/27/99 5.13% 4.55%
1/28/99 5.11% 4.56%
1/29/99 5.09% 4.55%
2/1/99 5.18% 4.64%
2/2/99 5.24% 4.70%
2/3/99 5.25% 4.73%
2/4/99 5.29% 4.79%
2/5/99 5.35% 4.86%
2/8/99 5.34% 4.84%
2/9/99 5.30% 4.80%
2/10/99 5.37% 4.82%
2/11/99 5.37% 4.84%
2/12/99 5.42% 4.96%
2/15/99 5.43% 4.98%
2/16/99 5.34% 4.94%
2/17/99 5.31% 4.90%
2/18/99 5.38% 4.97%
2/19/99 5.39% 4.99%
2/22/99 5.36% 4.94%
2/23/99 5.43% 5.04%
2/24/99 5.51% 5.12%
2/25/99 5.65% 5.29%
2/26/99 5.58% 5.22%
3/1/99 5.67% 5.31%
3/2/99 5.61% 5.23%
3/3/99 5.70% 5.29%
3/4/99 5.70% 5.31%
3/5/99 5.60% 5.22%
3/8/99 5.59% 5.19%
3/9/99 5.53% 5.10%
3/10/99 5.55% 5.12%
3/11/99 5.56% 5.12%
3/12/99 5.53% 5.06%
3/15/99 5.52% 5.06%
3/16/99 5.48% 5.02%
3/17/99 5.51% 5.04%
3/18/99 5.49% 5.01%
3/19/99 5.56% 5.08%
3/22/99 5.57% 5.12%
3/23/99 5.54% 5.05%
3/24/99 5.53% 5.06%
3/25/99 5.59% 5.10%
3/26/99 5.59% 5.08%
3/29/99 5.64% 5.13%
3/30/99 5.58% 5.05%
3/31/99 5.63% 5.10%
4/1/99 5.67% 5.14%
4/2/99 5.60% 5.05%
4/5/99 5.59% 5.05%
4/6/99 5.52% 4.99%
4/7/99 5.50% 5.01%
4/8/99 5.44% 4.94%
4/9/99 5.46% 4.96%
4/12/99 5.45% 4.96%
4/13/99 5.49% 5.00%
4/14/99 5.51% 5.03%
4/15/99 5.53% 5.06%
4/16/99 5.57% 5.11%
4/19/99 5.52% 5.03%
4/20/99 5.51% 5.03%
4/21/99 5.52% 5.08%
4/22/99 5.60% 5.13%
4/23/99 5.60% 5.14%
4/26/99 5.58% 5.11%
4/27/99 5.54% 5.10%
4/28/99 5.58% 5.14%
4/29/99 5.53% 5.08%
4/30/99 5.66% 5.21%
</TABLE>
This market overview has been provided by the portfolio management team.
4
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
FUND PERFORMANCE
CUMULATIVE TOTAL RETURN FOR THE PERIOD ENDED 4/30/99(1)
<TABLE>
<CAPTION>
SINCE
INCEPTION
(2/1/99)
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT S&P 500 FUND(2) 4.60%
- -----------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 4.67%
- -----------------------------------------------------------------------------------------------------------------
Index Tracking Differential 0.07%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's since-inception cumulative
total return was 0.70%. Without fee waivers and guarantees, the Fund's
since-inception cumulative total return would have been 0.63% as of 3/31/99.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 12/31/05 that total
operating expenses will not exceed 0.15%. Without fee waivers and
guarantees, the Fund's since-inception cumulative total return would have
been 4.50% as of 4/30/99.
5
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Institutional
Select S&P 500
S&P 500 Fund Index
<S> <C> <C>
2/1/1999 $10,000 $10,000
2/28/1999 $9,680 $9,689
3/31/1999 $10,070 $10,077
4/30/1999 $10,460 $10,467
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select S&P 500 Fund, made at its inception, with a similar
investment in the S&P 500-Registered Trademark- Index. A detailed analysis of
the performance of the Fund is provided in the Fund Discussion section later in
this report.
Also shown is the difference between the total returns of the S&P 500 Index and
the Institutional Select S&P 500 Fund, which is often referred to as the
"tracking differential." The tracking differential arises due to several
factors. For example, unlike the index, the Fund has operating expenses and
incurs trading costs when it buys or sells securities. The Fund also may hold
non-index securities that can produce either higher or lower returns than their
index counterparts. Furthermore, unlike the index, the Fund holds a portion of
its assets in cash.
ASSETS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 138,191
- -------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
PORTFOLIO SNAPSHOT
The Institutional Select S&P 500 Fund (the Fund) seeks high total return by
tracking the performance of the S&P 500-Registered Trademark- Index. To do this,
it invests primarily in common stocks of the S&P 500 Index, a widely recognized,
unmanaged index comprised of 500 large-cap stocks selected by Standard &
Poor's.-Registered Trademark- As of April 30, 1999, the aggregate market
capitalization of the S&P 500 Index represented approximately 79.9% of the total
value of the U.S. stock market.(1) Common stocks of the 50 largest companies in
the S&P 500 Index accounted for approximately 54.6% of the index. Standard &
Poor's rebalances the index periodically and with no set schedule. The
information below and on the following page provides a snapshot of the Fund's
characteristics as of 4/30/99, and is not indicative of its composition after
that date. The terms used below are defined on page 21. A complete list of the
securities in the Fund's portfolio as of 4/30/99 is provided in the Schedule of
Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL
SELECT S&P 500
FUND*
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Number of Issues 505
- --------------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $8,364
- --------------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 32.9
- --------------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 13.7
- --------------------------------------------------------------------------------------------------------------------------------
12-Month Yield N/A
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate -- **
- --------------------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A
- --------------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.15%+
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Source: Wilshire Associates. The U.S. stock market is represented by the
Wilshire 5000 Index.
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Fund.
** Portfolio turnover rate is less than one percent.
+ Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 12/31/05.
7
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 33.6%
Healthcare/Drugs and Medicine 10.4%
Business Machines and Software 10.3%
Telephone 7.9%
Electronics 7.1%
Banks 6.8%
Retail 5.9%
Miscellaneous Finance 5.5%
Producer Goods and Manufacturing 4.4%
Oil-International 4.4%
Food and Agriculture 3.7%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EQUITY INVESTMENT STYLE BOX(1)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Microsoft Corp. 3.52%
- ---------------------------------------------------
General Electric Co. 2.97%
- ---------------------------------------------------
Wal-Mart Stores, Inc. 1.76%
- ---------------------------------------------------
Intel Corp. 1.75%
- ---------------------------------------------------
Exxon Corp. 1.74%
- ---------------------------------------------------
IBM Corp. 1.67%
- ---------------------------------------------------
Cisco Systems, Inc. 1.55%
- ---------------------------------------------------
Citigroup, Inc. 1.46%
- ---------------------------------------------------
Coca-Cola Co. 1.44%
- ---------------------------------------------------
Merck & Co., Inc. 1.44%
- ---------------------------------------------------
</TABLE>
(1) Source: Charles Schwab & Co., Inc. The style box illustrates the composition
of the Fund's portfolio as of 4/30/99. It is not indicative of its holdings
after that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
8
<PAGE>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
FUND PERFORMANCE
CUMULATIVE TOTAL RETURN FOR THE PERIOD ENDED 4/30/99(1)
<TABLE>
<CAPTION>
SINCE
INCEPTION
(2/1/99)
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND(2) 9.30%
- -----------------------------------------------------------------------------------------------------------------
S&P 500/BARRA Value Index 9.50%
- -----------------------------------------------------------------------------------------------------------------
Index Tracking Differential 0.20%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's since-inception cumulative
total return was 0.80%. Without fee waivers and guarantees, the Fund's
since-inception cumulative total returns would have been 0.71% as of 3/31/99.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived a portion of their fees during the
reporting period and have guaranteed through at least 12/30/05 that total
operating expenses will not exceed 0.25%. Without fee waivers and
guarantees, the Fund's since-inception cumulative total return would have
been 9.41% as of 4/30/99.
9
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Institutional
Select
Large-Cap S&P 500 BARRA
Value Index Fund Value Index
<S> <C> <C>
2/1/1999 $10,000 $10,000
2/28/1999 $9,780 $9,785
3/31/1999 $10,080 $10,081
4/30/1999 $10,930 $10,950
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Large-Cap Value Index Fund, made at its inception, with a
similar investment in the S&P 500/BARRA Value Index. A detailed analysis of the
performance of the Fund is provided in the Fund discussion section later in this
report.
Also shown is the difference between the total returns of the S&P 500/BARRA
Value Index and the Institutional Select Large-Cap Value Index Fund, which is
often referred to as the "tracking differential." (See page 6 for a more
detailed discussion).
ASSETS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 41,533
- --------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Large-Cap Value Index Fund (the Fund) seeks high total
return by tracking the performance of the S&P 500/BARRA Value Index. To do this,
it invests primarily in common stocks of the S&P 500/BARRA Value index, a widely
recognized index comprised of approximately 350 large-cap value common stocks
selected by BARRA, Inc. and Standard & Poor's.-Registered Trademark- The total
value of the index (as measured by the combined market capitalization of the
companies included in the index) is approximately half the total value of the
S&P 500-Registered Trademark- Index. The companies with the highest price/book
ratios may be included in the index. BARRA, Inc., and Standard & Poor's
rebalance the index at least semiannually. The information below and on the
following page provides a snapshot of the Fund's characteristics as of 4/30/99,
and is not indicative of its composition after that date. The terms used below
are defined on page 21. A complete list of the securities in the Fund's
portfolio as of 4/30/99 is provided in the Schedule of Investments later in this
report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT
LARGE-CAP VALUE INDEX
FUND*
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Number of Issues 384
- --------------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $6,584
- --------------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 28.1
- --------------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 6.9
- --------------------------------------------------------------------------------------------------------------------------------
12-Month Yield N/A
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate --**
- --------------------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A
- --------------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.25%+
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Fund.
** Portfolio turnover rate was less than one percent.
+ Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 12/31/05.
11
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 32.3%
Banks 12.8%
Telephone 9.7%
Oil-International 9.4%
Miscellaneous Finance 7.9%
Electronics 5.5%
Utilities-Energy and Gas 5.3%
Media 5.2%
Insurance 4.2%
Chemical 3.9%
Retail 3.8%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INVESTMENT STYLE BOX(1)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
X Large
Medium
Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Exxon Corp. 3.73%
- ---------------------------------------------------
Citigroup, Inc. 3.15%
- ---------------------------------------------------
AT&T Corp. 2.94%
- ---------------------------------------------------
Royal Dutch Petroleum Co.-Sponsored ADR 2.34%
- ---------------------------------------------------
Bank of America Corp. 2.31%
- ---------------------------------------------------
Bell Atlantic Corp. 1.67%
- ---------------------------------------------------
BellSouth Corp. 1.63%
- ---------------------------------------------------
Time Warner, Inc. 1.59%
- ---------------------------------------------------
Mobil Corp. 1.53%
- ---------------------------------------------------
Hewlett Packard Co. 1.49%
- ---------------------------------------------------
</TABLE>
(1) Source: Charles Schwab & Co., Inc. The style box illustrates the composition
of the Fund's portfolio as of 4/30/99. It is not indicative of its holdings
after that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
12
<PAGE>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
FUND PERFORMANCE
CUMULATIVE TOTAL RETURN FOR THE PERIOD ENDED 4/30/99(1)
<TABLE>
<CAPTION>
SINCE
INCEPTION
(2/1/99)
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND(2) (0.80)%
- -----------------------------------------------------------------------------------------------------------------
S&P Small-Cap 600/BARRA Value Index (0.53)%
- -----------------------------------------------------------------------------------------------------------------
Index Tracking Differential 0.27%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
National Association of Securities Dealers (NASD) regulations require that we
report performance data as of the most recent calendar quarter--in this case,
the quarter ended 3/31/99. As of 3/31/99, the Fund's since-inception cumulative
total return was (8.70)%. Without fee waivers and guarantees, the Fund's
since-inception cumulative total return would have been (8.82)% as of 3/31/99.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
(1) Actual, not annualized, because period is less than one year.
(2) The Investment Adviser and Schwab waived their fees during the reporting
period and have guaranteed through at least 6/30/99 that total operating
expenses will not exceed 0.00%. Additionally, they have guaranteed through
at least 12/31/05 that total operating expenses will not exceed 0.32%.
Without fee waivers and guarantees, the Fund's since-inception cumulative
total return would have been (1.01)% as of 4/30/99.
13
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Institutional
Select S&P Small-Cap
Small-Cap Value 600/Barra
Index Fund Value Index
<S> <C> <C>
2/1/1999 $10,000 $10,000
2/28/1999 $ 9,170 $ 9,186
3/31/1999 $ 9,130 $ 9,150
4/30/1999 $ 9,920 $ 9,947
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Small-Cap Value Index Fund, made at its inception, with a
similar investment in the S&P Small-Cap 600/BARRA Value Index. A detailed
analysis of the performance of the Fund is provided in the Fund discussion
section later in this report.
Also shown is the difference between the total returns of the S&P Small-Cap
600/BARRA Value Index and the Institutional Select Small-Cap Value Index Fund,
which is often referred to as the "tracking differential."(See page 6 for a more
detailed discussion).
ASSETS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
Total net assets as of 4/30/99 (000s) $ 20,554
- --------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Small-Cap Value Index Fund (the Fund) seeks high total
return by tracking the performance of the S&P SmallCap 600/BARRA Value index. To
do this, it invests primarily in common stocks of the S&P SmallCap 600/BARRA
Value Index, a widely recognized index composed of approximately 375 small-cap
value common stocks selected by BARRA, Inc. and Standard &
Poor's.-Registered Trademark- The total value of the index (as measured by the
combined market capitalization of the companies included in the index) is
approximately half the total value of the S&P SmallCap 600 Index. The companies
with the highest price/book ratios may be included in the index. BARRA, Inc. and
Standard & Poor's rebalance the index at least semiannually. The information
below and on the following page provides a snapshot of the Fund's
characteristics as of 4/30/99, and is not indicative of its composition after
that date. The terms used below are defined on page 21. A complete list of the
securities in the Fund's portfolio as of 4/30/99 is provided in the Schedule of
Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT
SMALL-CAP
VALUE INDEX FUND*
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Issues 404
- ---------------------------------------------------------------------------------------------------------------------------------
Median Market Cap ($ Mil) $344
- ---------------------------------------------------------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 22.5
- ---------------------------------------------------------------------------------------------------------------------------------
Price/Book (P/B) Ratio 1.9
- ---------------------------------------------------------------------------------------------------------------------------------
12-Month Yield N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 4%
- ---------------------------------------------------------------------------------------------------------------------------------
Three-Year Beta N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Expense Ratio 0.32%**
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. This information is for illustrative
purposes only and is not intended to show, predict or guarantee future
composition of the Fund.
** Reflects a voluntary reduction by the Investment Adviser and Schwab, which is
guaranteed through at least 12/31/05.
15
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 4/30/99
<S> <C>
Other 40.2%
Electronics 9.2%
UtilitiesEnergy and Gas 8.7%
Business Services 6.7%
Producer Goods and Manufacturing 6.5%
Retail 5.8%
Healthcare/Drugs and Medicine 5.6%
Insurance 5.0%
Construction 4.7%
Food and Agriculture 4.0%
Trucking and Freight 3.6%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INVESTMENT STYLE BOX(1)
AS OF 4/30/99
-STYLE-
<S> <C> <C> <C>
Value Blend Growth -Market Cap-
Large
Medium
X Small
</TABLE>
TOP 10 HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS
<TABLE>
<S> <C>
- ---------------------------------------------------
Commercial Federal Corp. 0.89%
- ---------------------------------------------------
Fremont General Corp. 0.84%
- ---------------------------------------------------
Zale Corp. 0.83%
- ---------------------------------------------------
Ann Taylor Stores 0.75%
- ---------------------------------------------------
D.R. Horton, Inc. 0.74%
- ---------------------------------------------------
Dallas Semiconductor Corp. 0.73%
- ---------------------------------------------------
Sierra Pacific Resources 0.66%
- ---------------------------------------------------
Devon Energy Corp. 0.65%
- ---------------------------------------------------
Tower Automotive, Inc. 0.63%
- ---------------------------------------------------
AptarGroup, Inc. 0.63%
- ---------------------------------------------------
</TABLE>
(1) Source: Charles Schwab & Co., Inc. The style box illustrates the composition
of the Fund's portfolio as of 4/30/99. It is not indicative of its holdings
after that date, nor does it represent an exact assessment of risk or future
assessment or any type of future performance. Placement is based on the
Fund's P/E and P/B ratios relative to the S&P 500-Registered Trademark-
Index, as well as the size of the companies in which it invests, or median
market capitalization.
16
<PAGE>
PORTFOLIO MANAGEMENT
THE PORTFOLIO MANAGEMENT TEAM
GERI HOM--vice president and senior portfolio manager, has primary
responsibility for the management of the Institutional Select-TM- Funds. Geri
also manages all Schwab's Equity Index Funds and the Schwab Analytics
Fund-Registered Trademark- and she co-manages the Schwab MarketTrack
Portfolios.-TM- Geri joined CSIM in March 1995 as portfolio manager and was
promoted to her current position in December 1996. She currently manages
approximately $15 billion in indexed equity mutual fund assets. Prior to joining
CSIM, Geri was a principal for Wells Fargo Nikko Investment Advisors and vice
president and manager of the Domestic Equity Portfolio Group for Wells Fargo
Nikko.
LARRY MANO--director and portfolio manager, has day-to-day portfolio management
responsibilities for the Institutional Select Large-Cap Value Index Fund and the
Institutional Select Small-Cap Value Index Fund. Prior to joining the firm in
1998, he spent 20 years at Wilshire Associates, where he directed the
development of equity index investment products.
17
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
Q. HOW DID THE FUNDS PERFORM DURING THE REPORTING PERIOD?
A. Typically, you will receive semiannual reports for the six months ended April
30 and annual reports for the year ended October 31 of each year. Because the
Institutional Select Funds had their inception on February 1, 1999, this report
addresses only the three-month period ended April 30, 1999. Additionally,
because the managers seek to manage the Funds with an emphasis tax efficiency,
we plan to report the Funds' returns as well as the category average return on
both a pre- and after-tax basis. Given the shorter-than-normal reporting period
and the fact that the period covered does not include the Funds' annual year-end
distribution date, we are not including after-tax returns in this report.
During the three-month period, large-cap domestic stocks continued their strong
performance. In particular, large-cap value stocks had a very strong showing.
The following tables show the Funds' returns as well as those of the Funds'
respective benchmark indices and Morningstar peer groups.
INSTITUTIONAL SELECT S&P 500 FUND
<TABLE>
<CAPTION>
THREE MONTHS
ENDED 4/30/99
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Select S&P 500 Fund 4.60%
- ---------------------------------------------------------------------------------------------------------------------------
S&P 500-Registered Trademark- Index 4.67%
- ---------------------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund 4.57%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTITUTIONAL SELECT LARGE-CAP VALUE FUND
<TABLE>
<CAPTION>
THREE MONTHS
ENDED 4/30/99
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Select Large-Cap Value Fund 9.30%
- ---------------------------------------------------------------------------------------------------------------------------
S&P 500/BARRA Value Index 9.50%
- ---------------------------------------------------------------------------------------------------------------------------
Average Large-Cap Value Fund 7.56%
- ---------------------------------------------------------------------------------------------------------------------------
S&P 500 Index 4.67%
- ---------------------------------------------------------------------------------------------------------------------------
Average Large-Cap Fund 4.57%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTITUTIONAL SELECT SMALL-CAP VALUE FUND
<TABLE>
<CAPTION>
THREE MONTHS
ENDED 4/30/99
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Select Small-Cap Value Fund (0.80)%
- ---------------------------------------------------------------------------------------------------------------------------
S&P SmallCap 600/BARRA Value Index (0.53)%
- ---------------------------------------------------------------------------------------------------------------------------
Average Small-Cap Value Fund 0.18%
- ---------------------------------------------------------------------------------------------------------------------------
S&P 600-Registered Trademark- SmallCap Index 4.67%
- ---------------------------------------------------------------------------------------------------------------------------
Average Small-Cap Fund 0.14%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the Fund. Investors cannot invest in an index
directly.
The Investment Adviser and Schwab waived a portion of their fees during the
reporting period. They have guaranteed through at least 12/31/05 that total
operating expenses will not exceed 0.15% for the Institutional Select S&P 500
Fund, 0.25% for the Institutional Select Large-Cap Value Index Fund or 0.32% for
the Institutional Select Small-Cap Value Index Fund. Additionally, they have
guaranteed through at least 6/30/99 that the total operating expenses will not
exceed 0.00% for the Institutional Select Small-Cap Value Index Fund. Without
fee waivers and guarantees, the Funds' since-inception cumulative total return
would have been 4.50%, 9.41% and (1.01)%, respectively, as of 4/30/99.
Source: Morningstar, Inc. As of 4/30/99, the average large-cap fund category
contained 959 funds, the average large-cap value fund category contained 263
funds the average small-cap value fund category contained 133 funds and the
averge small-cap fund category contained 450 funds. Although many mutual funds
have multiple classes of shares, the category average includes only those funds
that were classified by Morningstar as a distinct portfolio. This typically
means that a fund's oldest class of shares was used.
18
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
FUND DISCUSSION (CONTINUED)
Q. CAN YOU PROVIDE SOME HISTORICAL PERSPECTIVE ON VALUE STOCK RETURNS COMPARED
WITH GROWTH STOCK RETURNS?
A. As shown on the charts below, performance has varied considerably between the
two styles. The Schwab Center for Investment Research (SCIR) found that the
value stocks historically have shown much less volatility. Whether looking at
the past 10, 15 or 20 years, value stocks exhibited only three-quarters the
volatility of growth stocks. Volatility was measured by the annualized standard
deviation of monthly total returns for each index.
On the return side, the data is less definitive. Although value stock returns
have outperformed the growth stock returns for the period from 1975 through
1998, there have been periods when growth stocks have performed better than
value stocks and vice versa. These shifting results are driven by the fact
that value and growth stocks tend to take turns leading the market, and these
"performance cycles" have varied in length and magnitude, as shown by the
second graph below. Depending on which time period you consider, growth
looked better than value and vice versa, although the value cycles tended to
be longer. Although these cycles may not be entirely random, predicting them
is difficult.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $1
INVESTMENT
S&P/BARRA 500 Growth S&P/BARRA 500 Value
<S> <C> <C>
1/1/75 $1.00 $1.00
1975 $1.32 $1.43
1976 $1.50 $1.93
1977 $1.32 $1.88
1978 $1.41 $2.00
1979 $1.63 $2.42
1980 $2.28 $3.00
1981 $2.05 $3.00
1982 $2.51 $3.63
1983 $2.91 $4.68
1984 $2.98 $5.17
1985 $3.97 $6.70
1986 $4.55 $8.15
1987 $4.85 $8.45
1988 $5.43 $10.28
1989 $7.40 $12.97
1990 $7.42 $12.08
1991 $10.26 $14.81
1992 $10.78 $16.37
1993 $10.96 $19.41
1994 $11.31 $19.29
1995 $15.62 $26.43
1996 $19.36 $32.24
1997 $26.43 $41.90
1998 $37.57 $48.05
</TABLE>
Q. CAN YOU PROVIDE SOME BACKGROUND ON THE S&P/BARRA VALUE INDICES?
A. The S&P 500/BARRA VALUE INDEX, and its counterpart, the S&P 500/BARRA Growth
Index, are based on methodology developed by 1990 Nobel Laureate William F.
Sharpe, who determined that dividing S&P 500 stocks into growth and value
indices can account for 90% of the monthly variation in return. Stocks from the
S&P 500-Registered Trademark- Index are divided into value and growth indices
based on book value
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VALUE AND GROWTH
RELATIVE PERFORMANCE: 1975-1998
<S> <C>
1975 11.66%
1976 21.09%
1977 9.25%
1978 -0.62%
1979 5.44%
1980 -15.81%
1981 9.83%
1982 -0.99%
1983 12.65%
1984 8.19%
1985 -3.63%
1986 7.17%
1987 -2.82%
1988 9.72%
1989 -10.27%
1990 -7.05%
1991 -15.81%
1992 5.46%
1993 16.92%
1994 -3.77%
1995 -1.14%
1996 -1.97%
1997 -6.54%
1998 -27.49%
VALUE RELATIVE PERFORMANCE
GROWTH RELATIVE PERFORMANCE
</TABLE>
19
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
FUND DISCUSSION (CONTINUED)
relative to price. Value index stocks tend to have betas below 1, whereas
growth index stocks tend to have betas greater than 1. Each index should hold
an equal distribution of the total market capitalization for the S&P
500-Registered Trademark- Index following the regularly scheduled semiannual
rebalancing on December 31 and June 30. The growth and value indices are also
modified monthly to reflect base index changes.
The methodology used to create the S&P SMALL-CAP 600/BARRA VALUE INDEX is
identical to that used to create the S&P 500/BARRA Value Index. The S&P SmallCap
600/BARRA Value Index and its growth counterpart, the S&P SmallCap 600/BARRA
Growth Index, should hold an equal distribution of total market capitalization
for the S&P SmallCap 600 Index following the regularly scheduled semiannual
rebalancing on December 31 and June 30. The growth and value indices are
modified monthly to reflect base index changes.
20
<PAGE>
GLOSSARY
ASSET ALLOCATION--The division of holdings among different types of assets, such
as domestic stocks, international stocks, bonds and cashequivalent securities.
BETA--A measure of a stock's volatility relative to the overall stock market.
The beta of the S&P 500-Registered Trademark- Index is 1. Any investment that is
more volatile than the market as a whole has a beta value higher than 1. If the
beta is less than 1, the investment is considered to be less volatile than the
market.
CAPITAL GAIN (LOSS)--When a stock is sold for a profit, the difference between
the net sales price and its net purchase price, or cost basis, is a capital
gain. If a stock is sold below cost, the difference is a capital loss.
EARNINGS GROWTH RATE--The average annual rate of growth in earnings over the
past five years for the stocks in a fund's portfolio.
EARNINGS PER SHARE (EPS)--The net income (or earnings) of a company for the past
12 months divided by the current number of shares outstanding.
EXPENSE RATIO--Amount, expressed as a percentage of total investment, that
shareholders pay annually for mutual fund operating expenses and management
fees.
MARKET CAPITALIZATION--The dollar value of a company or the amount someone would
pay to buy the company today. It is calculated by multiplying the total number
of outstanding shares by the current price per share. Median market cap is the
midpoint of a fund's total market capitalization, weighted by the portion of
assets invested in each holding. As a result, half of the fund's holdings will
have market caps above the median, and the rest below it.
NET ASSET VALUE (NAV)--The market value of a fund share.
PRICE/BOOK (P/B) RATIO--Compares a stock's market value with the value of total
assets minus intangible assets and total liabilities (the book value). It is
determined by dividing the current price of the stock by common stockholder
equity per share. In evaluating stocks, comparing P/B ratios often works well in
situations where price/earnings ratios do not, because the P/B ratio is stable
over time and is always a positive number. P/B ratios are best used for
comparisons within an industry rather than between industries, as certain
industries will usually contain stocks that have all high or all low P/B ratios.
For mutual funds the P/B ratio is the weighted average of all the stocks' P/B
ratios in the portfolio.
PRICE/EARNINGS (P/E) RATIO--The ratio of a company's stock price to its earnings
per share over the past year. For mutual funds the P/E ratio is the weighted
average of all the stocks' P/E ratios in the mutual fund's portfolio. The P/E is
an indicator of market expectations about a company's prospects. Typically, the
higher the P/E, the greater the expectations for a company's future growth.
Because earnings are volatile and sometimes "negative," however, the P/E has its
limitations and may fail as a measure for a significant number of stocks at any
given time.
RETURN ON EQUITY--The average annual rate of return generated by the companies a
fund holds during the past five years for each dollar of shareholders' equity
(net income divided by shareholders' equity).
STOCK--A share of ownership, or equity, in a corporation.
TOTAL RETURN--The sum of dividends, plus capital gains (or losses).
TURNOVER RATE--An indication of a fund's trading activity. Funds with higher
turnover rates typically incur higher transaction costs and are more likely to
distribute capital gains, which are taxable to investors.
YIELD--The income generated by an investment, expressed as a percentage of its
price.
21
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
SCHEDULE OF INVESTMENTS
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
COMMON STOCK -- 95.3%
AEROSPACE / DEFENSE -- 1.3%
Boeing Co. 11,400 $ 463
General Dynamics Corp. 1,500 105
Lockheed Martin Corp. 4,800 207
Northrop Grumman Corp. 900 58
Raytheon Co., Class B 4,000 281
Rockwell International Corp. 2,200 114
Textron, Inc. 1,900 175
United Technologies Corp. 2,700 391
------
1,794
------
AIR TRANSPORTATION -- 0.5%
AMR Corp./Del+ 2,300 161
Delta Air Lines, Inc. 1,700 108
FDX Corp.+ 1,800 203
Southwest Airlines Co. 3,900 127
U.S. Airways Group, Inc.+ 1,000 54
------
653
------
ALCOHOLIC BEVERAGES -- 0.6%
Adolph Coors Co., Class B 600 32
Anheuser-Busch Companies, Inc. 5,700 417
Brown-Forman Corp., Class B 800 59
Seagram Co., Ltd. 4,900 281
------
789
------
APPAREL -- 0.3%
Fruit of the Loom, Inc., Class A+ 600 6
Liz Claiborne, Inc. 800 26
Nike, Inc., Class B 3,400 211
Reebok International, Ltd.+ 700 13
Russell Corp. 300 7
VF Corp. 1,700 88
------
351
------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 1.6%
B.F. Goodrich Co. 900 36
Cooper Tire & Rubber Co. 900 20
Cummins Engine Co., Inc. 600 32
Dana Corp. 1,900 90
Danaher Corp. 1,600 106
Eaton Corp. 900 83
Fleetwood Enterprises, Inc. 300 7
Ford Motor Co. 14,600 933
General Motors Corp. 7,900 703
Number Value
of Shares (000s)
--------- ------
Genuine Parts Co. 2,000 $ 60
Goodyear Tire & Rubber Co. 1,900 109
Navistar International Corp.+ 800 42
TRW Inc. 1,400 59
------
2,280
------
BANKS -- 7.1%
AmSouth Bancorp. 1,400 67
Bank of America Corp. 20,900 1,505
Bank of New York Co., Inc. 9,200 368
Bank One Corp. 14,200 838
BankBoston Corp. 3,600 176
Bankers Trust New York Corp. 1,100 99
BB&T Corp. 3,800 152
Chase Manhattan Corp. 10,200 844
Comerica, Inc. 1,800 117
Fifth Third Bancorp. 3,300 237
Firstar Corp. 8,200 247
First Union Corp. 12,000 664
Fleet Financial Group, Inc. 6,900 297
Golden West Financial Corp. 700 70
Huntington Bancshares Inc. 2,500 89
J.P. Morgan & Co., Inc. 2,100 283
KeyCorp, Inc. 5,500 170
Mellon Bank Corp. 3,100 230
Mercantile Bancorp, Inc. 1,800 103
National City Corp. 3,900 280
Northern Trust Corp. 1,300 121
PNC Bank Corp. 3,700 214
Regions Financial Corp. 2,600 98
Republic New York Corp. 1,300 76
SouthTrust Corp. 2,000 80
State Street Corp. 1,900 166
Summit Bancorp. 2,100 89
SunTrust Banks, Inc. 3,800 272
Synovus Financial Corp. 3,100 69
U.S. Bancorp. 8,700 322
Union Planters Corp. 1,700 73
Wachovia Corp. 2,400 211
Washington Mutual, Inc. 7,200 296
Wells Fargo & Co. 19,900 859
------
9,782
------
BUSINESS MACHINES & SOFTWARE -- 11.1%
3Com Corp.+ 4,400 115
Adobe Systems, Inc. 900 57
Apple Computer, Inc.+ 1,700 78
22
<PAGE>
Number Value
of Shares (000s)
--------- ------
Autodesk, Inc. 800 $ 24
BMC Software, Inc.+ 2,800 121
Cabletron Systems, Inc.+ 1,900 18
Ceridian Corp.+ 1,600 59
Cisco Systems, Inc.+ 19,100 2,179
Compaq Computer Corp. 20,400 455
Computer Associates
International, Inc. 6,400 273
Compuware Corp.+ 4,500 110
Data General Corp.+ 400 5
Dell Computer Corp.+ 30,700 1,264
Gateway 2000, Inc.+ 1,900 126
Hewlett-Packard Co. 12,300 970
Honeywell, Inc. 1,500 142
International Business
Machines Corp. 11,200 2,343
Microsoft Corp.+ 60,900 4,952
Novell, Inc.+ 4,000 89
Oracle Systems Corp.+ 17,450 472
Parametic Technology Corp.+ 2,900 38
PeopleSoft, Inc.+ 2,700 37
Pitney Bowes, Inc. 3,300 231
Seagate Technology, Inc.+ 2,900 81
Silicon Graphics, Inc.+ 2,200 28
Sun Microsystems, Inc.+ 9,300 556
Unisys Corp.+ 3,000 94
Xerox Corp. 8,000 470
------
15,387
------
BUSINESS SERVICES -- 3.3%
America Online, Inc.+ 12,400 1,770
Automatic Data Processing, Inc. 7,400 329
Browning-Ferris Industries, Inc. 1,900 76
Cendant Corp.+ 9,900 178
Computer Sciences Corp.+ 1,900 113
Deluxe Corp. 1,000 35
Ecolab, Inc. 1,600 67
Equifax, Inc. 1,700 61
First Data Corp. 5,400 229
H&R Block, Inc. 1,200 58
Interpublic Group of
Companies, Inc. 1,700 132
Laidlaw, Inc. 3,200 20
Moore Corp., Ltd. 700 7
National Service Industries, Inc. 500 19
Omnicom Group, Inc. 2,000 145
Paychex, Inc. 1,900 97
Number Value
of Shares (000s)
--------- ------
R.R. Donnelley & Sons Co. 1,500 $ 53
Tyco International Ltd. 9,926 806
Waste Management, Inc. 7,300 412
------
4,607
------
CHEMICAL -- 1.9%
Air Products & Chemicals, Inc. 2,700 127
Dow Chemical Co. 2,700 354
E.I. du Pont de Nemours & Co. 13,600 960
Eastman Chemical Co. 1,000 56
Great Lakes Chemical Corp. 800 38
Hercules, Inc. 1,200 45
Minnesota Mining &
Manufacturing Co. 4,800 427
Morton International, Inc. 1,400 57
Nalco Chemical Co. 800 29
PPG Industries, Inc. 2,100 136
Praxair, Inc. 2,000 104
Rohm & Haas Co. 2,000 90
Sigma-Aldrich Corp. 1,200 39
Union Carbide Corp. 1,700 88
W.R. Grace & Co.+ 600 10
------
2,560
------
CONSTRUCTION -- 0.3%
Armstrong World Industries, Inc. 400 22
Centex Corp. 600 22
Crane Co. 700 20
Fluor Corp. 800 27
Kaufman & Broad Home Corp. 600 15
Masco Corp. 4,100 120
Owens Corning 700 25
Pulte Corp. 600 14
Sherwin-Williams Co. 2,100 65
The Stanley Works 1,100 33
------
363
------
CONSUMER - DURABLE -- 0.3%
Black & Decker Corp. 1,000 57
Fortune Brands, Inc. 2,100 83
Maytag Corp. 1,200 82
Newell Rubbermaid Inc. 3,367 160
Whirlpool Corp. 900 60
------
442
------
23
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
CONSUMER - NONDURABLE -- 1.2%
American Greetings Corp., Class A 700 $ 18
Darden Restaurants, Inc. 1,600 36
Hasbro, Inc. 2,400 82
Jostens, Inc. 300 6
Mattel, Inc. 3,400 88
McDonald's Corp. 16,400 695
RJR Nabisco Holdings Corp. 3,800 98
Tricon Global Restaurants, Inc.+ 1,800 116
Unilever NV+ 7,800 507
Wendy's International, Inc. 1,400 38
------
1,684
------
CONTAINERS -- 0.1%
Ball Corp. 300 16
Bemis Co., Inc. 600 21
Crown Cork & Seal Co., Inc. 1,400 46
Owens-Illinois, Inc.+ 1,800 52
Sealed Air Corp.+ 1,000 61
------
196
------
ELECTRONICS -- 5.9%
Advanced Micro Devices, Inc.+ 1,800 30
Andrew Corp.+ 1,000 14
Applied Materials, Inc.+ 4,400 236
Ascend Communications, Inc.+ 2,600 251
EG&G, Inc. 600 19
Electronic Data Systems Corp. 5,900 317
EMC Corp.+ 6,100 665
Emerson Electric Co. 5,200 335
General Instrument Corp.+ 1,900 69
Harris Corp. 900 31
Intel Corp. 40,200 2,460
KLA-Tencor Corp.+ 1,000 50
LSI Logic Corp.+ 1,600 54
Lucent Technologies, Inc. 31,900 1,918
Micron Technology, Inc.+ 3,000 111
Motorola, Inc. 7,300 585
National Semiconductor Corp.+ 1,900 24
Perkin Elmer Corp.+ 600 65
Scientific-Atlanta, Inc. 800 25
Solectron Corp.+ 3,100 150
Tektronix, Inc. 500 12
Tellabs, Inc.+ 2,300 252
Texas Instruments, Inc. 4,800 490
Number Value
of Shares (000s)
--------- ------
Thermo Electron Corp.+ 1,800 $ 29
Thomas & Betts Corp. 600 25
------
8,217
------
ENERGY - RAW MATERIALS -- 0.9%
Anadarko Petroleum Corp. 1,400 53
Apache Corp. 1,200 37
Baker Hughes, Inc. 3,900 117
Burlington Resources, Inc. 2,100 97
Halliburton Co. 5,200 222
Helmerich & Payne, Inc. 600 15
McDermott International, Inc. 800 23
Occidental Petroleum Corp. 4,100 83
ONEOK, Inc. 300 8
Rowan Companies, Inc.+ 1,000 16
Schlumberger Ltd. 6,600 422
Sempra Energy 2,900 60
Sunoco, Inc. 1,000 36
Union Pacific Resources
Group Inc. 2,800 39
------
1,228
------
FOOD & AGRICULTURE -- 3.8%
Archer-Daniels Midland Co. 7,200 108
Bestfoods, Inc. 3,500 176
Campbell Soup Co. 5,400 221
Coca-Cola Co. 29,800 2,026
Coca-Cola Enterprises, Inc. 4,600 159
ConAgra, Inc. 5,900 147
General Mills, Inc. 1,800 132
H.J. Heinz Co. 4,300 201
Hershey Foods Corp. 1,700 89
Kellogg Co. 4,800 178
Monsanto Co. 7,600 344
PepsiCo, Inc. 17,700 654
Pioneer Hi-Bred
International, Inc. 2,800 105
Quaker Oats Co. 1,600 103
Ralston-Ralston Purina Co. 3,800 116
Sara Lee Corp. 10,800 240
SYSCO Corp. 4,100 122
Wm. Wrigley Jr. Co. 1,400 124
------
5,245
------
GOLD -- 0.2%
Barrick Gold Corp. 4,400 89
Battle Mountain Gold Co. 1,800 5
Homestake Mining Co. 3,200 31
24
<PAGE>
Number Value
of Shares (000s)
--------- ------
Newmont Mining Corp. 2,100 $ 51
Placer Dome, Inc. 2,800 40
-------
216
-------
HEALTHCARE/DRUGS & MEDICINE -- 10.6%
Abbott Laboratories 18,300 886
Allergan, Inc. 800 72
ALZA Corp.+ 1,200 40
American Home Products Corp. 15,900 970
Amgen, Inc.+ 6,200 381
Bausch & Lomb, Inc. 700 53
Baxter International, Inc. 3,400 214
Becton, Dickinson & Co. 2,900 108
Biomet, Inc. 1,300 53
Boston Scientific Corp.+ 4,700 200
Bristol-Meyers Squibb Co. 24,000 1,526
C.R. Bard, Inc. 600 29
Cardinal Health, Inc. 3,200 191
Columbia / HCA Healthcare Corp. 7,600 188
Eli Lilly & Co. 13,300 979
Guidant Corp. 3,700 199
HCR Manor Care, Inc.+ 1,300 36
HealthSouth Corp.+ 5,000 67
Humana, Inc.+ 2,000 27
IMS Health, Inc. 3,700 111
Johnson & Johnson 16,300 1,589
Mallinckrodt, Inc. 1,000 35
McKesson HBOC, Inc. 3,300 116
Medtronic, Inc. 7,100 511
Merck & Co., Inc. 28,800 2,023
Pfizer, Inc. 15,700 1,806
Pharmacia & Upjohn, Inc. 6,200 347
Schering-Plough Corp. 17,800 860
Service Corp. International 3,300 68
Shared Medical Systems Corp. 400 22
St. Jude Medical, Inc.+ 1,000 28
Tenet Healthcare Corp.+ 3,700 87
United Healthcare Corp. 2,300 129
Warner Lambert Co. 10,000 679
Watson Pharmaceuticals, Inc.+ 1,100 45
-------
14,675
-------
HOUSEHOLD PRODUCTS -- 2.2%
Alberto-Culver Co., Class B 800 20
Avon Products, Inc. 3,200 174
Clorox Co. 1,400 162
Number Value
of Shares (000s)
--------- ------
Colgate-Palmolive Co. 3,500 $ 359
Gillette Co. 13,400 699
International Flavors &
Fragrances, Inc. 1,300 51
Procter & Gamble Co. 16,100 1,510
Tupperware Corp. 600 14
-------
2,989
-------
INSURANCE -- 3.3%
Aetna, Inc. 1,800 158
Allstate Corp. 9,900 360
American General Corp. 3,000 222
American International
Group, Inc. 14,900 1,750
Aon Corp. 2,100 144
Chubb Corp. 1,900 113
CIGNA Corp. 2,600 227
Cincinnati Financial Corp. 1,900 77
Conseco, Inc. 3,800 120
Hartford Financial Services
Group, Inc. 2,900 171
Jefferson-Pilot Corp. 1,300 88
Lincoln National Corp. 1,200 115
Marsh & McLennan
Companies, Inc. 3,200 245
MBIA, Inc. 1,200 81
MGIC Investment Corp. 1,300 63
Progressive Corp. 900 129
Provident Companies, Inc. 1,500 59
SAFECO Corp. 1,700 68
St. Paul Companies, Inc. 2,800 80
Torchmark Corp. 1,600 55
Transamerica Corp. 1,500 107
UNUM Corp. 1,700 93
-------
4,525
-------
MEDIA -- 2.7%
CBS Corp.+ 8,600 392
Clear Channel
Communications, Inc.+ 3,200 222
Comcast Corp., Class A 4,400 289
Dow Jones & Co., Inc. 1,100 60
Gannett Co., Inc. 3,400 241
Harcourt General, Inc. 800 38
King World Productions, Inc.+ 800 28
Knight-Ridder, Inc. 900 48
McGraw-Hill Companies, Inc. 2,400 133
25
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
Mediaone Group+ 7,400 $ 604
Meredith Group 700 26
New York Times Co., Class A 2,200 76
Time Warner, Inc. 14,800 1,036
Times Mirror Co., Series A 900 53
Tribune Co. 1,400 117
Viacom, Inc., Class B+ 8,300 339
------
3,702
------
MISCELLANEOUS FINANCE -- 5.4%
American Express Co. 5,500 719
Associates First Capital Corp. 8,800 390
Bear Stearns Companies, Inc. 1,320 62
Capital One Financial Corp. 800 139
Charles Schwab Corp. 4,800 527
Citigroup, Inc. 27,300 2,054
Countrywide Credit
Industries, Inc. 1,300 59
Dun & Bradstreet Corp. 1,900 70
Fannie Mae 12,600 894
Franklin Resources, Inc. 3,000 120
Freddie Mac 8,200 515
Household International, Inc. 5,800 292
Lehman Brothers Holdings, Inc. 1,300 72
MBNA Corp. 9,500 268
Merrill Lynch & Co., Inc. 4,300 361
Morgan Stanley, Dean Witter,
Discover & Co. 7,000 694
Providian Financial Corp. 1,700 219
SLM Holding Corp. 1,900 81
------
7,536
------
NON-FERROUS METALS -- 0.4%
Alcan Aluminum, Ltd. 2,700 86
Alcoa Inc. 4,400 274
Asarco, Inc. 400 7
Cyprus Amax Minerals Co. 1,100 17
Engelhard Corp. 1,700 33
Freeport-McMoRan Copper &
Gold, Inc., Class B 1,700 26
Inco, Ltd. 1,800 35
Phelps Dodge Corp. 700 44
Reynolds Metals Co. 700 44
------
566
------
OIL - DOMESTIC -- 0.6%
Amerada Hess Corp. 1,100 63
Ashland, Inc. 900 38
Atlantic Richfield Co. 3,900 327
Number Value
of Shares (000s)
--------- ------
Kerr-McGee Corp. 1,073 $ 45
Phillips Petroleum Co. 3,000 152
Unocal Corp. 2,800 116
USX-Marathon Group 3,600 113
------
854
------
OIL - INTERNATIONAL -- 4.4%
Chevron Corp. 7,900 788
Exxon Corp. 29,400 2,442
Mobil Corp. 9,500 995
Royal Dutch Petroleum Co. -
Sponsored ADR 25,900 1,520
Texaco, Inc. 6,500 408
------
6,153
------
OPTICAL & PHOTO -- 0.2%
Eastman Kodak Co. 4,000 299
Polaroid Corp. 600 12
------
311
------
PAPER & FOREST PRODUCTS -- 1.0%
Boise Cascade Corp. 700 28
Champion International Corp. 1,100 60
Fort James Corp. 2,600 99
Georgia-Pacific Group 1,100 102
International Paper Co. 3,700 197
Kimberly-Clark Corp. 6,600 405
Louisiana-Pacific Corp. 1,400 29
Mead Corp. 1,300 54
Potlatch Corp. 300 12
Temple Inland, Inc. 700 48
Union Camp Corp. 800 64
Westvaco Corp. 1,200 36
Weyerhaeuser Co. 2,400 161
Willamette Industries, Inc. 1,400 65
------
1,360
------
PRODUCER GOODS & MANUFACTURING -- 4.5%
Allied Signal, Inc. 6,800 400
Avery Dennison Corp. 1,400 96
Briggs & Stratton Corp. 400 26
Case Corp. 800 28
Caterpillar, Inc. 4,300 277
Cooper Industries, Inc. 1,200 58
Corning Inc. 2,800 160
Deere & Co. 2,800 120
26
<PAGE>
Number Value
of Shares (000s)
--------- ------
Dover Corp. 2,700 $ 100
FMC Corp.+ 400 26
Foster Wheeler Corp. 400 5
General Electric Co. 39,600 4,178
Harnischfeger Industries, Inc. 300 3
Illinois Tool Works, Inc. 3,000 231
Ingersoll Rand Co. 2,000 138
ITT Industries, Inc. 1,200 43
Johnson Controls, Inc. 1,000 73
Milacron Inc. 400 9
Millipore Corp. 500 15
NACCO Industries, Inc., Class A 100 8
Pall Corp. 1,400 26
Parker-Hannifin Corp. 1,400 66
Raychem Corp. 900 24
Snap-On, Inc. 700 23
Springs Industries, Inc. 300 11
Tenneco, Inc. 1,900 51
The Timken Company 800 18
W.W. Grainger, Inc. 1,100 55
------
6,268
------
RAILROAD & SHIPPING -- 0.5%
Burlington Northern
Santa Fe Corp. 5,600 205
CSX Corp. 2,600 128
Kansas City Southern
Industries, Inc. 1,400 83
Norfolk Southern Corp. 4,500 147
Union Pacific Corp. 3,000 180
------
743
------
RETAIL -- 5.9%
Albertson's, Inc. 2,900 149
American Stores Co. 3,200 101
AutoZone, Inc.+ 1,800 54
Circuit City Stores, Inc. 1,200 74
Consolidated Stores Corp.+ 1,200 41
Costco Companies, Inc.+ 2,600 210
CVS Corp. 4,600 219
Dayton Hudson Corp. 5,400 363
Dillards, Inc., Class A 1,200 33
Dollar General Corp. 2,000 70
Federated Department
Stores, Inc.+ 2,500 117
Fred Meyer, Inc.+ 1,800 97
Gap, Inc. 6,800 453
Number Value
of Shares (000s)
--------- ------
Great Atlantic & Pacific
Tea Co., Inc. 500 $ 15
Home Depot, Inc. 17,800 1,067
IKON Office Solutions 1,500 18
J.C. Penney Co., Inc. 3,100 141
Kmart Corp.+ 5,700 85
Kohl's Corp.+ 1,900 126
Kroger Co.+ 3,000 163
Limited, Inc. 2,700 118
Longs Drug Stores, Inc. 500 17
Lowe's Companies, Inc. 4,500 237
May Department Stores Co. 4,200 167
Nordstrom, Inc. 1,600 56
Pep Boys-Manny, Moe, & Jack 400 6
Rite Aid Corp. 3,500 82
Safeway, Inc.+ 5,900 318
Sears, Roebuck & Co. 4,700 216
Staples, Inc.+ 5,500 165
SUPERVALU, Inc. 1,400 29
Tandy Corp. 1,200 87
TJX Companies, Inc. 3,900 130
Toys `R' Us, Inc.+ 3,100 67
Wal-Mart Stores, Inc. 53,700 2,470
Walgreen Co. 11,900 320
Winn Dixie Stores, Inc. 1,800 64
------
8,145
------
STEEL -- 0.1%
Allegheny Teledyne, Inc. 2,200 49
Bethlehem Steel Corp.+ 1,500 14
Nucor Corp. 1,000 59
USX-U.S. Steel Group, Inc. 1,100 33
Worthington Industries, Inc. 1,100 15
------
170
------
TELEPHONE -- 8.5%
AirTouch Communications, Inc.+ 6,900 644
Alltel Corp. 3,400 229
Ameritech Corp. 13,300 910
AT&T Corp. 38,003 1,919
Bell Atlantic Corp. 18,800 1,083
BellSouth Corp. 23,600 1,056
Century Telephone
Enterprises, Inc.+ 1,700 68
Frontier Corp. 2,000 110
GTE Corp. 11,700 783
MCI WorldCom, Inc.+ 22,200 1,825
27
<PAGE>
INSTITUTIONAL SELECT S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
Nextel Communications Inc.,
Class A+ 3,400 $ 139
Nortel Networks Corp. 8,100 552
SBC Communications, Inc. 23,600 1,322
Sprint Corp. 5,400 554
Sprint Corp. (PCS Group)+ 5,200 220
U S WEST, Inc. 6,100 319
-------
11,733
-------
TOBACCO -- 0.9%
Loew's Corp. 1,400 102
Philip Morris Companies, Inc. 29,400 1,031
UST, Inc. 2,300 64
-------
1,197
-------
TRAVEL & RECREATION -- 1.0%
Brunswick Corp. 1,100 26
Carnival Corp. 7,300 301
Harrah's Entertainment, Inc.+ 1,600 35
Hilton Hotels Corp. 2,900 45
Marriott International, Inc.,
Class A 3,000 126
Mirage Resorts, Inc.+ 2,000 45
Walt Disney Co. 24,800 787
-------
1,365
-------
TRUCKING & FREIGHT -- 0.1%
PACCAR Inc. 900 50
Ryder Systems, Inc. 800 21
-------
71
-------
UTILITIES - ELECTRIC & GAS -- 2.6%
AES Corp.+ 2,200 110
Ameren Corp. 1,700 66
American Electric Power Co., Inc.2,500 104
Baltimore Gas & Electric Co.+ 1,700 48
Carolina Power & Light Co. 1,700 69
Central & South West Corp. 2,400 60
Cinergy Corp. 1,800 54
Number Value
of Shares (000s)
--------- ------
CMS Energy Corp. 1,200 $ 53
Coastal Corp. 2,500 96
Columbia Energy Group 1,000 48
Consolidated Edison, Inc. 2,800 127
Consolidated Natural Gas Co. 1,100 65
Dominion Resources, Inc. 2,400 99
DTE Energy Co. 1,800 73
Duke Energy Corp. 4,300 241
Eastern Enterprises 300 11
Edison International 4,200 103
Enron Corp. 4,200 316
Entergy Corp. 3,000 94
First Energy Corp. 2,800 83
FPL Group, Inc. 2,100 118
GPU, Inc. 1,700 65
New Century Energies, Inc. 1,300 46
Niagara Mohawk Holdings, Inc.+ 2,200 29
NICOR, Inc. 500 18
Northern States Power Co. 1,700 41
PacifiCorp. 3,600 60
PECO Energy Co. 2,600 123
Peoples Energy Corp. 300 11
PG&E Corp. 4,700 146
PP&L Resources, Inc. 1,700 47
Public Service Enterprise
Group, Inc. 2,700 108
Reliant Energy, Inc. 3,300 93
Sonat, Inc. 1,200 43
Southern Co. 8,300 225
Texas Utilities Co. 3,300 131
Unicom Corp. 2,600 101
Williams Companies, Inc. 5,200 246
--------
3,571
--------
Total Common Stock
(Cost $126,709) 131,728
--------
28
<PAGE>
Par Value
(000) (000s)
----- ------
U.S. TREASURY OBLIGATIONS -- 0.4%
U.S. Treasury Bills (a) (b)
4.30%, 06/10/99 $ 50 $ 50
4.44%, 06/10/99 100 100
4.54%, 06/10/99 150 149
4.25%, 06/17/99 280 278
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $577) 577
--------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 6.0%
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.53%* 4,160,625 4,161
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.57%* 4,160,625 4,161
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $8,322) 8,322
--------
TOTAL INVESTMENTS -- 101.7%
(Cost $135,608) 140,627
--------
OTHER ASSETS AND LIABILITIES, NET -- (1.7%)
Other assets 3,012
Liabilities (5,448)
--------
(2,436)
--------
TOTAL NET ASSETS -- 100.0% $138,191
========
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO
FINANCIAL STATEMENTS.
29
<PAGE>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
COMMON STOCK -- 98.4%
AEROSPACE / DEFENSE -- 2.8%
Boeing Co. 7,200 $ 292
General Dynamics Corp. 1,000 70
Lockheed Martin Corp. 3,100 133
Northrop Grumman Corp. 500 32
Raytheon Co., Class B 2,600 183
Rockwell International Corp. 1,500 77
Textron, Inc. 1,200 111
United Technologies Corp. 1,800 261
------
1,159
------
AIR TRANSPORTATION -- 0.9%
AMR Corp./Del+ 1,400 98
Delta Air Lines, Inc. 1,100 70
FDX Corp.+ 1,300 146
U.S. Airways Group, Inc.+ 700 38
------
352
------
ALCOHOLIC BEVERAGES -- 0.6%
Adolph Coors Co., Class B 300 16
Brown-Forman Corp., Class B 500 37
Seagram Co., Ltd. 3,100 178
------
231
------
APPAREL -- 0.5%
Fruit of The Loom, Inc., Class A+ 400 4
Liz Claiborne, Inc. 500 17
Nike, Inc., Class B 2,300 143
Reebok International, Ltd.+ 300 6
Russell Corp. 200 4
VF Corp. 900 46
------
220
------
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 3.4%
B.F. Goodrich Co. 500 20
Cooper Tire & Rubber Co. 600 13
Cummins Engine Co., Inc. 300 16
Dana Corp. 1,300 61
Eaton Corp. 600 55
Fleetwood Enterprises, Inc. 200 5
Ford Motor Co. 9,400 601
General Motors Corp. 5,100 454
Genuine Parts Co. 1,400 42
Goodyear Tire & Rubber Co. 1,200 69
Number Value
of Shares (000s)
--------- ------
Navistar International Corp.+ 500 $ 26
TRW, Inc. 900 38
------
1,400
------
BANKS -- 12.9%
AmSouth Bancorp. 900 43
Bank of America Corp. 13,400 965
Bank of New York Co., Inc. 6,000 240
Bank One Corp. 9,100 537
BankBoston Corp. 2,300 113
BB&T Corp. 2,400 96
Chase Manhattan Corp. 6,600 546
Comerica, Inc. 1,200 78
Fifth Third Bancorp. 2,100 151
First Union Corp. 7,700 426
Fleet Financial Group, Inc. 4,400 189
Golden West Financial Corp. 500 50
Huntington Bancshares Inc. 1,600 57
J.P. Morgan & Co., Inc. 1,400 189
KeyCorp, Inc. 3,600 111
Mellon Bank Corp. 2,000 149
Mercantile Bancorp, Inc. 1,200 68
Nankers Trust New York Corp. 800 72
National City Corp. 2,500 179
Northern Trust Corp. 900 84
PNC Bank Corp. 2,300 133
Regions Financial Corp. 1,700 64
Republic New York Corp. 800 47
SouthTrust Corp. 1,200 48
State Street Corp. 1,300 114
Summit Bancorp 1,300 55
SunTrust Banks, Inc. 2,500 179
Union Planters Corp. 1,000 43
Wachovia Corp. 1,600 141
Washington Mutual, Inc. 4,600 189
------
5,356
------
BUSINESS MACHINES & SOFTWARE -- 4.0%
3Com Corp.+ 2,700 71
Adobe Systems, Inc. 500 32
Apple Computer, Inc.+ 1,000 46
Autodesk, Inc. 400 12
Cabletron Systems, Inc.+ 1,100 10
Compaq Computer Corp. 13,200 295
Data General Corp.+ 300 4
Hewlett-Packard Co. 7,900 623
30
<PAGE>
Number Value
of Shares (000s)
--------- ------
Honeywell, Inc. 1,000 $ 95
Novell, Inc.+ 2,500 56
Seagate Technology, Inc.+ 1,900 53
Silicon Graphics, Inc.+ 1,300 17
Unisys Corp.+ 2,000 63
Xerox Corp. 5,100 300
------
1,677
------
BUSINESS SERVICES -- 1.4%
Browing-Ferris Industries, Inc. 1,200 48
Cendant Corp.+ 6,400 115
Computer Sciences Corp.+ 1,200 71
Deluxe Corp. 600 21
First Data Corp. 3,400 144
H&R Block, Inc. 700 34
Laidlaw, Inc. 2,500 16
Moore Corp., Ltd. 500 5
National Service Industries, Inc. 300 12
R.R. Donnelley & Sons Co. 1,000 35
Tyco International Ltd. 1,050 85
------
586
------
CHEMICAL -- 3.9%
Air Products & Chemicals, Inc. 1,800 85
Dow Chemical Co. 1,700 223
E.I. du Pont de Nemours & Co. 8,800 621
Eastman Chemical Co. 600 33
Great Lakes Chemical Corp. 400 19
Hercules, Inc. 700 26
Minnesota Mining &
Manufacturing Co. 3,100 276
Morton International, Inc. 1,000 40
Nalco Chemical Co. 500 18
PPG Industries, Inc. 1,400 91
Praxair, Inc. 1,200 62
Rohm & Haas Co. 1,300 58
Sigma-Aldrich Corp. 800 26
Union Carbide Corp. 1,000 52
W.R. Grace & Co.+ 500 8
------
1,638
------
CONSTRUCTION -- 0.5%
Armstrong World Industries, Inc. 300 16
Centex Corp. 400 15
Crane Co. 500 14
Fluor Corp. 600 20
Kaufman & Broad Home Corp. 300 7
Number Value
of Shares (000s)
--------- ------
Masco Corp. 2,600 $ 76
Pulte Corp. 400 9
Sherwin-Williams Co. 1,300 40
The Stanley Works 600 18
------
215
------
CONSUMER - DURABLE -- 0.5%
Black & Decker Corp. 700 40
Fortune Brands, Inc. 1,300 51
Maytag Corp. 700 48
Newell Rubbermaid, Inc. 551 26
Snap-On, Inc. 400 13
Whirlpool Corp. 600 40
------
218
------
CONSUMER - NONDURABLE -- 1.6%
American Greetings Corp., Class A 600 16
Darden Restaurants, Inc. 1,000 22
Hasbro, Inc. 1,450 49
Mattel, Inc. 2,300 60
McDonald's Corp. 10,500 445
RJR Nabisco Holdings Corp. 2,400 62
Wendy's International, Inc. 1,000 27
------
681
------
CONTAINERS -- 0.2%
Ball Corp. 200 11
Bemis Co., Inc. 400 14
Crown Cork & Seal Co., Inc. 900 29
Owens-Illinois, Inc.+ 1,100 32
------
86
------
ELECTRONICS -- 3.7%
Advanced Micro Devices, Inc.+ 1,000 16
Andrew Corp.+ 500 7
Applied Materials, Inc.+ 2,800 150
EG&G, Inc. 300 9
Electronic Data Systems Corp. 3,800 204
Emerson Electric Co. 3,400 219
Harris Corp. 600 21
KLA-Tencor Corp.+ 700 35
LSI Logic Corp.+ 1,100 37
Micron Technology, Inc.+ 2,000 74
Motorola, Inc. 4,700 377
31
<PAGE>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
National Semiconductor Corp.+ 1,300 $ 16
Scientific-Atlanta, Inc. 600 19
Tektronix, Inc. 400 10
Texas Instruments, Inc. 3,000 306
Thermo Electron Corp.+ 1,200 19
Thomas & Betts Corp. 400 17
------
1,536
------
ENERGY - RAW MATERIALS -- 1.9%
Anadarko Petroleum Corp. 900 34
Apache Corp. 700 21
Baker Hughes, Inc. 2,600 78
Burlington Resources, Inc. 1,400 64
Halliburton Co. 3,400 145
Helmerich & Payne, Inc. 300 8
McDermott International, Inc. 500 14
Occidental Petroleum Corp. 2,700 55
ONEOK, Inc. 200 6
Rowan Companies, Inc.+ 500 8
Schlumberger Ltd. 4,300 275
Sempra Energy 1,900 39
Sunoco, Inc. 700 25
Union Pacific Resources
Group Inc. 1,800 25
------
797
------
FOOD & AGRICULTURE -- 1.1%
Archer Daniels Midland Co. 4,500 67
ConAgra, Inc. 4,000 99
Monsanto Co. 4,900 222
Pioneer Hi-Bred
International, Inc. 1,800 67
------
455
------
GOLD -- 0.3%
Barrick Gold Corp. 2,900 58
Battle Mountain Gold Co. 1,400 4
Homestake Mining Co. 1,800 17
Newmont Mining Corp. 1,200 29
Placer Dome, Inc. 1,800 25
------
133
------
HEALTHCARE/DRUGS & MEDICINE -- 1.8%
Allergan, Inc. 500 45
Bausch & Lomb, Inc. 400 30
Biomet, Inc. 800 33
C.R. Bard, Inc. 400 20
Columbia / HCA Healthcare Corp. 5,000 123
Number Value
of Shares (000s)
--------- ------
HealthSouth Corp.+ 3,200 $ 43
Humana, Inc.+ 1,300 18
Mallinckrodt, Inc. 600 21
Pharmacia & Upjohn, Inc. 3,900 218
Service Corp. International 2,100 44
Shared Medical Systems Corp. 200 11
St. Jude Medical, Inc.+ 600 17
Tenet Healthcare Corp.+ 2,300 54
United Healthcare Corp. 1,400 79
------
756
------
HOUSEHOLD PRODUCTS -- 0.1%
Alberto-Culver Co., Class B 500 12
International Flavors &
Fragrances, Inc. 800 32
Tupperware Corp. 500 12
------
56
------
INSURANCE -- 4.3%
Aetna, Inc. 1,100 96
Allstate Corp. 6,300 229
American General Corp. 2,000 148
Aon Corp. 1,300 89
Chubb Corp. 1,300 77
CIGNA Corp. 1,600 139
Cincinnati Financial Corp. 1,300 52
Conseco, Inc. 2,400 76
Hartford Financial Services
Group, Inc. 1,800 106
Jefferson-Pilot Corp. 800 54
Lincoln National Corp. 800 77
Marsh & McLennan
Companies, Inc. 2,000 153
MBIA, Inc. 800 54
MGIC Investment Corp. 800 39
Progressive Corp. 600 86
Provident Companies, Inc. 1,000 39
SAFECO Corp. 1,000 40
St. Paul Companies, Inc. 1,800 52
Torchmark Corp. 1,000 34
Transamerica Corp. 1,000 71
UNUM Corp. 1,100 60
------
1,771
------
32
<PAGE>
Number Value
of Shares (000s)
--------- ------
MEDIA -- 5.2%
CBS Corp.+ 5,600 $ 255
Clear Channel
Communications, Inc.+ 2,000 139
Dow Jones & Co., Inc. 700 38
Gannett Co., Inc. 2,300 163
Harcourt General, Inc. 500 24
King World Productions, Inc.+ 500 18
Knight-Ridder, Inc. 600 32
McGraw-Hill Companies, Inc. 1,500 83
Mediaone Group+ 4,700 383
Meredith Group 400 15
New York Times Co., Class A 1,400 48
Time Warner, Inc. 9,500 665
Tribune Co. 900 75
Viacom, Inc., Class B+ 5,400 221
------
2,159
------
MISCELLANEOUS FINANCE -- 8.0%
Associates First Capital Corp. 5,600 248
Bear Stearns Companies, Inc. 820 38
Capital One Financial Corp. 500 87
Citigroup, Inc. 17,500 1,317
Countrywide Credit
Industries, Inc. 900 41
Fannie Mae 8,100 575
Franklin Resources, Inc. 1,900 76
Household International, Inc. 3,700 186
Lehman Brothers Holdings, Inc. 900 50
Merrill Lynch & Co., Inc. 2,800 235
Morgan Stanley, Dean Witter,
Discover & Co. 4,500 446
------
3,299
------
NON-FERROUS METALS -- 0.8%
Alcan Aluminum, Ltd. 1,800 57
Alcoa Inc. 2,800 174
Asarco, Inc. 200 4
Cyprus Amax Minerals Co. 600 9
Engelhard Corp. 1,000 19
Inco, Ltd. 1,200 23
Phelps Dodge Corp. 400 25
Reynolds Metals Co. 500 31
------
342
------
Number Value
of Shares (000s)
--------- ------
OIL - DOMESTIC -- 1.3%
Amerada Hess Corp. 700 $ 40
Ashland, Inc. 600 25
Atlantic Richfield Co. 2,500 210
Kerr-McGee Corp. 600 25
Phillips Petroleum Co. 2,000 101
Unocal Corp. 1,800 75
USX-Marathon Group 2,300 72
------
548
------
OIL - INTERNATIONAL -- 9.5%
Chevron Corp. 5,100 509
Exxon Corp. 18,800 1,562
Mobil Corp. 6,100 639
Royal Dutch Petroleum Co. -
Sponsored ADR 16,700 980
Texaco, Inc. 4,100 257
------
3,947
------
OPTICAL & PHOTO -- 0.5%
Eastman Kodak Co. 2,500 187
Polaroid Corp. 300 6
------
193
------
PAPER & FOREST PRODUCTS -- 1.3%
Boise Cascade Corp. 400 16
Champion International Corp. 700 38
Georgia-Pacific Group 700 65
International Paper Co. 2,400 128
Louisiana-Pacific Corp. 800 17
Mead Corp. 800 33
Potlatch Corp. 200 8
Temple Inland, Inc. 400 28
Union Camp Corp. 500 40
Westvaco Corp. 800 24
Weyerhaeuser Co. 1,500 101
Willamette Industries, Inc. 800 37
------
535
------
PRODUCER GOODS & MANUFACTURING -- 2.6%
Allied Signal, Inc. 4,300 253
Briggs & Stratton Corp. 200 13
Case Corp. 500 17
Caterpillar, Inc. 2,800 180
33
<PAGE>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
Cooper Industries, Inc. 800 $ 39
Deere & Co. 1,800 77
FMC Corp.+ 300 20
Foster Wheeler Corp. 200 3
Harnischfeger Industries, Inc. 200 2
Illinois Tool Works, Inc. 1,900 146
Ingersoll Rand Co. 1,300 90
ITT Industries, Inc. 800 29
Johnson Controls, Inc. 700 51
Milacron Inc. 200 5
NACCO Industries, Inc. , Class A 100 8
Pall Corp. 900 17
Parker-Hannifin Corp. 800 38
Raychem Corp. 600 16
Spring Industries, Inc. 100 4
Tenneco, Inc. 1,300 35
The Timken Company 500 11
W.W. Grainger, Inc. 700 35
------
1,089
------
RAILROAD & SHIPPING -- 1.0%
Burlington Northern
Santa Fe Corp. 3,600 132
CSX Corp. 1,700 84
Norfolk Southern Corp. 3,000 98
Union Pacific Corp. 1,900 114
------
428
------
RETAIL -- 3.6%
Albertson's, Inc. 1,900 98
American Stores Co. 2,300 73
AutoZone, Inc.+ 1,100 33
Circuit City Stores, Inc. 800 49
Consolidated Stores Corp.+ 800 28
Costco Companies, Inc.+ 1,700 138
Dillards, Inc., Class A 800 22
Federated Department
Stores, Inc.+ 1,600 75
Fred Meyer, Inc.+ 1,200 65
Great Atlantic & Pacific
Tea Co., Inc. 300 9
IKON Office Solutions 1,100 13
J.C. Penney Co., Inc. 2,000 91
Kmart Corp.+ 3,900 58
Limited, Inc. 1,700 74
Longs Drug Stores, Inc. 300 10
Lowe's Companies, Inc. 2,900 153
May Department Stores Co. 2,700 107
Number Value
of Shares (000s)
--------- ------
Nordstrom, Inc. 1,100 $ 39
Pep Boys-Manny, Moe, & Jack 300 4
Rite Aid Corp. 2,000 47
Sears, Roebuck & Co. 2,900 133
SUPERVALU, Inc. 800 17
Tandy Corp. 800 58
Toys `R' Us, Inc.+ 1,900 41
Winn Dixie Stores, Inc. 1,100 39
------
1,474
------
STEEL -- 0.3%
Allegheny Teledyne, Inc. 1,400 31
Bethlehem Steel Corp.+ 800 7
Nucor Corp. 700 41
USX-U.S. Steel Group, Inc. 700 21
Worthington Industries, Inc. 700 10
------
110
------
TELEPHONE -- 10.0%
Alltel Corp. 2,100 142
AT&T Corp. 24,350 1,230
Bell Atlantic Corp. 12,100 697
BellSouth Corp. 15,200 680
Century Telephone
Enterprises, Inc.+ 1,000 40
Frontier Corp. 1,300 72
GTE Corp. 7,500 502
Nextel Communications Inc.,
Class A+ 2,200 90
Sprint Corp. 3,500 359
Sprint Corp. (PCS Group)+ 3,400 144
US West Inc. 3,900 204
------
4,160
------
TOBACCO -- 0.2%
Loew's Corp. 900 66
------
TRAVEL & RECREATION -- 2.1%
Brunswick Corp. 700 17
Carnival Corp. 4,700 194
Harrah's Entertainment Inc.+ 900 20
Hilton Hotels Corp. 1,900 30
Marriott International Inc.,
Class A 1,900 80
Mirage Resorts, Inc.+ 1,300 29
Walt Disney Co. 16,000 508
------
878
------
34
<PAGE>
Number Value
of Shares (000s)
--------- ------
TRUCKING & FREIGHT -- 0.1%
PACCAR, Inc. 600 $ 34
Ryder Systems, Inc. 600 16
-------
50
-------
UTILITIES - ELECTRIC & GAS -- 5.5%
AES Corp.+ 1,400 70
Ameren Corp. 1,000 39
American Electric Power
Co., Inc. 1,500 62
Baltimore Gas & Electric Co.+ 1,200 34
Carolina Power & Light Co. 1,100 44
Central & South West Corp. 1,600 40
Cinergy Corp. 1,200 36
CMS Energy Corp. 800 35
Coastal Corp. 1,600 61
Columbia Energy Group 600 29
Consolidated Edison, Inc. 1,800 82
Consolidated Natural Gas Co. 700 42
Dominion Resources, Inc. 1,500 62
DTE Energy Co. 1,100 45
Duke Energy Corp. 2,800 157
Eastern Enterprises 100 4
Edison International 2,600 64
Enron Corp. 2,700 203
Entergy Corp. 2,000 63
First Energy Corp. 1,800 53
FPL Group, Inc. 1,400 79
GPU, Inc. 1,000 38
New Centuries Energies, Inc. 800 28
Niagara Mohawk Holdings, Inc.+ 1,400 19
NICOR, Inc. 300 11
Northern States Power Co. 1,200 29
PacifiCorp. 2,200 37
PECO Energy Co. 1,700 81
Peoples Energy Corp. 200 7
PG&E Corp. 2,900 90
PP&L Resources, Inc. 1,200 34
Public Service Enterprise
Group, Inc. 1,700 68
Reliant Energy, Inc. 2,100 59
Sonat, Inc. 800 29
Southern Co. 5,300 143
Texas Utilities Co. 2,200 87
Unicom Corp. 1,600 62
Williams Companies, Inc. 3,300 156
-------
2,282
-------
TOTAL COMMON STOCK
(Cost $37,864) 40,883
-------
Number Value
of Shares (000s)
--------- ------
U.S. TREASURY OBLIGATIONS -- 0.2%
U.S. Treasury Bills (a) (b)
4.45%, 05/20/99 $ 20 $ 20
4.52%, 05/20/99 60 60
-------
Total U.S. Treasury Obligations
(Cost $80) 80
-------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 2.1%
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.53%* 434,044 434
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.57%* 434,044 434
-------
TOTAL SHORT-TERM INVESTMENTS
(Cost $868) 868
-------
TOTAL INVESTMENTS -- 100.7%
(Cost $38,812) 41,831
-------
OTHER ASSETS AND LIABILITIES, NET -- (0.7%)
Other assets 293
Liabilities (591)
-------
(298)
-------
TOTAL NET ASSETS -- 100.0% $41,533
=======
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO
FINANCIAL STATEMENTS.
35
<PAGE>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
COMMON STOCK -- 98.8%
AEROSPACE / DEFENSE -- 0.3%
Kaman Corp., Class A 2,800 $ 37
Trimble Navigation Ltd.+ 2,600 30
-----
67
-----
AIR TRANSPORTATION -- 0.3%
Mesa Air Group, Inc.+ 3,400 23
Offshore Logistics, Inc.+ 2,600 32
-----
55
-----
ALCOHOLIC BEVERAGES -- 0.5%
Canandaigua Brands, Inc., Class A+ 2,200 113
-----
APPAREL -- 3.3%
Ashworth, Inc.+ 1,600 7
Cone Mills Corp.+ 3,100 19
Delta Woodside Industries, Inc. 2,900 20
Footstar, Inc.+ 3,100 105
Galey & Lord, Inc.+ 1,300 6
Guilford Mills 2,700 26
Haggar Corp. 900 10
Hartmarx Corp.+ 4,500 21
K-Swiss, Inc., Class A 1,300 55
Kellwood Co. 2,800 72
Oxford Industries, Inc. 1,000 26
Phillips-Van Heusen Corp. 3,200 28
St. John Knits, Inc. 2,000 54
Stride Rite Corp. 5,800 68
Timberland Co., Class A+ 1,500 104
Wolverine World Wide, Inc. 5,300 64
-----
685
-----
AUTOMOTIVE PRODUCTS/MOTOR VEHICLES -- 3.0%
A.O. Smith Corp., Class B 3,000 76
Arctic Cat Inc. 3,300 28
Borg-Warner Automotive, Inc. 17 1
Discount Auto Parts, Inc.+ 2,000 46
Myers Industries, Inc. 2,200 50
Simpson Industries, Inc. 2,100 22
Spartan Motors, Inc. 1,500 8
Standard Motor Products, Inc. 1,600 37
TBC Corp.+ 2,500 19
The Standard Products Company 1,900 34
Thor Industries, Inc. 1,500 45
Number Value
of Shares (000s)
--------- ------
Titan International, Inc. 2,600 $ 26
Tower Automotive, Inc.+ 5,800 133
Walbro Corp.+ 1,000 20
Winnebago Industries, Inc. 2,800 40
Wynns International, Inc. 2,400 40
-----
625
-----
BANKS -- 3.6%
Anchor Bancorp Wisconsin, Inc. 2,200 40
Banknorth Group, Inc. 2,900 77
Carolina First Corp. 2,800 76
Downey Financial Corp. 3,500 70
MAF Bancorp, Inc. 3,100 69
Provident Bankshares Corp. 3,245 81
Riggs National Corp. 3,700 62
Silicon Valley Bancshares+ 2,600 46
St. Paul Bancorp, Inc. 5,200 126
Susquehanna Bancshares, Inc. 4,500 83
-----
730
-----
BUSINESS MACHINES & SOFTWARE -- 2.5%
Analogic Corp. 1,700 62
Applied Magnetics Corp.+ 4,100 12
Auspex Systems, Inc.+ 3,000 21
BancTec, Inc.+ 2,500 41
Dialogic Corp.+ 2,100 59
Digi International, Inc.+ 1,700 13
Esterline Technologies Corp.+ 2,400 34
Exabyte Corp.+ 2,600 12
FileNet Corp.+ 4,100 35
Harbinger Corp.+ 5,000 55
Input/Output, Inc.+ 6,300 46
Komag, Inc.+ 6,300 24
PictureTel Corp.+ 4,600 38
TCSI Corp.+ 2,600 5
Telxon Corp. 2,000 20
Wall Data, Inc.+ 1,200 19
X-Rite Inc. 2,400 16
-----
512
-----
BUSINESS SERVICES -- 6.9%
Angelica Corp. 1,000 16
Aspen Technology, Inc.+ 2,900 25
Aviation Sales Co.+ 1,600 64
Bowne & Co., Inc. 4,600 86
CDI Corp.+ 2,500 66
36
<PAGE>
Number Value
of Shares (000s)
--------- ------
Chemed Corp. 1,300 $ 39
CPI Corp. 1,200 32
CustomTracks Corp.+ 1,900 71
Cyrk International Inc.+ 1,700 11
Dames & Moore Group 2,300 27
Franklin Covey Co.+ 2,600 25
Genesis Health Ventures, Inc. 4,200 29
Inacom Corp.+ 5,440 53
Insurance Auto Auctions, Inc.+ 1,400 17
Integrated Health Services,
Inc.+ 6,700 32
Interim Services, Inc.+ 5,800 101
John H. Harland Co. 3,900 65
Kirby Corp.+ 2,500 47
Merrill Corp. 1,900 28
MicroAge, Inc.+ 2,400 13
Nashua Corp.+ 800 9
NFO Worldwide, Inc.+ 2,600 29
Norrell Corp. 3,500 53
Oceaneering International, Inc.+ 2,900 48
PAXAR Corp.+ 6,000 54
Pittston BAX Group 2,300 21
Rural/Metro Corp.+ 1,600 13
S3, Inc.+ 6,200 45
SEACOR SMIT, Inc.+ 1,600 85
Sitel Corp.+ 3,000 52
Superior Services, Inc.+ 4,100 75
Technology Solutions Co.+ 4,900 39
Tetra Technology, Inc.+ 1,500 14
Volt Information Sciences, Inc.+ 1,800 32
------
1,416
------
CHEMICAL -- 2.4%
Cambrex Corp. 3,100 79
Chemfirst, Inc. 2,400 57
Geon Co. 3,000 92
Lilly Industries, Inc., Class A 2,900 51
McWhorter Technologies, Inc.+ 1,300 19
OM Group, Inc. 3,000 109
Penford Corp. 900 12
Quaker Chemical Corp. 1,000 16
Regal Beloit 2,700 58
------
493
------
CONSTRUCTION -- 4.8%
D.R. Horton, Inc. 8,100 156
Florida Rock Industries, Inc. 2,300 79
Number Value
of Shares (000s)
--------- ------
Justin Industries, Inc. 3,500 $ 47
Lawson Products, Inc. 1,300 29
Lone Star Industries, Inc. 2,600 93
M.D.C. Holdings, Inc. 2,200 43
Morrison Knudsen Corp.+ 6,500 71
Oakwood Homes Corp. 6,000 83
Skyline Corp. 1,100 32
Southern Energy Homes, Inc.+ 1,400 7
Standard Pacific Corp. 3,900 54
Stone & Webster, Inc. 1,600 35
T J International, Inc. 1,900 53
The Ryland Group, Inc. 1,800 47
Toll Brothers, Inc.+ 4,800 103
U.S. Home Corp.+ 1,800 62
-----
994
-----
CONSUMER - DURABLE -- 3.3%
Bassett Furniture
Industries, Inc. 1,600 38
Champion Enterprises, Inc.+ 6,100 113
Coachmen Industries, Inc. 2,000 38
Griffon Corp.+ 3,600 26
Harman International
Industries, Inc. 2,200 101
Huffy Corp. 1,400 19
Interface, Inc. 6,300 44
La-Z-Boy Chair Co. 6,500 128
National Presto Industries, Inc. 900 31
Pillowtex Corp. 1,700 28
Royal Appliance
Manufacturing, Co.+ 2,200 10
Sturm, Ruger & Co., Inc. 3,200 34
Thomas Nelson, Inc. 1,700 17
Toro Co. 1,600 56
-----
683
-----
CONSUMER - NONDURABLE -- 3.2%
A.T. Cross Co., Class A 2,000 13
Applebee's International, Inc. 3,800 98
Au Bon Pain Co., Class A+ 1,400 7
CKE Restaurants, Inc. 6,600 108
Gibson Greetings, Inc.+ 1,800 11
IHOP Corp.+ 1,200 55
Landry's Seafood
Restaurants, Inc.+ 3,600 29
Luby's Cafeterias, Inc. 2,900 49
Midway Games, Inc.+ 4,500 39
37
<PAGE>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
Ruby Tuesday, Inc. 4,100 $ 75
Russ Berrie & Co., Inc. 2,700 73
Ryan's Family Steak
Houses, Inc.+ 5,000 62
Taco Cabana, Inc., Class A+ 1,600 16
TCBY Enterprises, Inc. 2,700 18
------
653
------
ELECTRONICS -- 9.5%
Allen Telecom, Inc.+ 3,200 30
Anixter International, Inc.+ 5,400 85
Belden, Inc. 3,100 60
Bell Industries, Inc.+ 1,200 13
Benchmark Electronics, Inc.+ 1,400 47
C-Cor Electronics, Inc.+ 1,100 27
Cable Design Technologies Corp.+ 3,500 52
Checkpoint Systems, Inc.+ 3,700 36
Coherent, Inc.+ 2,900 43
CTS Corp. 1,700 91
Dallas Semiconductor Corp. 3,600 153
Digital Microwave Corp.+ 7,800 99
Electro Scientific
Industries, Inc.+ 1,500 57
Electroglas, Inc.+ 2,400 33
Gerber Scientific, Inc. 2,900 55
Hadco Corp.+ 1,600 42
Hutchinson Technology, Inc.+ 3,000 66
Innovex, Inc. 1,700 24
Integrated Circuit
Systems, Inc.+ 1,600 32
International Rectifier Corp.+ 6,500 63
Itron, Inc. 1,800 15
Kemet Corp.+ 4,900 76
Kent Electronics Corp.+ 3,300 31
Kulicke & Soffa
Industries, Inc.+ 3,000 69
Lattice Semiconductor Corp.+ 3,000 123
Marshall Industries+ 2,000 32
Methode Electronics, Inc.,
Class A 4,300 64
Network Equipment
Technologies, Inc.+ 2,600 20
Park Electrochemical Corp. 1,300 31
Pioneer - Standard
Electronics, Inc. 3,100 26
Silicon Valley Group, Inc.+ 4,100 54
Standard Microsystems Corp.+ 1,800 13
Symmetricom, Inc.+ 1,800 13
Varian Medical Systems, Inc. 3,800 65
Vicor Corp.+ 5,400 76
VLSI Technology, Inc.+ 5,800 109
Watkins - Johnson Co. 800 20
------
1,945
------
Number Value
of Shares (000s)
--------- ------
ENERGY - RAW MATERIALS -- 3.0%
Amcol International Corp. 3,400 $ 42
Barrett Resources Corp.+ 4,000 122
Benton Oil & Gas Co.+ 3,400 14
Cabot Oil & Gas Corp., Class A 3,000 53
Devon Energy Corp. 4,100 136
Remington Oil & Gas Corp.+ 3,000 12
Southwestern Energy Co. 3,000 24
Stone Energy Corp.+ 1,900 64
Tuboscope Vetco International
Corp.+ 5,700 78
Vintage Petroleum, Inc. 6,700 72
------
617
------
FOOD & AGRICULTURE -- 4.1%
American States Water Co. 1,100 28
Aquarion Co. 1,400 36
Chiquita Brands
International, Inc. 8,100 81
Corn Products
International, Inc. 4,500 130
Dimon, Inc. 5,800 25
Earthgrains Co. 5,400 114
Fleming Companies, Inc. 4,600 40
J & J Snack Foods Corp.+ 1,100 24
Michael Foods, Inc. 2,600 59
Mississippi Chemical Corp. 3,100 28
Nash - Finch Co. 1,300 12
Ralcorp Holdings, Inc.+ 4,100 75
Richfood Holdings, Inc. 6,000 75
Smithfield Foods, Inc.+ 4,700 111
------
838
------
GOLD -- 0.6%
Getchell Gold Corp.+ 3,900 133
------
HEALTHCARE/DRUGS & MEDICINE -- 5.7%
Alliance Pharmaceutical Corp.+ 3,700 9
Alpharma, Inc., Class A 3,300 97
American Oncology
Resources, Inc.+ 4,200 38
Bindley Western Industries, Inc. 2,800 86
Cooper Companies, Inc. 1,700 27
Coventry Health Care, Inc.+ 7,400 68
Datascope Corp.+ 1,900 54
Diagnostic Products Corp. 1,800 41
Dura Pharmaceuticals, Inc.+ 5,900 71
Hologic, Inc. 1,600 11
38
<PAGE>
Number Value
of Shares (000s)
--------- ------
Magellan Health Services, Inc.+ 3,700 $ 20
Maxxim Medical, Inc.+ 1,700 27
Mentor Corp. 2,900 42
Molecular Biosystems, Inc.+ 2,300 6
NCS HealthCare, Inc., Class A+ 2,500 33
PhyCor, Inc.+ 9,500 48
Priority Healthcare Corp.,
Class B+ 1,600 81
Protein Design Labs, Inc.+ 2,200 34
Regeneron Pharmaceuticals, Inc.+ 3,600 24
Roberts Pharmaceutical Corp.+ 3,900 66
Sola International, Inc.+ 3,000 45
Spacelabs Medical, Inc.+ 1,100 19
Summit Technology, Inc.+ 4,100 71
Sunrise Medical, Inc.+ 2,500 18
Syncor International Corp.+ 1,400 40
Vertex Pharmaceuticals, Inc.+ 3,200 68
Vital Signs, Inc. 1,500 32
------
1,176
------
INSURANCE -- 5.1%
Capital Re Corp. 4,000 78
CompDent Corp.+ 1,200 17
Delphi Financial Group, Inc.,
Class A+ 2,500 78
Enhance Financial Services
Group, Inc. 4,700 97
Executive Risk, Inc. 1,400 100
Fremont General Corp. 8,800 176
Frontier Insurance Group, Inc. 4,800 66
NAC Re Corp. 2,400 131
Orion Capital Corp. 3,400 100
Selective Insurance Group, Inc. 3,600 70
Sierra Health Services, Inc.+ 3,300 41
Trenwick Group, Inc. 1,500 42
Zenith National Insurance Corp. 2,200 52
------
1,048
------
MEDIA -- 1.4%
Carmike Cinemas, Inc., Class A+ 1,500 32
GC Companies, Inc.+ 1,000 35
Oak Industries, Inc.+ 2,300 96
World Color Press, Inc.+ 4,800 123
------
286
------
Number Value
of Shares (000s)
--------- ------
MISCELLANEOUS FINANCE -- 3.4%
AmeriCredit Corp.+ 7,800 $ 129
AMRESCO, Inc.+ 5,400 35
Cash America International, Inc. 3,000 38
Commercial Federal Corp. 7,700 187
Dain Rauscher Corp. 1,600 69
JSB Financial, Inc. 1,200 59
Pioneer Group, Inc. 3,300 61
Raymond James Financial, Inc. 6,000 129
------
707
------
NON-FERROUS METALS -- 1.4%
Brush Wellman Inc. 2,100 32
Coeur d'Alene Mines Corp.+ 2,600 12
Commercial Metals Co. 1,800 42
Commonwealth Industries, Inc. 1,900 18
Hecla Mining Company+ 7,400 22
Reliance Steel & Aluminum Co. 2,400 87
RTI International Metals, Inc.+ 2,800 37
Wolverine Tube, Inc.+ 1,700 43
------
293
------
OIL - DOMESTIC -- 1.7%
HS Resources, Inc.+ 2,200 23
Pool Energy Services Co.+ 2,700 48
Pride International, Inc.+ 6,300 74
Santa Fe Energy
Resources, Inc.+ 12,700 114
Snyder Oil Corp. 4,200 76
St. Mary Land & Exploration
Company 1,300 25
------
360
------
OPTICAL & PHOTO -- 0.7%
BMC Industries, Inc. 3,300 29
Photronics, Inc.+ 3,100 74
Ultratech Stepper, Inc.+ 2,500 35
------
138
------
PAPER & FOREST PRODUCTS -- 0.2%
Pope & Talbot 1,600 17
Schweitzer-Mauduit
International, Inc. 1,900 31
------
48
------
39
<PAGE>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1999 (Unaudited)
Number Value
of Shares (000s)
--------- ------
PRODUCER GOODS & MANUFACTURING -- 6.7%
Amcast Industrial Corp. 1,100 $ 18
Applied Industrial
Technologies, Inc. 2,800 42
AptarGroup, Inc. 4,700 132
Barnes Group, Inc. 2,400 51
Brady Corp., Class A 2,900 75
Butler Manufacturing Company 900 27
CLARCOR Inc. 3,000 56
Daniel Industries, Inc. 2,100 35
Fedders Corp. 4,300 25
Flow International Corp.+ 1,800 18
Gardner Denver Inc.+ 1,900 34
Global Industrial
Technologies, Inc.+ 3,500 46
Hughes Supply, Inc. 3,100 72
IMCO Recycling Inc. 2,000 34
Insteel Industries, Inc. 1,100 9
Intermagnetics General Corp.+ 1,500 17
Ionics, Inc.+ 2,000 68
Juno Lighting, Inc. 2,400 55
Lindsay Manufacturing Co. 1,600 34
Lydall, Inc+ 1,800 16
O'Sullivan Corp. 1,900 17
Quanex Corp. 1,700 43
Republic Group Inc. 1,400 25
Robbins & Myers, Inc. 1,300 28
SpeedFam-IPEC, Inc.+ 3,500 40
Standex International Corp. 1,600 39
Texas Industries, Inc. 2,600 80
The Dixie Group, Inc. 1,400 12
Thomas Industries Inc. 1,900 38
Three-Five Systems, Inc.+ 900 10
Universal Forest Products, Inc. 2,500 50
Valmont Industries, Inc. 3,200 54
Watsco, Inc. 3,700 73
------
1,373
------
RAILROAD & SHIPPING -- 0.2%
Halter Marine Group, Inc.+ 3,400 21
RailTex, Inc.+ 1,100 15
------
36
------
RETAIL -- 6.0%
AnnTaylor Stores Corp.+ 3,300 157
Authentic Fitness Corp. 3,100 53
Number Value
of Shares (000s)
--------- ------
Books-A-Million Inc.+ 2,400 $ 21
Brown Group, Inc.+ 2,500 41
Building Materials
Holding Corp.+ 1,600 20
DEMARK International,
Inc., Class A+ 700 7
Etec Systems, Inc.+ 2,700 83
Goody's Family Clothing, Inc.+ 4,200 38
Gottschalks Inc.+ 1,500 11
Hancock Fabrics Inc. 2,200 14
J. Baker Inc. 1,600 10
Jan Bell Marketing Inc.+ 3,100 9
Jo-Ann Stores, Inc., Class A+ 2,400 39
Just for Feet, Inc.+ 3,800 48
Lillian Vernon Corp. 1,200 18
Michaels Stores, Inc.+ 3,600 81
Pier 1 Imports, Inc. 12,200 90
ShopKo Stores, Inc.+ 3,200 110
Stein Mart, Inc.+ 5,700 57
Swiss Army Brands Inc.+ 900 8
The Bombay Company, Inc.+ 4,500 28
The Cato Corp., Class A 3,600 41
The Dress Barn, Inc.+ 2,700 39
The Gymboree Corp.+ 2,900 30
Zale Corp.+ 4,600 174
------
1,227
------
STEEL -- 0.6%
Birmingham Steel Corp. 3,400 21
Intermet Corp. 3,200 47
Material Sciences Corp.+ 1,900 20
Steel Technologies Inc. 1,300 12
WHX Corp.+ 2,000 17
------
117
------
TELEPHONE -- 0.5%
Adaptive Broadband Corp.+ 1,800 27
Centigram Communications
Corp.+ 700 6
General Communication, Inc.+ 5,800 27
P-Com, Inc.+ 5,800 34
------
94
------
TRAVEL & RECREATION -- 1.3%
Aztar Corp.+ 5,400 37
Hollywood Park Inc.+ 3,200 41
40
<PAGE>
Number Value
of Shares (000s)
--------- ------
K2, Inc. 2,000 $ 20
Players International Inc.+ 3,800 23
Prime Hospitality Corp.+ 6,600 80
The Marcus Corp. 3,900 49
The Sports Authority, Inc.+ 3,700 26
------
276
------
TRUCKING & FREIGHT -- 3.7%
Air Express International Corp. 4,300 94
American Freightways Corp.+ 4,000 69
Arkansas Best Corp. 2,300 21
Fritz Companies, Inc.+ 4,400 45
Frozen Food Express
Industries Inc. 2,000 13
Landstar Systems, Inc.+ 1,300 51
M.S. Carriers, Inc.+ 1,500 48
Rollins Truck Leasing Corp. 7,300 76
US Freightways Corp. 3,300 124
Wabash National Corp. 3,100 49
Werner Enterprises, Inc. 5,900 114
Yellow Corp.+ 3,100 55
------
759
------
UTILITIES - ELECTRIC & GAS -- 8.9%
Atmos Energy Corp. 3,900 98
Bangor Hydro-Electric Co.+ 800 10
Cascade Natural Gas Corp. 1,300 21
Central Hudson Gas &
Electric Corp. 2,200 82
Central Vermont Public
Service Corp. 1,400 15
CILCORP, Inc. 1,700 103
Commonwealth Energy System 2,700 110
Connecticut Energy Corp. 1,300 49
Eastern Utilities Associates 2,600 74
Energen Corp. 3,900 67
Green Mountain Power Corp. 900 9
Insituform Technologies, Inc. ,
Class A+ 3,200 61
New Jersey Resources Corp. 2,200 81
Northwest Natural Gas Co. 3,100 70
Orange & Rockland
Utilities, Inc. 1,700 99
Pennsylvania Enterprises, Inc. 1,400 36
Piedmont Natural Gas Co., Inc. 3,900 124
Primark Corp.+ 2,600 60
Number Value
of Shares (000s)
--------- ------
Public Service Company of
North Carolina, Inc. 2,500 $ 71
Sierra Pacific Resources 3,900 139
Southwest Gas Corp. 3,800 109
TNP Enterprises, Inc. 1,600 50
United Illuminating Co. 1,900 75
United Water Resources, Inc. 4,700 98
WICOR, Inc. 4,700 111
-------
1,822
-------
Total Common Stock
(Cost $19,925) 20,319
-------
Par
(000s)
-------
U.S. TREASURY OBLIGATIONS -- 0.1%
U.S. Treasury Bills (a) (b)
4.32%, 05/20/99 $ 20 20
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $20) 20
-------
Number
of Shares
---------
SHORT-TERM INVESTMENTS -- 3.6%
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.53% 366,825 367
Temporary Investment Fund, Inc.-
Temporary Cash Portfolio
4.57% 366,825 367
-------
TOTAL SHORT-TERM INVESTMENTS
(Cost $734) 734
-------
TOTAL INVESTMENTS -- 102.5%
(Cost $20,679) 21,073
-------
OTHER ASSETS AND LIABILITIES, NET--(2.5%)
Other assets 434
Liabilities (953)
-------
(519)
-------
TOTAL NET ASSETS -- 100.0% $20,554
=======
SEE ACCOMPANYING NOTES TO SCHEDULES OF INVESTMENTS AND NOTES TO
FINANCIAL STATEMENTS.
41
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
April 30, 1999 (Unaudited)
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR -- American Depository Receipt.
(a) Yields shown are effective yields at time of purchase.
(b) These securities, or portion thereof, are being used to collaterize open
futures contracts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (in thousands)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Institutional Select Funds(TM)
---------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
-------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost: $135,608, $38,812
and $20,679, respectively) $140,627 $41,831 $21,073
Amounts on deposit with broker 670 77 25
Receivables:
Investments sold -- -- 52
Fund shares sold 2,095 141 317
Variation margin 118 16 16
Dividends and interest 120 50 12
Deferred offering costs 9 9 9
-------- ------- -------
Total assets 143,639 42,124 21,504
-------- ------- -------
LIABILITIES
Payables:
Investments purchased 5,394 463 831
Fund shares redeemed 14 109 106
Accrued expenses 40 19 13
-------- ------- -------
Total liabilities 5,448 591 950
-------- ------- -------
Net assets applicable to outstanding shares $138,191 $41,533 $20,554
======== ======= =======
NET ASSETS CONSIST OF:
Paid-in capital $132,486 $38,344 $20,154
Undistributed net investment income 308 132 52
Accumulated net realized gain (loss) on investments sold
and futures contracts 260 22 (62)
Net unrealized appreciation on investments and futures contracts 5,137 3,035 410
-------- ------- -------
$138,191 $41,533 $20,554
======== ======= =======
PRICING OF SHARES:
Outstanding shares, $0.00001 par value
(unlimited shares authorized) 13,217 3,800 2,072
Net asset value, offering and redemption price per share $10.46 $10.93 $9.92
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
STATEMENTS OF OPERATIONS (in thousands)
For the period ended April 30, 1999+ (Unaudited)
<TABLE>
<CAPTION>
Institutional Select Funds(TM)
-----------------------------------------
Large-Cap Small-Cap
S&P 500+ Value Index+ Value Index+
------------ ------------ ------------
<S> <C> <C> <C>
Investment income:
Dividend $ 220 $ 117 $ 45
Interest 100 22 7
------ ------ ----
Total investment income 320 139 52
Expenses:
Investment advisory and administration fees 40 14 9
Transfer agency and shareholder service fees 20 7 4
Custodian fees 2 1 --
Portfolio accounting fees 3 1 1
Registration fees 52 23 13
Professional fees 5 7 7
Shareholder reports 5 4 2
Trustees' fees 1 -- --
Amortization of deferred offering costs 4 4 4
Insurance and other expenses 1 1 1
------ ------ ----
133 62 41
Less:expenses reduced (see Note 4) (121) (55) (41)
------ ------ ----
Net expenses incurred by Fund 12 7 --
------ ------ ----
Net investment income 308 132 52
------ ------ ----
Net realized gain (loss) on investments and futures contracts:
Net realized loss on investments sold (8) (5) (62)
Net realized gain on futures contracts 268 27 --
====== ====== ====
Net realized gain (loss) on investments and futures contracts 260 22 (62)
------ ------ ----
Change in net unrealized appreciation on investments and
futures contracts:
Net unrealized appreciation on investments 5,019 3,019 394
Net unrealized appreciation on futures contracts 118 16 16
------ ------ ----
Net unrealized appreciation on investments and
futures contracts 5,137 3,035 410
------ ------ ----
Net gain on investments 5,397 3,057 348
------ ------ ----
Increase in net assets resulting from operations $5,705 $3,189 $400
====== ====== ====
</TABLE>
+ For the period from February 1, 1999 (commencement of operation) to April 30,
1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
<TABLE>
<CAPTION>
Institutional Select Funds(TM)
-------------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
---------- ----------- -----------
02/01/99+ 02/01/99+ 02/01/99+
to to to
04/30/99 04/30/99 04/30/99
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Net investment income $ 308 $ 132 $ 52
Net realized gain (loss) on investments and
futures contracts 260 22 (62)
Change in net unrealized appreciation on investments
and futures contracts 5,137 3,035 410
-------- ------- -------
Increase in net assets resulting from operations 5,705 3,189 400
Capital share transactions:
Proceeds from shares sold 134,172 39,008 20,600
Early withdrawal fees (see Note 7) 2 2 3
Less payments for shares redeemed (1,688) (666) (449)
-------- -------- -------
Increase in net assets from capital share transactions 132,486 38,344 20,154
-------- -------- -------
Total increase in net assets 138,191 41,533 20,554
Net assets:
Beginning of period -- -- --
-------- -------- -------
End of period (including undistributed net investment
income of $308, $132, and $52, respectively) $138,191 $41,533 $20,554
======== ======= =======
Number of fund shares:
Sold 13,383 3,864 2,119
Redeemed (166) (64) (47)
-------- ------- -------
Net increase in shares outstanding 13,217 3,800 2,072
Shares outstanding:
Beginning of period -- -- --
-------- -------- -------
End of period 13,217 3,800 2,072
======== ======== =======
</TABLE>
+ Commencement of operations.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Institutional Select
S&P 500 Fund
--------------------
1999(1)
--------
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset value at beginning of period $ 10.00
--------
From investment operations:
Net investment income 0.02
Net realized and unrealized gains on investments 0.44
--------
Total from investment operations 0.46
--------
NET ASSET VALUE AT END OF PERIOD $ 10.46
========
Total return (%) 4.60*
RATIOS/SUPPLEMENTAL DATA (%)
- -----------------------------------------------------
Ratio of net operating expenses to average net assets 0.06**
Reductions reflected in above expense ratio 0.61**
Ratio of net investment income to average net assets 1.57**
Portfolio turnover rate --
Net assets, end of period (000s) $138,191
</TABLE>
(1) For the period from February 1, 1999 (commencement of operations) to
April 30, 1999 (Unaudited).
* Not Annualized.
** Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Institutional Select
Large-Cap Value Index Fund
--------------------------
1999(1)
--------
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset value at beginning of period $ 10.00
--------
From investment operations:
Net investment income 0.03
Net realized and unrealized gains on investments 0.90
--------
Total from investment operations 0.93
NET ASSET VALUE AT END OF PERIOD $ 10.93
========
Total return (%) 9.30*
RATIOS/SUPPLEMENTAL DATA (%)
- -----------------------------------------------------
Ratio of net operating expenses to average net assets 0.09**
Reductions reflected in above expense ratio 0.81**
Ratio of net investment income to average net assets 1.96**
Portfolio turnover rate --
Net assets, end of period (000s) $41,533
</TABLE>
(1) For the period from February 1, 1999 (commencement of operations) to
April 30, 1999 (Unaudited).
* Not Annualized.
** Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Institutional Select
Small-Cap Value Index Fund
--------------------------
1999(1)
--------
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
Net asset value at beginning of period $ 10.00
--------
From investment operations:
Net investment income 0.03
Net realized and unrealized loss on investments (0.11)
--------
Total from investment operations (0.08)
NET ASSET VALUE AT END OF PERIOD $ 9.92
========
Total return (%) (0.80)*
RATIOS/SUPPLEMENTAL DATA (%)
- -----------------------------------------------------
Ratio of net operating expenses to average net assets 0.00**
Reductions reflected in above expense ratio 1.14**
Ratio of net investment income to average net assets 1.43**
Portfolio turnover rate 4
Net assets, end of period (000s) $20,554
</TABLE>
(1) For the period from February 1, 1999 (commencement of operations) to
April 30, 1999 (Unaudited).
* Not Annualized.
** Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the period from February 1, 1999 (commencement of operations) to April 30,
1999 (Unaudited)
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value
Index Fund, and Institutional Select Small-Cap Value Index Fund are series of
Schwab Capital Trust (the "Trust"), a no-load, open-end, investment management
company organized as a Massachusetts business trust on May 7, 1993, and
registered under the Investment Company Act of 1940, as amended.
In addition to the three Funds described above, the Trust also offers the Schwab
Total Stock Market Index Fund(TM) (effective on April 16, 1999, and commenced
operations on June 1, 1999), Schwab S&P 500 Fund, Schwab Small-Cap Index
Fund,(R) Schwab International Index Fund,(R) Schwab MarketTrack Growth
Portfolio, Schwab MarketTrack BalancED Portfolio, Schwab MarketTrack
Conservative Portfolio, Schwab MarketTrack All Equity Portfolio, Schwab
Analytics Fund,(R) Schwab MarketManager Growth Portfolio, Schwab MarketManager
Balanced Portfolio, Schwab MarketManager Small Cap Portfolio, and Schwab
MarketManager International Portfolio. The assets of each series are segregated
and accounted for separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with generally
accepted accounting principles. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
SECURITY VALUATION -- Investments in securities traded on an exchange or in the
over-the-counter market are valued at the last-quoted sale price for a given
day, or if a sale is not reported for that day, at the mean between the most
recent quoted bid and asked prices. Securities for which no quotations are
readily available are valued at fair value as determined by the Fund's
investment adviser pursuant to guidelines adopted in good faith by the Board of
Trustees. Futures contracts and options thereon, which are traded on exchanges,
are valued at their settlement prices as of the close of such exchanges.
Short-term securities with 60 days or less to maturity are stated at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND REALIZED GAINS (LOSSES) -- Security
transactions are accounted for on a trade-date basis (date the order to buy or
sell is executed). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income (including accretion of
discount) is recorded on the accrual basis. Realized gains and losses from
security transactions are determined on an identified cost basis.
FUTURES CONTRACTS -- The Institutional Select S&P 500 Fund, Institutional Select
Large-Cap Value Index Fund and Institutional Select Small-Cap Value Index Fund
may invest in futures contracts. The Funds are required to deposit with the
broker an amount of cash equivalents equal to a certain percentage of the
contract amount. This is known as the "initial margin." The "variation margin"
represents unrealized gains (losses) due to daily fluctuation in the value of
the contract. The Funds record a realized gain or loss equal to the variation
margin at the time the contracts are closed.
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
The Funds will invest in these instruments to participate in the return of an
index. The use of futures contracts involves certain risks, which include (1)
imperfect correlation between the price movement of the contracts and the
underlying securities, or (2) inability to close out positions due to different
trading hours, or the temporary absence of a liquid market, for either the
contract or underlying securities. These risks may involve amounts exceeding the
amount recognized in each Fund's Statements of Operations at any given time.
As of April 30, 1999, the Institutional Select S&P 500 Fund, Institutional
Select Large-Cap Value Index Fund, and Institutional Select Small-Cap Value
Index Fund had the following open Index futures contracts:
<TABLE>
<CAPTION>
Type of Number of Contract Unrealized
Fund Contract Contracts Value Expiration Appreciation
- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Select S&P 500 Fund S&P 500 Index 19 $6,348 06/18/99 $118
Institutional Select Large-Cap Value Index Fund S&P 500 Index 2 668 06/18/99 16
Institutional Select Small-Cap Value Index Fund Russell 2000 1 217 06/18/99 16
</TABLE>
The cash and eligible securities on deposit with brokers available to cover
margin requirements for open futures positions at April 30, 1999, were $670 and
$577, respectively, for the Institutional Select S&P 500 Fund, and $77 and $80,
respectively, for the Institutional Select Large-Cap Value Index Fund, and $25
and $20, respectively, for the Institutional Select Small-Cap Value Index Fund.
The Funds have segregated short-term investments or repurchase agreements for
the remaining portion of the contract value.
EXPENSES -- Expenses arising in connection with a Fund are charged directly to
that Fund. Expenses common to all series of the Trust are generally allocated to
each series in proportion to their relative net assets.
FEDERAL INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income and realized net capital
gains, if any, to shareholders. Therefore, no federal income tax provision is
required. Each Fund is considered a separate entity for tax purposes.
The aggregate gross unrealized appreciation and depreciation for securities held
by the Funds at April 30, 1999 (for financial reporting and federal income tax
purposes) is as follows:
<TABLE>
<CAPTION>
Net Unrealized Appreciated Depreciated
Fund Appreciation Securities Securities
- -------- ------------ ---------- -----------
<S> <C> <C> <C>
Institutional Select S&P 500 Fund $ 5,137 $9,402 $(4,265)
Institutional Select Large-Cap Value Index Fund 3,035 4,139 (1,104)
Institutional Select Small-Cap Value Index Fund 410 1,835 (1,425)
</TABLE>
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT -- The Trust has an investment
advisory and administration agreement with Charles Schwab Investment Management,
Inc. (the "Investment Adviser"). For advisory services and facilities furnished,
each Fund pays an annual fee, payable monthly, of 0.20% of the first $1 billion
of average daily net assets and 0.18% of such assets over $1 billion for the
Institutional Select S&P 500 Fund and Large-Cap Value Index Fund, and of 0.25%
of the first $1 billion of average daily net assets and 0.23% of such assets
over $1 billion for the Institutional Select Small-Cap Value Index Fund. The
Investment Adviser has voluntarily waived or reduced its fee for the period
ended April 30, 1999 (see Note 4).
TRANSFER AGENCY AND SHAREHOLDER SERVICE AGREEMENTS -- The Trust has transfer
agency and shareholder service agreements with Charles Schwab & Co., Inc.
("Schwab"). For services provided under these agreements, Schwab receives an
annual fee, payable monthly, of 0.05% of each Fund's average daily net assets
for transfer agency services and 0.05% of such assets for shareholder services.
Schwab has voluntarily waived or reduced a portion of its transfer agency and
shareholder service fees for the period ended April 30, 1999 (see Note 4).
OFFICERS AND TRUSTEES -- Certain officers and trustees of the Trust are also
officers and/or directors of the Investment Adviser and/or Schwab. During the
period ended April 30, 1999, the Trust made no direct payments to its officers
or trustees who are "interested persons" within the meaning of the Investment
Company Act of 1940, as amended. The Funds incurred fees aggregating $1 related
to the Trust's unaffiliated trustees.
4. EXPENSES REDUCED AND ABSORBED BY THE INVESTMENT ADVISER AND SCHWAB
The Investment Adviser and Schwab guarantee that, through at least December 31,
2005, total operating expenses of Institutional Select S&P 500 Fund, Large-Cap
Value Index Fund and Small-Cap Value Index Fund will not exceed 0.15%, 0.25% and
0.32%, respectively, of each Fund's average daily net assets, after waivers and
reimbursements, and further reduced the total operation expenses of the
Institutional Select Small-Cap Value Index Fund to 0.00% through at least June
30, 1999. For the purpose of this guarantee, operating expenses do not include
interest expenses, extraordinary expenses, taxes, foreign taxes and capital
items.
For the period ended April 30, 1999, the total of such fees and expenses reduced
by the Investment Adviser was $101, $48, and $37, respectively, for the
Institutional Select S&P 500, Large-Cap Value Index and Small-Cap Value Index
Funds and the total of such fees reduced by Schwab was $20, $7, and $4,
respectively, for the Institutional Select S&P 500 Fund, Large-Cap Value Index
Fund and Small-Cap Value Index Fund.
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. INVESTMENT TRANSACTIONS
Aggregate purchases and sales of investment securities, other than short-term
obligations, for the period ended April 30, 1999, were as follows:
Proceeds of
sales and
Fund Purchases maturities
- -------- ------------ -----------
Institutional Select S&P 500 Fund $126,785 $ 67
Institutional Select Large-Cap Value Index Fund 37,921 51
Institutional Select Small-Cap Value Index Fund 20,712 726
For the Institutional Select S&P 500 Fund, included in the aforementioned
purchases of common stock are purchases of The Charles Schwab Corp., an
affiliated issuer, with a current value as of April 30, 1999 of $527.
6. EARLY WITHDRAWAL FEES
The early withdrawal fees are retained by the Funds and are treated as a
contribution to capital.
<TABLE>
<CAPTION>
Early withdrawal fees on Early withdrawal
Fund redemption proceeds* fees as of 4/30/99
-------- ---------------------- ----------------
<S> <C> <C>
Institutional Select S&P 500 Fund 0.25% 2
Institutional Select Large-Cap Value Index Fund 0.50% 2
Institutional Select Small-Cap Value Index Fund 0.75% 3
</TABLE>
*Attributable to shares purchased and held less than 180 days.
52
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
FUNDS DESIGNED TO MEET YOUR NEEDS
The new Institutional Select Funds were designed with input from Investment
Managers, who indicated a need for new, low-cost, tax-efficient index fund
alternatives.
At Charles Schwab Investment Management, Inc. (CSIM), our goal is to understand
the needs of our clients--and then design investment tools that meet those
needs. Through targeted research, we learned that our clients want additional
low-cost index fund alternatives that are managed for greater tax efficiency and
offer accurate tracking and a proven management team. The Institutional Select
Funds are a direct result of that research, and they offer real advantages
designed specifically for institutional-type investors.
CSIM--THE RIGHT RESOURCES FOR INVESTMENT MANAGERS
When we began in 1990, CSIM's primary focus was the retail customer, and
today--with more than 45 fund products, four million
SchwabFunds-Registered Trademark- shareholders and more than $90 billion in
assets under management--we are a market leader.
But we are extending our reach. Investment Managers represent a growing segment
of the overall customer base for Charles Schwab & Co., Inc. (Schwab), and the
Institutional Select Funds are the first of what we hope will be many new CSIM
fund products that will provide low-cost, tax-efficient portfolios for
Investment Managers and their clients. By continuing to work with Investment
Managers nationwide, we have every intention of becoming a leading provider of
institutional investment tools.
CSIM serves as the investment advisor to the SchwabFunds, and is an affiliate of
Schwab, which is a registered broker/dealer that distributes the Institutional
Select Funds and the SchwabFunds. Schwab Institutional is a division of Schwab.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
<PAGE>
INSTITUTIONAL SELECT-TM- FUNDS
101 MONTGOMERY STREET, SAN FRANCISCO, CA 94104
INVESTMENT ADVISER
Charles Schwab Investment Management, Inc.
101 Montgomery Street, San Francisco, CA 94104
DISTRIBUTOR
Charles Schwab & Co., Inc.
101 Montgomery Street, San Francisco, CA 94104
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
- -C-1999 Charles Schwab & Co., Inc.
All rights reserved, Member SIPC/NYSE.
Printed on recycled paper. (0099-2264) MKT3995 (6/99)
