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<PAGE> 1
[graphic of box]
INSTITUTIONAL SELECT(TM) FUNDS
OCTOBER 31, 2000
ANNUAL REPORT
AND
AN IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
[graphic of box]
<PAGE> 2
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission (SEC) permits mutual funds to deliver
only one copy of shareholder documents, including prospectuses and shareholder
reports, to fund investors with multiple accounts at the same residential or
post office box address. This practice is commonly called "householding" and is
intended to eliminate duplicate mailings of shareholder documents.
Mailings of your Institutional Select(TM) Funds shareholder documents may be
householded indefinitely unless you instruct us otherwise.
ADDITIONAL COPIES OF SHAREHOLDERS DOCUMENTS
THE PROSPECTUS AND SHAREHOLDER REPORTS FOR THE INSTITUTIONAL SELECT FUNDS ARE
AVAILABLE FREE OF CHARGE, AND MAY BE REQUESTED AT ANY TIME BY CALLING
1-800-515-2157.
If you would prefer that your Institutional Select Funds mailings not be
householded, please contact Schwab at 1-800-515-2157, or your Investment
Manager. Your instructions that householding not apply to accounts holding
Institutional Select Funds will be effective within 30 days of receipt by
Schwab.
<PAGE> 3
[graphic of box]
INSTITUTIONAL SELECT(TM) FUNDS
ANNUAL REPORT
OCTOBER 31, 2000
INSTITUTIONAL SELECT
S&P 500 Fund
INSTITUTIONAL SELECT
Large-Cap Value Index Fund
INSTITUTIONAL SELECT
Small-Cap Value Index Fund
[graphic of box]
<PAGE> 4
INSTITUTIONAL SELECT(TM) FUNDS
We are pleased to bring you this annual report for the Institutional Select(TM)
Funds (the funds) for the period ended October 31, 2000. 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
The funds seek to achieve their respective goals by tracking the performances of
different stock market indices. Because each fund typically rebalances its
portfolio periodically in order to track its index, the funds have experienced
significantly lower portfolio turnover and transaction costs than non-index
funds. This approach, combined with low fund operating expenses, makes these
funds cost-effective investments for long-term investors.
FUND LISTINGS
The funds are listed in The Wall Street Journal, USA Today, Investor's Business
Daily and most local newspapers under the heading Institutional Select:
Newspaper Listing Symbol
S&P 500 ISLCX
LrgCapValue ISLVX
SmCapValue ISSVX
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500" and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by the Institutional Select Funds. The funds are not sponsored,
endorsed, sold or promoted by Standard & Poor's, and Standard & Poor's makes no
representation regarding the advisability of investing in the funds.
<TABLE>
<CAPTION>
<S> <C>
CONTENTS
--------------------------------------------------------------------------------
A Message from the Chairman 1
--------------------------------------------------------------------------------
Market Overview 2
--------------------------------------------------------------------------------
Institutional Select S&P 500 Fund
Fund Performance 6
Portfolio Snapshot 8
--------------------------------------------------------------------------------
Institutional Select Large-Cap Value Index Fund
Fund Performance 10
Portfolio Snapshot 12
--------------------------------------------------------------------------------
Institutional Select Small-Cap Value Index Fund
Fund Performance 14
Portfolio Snapshot 16
--------------------------------------------------------------------------------
Portfolio Management 18
--------------------------------------------------------------------------------
Fund Discussion 19
--------------------------------------------------------------------------------
Glossary 22
--------------------------------------------------------------------------------
Financial Statements and Notes 24
--------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
A MESSAGE FROM THE CHAIRMAN
[PHOTO OF CHARLES SCHWAB]
Dear Shareholder,
This annual report is designed to provide you with detailed information about
the Institutional Select(TM) Funds, a family of institutional index funds to
better serve the needs of Investment Managers and their clients. These funds
have highly competitive expense ratios and are generally only available through
Investment Managers. With the support of investors such as yourselves, combined
assets in the Institutional Select Funds have grown to over $550 million as of
October 31, 2000.
Charles Schwab Investment Management, Inc. (CSIM) is the Institutional Select
Funds' investment adviser. CSIM is committed to providing investors with
high-quality, cost-efficient investment solutions. CSIM was created in 1989, and
as of October 31, 2000, managed more than $120 billion in assets for over 5
million shareholder accounts.
In closing, I would like to thank you for your business. We will continue to do
everything we can to warrant the trust you have placed in us.
Sincerely,
/s/ CHARLES SCHWAB
Charles Schwab
October 31, 2000
1
<PAGE> 6
MARKET OVERVIEW
GROWTH PERIOD IS THE LONGEST IN U.S. HISTORY.
As of October 31, 2000, U.S. economic expansion was in the middle of its tenth
year, marking the longest period of continuous growth in U.S. history. The main
force behind the expansion has been high levels of consumer spending, fueled by
increases in personal income, personal wealth and consumer confidence.
The pace of economic growth remained robust through the second quarter of 2000,
then moderated somewhat in the third quarter, in part due to reduced government
spending. Actual Q3 growth was lower than many analysts had expected.
Although energy prices soared, inflation still appears to remain in check. The
GDP price deflator, a widely used inflation indicator, declined slightly from
2.4% in the second quarter to 2.0% in the third quarter.
Source: Bloomberg L.P.
PRODUCTIVITY EMERGES AS A KEY FACTOR. [PRODUCTION LINE GRAPHIC]
In recent years, the Federal Reserve Bank (the Fed) demonstrated its resolve to
moderate the pace of the economy's growth by raising short-term interest rates
(since June 1999, it has raised these rates six times). The Fed has voiced
concern that increases in wages could outpace gains in productivity, forcing
companies to boost prices and potentially sparking inflation.
ASSETS CLASS PERFORMANCE COMPARISON % returns during the report period
This graph compares the performance of four widely used measures of securities
market performance, including U.S. stocks and bonds and international stocks.
[LINE GRAPH]
<TABLE>
<CAPTION>
Lehman Brothers
U.S. Aggregate MSCI-EAFE(R) Russell 2000(R) S&P 500(R)
Bond Index Index Index Index
---------- ----- ----- -----
<S> <C> <C> <C> <C>
11/05/99 0.0061 0.005 0.0323 0.0054
11/12/99 0.0073 0.02 0.0495 0.0244
11/19/99 0.0032 0.039 0.0762 0.0435
11/26/99 0.0011 0.052 0.0708 0.0395
12/03/99 0.0015 0.053 0.0843 0.0522
12/10/99 0.0078 0.067 0.0894 0.041
12/17/99 -0.003 0.068 0.0889 0.0439
12/24/99 -0.0061 0.107 0.1268 0.0713
12/31/99 -0.0051 0.126 0.1796 0.0804
01/07/00 -0.0057 0.074 0.1415 0.06
01/14/00 -0.0103 0.101 0.1867 0.0774
01/21/00 -0.0119 0.076 0.2483 0.0599
01/28/00 -0.0052 0.071 0.1801 0.0002
02/04/00 -0.0039 0.093 0.2292 0.0481
02/11/00 -0.0068 0.1 0.2568 0.0207
02/18/00 -0.0015 0.083 0.277 -0.0095
02/25/00 0.005 0.092 0.3029 -0.0189
03/03/00 0.0068 0.115 0.4004 0.0381
03/10/00 0.0048 0.114 0.4137 0.0277
03/17/00 0.0118 0.101 0.3458 0.0788
03/24/00 0.0105 0.123 0.3449 0.1251
03/31/00 0.0168 0.121 0.2632 0.1049
04/07/00 0.0249 0.11 0.2726 0.118
04/14/00 0.0242 0.071 0.064 0.0002
04/21/00 0.0233 0.062 0.1297 0.0577
04/28/00 0.0138 0.061 0.1872 0.0717
05/05/00 -0.0004 0.057 0.203 0.0571
05/12/00 -0.0017 0.046 0.1521 0.0485
05/19/00 0.0003 0.008 0.1258 0.0381
05/26/00 0.0112 0.014 0.0738 0.0168
06/02/00 0.023 0.081 0.2045 0.0916
06/09/00 0.0262 0.079 0.2287 0.0766
06/16/00 0.0349 0.075 0.2075 0.0822
06/23/00 0.0253 0.065 0.2002 0.0652
06/30/00 0.0344 0.073 0.2155 0.0757
07/07/00 0.0391 0.083 0.2406 0.0937
07/14/00 0.0376 0.079 0.2748 0.1166
07/21/00 0.0434 0.055 0.228 0.0946
07/28/00 0.0433 0.02 0.152 0.0501
08/04/00 0.0513 0.016 0.1839 0.0827
08/11/00 0.0531 0.031 0.2002 0.0893
08/18/00 0.0544 0.039 0.2129 0.104
08/25/00 0.0584 0.046 0.2359 0.115
09/01/00 0.0616 0.057 0.2758 0.127
09/08/00 0.0606 0.014 0.2598 0.1075
09/15/00 0.0588 -0.009 0.2506 0.0862
09/22/00 0.0613 -0.024 0.2224 0.0735
09/29/00 0.0657 -0.017 0.2293 0.0653
10/06/00 0.0654 -0.02 0.1579 0.0448
10/13/00 0.0692 -0.051 0.1332 0.019
10/20/00 0.0749 -0.052 0.15 0.0361
10/27/00 0.0736 -0.037 0.1321 0.0233
10/31/00 0.073 -0.029 0.174 0.0609
7.30% -2.90% 17.41% 6.09%
</TABLE>
These figures assume dividends and distributions were reinvested. Index figures
don't include trading and management costs, which would lower performance.
Indices are unmanaged and you can't invest in them directly. Data source:
Charles Schwab & Co., Inc. (Schwab).
2
<PAGE> 7
Productivity gains are important because they enable companies to achieve
greater output for every dollar spent for labor costs. Spurred mainly by
technological advances, productivity grew at 4.0% during the first half of 2000
and 3.3% during the third quarter (these figures include all economic sectors
except farming). However, third quarter productivity gains were partially offset
by a 2.5% increase in unit labor costs -- costs that had declined in the
previous quarter. Source: Bloomberg L.P.
UNEMPLOYMENT HITS NEW LOWS, YET INFLATION REMAINS AT BAY.
The unemployment rate has been trending downward for years. In April it fell
below 4% -- the lowest level in 30 years and one previously considered
improbable without high inflation.
Overall, labor markets continue to be extremely tight, and there has been
evidence in some regions of labor shortages driving up wages. In spite of these
regional trends, overall increases in prices and wages during the report period
were relatively modest, due in part to strong productivity gains. However, an
upturn in labor costs may make the Fed more sensitive to other potential signs
of inflation.
STOCKS STUMBLE, RECOVER; MOST BONDS POST HEALTHY RETURNS.
U.S. equities, as measured by the major indices (chart, page 2) had positive
returns for the report period. By historical standards, they also remained
highly valued (P/E chart, page 5).
FIVE FACTORS AND THEIR EFFECTS ON THESE FUNDS.
The following charts show recent figures for four common measures of the state
of the U.S. economy and the stock market, as well as one measure of
international stock performance.
While the relationship of each of these factors to the performance of the funds
is complex, the captions over each chart and the discussion above include
analysis of how we believe these factors may have influenced market behavior
during the report period.
REAL GDP GROWTH
Annualized growth rate for each quarter shown
The U.S. economy has grown steadily for more than nine years. Real GDP grew at a
2.4% annualized rate in Q3 2000 -- slower than the 5.2% for the first half of
the year.
[BAR GRAPH]
<TABLE>
<CAPTION>
<S> <C>
Dec-90 -3.2
Mar-91 -2
Jun-91 2.3
Sep-91 1
Dec-91 2.2
Mar-92 3.8
Jun-92 3.8
Sep-92 3.1
Dec-92 5.4
Mar-93 -0.1
Jun-93 2.5
Sep-93 1.8
Dec-93 6.2
Mar-94 3.4
Jun-94 5.7
Sep-94 2.2
Dec-94 5
Mar-95 1.5
Jun-95 0.8
Sep-95 3.1
Dec-95 3.2
Mar-96 2.9
Jun-96 6.8
Sep-96 2
Dec-96 4.6
Mar-97 4.4
Jun-97 5.9
Sep-97 4.2
Dec-97 2.8
Mar-98 6.5
Jun-98 2.9
Sep-98 3.4
Dec-98 5.6
Mar-99 3.5
Jun-99 2.5
Sep-99 5.7
Dec-99 8.3
Mar-00 4.8
Jun-00 5.6
Sep-00 2.4
</TABLE>
Gross domestic product (GDP), a broad measure of the goods and services produced
in the United States during a given time period, is a prime indicator of the
health of the country's economy. Typically, stock investors see increases in GDP
as a positive, since it indicates stronger demand, production and corporate
earnings. The figures shown here are adjusted for inflation.
Data source: Bloomberg L.P.
3
<PAGE> 8
MARKET OVERVIEW Continued
However, the report period saw extreme volatility in the stock market,
particularly for U.S. stocks. In March and April, the P/E for the Nasdaq 100
Index lost one-third of its value in just a two-week period. (The Nasdaq 100
Index reflects 100 of the largest Nasdaq companies across major industry groups,
including computers, telecommunications, retail/wholesale and biotechnology, but
excluding financial companies.) Volatility continued through the end of the
report period as investors shifted their focus from hard-hit sectors such as
technology to undervalued and established companies.
[GRAPHIC OF PEOPLE AT STOCK MARKET]
"Old economy" stocks and value stocks regained popularity as many newer company
stocks fell.
Outside the U.S., stocks were held back by uncertainty over oil prices and
corporate earnings. For U.S. investors, the continued rise of the dollar against
the euro and yen was a factor as well, because it eroded the dollar value of
foreign stocks.
A major factor for bonds during the report period was the U.S. Treasury's
decision to use some of the budget surplus to buy back its own bonds. This
created a major change in the picture for supply and demand of bonds, and
resulted in an inverted yield curve (a situation where short-term bonds actually
pay higher yields than long-term bonds). While short-term interest rates rose
during the report period, intermediate and long-term rates actually
U. S. UNEMPLOYMENT RATE
Adjusted for seasonal variations
Unemployment hit a three-decade low of 3.9% in April. Although it trended up to
4.1% during the summer months, it closed the reporting period back at 3.9%.
<TABLE>
<CAPTION>
[LINE GRAPH]
<S> <C>
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
Nov-91 7
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
Apr-93 7.1
May-93 7.1
Jun-93 7
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 6.8
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
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 5.4
Apr-95 5.8
May-95 5.6
Jun-95 5.6
Jul-95 5.7
Aug-95 5.7
Sep-95 5.6
Oct-95 5.5
Nov-95 5.6
Dec-95 5.6
Jan-96 5.7
Feb-96 5.5
Mar-96 5.5
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 5.4
Dec-96 5.4
Jan-97 5.3
Feb-97 5.3
Mar-97 5.2
Apr-97 5
May-97 4.9
Jun-97 5
Jul-97 4.8
Aug-97 4.8
Sep-97 4.9
Oct-97 4.7
Nov-97 4.6
Dec-97 4.7
Jan-98 4.7
Feb-98 4.6
Mar-98 4.7
Apr-98 4.3
May-98 4.4
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 4.4
Jan-99 4.3
Feb-99 4.4
Mar-99 4.2
Apr-99 4.3
May-99 4.2
Jun-99 4.3
Jul-99 4.3
Aug-99 4.2
Sep-99 4.2
Oct-99 4.1
Nov-99 4.1
Dec-99 4.1
Jan-00 4
Feb-00 4.1
Mar-00 4.1
Apr-00 3.9
May-00 4.1
Jun-00 4
Jul-00 4
Aug-00 4.1
Sep-00 3.9
Oct-00 3.9
</TABLE>
This measures the portion of the U.S. labor force that is unemployed and is
either seeking a job or waiting to return to one. Low unemployment often
accompanies prosperity and is generally a positive factor for investors,
although very low unemployment may boost inflation as employers raise pay to
compete for workers. Rising unemployment may mean a softening economy.
Data source: Bloomberg L.P.
MEASURES OF INFLATION
Annualized figures for the Consumer Price Index (monthly) and Employment Cost
Index (quarterly)
CPI was up 3.4% for the 12 months ended October 31, 2000 (2.5% if food and
energy are excluded). ECI rose 4.3% for the 12 months ended September 30, 2000.
<TABLE>
<CAPTION>
[LINE GRAPH]
Date CPI ECI
---- --- ---
<S> <C> <C>
Sep-90 6.2 5.2
Oct-90 6.4 5.2
Nov-90 6.3 5.2
Dec-90 6.3 4.9
Jan-91 5.6 4.9
Feb-91 5.3 4.9
Mar-91 4.9 4.6
Apr-91 4.8 4.6
May-91 5 4.6
Jun-91 4.7 4.6
Jul-91 4.4 4.6
Aug-91 3.8 4.6
Sep-91 3.4 4.3
Oct-91 2.8 4.3
Nov-91 3.1 4.3
Dec-91 3 4.3
Jan-92 2.7 4.3
Feb-92 2.8 4.3
Mar-92 3.2 4
Apr-92 3.2 4
May-92 3 4
Jun-92 3 3.6
Jul-92 3.2 3.6
Aug-92 3.1 3.6
Sep-92 3 3.5
Oct-92 3.3 3.5
Nov-92 3.1 3.5
Dec-92 3 3.5
Jan-93 3.2 3.5
Feb-93 3.2 3.5
Mar-93 3 3.5
Apr-93 3.2 3.5
May-93 3.2 3.5
Jun-93 3 3.6
Jul-93 2.8 3.6
Aug-93 2.8 3.6
Sep-93 2.8 3.6
Oct-93 2.8 3.6
Nov-93 2.7 3.6
Dec-93 2.8 3.5
Jan-94 2.5 3.5
Feb-94 2.5 3.5
Mar-94 2.6 3.2
Apr-94 2.4 3.2
May-94 2.3 3.2
Jun-94 2.5 3.2
Jul-94 2.7 3.2
Aug-94 2.9 3.2
Sep-94 3 3.2
Oct-94 2.6 3.2
Nov-94 2.7 3.2
Dec-94 2.6 3
Jan-95 2.8 3
Feb-95 2.9 3
Mar-95 2.9 2.9
Apr-95 2.8 2.9
May-95 3.1 2.9
Jun-95 3 2.9
Jul-95 2.8 2.9
Aug-95 2.6 2.9
Sep-95 2.5 2.7
Oct-95 2.8 2.7
Nov-95 2.6 2.7
Dec-95 2.6 2.8
Jan-96 2.7 2.8
Feb-96 2.7 2.8
Mar-96 2.9 2.8
Apr-96 2.8 2.8
May-96 2.9 2.8
Jun-96 2.8 2.9
Jul-96 2.9 2.9
Aug-96 2.8 2.9
Sep-96 3 2.8
Oct-96 3 2.8
Nov-96 3.2 2.8
Dec-96 3.2 2.9
Jan-97 3 2.9
Feb-97 3 2.9
Mar-97 2.8 2.9
Apr-97 2.5 2.9
May-97 2.2 2.9
Jun-97 2.3 2.8
Jul-97 2.2 2.8
Aug-97 2.2 2.8
Sep-97 2.2 3
Oct-97 2.1 3
Nov-97 1.9 3
Dec-97 1.7 3.3
Jan-98 1.6 3.3
Feb-98 1.4 3.3
Mar-98 1.4 3.3
Apr-98 1.5 3.3
May-98 1.7 3.3
Jun-98 1.6 3.5
Jul-98 1.7 3.5
Aug-98 1.7 3.5
Sep-98 1.4 3.7
Oct-98 1.4 3.7
Nov-98 1.5 3.7
Dec-98 1.6 3.4
Jan-99 1.7 3.4
Feb-99 1.7 3.4
Mar-99 1.8 3
Apr-99 2.3 3
May-99 2.1 3
Jun-99 2 3.2
Jul-99 2.1 3.2
Aug-99 2.3 3.2
Sep-99 2.6 3.1
Oct-99 2.6 3.1
Nov-99 2.6 3.1
Dec-99 2.7 3.4
Jan-00 2.7 3.4
Feb-00 3.2 3.4
Mar-00 3.8 4.3
Apr-00 3.1 4.3
May-00 3.2 4.3
Jun-00 3.7 4.4
Jul-00 3.7 4.4
Aug-00 3.4 4.4
Sep-00 3.5 4.3
Oct-00 3.4
</TABLE>
The Consumer Price Index (CPI) tracks changes in the cost of goods and services
and is the most common measure of inflation. The Employment Cost Index (ECI)
measures the cost of employing workers, including benefits costs. Financial
markets are very sensitive to increases in inflation because of the potentially
negative impact on corporate earnings, investors and consumers.
Data source: Bloomberg L.P.
4
<PAGE> 9
fell. Although these events were comparatively unusual, their net effect on
performance was generally positive for bond investments.
LOOKING AHEAD: GROWTH MAY CONTINUE,
BUT RATE MAY SLOW.
Through its aggressive tightening of short-term interest rates in late 1999 and
the first half of 2000, the Fed has sought to slow the economy to a "soft
landing" -- a growth rate that is high enough to avoid recession but not so high
as to tempt inflation.
Recent evidence indicates that economic growth has indeed slowed from its torrid
pace of the first half of 2000.
[PHOTO OF PEOPLE SHOPPING]
The question remains whether the slowdown is only a temporary condition prompted
by a build-up of manufacturing inventories or is the "soft landing" desired by
the Fed.
Factors to watch may include consumer spending and employer competition for
workers. If the slowdown is the desired "soft landing," we would expect to see a
slackening in one or both of these factors.
The consensus among economists is that the U.S. economy appears poised for
continued growth, albeit at lower rates than those of the past few years.
Source: Schwab.
S&P 500(R) PRICE/EARNINGS RATIO (P/E)
Dollar-weighted average P/E for all stocks in the index
Despite the recent downturn in stocks, the P/E ratio of the S&P 500 ended the
report period at 25.6, a level still significantly above the 30-year average of
15.8.
<TABLE>
<CAPTION>
S&P 500 PE Ratio 30 Avrge
---------------- --------
<S> <C> <C>
Sep-90 14.34 15.8
Oct-90 14.67 15.8
Nov-90 14.65 15.8
Dec-90 15.28 15.8
Jan-91 15.55 15.8
Feb-91 16.87 15.8
Mar-91 17.56 15.8
Apr-91 17.77 15.8
May-91 18.23 15.8
Jun-91 17.7 15.8
Jul-91 18.37 15.8
Aug-91 20.35 15.8
Sep-91 19.98 15.8
Oct-91 20.37 15.8
Nov-91 20.99 15.8
Dec-91 22.89 15.8
Jan-92 23.03 15.8
Feb-92 25.78 15.8
Mar-92 25.51 15.8
Apr-92 26.03 15.8
May-92 25.22 15.8
Jun-92 25.23 15.8
Jul-92 26.08 15.8
Aug-92 24.22 15.8
Sep-92 24.7 15.8
Oct-92 24.64 15.8
Nov-92 23.8 15.8
Dec-92 24.31 15.8
Jan-93 24.29 15.8
Feb-93 24.44 15.8
Mar-93 23.48 15.8
Apr-93 22.92 15.8
May-93 22.96 15.8
Jun-93 22.9 15.8
Jul-93 22.91 15.8
Aug-93 24.21 15.8
Sep-93 23.77 15.8
Oct-93 24.04 15.8
Nov-93 22.52 15.8
Dec-93 22.95 15.8
Jan-94 22.98 15.8
Feb-94 21.17 15.8
Mar-94 20.34 15.8
Apr-94 20.1 15.8
May-94 20.16 15.8
Jun-94 19.77 15.8
Jul-94 18.63 15.8
Aug-94 18.91 15.8
Sep-94 18.32 15.8
Oct-94 17.51 15.8
Nov-94 16.56 15.8
Dec-94 16.98 15.8
Jan-95 16.05 15.8
Feb-95 16.22 15.8
Mar-95 16.47 15.8
Apr-95 16 15.8
May-95 16.45 15.8
Jun-95 16.77 15.8
Jul-95 16.61 15.8
Aug-95 16.18 15.8
Sep-95 16.85 15.8
Oct-95 16.18 15.8
Nov-95 17.86 15.8
Dec-95 17.41 15.8
Jan-96 18.29 15.8
Feb-96 18.57 15.8
Mar-96 18.94 15.8
Apr-96 19.16 15.8
May-96 19.48 15.8
Jun-96 19.3 15.8
Jul-96 18.31 15.8
Aug-96 18.62 15.8
Sep-96 19.73 15.8
Oct-96 19.59 15.8
Nov-96 21.06 15.8
Dec-96 20.77 15.8
Jan-97 20.52 15.8
Feb-97 20.95 15.8
Mar-97 19.87 15.8
Apr-97 20.23 15.8
May-97 21.45 15.8
Jun-97 22.44 15.8
Jul-97 23.99 15.8
Aug-97 22.74 15.8
Sep-97 24 15.8
Oct-97 22.84 15.8
Nov-97 24.12 15.8
Dec-97 24.53 15.8
Jan-98 25.03 15.8
Feb-98 26.49 15.8
Mar-98 27.98 15.8
Apr-98 26.69 15.8
May-98 26.15 15.8
Jun-98 27.27 15.8
Jul-98 26.94 15.8
Aug-98 22.9 15.8
Sep-98 24.35 15.8
Oct-98 28.07 15.8
Nov-98 30.31 15.8
Dec-98 32.15 15.8
Jan-99 33.9 15.8
Feb-99 32.64 15.8
Mar-99 33.92 15.8
Apr-99 33.9 15.8
May-99 32.74 15.8
Jun-99 34.7 15.8
Jul-99 31.31 15.8
Aug-99 31.21 15.8
Sep-99 30.39 15.8
Oct-99 30.41 15.8
Nov-99 30.65 15.8
Dec-99 32.53 15.8
Jan-00 29.78 15.8
Feb-00 28.59 15.8
Mar-00 31.5 15.8
Apr-00 29.41 15.8
May-00 28.82 15.8
Jun-00 29.31 15.8
Jul-00 28.94 15.8
Aug-00 30.35 15.8
Sep-00 28.64 15.8
Oct-00 25.6 15.8
</TABLE>
P/E is stock price divided by earnings per share (for one company or, as here,
an entire index). P/E indicates the value that investors have placed on a stock,
or group of them. When index P/E is well above its long-term average, it shows
high investor confidence about future earnings growth. It also can mean that if
confidence wanes, there could be a substantial drop in stock prices.
Data Source: Bloomberg L.P.
STOCK MARKETS OF SELECTED COUNTRIES
Four best-performing and four worst-performing countries in the MSCI-EAFE(R)
Index during the report period.
While foreign stocks rose 11.8% when measured in their local currencies, a
rising U.S. dollar changed that into a -2.9% return for American investors.
<TABLE>
<CAPTION>
<S> <C>
Finland 25.54
Denmark 16.93
Norway 14.06
Italy 11.77
MSCI-EAFE Index -2.9
Ireland -13.08
Austria -13.92
Belgium -17.75
New Zealand -29.06
</TABLE>
The MSCI Europe, Australasia and Far East (EAFE) Index includes 19 non-U.S.
countries with major stock markets. In any report period, the gap between the
best and worst performers may be substantial. Similarly, a country's performance
may vary widely from period to period, although it's possible for a country to
perform above or below average for an extended time.
Data Source: Bloomberg L.P.
5
<PAGE> 10
INSTITUTIONAL SELECT(TM) S&P 500 Fund
FUND PERFORMANCE
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/00
<TABLE>
<CAPTION>
SINCE INCEPTION
ONE YEAR (2/1/99)
-------------------------------------------------------------------------------
<S> <C> <C>
INSTITUTIONAL SELECT S&P 500 Fund 1 5.86% 7.62%
S&P 500(R) Index 6.09% 7.83%
Index Tracking Differential (0.23%) (0.21%)
</TABLE>
The Index Tracking Differential represents the difference between the returns of
the S&P 500 Index and the Institutional Select S&P 500 Fund. This 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.
1 A portion of the fund's expenses was reduced during the reporting period.
Without such reductions, the fund's returns would have been lower.
The index is unmanaged and you cannot invest in it directly. When you sell
your shares, they may be worth more or less than what you paid for them.
Past performance doesn't indicate future results.
6
<PAGE> 11
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT LINE GRAPH]
<TABLE>
<CAPTION>
Institutional
Select(TM) S&P 500 Fund S&P 500 Index
<S> <C> <C>
2/1/99 10000 10000
2/28/99 9680 9689
3/31/99 10070 10077
4/30/99 10460 10467
5/31/99 10200 10220
6/30/99 10770 10787
7/31/99 10440 10450
8/31/99 10380 10398
9/30/99 10100 10113
10/31/99 10740 10753
11/30/99 10950 10972
12/31/99 11602 11618
1/31/00 11016 11035
2/29/00 10804 10826
3/31/00 11864 11885
4/30/99 11501 11527
5/31/00 11259 11291
6/30/00 11541 11569
7/31/00 11360 11389
8/31/00 12066 12096
9/30/00 11420 11458
10/31/00 11370 11410
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select(TM) S&P 500 Fund, made at its inception, to a similar
investment in the S&P 500(R) Index. A detailed analysis of the performance of
the fund is provided in the Fund Discussion section later in this report.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the fund. Investors cannot invest in an index
directly.
<TABLE>
<CAPTION>
NET ASSETS
-------------------------------------------------------------------------------
<S> <C>
Total net assets as of 10/31/99 ($M) $238
-------------------------------------------------------------------------------
Total net assets as of 10/31/00 ($M) $382
-------------------------------------------------------------------------------
Percentage growth from 10/31/99 to 10/31/00 61%
-------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 12
INSTITUTIONAL SELECT(TM) S&P 500 Fund
PORTFOLIO SNAPSHOT
The Institutional Select S&P 500 Fund (the fund) seeks high total return by
tracking the performance of the S&P 500(R) Index. To pursue its goal, the fund
invests primarily in stocks included in the S&P 500 Index, a widely recognized,
unmanaged index comprised of 500 mainly large-cap stocks selected by Standard &
Poor's(R). As of October 31, 2000, the aggregate market capitalization of the
S&P 500 Index represented approximately 79% of the total value of the U.S. stock
market.* Common stocks of the 50 largest companies in the S&P 500 Index
accounted for approximately 57% of the index.* Standard & Poor's rebalances the
index periodically and with no set schedule.
The information below, and on the following page, provides a snapshot of the
fund's characteristics as of October 31, 2000, and is not indicative of its
composition after that date. The terms used below are defined in the Glossary. A
complete list of securities in the fund's portfolio as of October 31, 2000 is
provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT PEER GROUP
S&P 500 Fund** Average+
-------------------------------------------------------------------------------
<S> <C> <C>
Number of Issues 502 137
-------------------------------------------------------------------------------
Median Market Cap ($M) $72,161 $56,749
-------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 30.3 34.3
-------------------------------------------------------------------------------
Price/Book (P/B) Ratio 7.1 8.7
-------------------------------------------------------------------------------
12-Month Yield 0.79%+ 0.45%
-------------------------------------------------------------------------------
Portfolio Turnover Rate 6% 98%
-------------------------------------------------------------------------------
Three-Year Beta -- --
-------------------------------------------------------------------------------
Expense Ratio 0.15%*** 1.34%
-------------------------------------------------------------------------------
</TABLE>
* Source: Wilshire Associates. The U.S. stock market as represented by
the Wilshire 5000 Index.
** Compiled by Charles Schwab & Co., Inc. (Schwab). 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 Charles Schwab Investment
Management, Inc. (CSIM) and Schwab, which is guaranteed through at
least 12/31/05 (excluding interest, taxes and certain non-routine
expenses). The actual expense ratio during the report period was 0.01%
higher due to certain non-routine expenses.
+ Source: Morningstar, Inc. The peer group average is based on 2,620
large-cap funds as tracked by Morningstar as of 10/31/00.
8
<PAGE> 13
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 10/31/00
[PORTFOLIO COMPOSITION BY INDUSTRY PIE CHART]
<TABLE>
<S> <C>
Other 26.1%
Business Machines and Software 14.8%
Healthcare/Drugs and Medicine 11.4%
Electronics 9.0%
Miscellaneous Finance 6.6%
Telephone 6.2%
Business Services 5.8%
Producer Goods and Manufacturing 5.6%
Banks 5.2%
Retail 5.1%
Oil - International 4.2%
</TABLE>
EQUITY INVESTMENT STYLE BOX 1
AS OF 10/31/00
<TABLE>
<S> <C> <C>
VALUE BLEND GROWTH
X LARGE
MEDIUM
SMALL
</TABLE>
[EQUITY INVESTMENT STYLE BOX]
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 2
-------------------------------------------------------------------------------
<S> <C>
General Electric Co. 4.3%
-------------------------------------------------------------------------------
Cisco Systems, Inc. 3.0%
-------------------------------------------------------------------------------
Microsoft Corp. 2.9%
-------------------------------------------------------------------------------
Exxon Mobil Corp. 2.5%
-------------------------------------------------------------------------------
Intel Corp. 2.4%
-------------------------------------------------------------------------------
Pfizer, Inc. 2.2%
-------------------------------------------------------------------------------
Citigroup, Inc. 1.9%
-------------------------------------------------------------------------------
American International Group, Inc. 1.8%
-------------------------------------------------------------------------------
Merck & Co., Inc. 1.7%
-------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.6%
-------------------------------------------------------------------------------
Total 24.3%
-------------------------------------------------------------------------------
</TABLE>
1 Source: Morningstar, Inc. The style box illustrates the composition of
the fund's portfolio as of 10/31/00. 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(R)
Index, as well as the size of the companies in which it invests, or
median market capitalization.
2 Nothing in this report represents a recommendation of a security by
Charles Schwab Investment Management, Inc. (CSIM). Portfolio holdings
may have changed since the report date.
9
<PAGE> 14
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
FUND PERFORMANCE
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED 10/31/00
<TABLE>
<CAPTION>
Since Inception
One Year (2/1/99)
-------------------------------------------------------------------------------
<S> <C> <C>
INSTITUTIONAL SELECT LARGE-CAP VALUE INDEX FUND 1 9.48% 9.36%
-------------------------------------------------------------------------------
S&P 500/BARRA Value Index 9.68% 9.66%
-------------------------------------------------------------------------------
Index Tracking Differential (0.20%) (0.30%)
-------------------------------------------------------------------------------
</TABLE>
The difference between the total returns of the S&P 500/BARRA Value Index and
the Institutional Select Large-Cap Value Index Fund is often referred to as the
"index tracking differential." See page 6 for a more detailed explanation of
this term.
1 A portion of the fund's expenses was reduced during the reporting
period. Without such reductions, the fund's returns would have been
lower.
The index is unmanaged and you cannot invest in it directly. When you
sell your shares, they may be worth more or less than what you paid for
them. Past performance doesn't indicate future results.
10
<PAGE> 15
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT LINE GRAPH]
<TABLE>
<CAPTION>
Institutional Select(TM)
Large-Cap Value Index Fund S&P 500/BARRA Value Index
-------------------------- -------------------------
<S> <C> <C>
2/1/99 10000 10000
2/28/99 9780 9785
3/31/99 10080 10081
4/30/99 10930 10950
5/31/99 10730 10756
6/30/99 11140 11169
7/31/99 10790 10826
8/31/99 10520 10553
9/30/99 10110 10140
10/31/99 10680 10712
11/30/99 10620 10649
12/31/99 11008 11049
1/31/00 10650 10698
2/29/00 9996 10030
3/31/00 11039 11076
4/30/00 10957 11001
5/30/00 10988 11036
6/30/00 10548 10600
7/31/00 10763 10812
8/31/00 11489 11537
9/30/00 11478 11535
10/31/00 11693 11751
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Large-Cap Value Index Fund, made at its inception, to a
similar investment in the S&P 500/BARRA Value Index. A detailed analysis of the
performance of the fund is provided in the Fund Discussion section later in this
report.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the fund. Investors cannot invest in an index
directly.
<TABLE>
<CAPTION>
NET ASSETS
------------------------------------------------------------------------------
<S> <C>
Total net assets as of 10/31/99 ($M) $71
-------------------------------------------------------------------------------
Total net assets as of 10/31/00 ($M) $129
-------------------------------------------------------------------------------
Percentage growth from 10/31/99 to 10/31/00 82%
-------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 16
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Large-Cap Value Index Fund (the fund) seeks high total
return by tracking the performance of the S&P 500/BARRA Value Index. To pursue
its goal, the fund invests primarily in stocks included in the S&P/BARRA Value
Index, a widely recognized index comprised of those stocks from the S&P 500(R)
Index determined by BARRA, Inc. and Standard & Poor's(R) to be "value" stocks.
The total value of the index (as measured by the combined market capitalization
of the companies included in the index) is approximately half the total value of
the S&P 500(R) Index. Companies with the highest price/book ratios may be
included in the index. BARRA, Inc., and Standard & Poor's rebalance the index at
least twice a year.
The information below, and on the following page, provides a snapshot of the
fund's characteristics as of October 31, 2000, and is not indicative of its
composition after that date. The terms as used below are defined in the
Glossary. A complete list of securities in the fund's portfolio as of October
31, 2000 is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
Institutional Select Large-Cap Peer Group
Value Index Fund* Average+
-------------------------------------------------------------------------------
<S> <C> <C>
Number of Issues 394 137
-------------------------------------------------------------------------------
Median Market Cap ($M) $31,609 $56,749
-------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 23.5 34.3
-------------------------------------------------------------------------------
Price/Book (P/B) Ratio 3.5 8.7
-------------------------------------------------------------------------------
12-Month Yield 0.94%+ 0.45%
-------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 98%
-------------------------------------------------------------------------------
Three-Year Beta -- --
-------------------------------------------------------------------------------
Expense Ratio 0.25%** 1.34%
-------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. (Schwab). 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 Charles Schwab Investment Management,
Inc. (CSIM) and Schwab, which is guaranteed through at least 12/31/05
(excluding interest, taxes and certain non-routine expenses). The
actual expense ratio during the report period was 0.01% higher due to
certain non-routine expenses.
+ Source: Morningstar, Inc. The peer group average is based on 2,620
large-cap funds as tracked by Morningstar as of 10/31/00.
12
<PAGE> 17
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 10/31/00
[PORTFOLIO COMPOSITION BY INDUSTRY PIE CHART]
<TABLE>
<S> <C>
Other 30.3%
Miscellaneous Finance 12.3%
Telephone 10.6%
Banks 10.2%
Oil-International 8.3%
Insurance 7.5%
Utilities-Energy and Gas 6.4%
Business Machines and Software 3.7%
Retail 3.7%
Media 3.5%
Chemical 3.5%
</TABLE>
EQUITY INVESTMENT STYLE BOX 1
AS OF 10/31/00
<TABLE>
<S> <C> <C>
VALUE BLEND GROWTH
X LARGE
MEDIUM
SMALL
</TABLE>
[EQUITY INVESTMENT STYLE BOX]
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 2
-------------------------------------------------------------------------------
<S> <C>
Exxon Mobil Corp. 4.9%
-------------------------------------------------------------------------------
Citigroup, Inc. 3.8%
-------------------------------------------------------------------------------
American International Group, Inc. 3.6%
-------------------------------------------------------------------------------
SBC Communications, Inc. 3.1%
-------------------------------------------------------------------------------
Verizon Communications 2.5%
-------------------------------------------------------------------------------
Royal Dutch Petroleum Co. - Sponsored ADR 2.0%
-------------------------------------------------------------------------------
Tyco International Ltd. 1.6%
-------------------------------------------------------------------------------
Proctor & Gamble Co. 1.5%
-------------------------------------------------------------------------------
Hewlett-Packard Co. 1.5%
-------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1.4%
-------------------------------------------------------------------------------
Total 25.9%
-------------------------------------------------------------------------------
</TABLE>
1 Source: Morningstar, Inc. The style box illustrates the composition of
the fund's portfolio as of 10/31/00. 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(R)
Index, as well as the size of the companies in which it invests, or
median market capitalization.
2 Nothing in this report represents a recommendation of a security by
Charles Schwab Investment Management, Inc. (CSIM). Portfolio holdings
may have changed since the report date.
13
<PAGE> 18
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 10/31/00
<TABLE>
<CAPTION>
SINCE INCEPTION
ONE YEAR (2/1/99)
-------------------------------------------------------------------------------
<S> <C> <C>
INSTITUTIONAL SELECT SMALL-CAP VALUE INDEX FUND 1 19.42% 9.99%
-------------------------------------------------------------------------------
S&P Small-Cap 600/BARRA Value Index 19.13% 10.04%
-------------------------------------------------------------------------------
Index Tracking Differential 0.29% (0.05%)
-------------------------------------------------------------------------------
</TABLE>
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 is often referred
to as the "index tracking differential." See page 6 for a more detailed
explanation of this term.
1 A portion of the fund's expenses was reduced during the reporting
period. Without such reductions, the fund's returns would have been
lower.
The index is unmanaged and you cannot invest in it directly. When you
sell your shares, they may be worth more or less than what you paid for
them. Past performance doesn't indicate future results.
14
<PAGE> 19
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
[GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT LINE GRAPH]
<TABLE>
<CAPTION>
Institutional Select(TM)
Small-Cap Value Index Fund S&P 600/BARRA Value Index
-------------------------- -------------------------
<S> <C> <C>
2/1/99 10000 10000
2/28/99 9170 9186
3/31/99 9130 9150
4/30/99 9920 9947
5/31/99 10310 10345
6/30/99 10930 10973
7/31/99 10760 10802
8/31/99 10310 10349
9/30/99 10120 10159
10/31/99 9890 9924
11/30/99 10120 10147
12/31/99 10411 10425
1/31/00 9886 9891
2/29/00 10338 10338
3/31/00 10716 10720
4/30/99 10801 10795
5/31/00 10611 10619
6/30/00 10916 10923
7/31/00 11127 11139
8/31/00 11789 11789
9/30/00 11747 11765
10/31/00 11810 11823
</TABLE>
The above graph compares the growth of a hypothetical $10,000 investment in the
Institutional Select Small-Cap Value Index Fund, made at its inception, to a
similar investment in the S&P Small-Cap 600/BARRA Value Index. A detailed
analysis of the performance of the fund is provided in the Fund Discussion
section later in this report.
THE INFORMATION PRESENTED IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
TOTAL RETURNS ASSUME REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS. PRINCIPAL VALUE AND INVESTMENT RETURNS WILL FLUCTUATE, SO AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. Indices are unmanaged and do not reflect advisory fees and other expenses
associated with an investment in the fund. Investors cannot invest in an index
directly.
<TABLE>
<CAPTION>
NET ASSETS
------------------------------------------------------------------------------
<S> <C>
Total net assets as of 10/31/99 ($M) $32
-------------------------------------------------------------------------------
Total net assets as of 10/31/00 ($M) $39
-------------------------------------------------------------------------------
Percentage growth from 10/31/99 to 10/31/00 22%
-------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 20
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
PORTFOLIO SNAPSHOT
The Institutional Select Small-Cap Value Index Fund (the fund) seeks high total
return by tracking the performance of the S&P SmallCap 600/BARRA Value Index. To
pursue its goal, the fund invests in stocks included in the S&P SmallCap
600/BARRA Value Index, a widely recognized index composed of those stocks within
the S&P SmallCap 600 Index determined by BARRA, Inc. and Standard & Poor's(R) to
be "value" stocks. The total value of the index (as measured by the combined
market capitalization of the companies included in the index) is approximately
half the total value of the S&P SmallCap 600 Index. The companies with the
highest price/book ratios may be included in the index. BARRA, Inc. and Standard
& Poor's rebalance the index at least twice a year.
The information below, and on the following page, provides a snapshot of the
fund's characteristics as of October 31, 2000, and is not indicative of its
composition after that date. The terms used below are defined in the Glossary. A
complete list of the securities in the fund's portfolio as of October 31, 2000
is provided in the Schedule of Investments later in this report.
FUND FACTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT SMALL-CAP PEER GROUP
VALUE INDEX FUND* AVERAGE+
-------------------------------------------------------------------------------
<S> <C> <C>
Number of Issues 424 181
-------------------------------------------------------------------------------
Median Market Cap ($M) $533 $1,256
-------------------------------------------------------------------------------
Price/Earnings (P/E) Ratio 16.9 27.7
-------------------------------------------------------------------------------
Price/Book (P/B) Ratio 2.1 5.5
-------------------------------------------------------------------------------
12-Month Yield 0.83% 0.22%
-------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 105%
-------------------------------------------------------------------------------
Three-Year Beta -- --
-------------------------------------------------------------------------------
Expense Ratio 0.32%** 1.55%
-------------------------------------------------------------------------------
</TABLE>
* Compiled by Charles Schwab & Co., Inc. (Schwab). This information is
for illustrative purposes only and is not intended to show, predict or
guarantee future composition of the fund.
** The Investment adviser, Charles Schwab Investment Management, Inc.
(CSIM) and Schwab guarantees, through at least 12/31/05, that the
operating expense ratio (excluding interest, taxes and certain
non-routine expenses) will not exceed 0.32%. However, the fund's actual
expense ratio for the report period, including certain non-routine
expenses, was 0.28%.
+ Source: Morningstar, Inc. The peer group average is based on 892
small-cap funds as tracked by Morningstar as of 10/31/00.
16
<PAGE> 21
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 10/31/00
[PORTFOLIO COMPOSITION BY INDUSTRY PIE CHART]
<TABLE>
<S> <C>
Other 33.9%
Miscellaneous Finance 9.3%
Business Services 9.0%
Healthcare/Drugs & Medicine 8.0%
Banks 7.3%
Electronics 6.6%
Producer Goods & Manufacturing 6.6%
Utilities-Energy & Gas 6.5%
Food & Agriculture 4.6%
Retail 4.5%
Construction 3.7%
</TABLE>
EQUITY INVESTMENT STYLE BOX 1
AS OF 10/31/00
<TABLE>
<S> <C> <C>
VALUE BLEND GROWTH
LARGE
MEDIUM
X SMALL
</TABLE>
[EQUITY INVESTMENT STYLE BOX]
<TABLE>
<CAPTION>
TOP TEN HOLDINGS
AS A PERCENTAGE OF FUND INVESTMENTS 2
-------------------------------------------------------------------------------
<S> <C>
Radian Group, Inc. 1.3%
-------------------------------------------------------------------------------
Universal Health Services, Class B 1.2%
-------------------------------------------------------------------------------
Cerner Corp. 1.0%
-------------------------------------------------------------------------------
AmeriCredit Corp. 1.0%
-------------------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 0.9%
-------------------------------------------------------------------------------
Pride International, Inc. 0.8%
-------------------------------------------------------------------------------
Fidelity National Financial, Inc. 0.8%
-------------------------------------------------------------------------------
Harmon International Industries, Inc. 0.8%
-------------------------------------------------------------------------------
Smithfield Foods, Inc. 0.8%
-------------------------------------------------------------------------------
Shaw Group, Inc. 0.8%
-------------------------------------------------------------------------------
Total 9.4%
-------------------------------------------------------------------------------
</TABLE>
1 Source: Morningstar, Inc. The style box illustrates the composition of
the fund's portfolio as of 10/31/00. 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(R) Index, as
well as the size of the companies in which it invests, or median market
capitalization.
2 Nothing in this report represents a recommendation of a security by
Charles Schwab Investment Management, Inc. (CSIM). Portfolio holdings may
have changed since the report date.
17
<PAGE> 22
PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT TEAM
GERI HOM -- vice president and senior portfolio manager, has overall
responsibility for the management of the Institutional Select(TM) Funds,
including day-to-day management responsibilities for the Institutional Select
S&P 500 Fund. Geri also manages all of the Schwab Equity Index Funds, the Schwab
Analytics Fund(R) and the Schwab Focus Funds and she co-manages the Schwab
MarketTrack Portfolios(R). Prior to joining CSIM in March 1995, Geri was a
principal for Wells Fargo Nikko Investment Advisors and vice president and
manager of the Domestic Equity Portfolio Management 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
CSIM in November 1998, he worked for 20 years in equity index management, most
recently at Wilshire Associates, Inc.
18
<PAGE> 23
FUND DISCUSSION
QUESTIONS TO THE
PORTFOLIO MANAGEMENT TEAM
INSTITUTIONAL SELECT FUNDS
Q. HOW DID THE FUNDS PERFORM DURING THE REPORTING PERIOD?
A. As discussed in the Market Overview section of this report, large-cap stocks,
as represented by the S&P 500 Index, relinquished their five-year hold as being
the strongest performing asset class to small-cap stocks. Accordingly, the
Institutional Select Small-Cap Value Index Fund had the best performance of the
three funds for the reporting period.
By following an indexing strategy, the funds may also be able to help investors
keep more of their return on an after-tax basis. Because the composition of an
index tends to be comparatively stable, index funds historically have shown
lower portfolio turnover compared to actively managed funds. 1
<TABLE>
<CAPTION>
ONE YEAR RETURNS % LOST
BEFORE TAX AFTER TAX* TO TAXES
------------------------------------------------------------------------------
<S> <C> <C> <C>
INSTITUTIONAL SELECT S&P 500 5.86% 5.47% 6.66%
FUND
-------------------------------------------------------------------------------
Average Large-Cap Fund 1 10.61% 8.81% 16.97%
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR RETURNS: % LOST
BEFORE TAX AFTER TAX* TO TAXES
------------------------------------------------------------------------------
<S> <C> <C> <C>
INSTITUTIONAL SELECT LARGE-CAP 9.48% 8.55% 9.81%
VALUE INDEX FUND
-------------------------------------------------------------------------------
Average Large-Cap 7.59% 5.47% 27.93%
Value Fund 1
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR RETURNS: % LOST
BEFORE TAX AFTER TAX* TO TAXES
------------------------------------------------------------------------------
<S> <C> <C> <C>
INSTITUTIONAL SELECT SMALL-CAP 19.42% 17.09% 12.00%
VALUE INDEX FUND
-------------------------------------------------------------------------------
Average Small-Cap 19.94% 18.98% 4.81%
Value Fund 1
-------------------------------------------------------------------------------
</TABLE>
1 Source: Morningstar, Inc. As of 10/31/00, the Large-Cap, Large-Cap
Value, and Small-Cap Value Fund categories respectively contained
2,620, 727 and 221 funds with track records of at least one-year.
* After-tax returns assume the maximum federal income tax rate of 39.60%
on dividends and 20% on capital gains distributions. Tax rates vary and
may be higher or lower than those shown. State and local taxes have not
been considered. After-tax returns are not applicable to shares held in
tax-deferred accounts such as IRAs and 401ks. Past performance doesn't
indicate future results. These after-tax returns do not reflect any
taxes you may have to pay as a result of selling your shares. All after
tax return information provided by Morningstar, Inc.
19
<PAGE> 24
FUND DISCUSSION CONTINUED
Q. CAN YOU PROVIDE SOME HISTORICAL PERSPECTIVE ON VALUE STOCK RETURNS COMPARED
TO GROWTH STOCK RETURNS?
A. Schwab Center for Investment Research (SCIR) found that value stocks
historically have shown much less volatility than growth stocks. Whether looking
at the past 10, 15 or 20 years, value stocks exhibited only three-quarters of
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 growth stock returns for the period from 1975 through 1998,
there have been periods within that timeframe during which growth stocks have
performed better than value stocks and vice versa. These shifting results are
driven by the fact that value and growth stocks have tended 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 may have 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.
[GROWTH OF A HYPOTHETICAL $1 INVESTMENT LINE GRAPH]
<TABLE>
<CAPTION>
S&P/BARRA 500 Growth Index S&P/BARRA 500 Value Index
-------------------------- -------------------------
<S> <C> <C>
1974 1 1
1975 1.32 1.43
1976 1.5 1.93
1977 1.32 1.88
1978 1.41 2
1979 1.63 2.42
1980 2.28 3
1981 2.05 3
1982 2.51 3.63
1983 2.91 4.68
1984 2.98 5.17
1985 3.97 6.7
1986 4.55 8.15
1987 4.85 8.45
1988 5.43 10.28
1989 7.4 12.97
1990 7.42 12.08
1991 10.26 14.81
1992 10.78 16.37
1993 10.96 19.41
1994 11.3 19.29
1995 15.61 26.42
1996 19.36 32.23
1997 26.43 41.9
1998 37.57 48.04
1999 48.18 54.16
</TABLE>
20
<PAGE> 25
[VALUE AND GROWTH RELATIVE PERFORMANCE BAR CHART]
<TABLE>
<CAPTION>
Growth Relative Performance Value Relative Performance
--------------------------- --------------------------
<S> <C> <C>
1975 11.66
21.09
9.25
-0.63
5.45
1980 -15.82
9.83
-0.99
12.65
8.18
1985 -3.64
7.17
-2.82
9.73
-10.27
1990 -7.05
-15.81
5.46
16.92
-3.77
1995 -1.13
-1.98
-6.53
-27.48
1999 -15.52
</TABLE>
Q. HOW ARE THE S&P/BARRA Value Indices constructed?
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 Index are divided into value and growth indices based on book value
relative to price.
THE S&P 500/BARRA VALUE INDEX -- The S&P 500/BARRA Value Index is a widely
recognized index designed to reflect the performance of large capitalization
"value stocks." The index includes those S&P 500 Index stocks with generally
higher price-to-book ratios, and is rebalanced semiannually. Its market
capitalization is about half the market capitalization of the S&P 500 Index.
Conceptually speaking, the index is constructed by first ranking all S&P 500
stocks by their price-to-book ratios. Then the stocks with higher price-to-book
ratios are placed in the S&P/BARRA Value Index until the index represents about
half of the total market capitalization of the S&P 500 Index.
THE S&P SMALLCAP 600/BARRA VALUE INDEX -- The S&P SmallCap 600/BARRA Value Index
is a widely recognized index designed to reflect the performance of small
capitalization "value stocks." The index includes those S&P Small Cap 600 Index
stocks with generally higher price-to-book ratios, and is rebalanced
semiannually. (The S&P Small Cap 600 Index is composed of stocks selected by
Standard & Poor's(R) to reflect the performance of U.S. small capitalization
stocks.) Its market capitalization is about half the market capitalization of
the S&P Small Cap 600 Index. Conceptually speaking, the index is constructed by
first ranking all S&P 500 stocks by their price-to-book ratios. Then the stocks
with higher price-to-book ratios are placed in the S&P Small Cap 600/BARRA Value
Index until the Index represents about half of the total market capitalization
of the S&P Small Cap 600 Index.
21
<PAGE> 26
GLOSSARY
ASSET ALLOCATION -- The division of holdings among different types of assets,
such as domestic stocks, international stocks, bonds and cash equivalent
securities.
BETA -- A measure of a stock's volatility relative to the overall stock market.
The beta of the S&P 500(R) 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 net assets, 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.
22
<PAGE> 27
TOTAL RETURN -- The overall performance of an investment over a given period,
including any expenses, any income or distributions paid out and any capital
gain or loss (increases or decreases in portfolio value).
TURNOVER RATE -- A measure 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
market value.
23
<PAGE> 28
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000S)
--------- ------
<S> <C> <C>
COMMON STOCK -- 99.8%
AEROSPACE / DEFENSE -- 1.3%
B.F. Goodrich Co. 3,100 $ 127
Boeing Co. 27,400 1,858
Crane Co. 1,800 47
General Dynamics Corp. 6,000 429
Lockheed Martin Corp. 13,000 466
Northrop Grumman Corp. 2,200 185
Raytheon Co., Class B 10,300 352
Rockwell International Corp. 5,700 224
Textron, Inc. 4,300 217
TRW, Inc. 3,500 147
United Technologies Corp. 14,300 998
-------
5,050
-------
AIR TRANSPORTATION -- 0.3%
AMR Corp.+ 4,200 138
Delta Air Lines, Inc. 3,700 175
FedEx Corp.+ 8,400 394
Southwest Airlines Co. 15,000 427
U.S. Airways Group, Inc.+ 2,000 75
-------
1,209
-------
ALCOHOLIC BEVERAGES -- 0.4%
Adolph Coors Co., Class B 1,000 64
Anheuser-Busch Cos., Inc. 27,600 1,263
Brown-Forman Corp., Class B 2,000 122
-------
1,449
-------
APPAREL -- 0.1%
Liz Claiborne, Inc. 1,500 64
Nike, Inc., Class B 8,100 323
Reebok International Ltd.+ 1,500 32
Russell Corp. 1,300 21
Springs Industries, Inc., Class A 1,000 24
VF Corp. 3,300 90
-------
554
-------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 1.1%
Cooper Tire & Rubber Co. 1,800 20
Cummins Engine Co., Inc. 1,200 41
Dana Corp. 4,500 100
Danaher Corp. 4,100 259
Delphi Automotive Systems Corp. 16,249 255
Eaton Corp. 2,300 157
Ford Motor Co.+ 56,911 1,487
General Motors Corp. 16,275 1,011
Genuine Parts Co. 5,000 107
Goodyear Tire & Rubber Co. 4,300 80
Harley-Davidson, Inc. 9,400 453
Navistar International Corp.+ 1,700 56
Visteon Corp. 4,569 81
-------
4,107
-------
BANKS -- 5.3%
AmSouth Bancorp. 11,500 160
Bank of America Corp. 50,000 2,403
Bank of New York Co., Inc. 22,300 1,284
Bank One Corp. 35,000 1,277
BB&T Corp. 12,000 382
Chase Manhattan Corp. 39,600 1,802
Comerica, Inc. 4,800 289
Fifth Third Bancorp. 14,150 727
First Union Corp. 29,500 894
Firstar Corp. 28,563 562
FleetBoston Financial Corp. 27,131 1,031
Golden West Financial Corp. 4,900 275
Huntington Bancshares, Inc. 7,183 103
J.P. Morgan & Co., Inc. 4,800 794
KeyCorp, Inc. 12,600 311
Mellon Financial Corp. 14,600 704
National City Corp. 18,300 391
Northern Trust Corp. 6,700 572
Old Kent Financial Corp. 4,080 113
PNC Financial Services Group 8,600 575
Providian Financial Corp. 4,500 468
Regions Financial Corp. 6,300 148
SouthTrust Corp. 4,900 159
State Street Corp. 4,700 586
Summit Bancorp. 5,100 191
SunTrust Banks, Inc. 9,200 449
Synovus Financial Corp. 8,100 175
U.S. Bancorp. 22,600 547
Union Planters Corp. 3,900 132
Wachovia Corp. 6,100 329
Wells Fargo & Co. 50,100 2,320
-------
20,153
-------
</TABLE>
24
<PAGE> 29
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
BUSINESS MACHINES & SOFTWARE -- 14.8%
Adaptec, Inc.+ 2,900 $ 46
Adobe Systems, Inc. 8,000 608
Apple Computer, Inc.+ 9,700 190
Autodesk, Inc. 1,600 35
BMC Software, Inc.+ 7,100 144
Cabletron Systems, Inc.+ 5,200 141
Ceridian Corp.+ 4,100 102
Cisco Systems, Inc.+ 215,100 11,588
Compaq Computer Corp. 51,300 1,560
Compuware Corp.+ 10,900 86
Comverse Technology, Inc.+ 5,100 570
Dell Computer Corp.+ 78,400 2,313
EMC Corp.+ 66,124 5,889
Gateway, Inc.+ 10,000 516
Hewlett-Packard Co. 60,200 2,796
International Business Machines Corp. 53,500 5,270
Lexmark International Group, Inc., Class A+ 3,700 152
Microsoft Corp.+ 159,700 10,999
NCR Corp.+ 2,900 125
Network Appliance, Inc.+ 9,400 1,119
Novell, Inc.+ 9,600 86
Novellus Systems, Inc.+ 3,850 158
Oracle Corp.+ 170,600 5,630
Pitney Bowes, Inc. 7,700 229
Seagate Technology, Inc.+ 7,200 503
Sun Microsystems, Inc.+ 48,400 5,366
Unisys Corp.+ 9,400 120
Xerox Corp. 20,000 169
------
56,510
------
BUSINESS SERVICES -- 6.0%
Allied Waste Industries, Inc.+ 5,400 50
America Online, Inc.+ 69,900 3,525
Automatic Data Processing, Inc. 19,300 1,261
Cendant Corp.+ 21,870 262
Citrix Systems, Inc.+ 5,400 119
Computer Associates International, Inc. 17,600 561
Computer Sciences Corp.+ 5,400 340
Convergys Corp.+ 4,425 193
Deluxe Corp. 2,200 50
Ecolab, Inc. 3,700 $ 145
Electronic Data Systems Corp. 14,200 666
Equifax, Inc. 4,200 145
Exelon Corp. 9,850 592
First Data Corp. 12,100 606
H&R Block, Inc. 2,700 96
IMS Health, Inc. 8,800 208
Interpublic Group of Cos., Inc. 9,200 395
Mercury Interactive Corp.+ 2,800 311
National Service Industries, Inc. 1,000 20
Nortel Networks Corp. 90,500 4,118
Omnicom Group, Inc. 5,700 526
Parametric Technology Corp.+ 7,900 97
Paychex, Inc. 11,425 648
PeopleSoft, Inc.+ 8,400 367
Sapient Corp.+ 3,400 121
Siebel Systems, Inc.+ 12,600 1,322
Stilwell Financial, Inc. 6,900 309
Tyco International Ltd. 51,834 2,938
VERITAS Software Corp.+ 12,100 1,706
Waste Management, Inc. 18,400 368
Yahoo!, Inc.+ 16,500 967
------
23,032
------
CHEMICAL -- 0.9%
Air Products & Chemicals, Inc. 6,700 250
Dow Chemical Co. 20,600 631
E.I. du Pont de Nemours & Co. 31,782 1,442
Eastman Chemical Co. 2,300 99
Great Lakes Chemical Corp. 1,400 47
Hercules, Inc. 3,200 59
PPG Industries, Inc. 5,000 223
Praxair, Inc. 4,500 168
Rohm & Haas Co. 6,263 188
Sigma-Aldrich Corp. 2,700 97
Union Carbide Corp. 4,100 176
W.R. Grace & Co.+ 1,900 7
------
3,387
------
CONSTRUCTION -- 0.2%
Armstrong Holdings, Inc. 1,300 4
Centex Corp. 1,800 67
Fluor Corp. 2,300 80
Kaufman & Broad Home Corp. 1,400 42
</TABLE>
25
<PAGE> 30
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
Masco Corp. 13,700 $ 256
Pulte Corp. 1,000 33
Sherwin-Williams Co. 4,500 98
The Stanley Works 2,500 67
Vulcan Materials Co. 3,100 130
-------
777
-------
CONSUMER - DURABLE -- 0.1%
Black & Decker Corp. 2,600 98
Leggett & Platt, Inc. 5,800 95
Maytag Corp. 2,300 66
Whirlpool Corp. 2,000 87
-------
346
-------
CONSUMER - NONDURABLE -- 0.6%
American Greetings Corp., Class A 1,900 35
Darden Restaurants, Inc. 3,500 79
Fortune Brands, Inc. 4,400 130
Harcourt General, Inc. 2,100 118
Hasbro, Inc. 4,800 52
Mattel, Inc. 12,800 166
McDonald's Corp. 39,900 1,237
Newell Rubbermaid, Inc. 7,967 153
Starbucks Corp.+ 5,820 260
Tricon Global Restaurants, Inc.+ 4,200 126
Tupperware Corp. 1,600 27
Wendy's International, Inc. 3,200 70
-------
2,453
-------
CONTAINERS -- 0.1%
Ball Corp. 800 28
Bemis Co., Inc. 1,400 36
Crown Cork & Seal Co., Inc. 3,800 35
Owens-Illinois, Inc.+ 4,300 26
Pactiv Corp.+ 4,400 46
Sealed Air Corp.+ 2,500 120
-------
291
-------
ELECTRONICS -- 8.6%
ADC Telecommunications, Inc.+ 23,200 496
Advanced Micro Devices, Inc.+ 9,200 208
Altera Corp.+ 12,120 496
American Power Conversion Corp.+ 5,550 72
Analog Devices, Inc.+ 11,000 715
Andrew Corp.+ 2,400 $ 63
Applied Materials, Inc.+ 24,500 1,302
Broadcom Corp., Class A+ 6,700 1,490
Conexant Systems, Inc.+ 6,900 182
Intel Corp. 203,500 9,157
ITT Industries, Inc. 2,400 78
JDS Uniphase Corp.+ 28,300 2,305
KLA-Tencor Corp.+ 5,400 183
Linear Technology Corp. 9,700 626
LSI Logic Corp.+ 9,400 309
Lucent Technologies, Inc. 101,045 2,356
Maxim Integrated Products, Inc.+ 8,900 590
Micron Technology, Inc.+ 16,900 587
Molex, Inc. 5,800 313
Moody's Corp. 5,400 142
Motorola, Inc. 65,626 1,637
National Semiconductor Corp.+ 5,200 135
Nextel Communications, Inc., Class A+ 22,800 876
PE Corp.-PE Biosystems Group 6,600 772
PerkinElmer, Inc. 1,600 191
Power-One, Inc.+ 2,300 163
QUALCOMM, Inc.+ 22,600 1,471
Sanmina Corp.+ 4,600 526
Scientific-Atlanta, Inc. 5,100 349
Solectron Corp.+ 18,200 801
Tektronix, Inc. 1,500 107
Tellabs, Inc.+ 12,300 614
Teradyne, Inc.+ 5,000 156
Texas Instruments, Inc. 52,600 2,581
Thermo Electron Corp.+ 5,000 145
Thomas & Betts Corp. 1,500 23
Xilinx, Inc.+ 9,800 710
-------
32,927
-------
ENERGY - RAW MATERIALS -- 1.0%
Anadarko Petroleum Corp. 7,621 488
Apache Corp. 3,700 205
Baker Hughes, Inc. 10,000 344
Burlington Resources, Inc. 6,700 241
Devon Energy Corp. 3,700 186
Eastern Enterprises 700 45
Halliburton Co. 13,700 508
McDermott International, Inc. 2,200 21
Nabors Industries, Inc.+ 4,500 229
</TABLE>
26
<PAGE> 31
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
Occidental Petroleum Corp. 10,600 $ 211
Rowan Cos., Inc.+ 2,800 71
Schlumberger Ltd. 17,400 1,325
-------
3,874
-------
FOOD & AGRICULTURE -- 3.2%
Archer-Daniels-Midland Co. 19,260 212
Campbell Soup Co. 12,700 371
Coca-Cola Co. 75,000 4,528
Coca-Cola Enterprises, Inc. 12,200 224
ConAgra, Inc. 15,800 338
General Mills, Inc. 8,700 363
H.J. Heinz Co. 10,300 432
Hershey Foods Corp. 4,000 217
Kellogg Co. 12,200 310
Nabisco Group Holdings Corp. 9,900 286
PepsiCo, Inc. 43,600 2,112
Quaker Oats Co. 4,300 351
Ralston Purina Group 9,300 226
Sara Lee Corp. 26,100 563
Supervalu, Inc. 4,000 61
Sysco Corp. 9,900 517
Unilever NV - Sponsored ADR 17,242 876
Wm. Wrigley Jr. Co. 3,300 261
-------
12,248
-------
GOLD -- 0.1%
Barrick Gold Corp. 11,400 152
Homestake Mining Co. 7,900 33
Newmont Mining Corp. 4,700 64
Placer Dome, Inc. 9,000 73
-------
322
-------
HEALTHCARE / DRUGS & MEDICINE -- 12.0%
Abbott Laboratories 46,900 2,477
Aetna, Inc. 4,100 237
Allergan, Inc. 3,900 328
ALZA Corp.+ 3,500 283
American Home Products Corp. 39,600 2,515
Amgen, Inc.+ 31,500 1,825
Bausch & Lomb, Inc. 1,600 62
Baxter International, Inc. 9,000 740
Becton, Dickinson & Co. 7,300 245
Biogen, Inc.+ 4,500 271
Biomet, Inc. 5,400 $ 195
Boston Scientific Corp.+ 11,700 186
Bristol-Myers Squibb Co. 59,700 3,638
C.R. Bard, Inc. 1,500 63
Cardinal Health, Inc. 8,700 824
Eli Lilly & Co. 34,400 3,074
Guidant Corp.+ 9,400 498
HCA-The Healthcare Co. 16,800 671
HealthSouth Corp.+ 11,700 140
Humana, Inc.+ 4,400 53
Johnson & Johnson 42,200 3,888
King Pharmaceuticals, Inc.+ 5,000 224
Manor Care, Inc.+ 3,200 53
McKesson HBOC, Inc. 8,300 233
Medimmune, Inc.+ 6,400 418
Medtronic, Inc. 36,400 1,977
Merck & Co., Inc. 70,000 6,296
Pfizer, Inc. 191,400 8,266
Pharmacia Corp. 39,227 2,157
Quintiles Transnational Corp.+ 3,400 47
Schering-Plough Corp. 44,200 2,285
St. Jude Medical, Inc.+ 2,400 132
Tenet Healthcare Corp.+ 9,700 381
UnitedHealth Group, Inc. 4,800 525
Watson Pharmaceuticals, Inc.+ 3,000 188
Wellpoint Health Networks, Inc.+ 1,800 210
-------
45,605
-------
HOUSEHOLD PRODUCTS -- 1.5%
Alberto-Culver Co., Class B 1,500 50
Avon Products, Inc. 7,300 354
Clorox Co. 7,200 321
Colgate-Palmolive Co. 17,700 1,040
Gillette Co. 32,000 1,116
International Flavors & Fragrances, Inc. 2,900 49
Procter & Gamble Co. 39,700 2,836
-------
5,766
-------
INSURANCE -- 3.8%
AFLAC, Inc. 7,900 577
Allstate Corp. 22,400 902
American General Corp. 7,800 628
American International Group, Inc. 70,337 6,893
</TABLE>
27
<PAGE> 32
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
Aon Corp. 7,600 $ 315
Chubb Corp. 5,600 473
CIGNA Corp. 4,800 585
Cincinnati Financial Corp. 4,700 173
Conseco, Inc. 9,800 68
Hartford Financial Services Group, Inc. 7,000 521
Jefferson-Pilot Corp. 3,000 206
Lincoln National Corp. 5,600 271
Loew's Corp. 2,900 264
Marsh & McLennan Cos., Inc. 8,400 1,098
MBIA, Inc. 3,000 218
MGIC Investment Corp. 3,500 238
Progressive Corp. 2,200 216
SAFECO Corp. 4,100 99
St. Paul Cos., Inc. 6,600 338
Torchmark Corp. 3,600 120
UnumProvident Corp. 6,960 197
-------
14,400
-------
MEDIA -- 3.3%
Clear Channel Communications, Inc.+ 17,795 1,069
Comcast Corp., Special Class A+ 27,300 1,112
Dow Jones & Co., Inc. 2,700 159
Gannett Co., Inc. 7,900 458
Knight-Ridder, Inc. 2,300 116
McGraw-Hill Cos., Inc. 6,100 392
Meredith Corp. 1,500 48
New York Times Co., Class A 5,100 187
R.R. Donnelley & Sons Co. 3,500 75
Seagram Co. Ltd. 13,300 760
Time Warner, Inc. 40,000 3,036
Tribune Co. 9,200 341
Viacom, Inc., Class B+ 46,145 2,624
The Walt Disney Co. 62,900 2,253
-------
12,630
-------
MISCELLANEOUS -- 0.5%
Agilent Technologies, Inc.+ 13,684 634
Palm, Inc.+ 17,180 920
Sabre Holdings Corp.+ 3,818 128
XCEL Energy, Inc. 10,060 257
-------
1,939
-------
MISCELLANEOUS FINANCE -- 6.5%
American Express Co. 40,500 $ 2,430
Associates First Capital Corp., Class A 22,000 817
Bear Stearns Cos., Inc. 3,246 197
Capital One Financial Corp. 5,900 372
Charles Schwab Corp. 41,738 1,466
Charter One Financial, Inc. 6,300 145
CIT Group, Inc., Class A 7,600 133
Citigroup, Inc. 136,266 7,171
Countrywide Credit Industries, Inc. 3,300 124
Fannie Mae 30,900 2,379
Franklin Resources, Inc. 7,200 308
Freddie Mac 21,100 1,266
Household International, Inc. 14,300 719
Lehman Brothers Holdings, Inc. 7,200 464
MBNA Corp. 25,700 965
Merrill Lynch & Co., Inc. 24,400 1,708
Morgan Stanley Dean Witter & Co. 34,100 2,739
Paine Webber Group, Inc. 4,400 313
T. Rowe Price Associates, Inc. 3,500 164
USA Education, Inc. 4,500 251
Washington Mutual, Inc. 16,500 726
-------
24,857
-------
NON-FERROUS METALS -- 0.4%
Alcan Aluminum Ltd. 10,100 319
Alcoa, Inc. 26,104 749
Engelhard Corp. 3,800 79
Freeport-McMoRan Copper & Gold, Inc., Class B+ 4,700 37
Inco Ltd.+ 5,100 79
Phelps Dodge Corp. 2,160 101
-------
1,364
-------
OIL - DOMESTIC -- 0.6%
Amerada Hess Corp. 2,600 161
Ashland, Inc. 1,900 62
Conoco, Inc., Class B 18,700 508
Kerr-McGee Corp. 2,773 181
Phillips Petroleum Co. 7,900 488
Sunoco, Inc. 2,400 72
Tosco Corp. 4,300 123
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
Transocean Sedco Forex, Inc. 6,620 $ 351
Unocal Corp. 7,500 256
USX-Marathon Group, Inc. 9,100 247
-------
2,449
-------
OIL - INTERNATIONAL -- 4.2%
Chevron Corp. 20,100 1,651
Exxon Mobil Corp. 105,510 9,410
Royal Dutch Petroleum Co. - Sponsored ADR 65,300 3,877
Texaco, Inc. 17,000 1,004
-------
15,942
-------
OPTICAL & PHOTO -- 0.1%
Eastman Kodak Co. 9,100 408
Polaroid Corp. 1,100 11
-------
419
-------
PAPER & FOREST PRODUCTS -- 0.7%
Boise Cascade Corp. 1,700 49
Fort James Corp. 6,000 198
Georgia-Pacific Group 4,800 129
International Paper Co. 14,639 536
Kimberly-Clark Corp. 16,600 1,096
Louisiana-Pacific Corp. 3,000 25
Mead Corp. 2,900 84
Potlatch Corp. 700 23
Temple-Inland, Inc. 1,600 72
Westvaco Corp. 2,900 83
Weyerhaeuser Co. 6,900 324
Willamette Industries, Inc. 3,300 120
-------
2,739
-------
PRODUCER GOODS & MANUFACTURING -- 6.4%
Avery Dennison Corp. 3,200 162
Briggs & Stratton Corp. 500 18
Caterpillar, Inc. 10,600 372
Cooper Industries, Inc. 2,800 107
Corning, Inc. 27,000 2,065
Deere & Co. 6,800 250
Dover Corp. 6,000 255
Emerson Electric Co. 13,100 962
FMC Corp.+ 800 61
General Electric Co. 300,200 16,455
Honeywell International, Inc. 24,162 $ 1,300
Illinois Tool Works, Inc. 9,300 517
Ingersoll-Rand Co. 4,800 181
Johnson Controls, Inc. 2,400 143
Millipore Corp. 1,500 79
Minnesota Mining & Manufacturing Co. 12,200 1,179
Pall Corp. 3,700 80
Parker-Hannifin Corp. 3,500 145
Snap-On, Inc. 1,700 43
The Timken Co. 1,500 21
W.W. Grainger, Inc. 2,700 86
-------
24,481
-------
RAILROAD & SHIPPING -- 0.3%
Burlington Northern Santa Fe Corp. 12,900 343
CSX Corp. 6,400 162
Norfolk Southern Corp. 11,100 157
Union Pacific Corp. 7,400 347
-------
1,009
-------
RETAIL -- 5.1%
Albertson's, Inc. 12,583 298
AutoZone, Inc.+ 3,700 99
Bed, Bath & Beyond, Inc.+ 8,500 219
Best Buy Co., Inc.+ 6,100 306
Circuit City Stores-Circuit City Group 5,800 77
Consolidated Stores Corp.+ 2,900 34
Costco Wholesale Corp.+ 13,200 483
CVS Corp. 11,800 625
Dillards, Inc., Class A 2,500 26
Dollar General Corp. 9,650 150
Federated Department Stores, Inc.+ 6,200 202
Gap, Inc. 25,600 661
Home Depot, Inc. 70,400 3,027
J.C. Penney Co., Inc. 7,500 88
Kmart Corp.+ 13,400 80
Kohl's Corp.+ 10,200 553
Kroger Co.+ 24,900 562
Limited, Inc. 12,800 323
Longs Drug Stores, Inc. 1,000 22
Lowe's Cos., Inc. 11,700 535
</TABLE>
29
<PAGE> 34
INSTITUTIONAL SELECT(TM) S&P 500 FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
May Department Stores Co. 9,700 $ 255
Nordstrom, Inc. 3,800 62
Office Depot, Inc.+ 9,100 76
RadioShack Corp. 5,500 328
Safeway, Inc.+ 15,000 820
Sears, Roebuck & Co. 10,500 312
Staples, Inc.+ 13,900 198
Target Corp. 27,400 757
Tiffany & Co., Inc. 4,250 181
TJX Cos., Inc. 8,800 240
Toys 'R' Us, Inc.+ 6,800 117
Wal-Mart Stores, Inc. 135,400 6,144
Walgreen Co. 30,400 1,387
Winn-Dixie Stores, Inc. 3,900 75
-------
19,322
-------
STEEL -- 0.1%
Allegheny Technologies, Inc. 2,350 48
Bethlehem Steel Corp.+ 5,640 16
Nucor Corp. 2,600 90
USX-U.S. Steel Group, Inc. 2,600 41
Worthington Industries, Inc. 2,500 24
-------
219
-------
TELEPHONE -- 6.2%
Alltel Corp. 9,800 631
AT&T Corp. 113,494 2,632
Avaya, Inc.+ 8,295 111
BellSouth Corp. 57,000 2,754
CenturyTel, Inc. 4,000 154
Global Crossing Ltd.+ 26,260 620
Qwest Communications
International, Inc.+ 50,121 2,437
SBC Communications, Inc. 102,730 5,926
Sprint Corp. (FON Group) 26,500 676
Sprint Corp. (PCS Group)+ 28,200 1,075
Verizon Communications 82,228 4,754
Worldcom, Inc.+ 86,650 2,058
-------
23,828
-------
TOBACCO -- 0.7%
Philip Morris Cos., Inc. 67,900 $ 2,487
UST, Inc. 4,700 119
-------
2,606
-------
TRAVEL & RECREATION -- 0.3%
Brunswick Corp. 2,400 47
Carnival Corp. 17,700 439
Harrah's Entertainment, Inc.+ 3,400 97
Hilton Hotels Corp. 11,100 105
Marriott International, Inc., Class A 7,200 292
-------
980
-------
TRUCKING & FREIGHT -- 0.0%
PACCAR, Inc. 2,300 97
Ryder Systems, Inc. 1,700 34
-------
131
-------
UTILITIES - ELECTRIC & GAS -- 3.0%
AES Corp.+ 14,100 797
Ameren Corp. 4,100 163
American Electric Power Co., Inc. 9,780 406
CP&L Energy, Inc. 4,700 189
Cinergy Corp. 4,700 144
CMS Energy Corp. 3,700 100
Coastal Corp. 6,800 513
Columbia Energy Group 2,300 165
Consolidated Edison, Inc. 6,200 218
Constellation Energy Group, Inc. 4,400 183
Dominion Resources, Inc. 7,491 446
DTE Energy Co. 4,200 152
Duke Energy Corp. 11,400 985
Dynegy, Inc., Class A 9,600 445
Edison International 9,800 234
El Paso Energy Corp. 7,200 451
Enron Corp. 22,300 1,830
Entergy Corp. 6,900 264
FirstEnergy Corp. 6,700 173
Florida Progress Corp. 3,000 160
</TABLE>
30
<PAGE> 35
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
FPL Group, Inc. 5,300 $ 350
GPU, Inc. 3,500 116
KeySpan Corp. 4,000 141
Niagara Mohawk Holdings, Inc.+ 5,600 90
NICOR, Inc. 1,300 46
ONEOK, Inc. 800 32
Peoples Energy Corp. 1,100 38
PG&E Corp. 11,600 312
Pinnacle West Capital Corp. 2,600 113
PPL Corp. 4,100 169
Public Service Enterprise
Group, Inc. 6,700 278
Reliant Energy, Inc. 8,700 359
Sempra Energy 5,985 124
Southern Co. 19,400 570
TXU Corp. 7,800 289
Williams Cos., Inc. 13,500 564
-------
11,609
-------
TOTAL COMMON STOCK
(Cost $357,552) 380,984
-------
</TABLE>
<TABLE>
<CAPTION>
Par
(000s)
------
<S> <C> <C>
U.S. TREASURY OBLIGATION -- 0.0%
U.S. Treasury Bill (a)(b)
6.00%, 12/14/00 $60 60
----
TOTAL U.S. TREASURY OBLIGATION
(Cost $60) 60
-----
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (000s)
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENT -- 0.1%
Provident Institutional
TempFund, 6.30%*, 11/01/00 427,131 $ 427
--------
TOTAL SHORT-TERM INVESTMENT
(Cost $427) 427
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $358,039) 381,471
--------
OTHER ASSETS & LIABILITIES, NET -- 0.1%
Other assets 3,059
Liabilities (2,803)
--------
256
--------
TOTAL NET ASSETS -- 100.0% $381,727
========
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
31
<PAGE> 36
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
COMMON STOCK -- 99.7%
AEROSPACE / DEFENSE -- 2.6%
B.F. Goodrich Co. 2,000 $ 82
Boeing Co. 18,500 1,255
Crane Co. 1,200 31
General Dynamics Corp. 4,000 286
Lockheed Martin Corp. 8,700 312
Northrop Grumman Corp. 1,500 126
Raytheon Co., Class B 7,000 239
Rockwell International Corp. 3,900 153
Textron, Inc. 3,000 151
TRW, Inc. 2,500 105
United Technologies Corp. 9,600 670
-------
3,410
-------
AIR TRANSPORTATION -- 0.6%
AMR Corp.+ 3,200 105
Delta Air Lines, Inc. 2,400 113
FedEx Corp.+ 5,800 272
Southwest Airlines Co. 10,200 291
-------
781
-------
ALCOHOLIC BEVERAGES -- 0.1%
Adolph Coors Co., Class B 700 45
Brown-Forman Corp., Class B 1,500 91
-------
136
-------
APPAREL -- 0.3%
Liz Claiborne, Inc. 1,100 47
Nike, Inc., Class B 5,500 220
Reebok International Ltd.+ 1,000 22
Russell Corp. 600 10
Springs Industries, Inc., Class A 400 9
VF Corp. 2,500 68
-------
376
-------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 2.0%
Cooper Tire & Rubber Co. 1,400 15
Cummins Engine Co., Inc. 1,000 34
Dana Corp. 3,100 69
Danaher Corp. 2,900 183
Delphi Automotive Systems Corp. 12,023 189
Eaton Corp. 1,600 109
Ford Motor Co.+ 38,309 1,001
General Motors Corp. 10,875 676
Genuine Parts Co. 3,600 77
Goodyear Tire & Rubber Co. 3,400 $ 63
Navistar International Corp.+ 1,500 50
Visteon Corp. 2,985 53
-------
2,519
-------
BANKS -- 10.4%
AmSouth Bancorp 7,800 109
Bank of America Corp. 33,800 1,625
Bank of New York Co., Inc. 15,200 875
Bank One Corp. 23,600 861
BB&T Corp. 8,100 258
Chase Manhattan Corp. 26,850 1,222
Comerica, Inc. 3,200 193
Fifth Third Bancorp. 9,500 488
First Union Corp. 20,400 618
Firstar Corp. 19,482 384
FleetBoston Financial Corp. 18,418 700
Golden West Financial Corp. 3,200 179
Huntington Bancshares, Inc. 5,141 74
J.P. Morgan & Co., Inc. 3,200 530
KeyCorp, Inc. 8,800 217
Mellon Financial Corp. 9,900 478
National City Corp. 12,700 271
Northern Trust Corp. 4,600 393
Old Kent Financial Corp. 2,825 78
PNC Financial Services Group 6,000 401
Regions Financial Corp. 4,400 104
SouthTrust Corp. 3,400 110
State Street Corp. 3,300 412
Summit Bancorp. 3,700 139
SunTrust Banks, Inc. 6,300 308
Synovus Financial Corp. 5,700 123
U.S. Bancorp. 15,300 370
Union Planters Corp. 2,800 95
Wachovia Corp. 4,100 221
Wells Fargo & Co. 33,800 1,565
-------
13,401
-------
BUSINESS MACHINES & SOFTWARE -- 3.7%
Adaptec, Inc.+ 2,100 33
Apple Computer, Inc.+ 7,100 139
Autodesk, Inc. 1,200 26
BMC Software, Inc.+ 5,000 102
Cabletron Systems, Inc.+ 3,700 100
Ceridian Corp.+ 2,900 72
Compaq Computer Corp. 34,800 1,058
Compuware Corp.+ 7,000 55
</TABLE>
32
<PAGE> 37
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Gateway, Inc.+ 6,600 $ 341
Hewlett-Packard Co. 40,800 1,895
NCR Corp.+ 2,100 91
Novell, Inc.+ 7,100 64
Novellus Systems, Inc.+ 2,600 106
Pitney Bowes, Inc. 5,200 154
Seagate Technology, Inc.+ 4,700 328
Unisys Corp.+ 6,400 82
Xerox Corp. 13,500 114
------
4,760
------
BUSINESS SERVICES -- 3.5%
Allied Waste Industries, Inc.+ 3,400 31
Cendant Corp.+ 14,700 176
Computer Sciences Corp.+ 3,400 214
Deluxe Corp. 1,400 32
Ecolab, Inc. 2,600 102
Electronic Data Systems Corp. 9,500 446
Exelon Corp. 6,837 411
First Data Corp. 8,500 426
H&R Block, Inc. 2,200 79
National Service Industries, Inc. 800 16
Parametric Technology Corp.+ 6,100 75
PeopleSoft, Inc.+ 5,500 240
Tyco International Ltd. 35,519 2,014
Waste Management, Inc. 12,600 252
------
4,514
------
CHEMICAL -- 1.8%
Air Products & Chemicals, Inc. 4,700 175
Dow Chemical Co. 13,800 423
E.I. du Pont de Nemours & Co. 21,300 966
Eastman Chemical Co. 1,600 69
Great Lakes Chemical Corp. 1,400 47
Hercules, Inc. 2,000 37
PPG Industries, Inc. 3,500 156
Praxair, Inc. 3,300 123
Rohm & Haas Co. 4,205 126
Sigma-Aldrich Corp. 1,700 61
Union Carbide Corp. 2,800 120
W.R. Grace & Co.+ 2,900 11
------
2,314
------
CONSTRUCTION -- 0.4%
Armstrong Holdings, Inc. 600 2
Centex Corp. 1,400 52
Fluor Corp. 1,400 49
Kaufman & Broad Home Corp. 900 $ 27
Masco Corp. 9,000 168
Pulte Corp. 800 27
Sherwin-Williams Co. 3,100 67
The Stanley Works 1,700 45
Vulcan Materials Co. 2,300 97
------
534
------
CONSUMER - DURABLE -- 0.2%
Black & Decker Corp. 1,600 60
Leggett & Platt, Inc. 4,400 72
Maytag Corp. 1,500 43
Whirlpool Corp. 1,400 61
------
236
------
CONSUMER - NONDURABLE -- 1.2%
American Greetings Corp., Class A 1,200 22
Darden Restaurants, Inc. 2,400 54
Fortune Brands, Inc. 3,200 94
Harcourt General, Inc. 1,500 84
Hasbro, Inc. 3,250 35
Mattel, Inc. 9,200 119
McDonald's Corp. 27,200 843
Newell Rubbermaid, Inc. 5,600 107
Starbucks Corp.+ 3,800 170
Wendy's International, Inc. 2,200 48
------
1,576
------
CONTAINERS -- 0.1%
Ball Corp. 500 18
Bemis Co., Inc. 1,100 28
Crown Cork & Seal Co., Inc. 2,500 23
Owens-Illinois, Inc.+ 2,900 17
Pactiv Corp.+ 3,300 35
------
121
------
ELECTRONICS -- 2.4%
Advanced Micro Devices, Inc.+ 6,300 143
Andrew Corp.+ 1,500 39
ITT Industries, Inc. 1,700 55
KLA-Tencor Corp.+ 3,800 128
Molex, Inc. 4,050 219
Motorola, Inc. 44,685 1,114
National Semiconductor Corp.+ 3,500 91
PerkinElmer, Inc. 1,100 131
Power-One, Inc.+ 1,450 103
Sanmina Corp.+ 3,100 354
</TABLE>
33
<PAGE> 38
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Solectron Corp.+ 12,400 $ 546
Tektronix, Inc. 1,100 78
Thermo Electron Corp.+ 3,400 99
Thomas & Betts Corp. 1,200 18
------
3,118
------
ENERGY - RAW MATERIALS -- 2.0%
Anadarko Petroleum Corp. 5,138 329
Apache Corp. 2,500 138
Baker Hughes, Inc. 7,000 241
Burlington Resources, Inc. 4,400 158
Devon Energy Corp. 2,600 131
Eastern Enterprises 500 32
Halliburton Co. 9,100 337
McDermott International, Inc. 1,300 13
Nabors Industries, Inc.+ 2,850 145
Occidental Petroleum Corp. 8,000 159
Rowan Cos., Inc.+ 2,200 55
Schlumberger Ltd. 11,700 891
------
2,629
------
FOOD & AGRICULTURE -- 1.3%
Archer-Daniels-Midland Co. 12,591 139
Coca-Cola Enterprises, Inc. 8,900 164
ConAgra, Inc. 10,900 233
Hershey Foods Corp. 2,800 152
Nabisco Group Holdings Corp. 6,700 193
Ralston Purina Group 6,200 150
Supervalu, Inc. 2,700 42
Unilever NV - Sponsored ADR 11,700 595
------
1,668
------
GOLD -- 0.2%
Barrick Gold Corp. 7,900 106
Homestake Mining Co. 4,700 19
Newmont Mining Corp. 3,400 46
Placer Dome, Inc. 7,100 58
------
229
------
HEALTHCARE / DRUGS & MEDICINE -- 4.0%
Aetna, Inc. 3,000 173
Bausch & Lomb, Inc. 1,100 42
Baxter International, Inc. 5,900 485
Becton, Dickinson & Co. 5,100 171
Biomet, Inc. 3,550 128
Boston Scientific Corp.+ 8,300 $ 132
C.R. Bard, Inc. 1,300 54
Cardinal Health, Inc. 5,700 540
HCA-The Healthcare Co. 11,500 459
HealthSouth Corp.+ 8,400 101
Humana, Inc.+ 3,000 36
King Pharmaceuticals, Inc.+ 3,400 152
Manor Care, Inc.+ 2,100 35
McKesson HBOC, Inc. 5,700 160
Pharmacia Corp. 26,563 1,461
Quintiles Transnational Corp.+ 2,400 33
St. Jude Medical, Inc.+ 1,800 99
Tenet Healthcare Corp.+ 6,400 252
UnitedHealth Group, Inc. 3,200 350
Watson Pharmaceuticals, Inc.+ 2,200 138
Wellpoint Health Networks, Inc.+ 1,300 152
------
5,153
------
HOUSEHOLD PRODUCTS -- 1.7%
Alberto-Culver Co., Class B 1,100 37
Clorox Co. 4,800 214
International Flavors & Fragrances, Inc. 1,900 32
Procter & Gamble Co. 26,900 1,922
------
2,205
------
INSURANCE -- 7.5%
AFLAC, Inc. 5,500 402
Allstate Corp. 15,000 604
American General Corp. 5,200 419
American International Group, Inc. 47,375 4,643
Aon Corp. 5,150 213
Chubb Corp. 3,600 304
CIGNA Corp. 3,400 415
Cincinnati Financial Corp. 3,300 121
Conseco, Inc. 6,200 43
Hartford Financial Services Group, Inc. 4,600 342
Jefferson-Pilot Corp. 2,100 144
Lincoln National Corp. 3,900 189
Loew's Corp. 2,000 182
Marsh & McLennan Cos., Inc. 5,500 719
MBIA, Inc. 2,000 145
MGIC Investment Corp. 2,400 164
Progressive Corp. 1,400 138
</TABLE>
34
<PAGE> 39
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
SAFECO Corp. 2,400 $ 58
St. Paul Cos., Inc. 4,600 236
Torchmark Corp. 2,600 87
UnumProvident Corp. 4,849 137
-------
9,705
-------
MEDIA -- 3.6%
Clear Channel Communications, Inc.+ 12,039 723
Comcast Corp., Special Class A+ 18,500 754
Gannett Co., Inc. 5,400 313
Knight-Ridder, Inc. 1,500 75
McGraw-Hill Cos., Inc. 3,900 250
Meredith Corp. 1,300 41
New York Times Co., Class A 3,400 125
R.R. Donnelley & Sons Co. 2,800 60
Seagram Co. Ltd. 8,900 508
Tribune Co. 6,180 229
The Walt Disney Co. 42,600 1,526
-------
4,604
-------
MISCELLANEOUS -- 0.2%
Sabre Holdings Corp.+ 2,578 86
XCEL Energy, Inc. 6,810 174
-------
260
-------
MISCELLANEOUS FINANCE -- 12.2%
American Express Co. 27,300 1,638
Associates First Capital Corp., Class A 15,000 557
Bear Stearns Cos., Inc. 2,201 133
Capital One Financial Corp. 4,100 259
Charter One Financial, Inc. 4,725 108
CIT Group, Inc., Class A 5,300 92
Citigroup, Inc. 92,366 4,861
Countrywide Credit Industries, Inc. 2,300 86
Fannie Mae 20,700 1,594
Franklin Resources, Inc. 4,900 210
Freddie Mac 14,300 858
Household International, Inc. 9,600 483
Lehman Brothers Holdings, Inc. 5,000 323
MBNA Corp. 17,400 654
Merrill Lynch & Co., Inc. 16,400 1,148
Morgan Stanley Dean Witter & Co. 23,200 $ 1,863
Paine Webber Group, Inc. 3,000 214
T. Rowe Price Associates, Inc. 2,400 112
Washington Mutual, Inc. 11,000 484
-------
15,677
-------
NON-FERROUS METALS -- 0.7%
Alcan Aluminum Ltd. 6,800 215
Alcoa, Inc. 17,732 509
Engelhard Corp. 2,600 54
Inco Ltd.+ 3,800 59
Phelps Dodge Corp. 1,520 71
-------
908
-------
OIL - DOMESTIC -- 1.3%
Amerada Hess Corp. 1,800 112
Ashland, Inc. 1,300 43
Conoco, Inc., Class B 12,800 348
Kerr-McGee Corp. 1,900 124
Phillips Petroleum Co. 5,300 327
Sunoco, Inc. 1,700 51
Tosco Corp. 2,800 80
Transocean Sedco Forex, Inc. 4,248 225
Unocal Corp. 5,100 174
USX-Marathon Group, Inc. 6,600 179
-------
1,663
-------
OIL - INTERNATIONAL -- 8.3%
Chevron Corp. 13,400 1,100
Exxon Mobil Corp. (b) 71,425 6,370
Royal Dutch Petroleum Co. - Sponsored ADR 44,100 2,618
Texaco, Inc. 11,300 667
-------
10,755
-------
OPTICAL & PHOTO -- 0.2%
Eastman Kodak Co. 6,200 278
Polaroid Corp. 1,300 13
-------
291
-------
PAPER & FOREST PRODUCTS -- 1.4%
Boise Cascade Corp. 1,200 34
Fort James Corp. 4,200 138
Georgia-Pacific Group 3,500 94
</TABLE>
35
<PAGE> 40
INSTITUTIONAL SELECT(TM) LARGE-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
International Paper Co. 9,915 $ 363
Kimberly-Clark Corp. 11,200 739
Louisiana-Pacific Corp. 2,100 18
Mead Corp. 2,000 58
Potlatch Corp. 500 17
Temple-Inland, Inc. 1,000 45
Westvaco Corp. 2,000 57
Weyerhaeuser Co. 4,500 211
Willamette Industries, Inc. 2,100 76
-------
1,850
-------
PRODUCER GOODS & MANUFACTURING -- 3.0%
Briggs & Stratton Corp. 500 18
Caterpillar, Inc. 7,100 249
Cooper Industries, Inc. 2,000 77
Deere & Co. 4,800 177
Dover Corp. 4,200 178
Emerson Electric Co. 8,700 639
FMC Corp.+ 700 53
Honeywell International, Inc. 16,387 882
Illinois Tool Works, Inc. 6,200 344
Ingersoll-Rand Co. 3,200 121
Johnson Controls, Inc. 1,700 101
Minnesota Mining & Manufacturing Co. 8,000 773
Pall Corp. 2,700 58
Parker-Hannifin Corp. 2,200 91
Snap-On, Inc. 1,200 31
The Timken Co. 1,300 18
W.W. Grainger, Inc. 1,800 57
-------
3,867
-------
RAILROAD & SHIPPING -- 0.5%
Burlington Northern Santa Fe Corp. 8,600 228
CSX Corp. 4,500 114
Norfolk Southern Corp. 7,900 112
Union Pacific Corp. 5,000 234
-------
688
-------
RETAIL -- 3.5%
Albertson's, Inc. 8,538 202
AutoZone, Inc.+ 2,800 75
Circuit City Stores-Circuit City Group 3,900 52
Consolidated Stores Corp.+ 2,300 27
Costco Wholesale Corp.+ 9,100 $ 333
CVS Corp. 7,900 418
Dillards, Inc., Class A 1,800 19
Dollar General Corp. 6,400 99
Federated Department Stores, Inc.+ 4,100 134
J.C. Penney Co., Inc. 5,200 61
Kmart Corp.+ 9,600 57
Kroger Co.+ 16,800 379
Limited, Inc. 8,800 222
Longs Drug Stores, Inc. 900 20
Lowe's Cos., Inc. 7,900 361
May Department Stores Co. 6,500 171
Nordstrom, Inc. 3,100 51
Office Depot, Inc.+ 5,800 48
Safeway, Inc.+ 10,100 552
Sears, Roebuck & Co. 7,000 208
Staples, Inc.+ 9,700 138
Target Corp. 18,600 514
Tiffany & Co., Inc 2,950 126
TJX Cos., Inc. 6,000 164
Toys 'R' Us, Inc.+ 4,700 81
Winn-Dixie Stores, Inc. 3,400 65
-------
4,577
-------
STEEL -- 0.1%
Allegheny Technologies, Inc. 1,750 35
Bethlehem Steel Corp.+ 2,200 6
Nucor Corp. 1,600 56
USX-U.S. Steel Group, Inc. 1,700 27
Worthington Industries, Inc. 1,700 16
-------
140
-------
TELEPHONE -- 10.7%
Alltel Corp. 6,500 419
AT&T Corp. 76,992 1,785
Avaya, Inc.+ 5,500 74
BellSouth Corp. 38,400 1,855
CenturyTel, Inc. 2,900 112
Global Crossing Ltd.+ 18,100 428
SBC Communications, Inc. 69,500 4,009
Sprint Corp. (FON Group) 18,400 469
Verizon Communications 55,674 3,219
Worldcom, Inc.+ 58,650 1,393
-------
13,763
-------
</TABLE>
36
<PAGE> 41
<TABLE>
<CAPTION>
Number Value
of Shares 000s
--------- -------
<S> <C> <C>
TOBACCO - 1.3%
Philip Morris Cos., Inc. 46,000 $ 1,685
-------
TRAVEL & RECREATION - 0.5%
Brunswick Corp. 1,700 33
Carnival Corp. 12,000 298
Harrah's Entertainment, Inc.+ 2,500 72
Hilton Hotels Corp. 7,400 70
Marriott International, Inc.,
Class A 4,900 198
-------
671
-------
TRUCKING & FREIGHT - 0.1%
PACCAR, Inc. 1,500 63
Ryder Systems, Inc. 1,100 22
-------
85
-------
UTILITIES - ELECTRIC & GAS - 6.1%
AES Corp.+ 9,400 531
Ameren Corp. 2,800 111
American Electric Power Co., Inc. 6,640 276
CP&L Energy, Inc. 3,300 133
Cinergy Corp. 3,200 98
CMS Energy Corp. 2,500 68
Coastal Corp. 4,400 332
Columbia Energy Group 1,700 122
Consolidated Edison, Inc. 4,300 151
Constellation Energy Group, Inc. 3,000 125
Dominion Resources, Inc. 4,848 289
DTE Energy Co. 2,900 105
Duke Energy Corp. 7,600 657
Dynegy, Inc., Class A 6,500 301
Edison International 6,600 158
El Paso Energy Corp. 4,700 295
Enron Corp. 15,200 1,247
Entergy Corp. 4,700 180
FirstEnergy Corp. 4,600 119
Florida Progress Corp. 2,200 117
FPL Group, Inc. 3,700 244
GPU, Inc. 2,300 76
KeySpan Corp. 2,800 99
Niagara Mohawk Holdings, Inc.+ 3,200 51
NICOR, Inc. 900 32
ONEOK, Inc. 500 $ 20
Peoples Energy Corp. 800 28
PG&E Corp. 7,800 210
Pinnacle West Capital Corp. 1,700 74
PPL Corp. 3,000 124
Public Service Enterprise
Group, Inc. 4,500 187
Reliant Energy, Inc. 5,900 244
Sempra Energy 4,000 83
Southern Co. 13,200 388
TXU Corp. 5,300 196
Williams Cos., Inc. 9,000 376
-------
7,847
-------
TOTAL COMMON STOCK
(Cost $121,244) 128,716
-------
</TABLE>
<TABLE>
<CAPTION>
Par
(000s)
------
<S> <C> <C>
U.S. TREASURY OBLIGATION - 0.0%
U.S. Treasury Bill (a)(b)
6.02%, 12/14/00 $20 20
---
TOTAL U.S. TREASURY OBLIGATION
(Cost $20) 20
---
</TABLE>
<TABLE>
<CAPTION>
Number
of Shares
---------
<S> <C> <C>
SHORT-TERM INVESTMENT - 0.8%
Provident Institutional
TempFund, 6.30%*, 11/01/00 962,734 962
---------
TOTAL SHORT-TERM INVESTMENT
(Cost $962) 962
---------
TOTAL INVESTMENTS - 100.5%
(Cost $122,226) 129,698
---------
OTHER ASSETS AND LIABILITIES, NET - (0.5%)
Other assets 527
Liabilities (1,161)
---------
(634)
---------
TOTAL NET ASSETS - 100.0% $ 129,064
=========
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
37
<PAGE> 42
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
COMMON STOCK -- 100.0%
AEROSPACE / DEFENSE -- 0.3%
GenCorp., Inc. 8,200 $ 69
Kaman Corp., Class A 4,500 65
------
134
------
AIR TRANSPORTATION -- 0.4%
AAR Corp. 5,000 60
Mesa Air Group, Inc.+ 6,500 38
Midwest Express Holdings, Inc.+ 2,800 53
------
151
------
ALCOHOLIC BEVERAGES -- 0.4%
Constellation Brands, Inc., Class A+ 3,500 171
------
APPAREL -- 3.5%
Ashworth, Inc.+ 2,700 20
Brown Shoe Co., Inc. 3,800 37
Cone Mills Corp.+ 5,000 21
Cyrk International, Inc.+ 3,100 12
Footstar, Inc.+ 3,800 136
Goody's Family Clothing, Inc.+ 6,400 23
Haggar Corp. 1,500 19
Hartmarx Corp.+ 5,600 15
J. Baker, Inc. 2,700 11
Jo-Ann Stores, Inc., Class A+ 3,300 21
K-Swiss, Inc., Class A 2,100 58
Kellwood Co. 4,600 89
The Men's Wearhouse, Inc.+ 8,000 234
Nautica Enterprises, Inc.+ 6,000 76
Oxford Industries, Inc. 1,500 26
Pacific Sunwear of California+ 6,100 125
Phillips-Van Heusen Corp. 5,300 63
Quiksilver, Inc.+ 4,200 80
Stride Rite Corp. 8,000 43
The Dixie Group, Inc.+ 2,300 7
The Dress Barn, Inc.+ 3,600 90
The Gymboree Corp.+ 4,400 39
Wet Seal, Inc., Class A+ 2,700 51
Wolverine World Wide, Inc. 7,800 84
------
1,380
------
AUTOMOTIVE PRODUCTS / MOTOR VEHICLES -- 2.6%
A.O. Smith Corp., Class B 4,500 64
Arctic Cat, Inc. 5,000 64
Discount Auto Parts, Inc.+ 3,100 22
Fleetwood Enterprises, Inc. 6,300 $ 83
Group 1 Automotive, Inc.+ 4,200 42
Monaco Coach Corp.+ 3,600 61
Myers Industries, Inc. 4,191 56
O'Reilly Automotive, Inc.+ 9,900 178
Oshkosh Truck Corp. 3,200 132
Simpson Industries, Inc. 3,500 41
Spartan Motors, Inc. 2,700 7
Standard Motor Products, Inc. 2,100 18
TBC Corp.+ 4,100 20
Thor Industries, Inc. 2,300 46
Titan International, Inc. 4,000 18
Tower Automotive, Inc.+ 9,200 101
Winnebago Industries, Inc. 4,000 46
------
999
------
BANKS -- 7.4%
Anchor Bancorp. Wisconsin, Inc. 4,300 66
Centura Banks, Inc. 7,700 296
Chittenden Corp. 5,100 135
Community First Bankshares, Inc. 8,600 133
Cullen/Frost Bankers, Inc. 10,000 333
First Bancorp./Puerto Rico 5,300 122
First Midwest Bancorp., Inc. 7,900 198
GBC Bancorp 2,200 70
Hudson United Bancorp 9,400 210
Imperial Bancorp.+ 8,800 214
MAF Bancorp., Inc. 4,400 106
Provident Bankshares Corp. 5,262 100
Queens County Bancorp., Inc. 3,900 109
Riggs National Corp.,
Washington, D.C 5,300 60
Southwest Bancorp. of Texas, Inc.+ 5,600 204
Susquehanna Bancshares, Inc. 7,600 107
The South Financial Group, Inc. 8,300 85
United Bankshares, Inc. 8,100 158
Whitney Holding Corp. 4,500 166
------
2,872
------
BUSINESS MACHINES & SOFTWARE - 1.8%
Analogic Corp. 2,600 92
Auspex Systems, Inc.+ 5,500 56
Caci International, Inc., Class A+ 2,200 45
Digi International, Inc.+ 2,900 21
Epicor Software Corp.+ 7,700 15
Exabyte Corp.+ 4,400 34
Flow International Corp.+ 2,800 35
</TABLE>
38
<PAGE> 43
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Hanger Orthopedic Group, Inc.+ 3,700 $ 12
Input/Output, Inc.+ 9,800 83
MICROS Systems, Inc.+ 3,200 63
Read-Rite Corp.+ 12,300 91
Telxon Corp.+ 3,400 76
Xircom, Inc.+ 5,700 81
------
704
------
BUSINESS SERVICES -- 9.3%
Aaron Rents, Inc. 3,700 62
ABM Industries, Inc. 4,300 120
Alliance Semiconductor Corp.+ 7,700 154
Analysts International Corp. 4,800 30
Angelica Corp. 1,700 15
Avant! Corp.+ 7,600 128
Billing Concepts Corp.+ 7,700 23
Bowne & Co., Inc. 6,400 54
Brady Corp., Class A 4,300 133
Brooktrout Technology, Inc.+ 2,300 33
CDI Corp.+ 3,800 60
Cerner Corp.+ 6,500 403
Chemed Corp. 2,000 66
Ciber, Inc.+ 11,300 88
Computer Task Group, Inc. 3,900 20
Edgewater Technology, Inc.+ 5,600 27
ePresence, Inc.+ 4,300 30
F.Y.I., Inc.+ 3,000 120
Franklin Covey Co.+ 3,900 31
G & K Services, Inc., Class A 4,000 110
HA-LO Industries, Inc.+ 11,800 46
HNC Software, Inc.+ 6,200 126
Information Resources, Inc.+ 5,300 28
Insteel Industries, Inc. 1,700 6
John H. Harland Co. 5,300 74
Kroll-O'Gara Co.+ 4,200 25
MAXIMUS, Inc.+ 4,300 106
Nashua Corp. 1,000 6
National Data Corp. 6,300 240
New England Business Service,
Inc 2,500 43
Orbital Sciences Corp.+ 7,300 58
PAXAR Corp.+ 9,000 74
Pegasus Solutions, Inc.+ 5,000 85
Performance Food Group Co.+ 2,700 109
Phoenix Technologies Ltd.+ 5,200 84
PolyOne Corp. 19,000 150
Profit Recovery Group
International, Inc.+ 9,600 $ 52
QRS Corp.+ 2,800 24
S3, Inc.+ 17,700 160
Seacor Smit, Inc.+ 3,300 138
Standard Register Co. 5,000 60
Tetra Technology, Inc.+ 2,600 38
URS Corp.+ 3,000 38
Volt Information Sciences, Inc.+ 3,100 67
Washington Group
International, Inc.+ 10,200 107
------
3,651
------
CHEMICAL -- 1.8%
Arch Chemicals, Inc. 4,300 84
Chemfirst, Inc. 3,100 71
Lilly Industries, Inc., Class A 4,400 132
OM Group, Inc. 4,600 213
Omnova Solutions, Inc. 7,100 40
Quaker Chemical Corp. 1,700 29
Tredegar Corp. 7,500 143
------
712
------
CONSTRUCTION -- 3.7%
Apogee Enterprises, Inc. 5,500 29
Building Materials Holding Corp.+ 2,200 19
D.R. Horton, Inc. 12,980 240
Elcor Corp. 3,800 59
Florida Rock Industries, Inc. 3,600 140
Interface, Inc. 9,900 90
Lawson Products, Inc. 1,800 49
NVR, Inc.+ 1,800 186
Republic Group, Inc. 2,300 43
Simpson Manufacturing, Inc.+ 2,300 98
Standard Pacific Corp. 5,700 107
Texas Industries, Inc. 4,100 96
The Ryland Group, Inc. 2,400 77
Toll Brothers, Inc.+ 7,000 228
------
1,461
------
CONSUMER - DURABLE -- 3.1%
Applica, Inc.+ 4,900 25
Bassett Furniture Industries, Inc. 2,200 28
Champion Enterprises, Inc.+ 8,000 31
Coachmen Industries, Inc. 3,000 25
Ethan Allen Interiors, Inc. 7,600 222
</TABLE>
39
<PAGE> 44
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Griffon Corp.+ 5,700 $ 43
La-Z-Boy, Inc. 11,700 184
Linens 'N Things, Inc.+ 7,700 237
National Presto Industries, Inc. 1,400 43
Royal Appliance Mfg. Co.+ 2,500 14
Salton, Inc.+ 2,300 53
Skyline Corp. 1,700 37
SLI, Inc. 6,800 56
Sturm, Ruger & Co., Inc. 5,300 45
Thomas Industries, Inc. 3,000 63
Toro Co. 2,400 84
------
1,190
------
CONSUMER - NONDURABLE -- 2.8%
A.T. Cross Co., Class A+ 3,300 16
Action Performance Cos., Inc.+ 3,000 7
CEC Entertainment, Inc.+ 5,300 169
Consolidated Products, Inc.+ 5,500 42
Department 56, Inc.+ 2,900 41
Huffy Corp.+ 2,100 21
IHOP Corp.+ 3,900 82
JAKKS Pacific, Inc.+ 3,500 31
Landry's Seafood
Restaurants, Inc.+ 3,900 31
Luby's, Inc. 4,200 25
Midway Games, Inc.+ 7,000 54
Panera Bread Co., Class A+ 2,300 47
Regis Corp. 7,800 118
Ruby Tuesday, Inc. 11,800 160
Russ Berrie & Co., Inc. 3,900 88
Ryan's Family Steak Houses, Inc.+ 6,400 54
Taco Cabana, Inc., Class A+ 2,600 22
The Marcus Corp. 5,800 82
------
1,090
------
ELECTRONICS -- 7.1%
Allen Telecom, Inc.+ 5,400 101
Anixter International, Inc.+ 7,200 175
Audiovox Corp., Class A+ 4,300 59
Avid Technology, Inc.+ 4,900 68
AVT Corp.+ 5,900 37
Belden, Inc. 4,900 127
Benchmark Electronics, Inc.+ 3,700 149
BMC Industries, Inc. 5,200 31
Cable Design Technologies Corp.+ 8,250 190
Checkpoint Systems, Inc.+ 5,700 45
Electroglas, Inc.+ 3,900 $ 55
ESS Technology, Inc.+ 8,400 130
Esterline Technologies Corp.+ 3,300 74
Gerber Scientific, Inc. 5,200 42
Harman International
Industries, Inc. 6,600 317
Hutchinson Technology, Inc.+ 4,900 107
Innovex, Inc.+ 2,800 39
Intermagnetics General Corp.+ 2,575 66
Itron, Inc.+ 2,800 16
Kent Electronics Corp.+ 5,600 104
Mayors Jewelers Inc.+ 3,000 11
Park Electrochemical Corp. 2,100 139
Photronics, Inc.+ 5,700 129
Pioneer Standard Electronics, Inc. 5,200 72
Silicon Valley Group, Inc.+ 6,500 214
SpeedFam-IPEC, Inc.+ 5,700 54
Standard Microsystems Corp.+ 3,000 72
Symmetricom, Inc.+ 4,350 55
THQ, Inc.+ 3,700 76
------
2,754
------
ENERGY - RAW MATERIALS -- 1.9%
Friede Goldman Halter, Inc.+ 9,300 53
Kirby Corp.+ 4,800 89
Louis Dreyfus Natural Gas Corp.+ 8,300 266
Offshore Logistics, Inc.+ 4,100 71
Seitel Corp.+ 4,700 71
Southwestern Energy Co.+ 4,800 38
Swift Energy Co.+ 4,300 140
------
728
------
FOOD & AGRICULTURE -- 4.6%
Agribrands International, Inc.+ 2,000 87
American Italian Pasta Co.,
Class A+ 3,400 68
Chiquita Brands International, Inc.+ 12,800 25
Corn Products International, Inc. 6,900 173
Dimon, Inc. 8,300 25
Earthgrains Co. 8,100 164
Fleming Cos., Inc. 7,400 105
International Multifoods Corp. 3,600 61
J & J Snack Foods Corp.+ 1,700 23
Lindsay Manufacturing Co. 2,300 48
Michael Foods, Inc. 3,400 92
Mississippi Chemical Corp. 5,100 23
</TABLE>
40
<PAGE> 45
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
Nash Finch Co. 2,300 $ 28
Ralcorp Holdings, Inc.+ 5,900 83
Smithfield Foods, Inc.+ 10,800 310
The Scotts Co., Class A+ 5,500 197
United Natural Foods, Inc.+ 3,500 44
Whole Foods Market, Inc.+ 5,100 236
------
1,792
------
HEALTHCARE / DRUGS & MEDICINE - 8.1%
Bindley Western Industries, Inc. 6,733 242
Conmed Corp.+ 2,800 41
Cooper Cos., Inc. 2,700 97
Coventry Health Care, Inc.+ 11,600 212
Curative Health Services, Inc.+ 1,900 10
Datascope Corp. 2,800 97
Diagnostic Products Corp. 2,800 128
Dura Pharmaceuticals, Inc.+ 8,600 296
Hologic, Inc.+ 3,000 20
Idexx Laboratories, Inc.+ 6,800 163
Invacare Corp. 5,900 168
Laser Vision Centers, Inc.+ 4,700 19
Nature's Sunshine Products, Inc. 3,400 24
Osteotech, Inc.+ 2,600 14
Owens & Minor, Inc. 6,500 98
Parexel International Corp.+ 4,700 41
Pediatrix Medical Group, Inc.+ 3,000 48
Pharmaceutical Product
Development, Inc.+ 4,800 150
PolyMedica Corp.+ 2,500 144
Province Healthcare Co.+ 5,900 249
Respironics, Inc.+ 5,700 112
Sierra Health Services, Inc.+ 4,800 26
Sola International, Inc.+ 4,700 20
Spacelabs Medical, Inc.+ 1,900 20
Sunrise Medical, Inc.+ 4,200 39
Theragenics Corp.+ 5,500 26
Universal Health Services, Class B+ 5,700 478
US Oncology, Inc.+ 17,600 95
Vital Signs, Inc. 2,400 75
------
3,152
------
INSURANCE - 4.3%
Delphi Financial Group, Inc.,
Class A+ 3,845 142
E.W. Blanch Holdings, Inc. 2,500 47
Enhance Financial Services
Group, Inc. 7,400 86
First American Corp. 12,300 258
Fremont General Corp. 13,500 49
Insurance Auto Auctions, Inc.+ 2,200 26
Mutual Risk Management Ltd. 8,000 145
Radian Group, Inc. 7,400 524
RLI Corp. 1,900 74
SCPIE Holdings, Inc. 2,000 38
Selective Insurance Group, Inc. 4,900 85
Trenwick Group Ltd. 6,100 120
Zenith National Insurance Corp. 3,300 75
------
1,669
------
MEDIA - 0.7%
Consolidated Graphics, Inc.+ 2,600 28
Network Equipment
Technologies, Inc.+ 4,200 40
Penton Media, Inc. 6,100 186
Thomas Nelson, Inc. 2,700 18
------
272
------
MISCELLANEOUS - 1.0%
C-Cube Microsystems, Inc.+ 9,500 185
Pac-West Telecomm, Inc.+ 6,900 60
Spherion Corp.+ 12,900 153
------
398
------
MISCELLANEOUS FINANCE - 7.3%
AmeriCredit Corp.+ 14,900 400
Cash America International, Inc. 4,900 25
Commercial Federal Corp. 10,800 189
Dain Rauscher Corp. 2,400 225
Downey Financial Corp. 5,500 263
Fidelity National Financial, Inc. 12,900 317
Jefferies Group, Inc. 4,700 128
MDC Holdings, Inc. 4,300 118
Morgan Keegan, Inc. 5,500 110
National Discount Broker
Group, Inc.+ 4,100 200
Penford Corp. 1,500 19
Raymond James Financial, Inc. 8,900 301
Southwest Securities Group 2,970 84
Staten Island Bancorp., Inc. 7,100 137
Tucker Anthony Sutro 4,400 102
Washington Federal, Inc. 10,100 225
------
2,843
------
</TABLE>
41
<PAGE> 46
INSTITUTIONAL SELECT(TM) SMALL-CAP VALUE INDEX FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 2000
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
NON-FERROUS METALS - 2.0%
A.M. Castle & Co. 2,800 $ 28
Brush Wellman, Inc. 3,100 63
Commercial Metals Co. 2,700 74
Commonwealth Industries, Inc. 3,000 17
IMCO Recycling, Inc. 3,000 17
Mueller Industries, Inc. (b)+ 6,800 159
Reliance Steel & Aluminum Co. 5,300 126
RTI International Metals, Inc.+ 4,100 59
Stillwater Mining Co.+ 7,400 215
Wolverine Tube, Inc.+ 2,300 31
------
789
------
OIL - DOMESTIC - 2.1%
Nuevo Energy Co.+ 3,400 62
Patina Oil & Gas Corp. 3,300 58
Pride International, Inc.+ 12,600 319
Remington Oil & Gas Corp.+ 4,100 38
St. Mary Land & Exploration Co. 4,300 101
Vintage Petroleum, Inc. 12,300 260
------
838
------
OPTICAL & PHOTO - 0.1%
CPI Corp. 1,700 34
------
PAPER & FOREST PRODUCTS -- 0.7%
Caraustar Industries, Inc. 4,800 48
Chesapeake Corp. 2,900 57
Deltic Timber Corp. 2,400 47
Lydall, Inc.+ 3,100 33
Pope & Talbot, Inc. 2,900 45
Universal Forest Products, Inc. 3,800 51
------
281
------
PRODUCER GOODS & MANUFACTURING - 6.6%
Applied Industrial
Technologies, Inc. 3,900 66
AptarGroup, Inc. 6,900 143
Astec Industries, Inc.+ 3,600 37
Baldor Electric, Co. 6,500 129
Barnes Group, Inc. 3,500 67
BE Aerospace, Inc.+ 4,700 78
Butler Manufacturing Co. 1,300 32
CLARCOR, Inc. 4,600 88
Fedders Corp. 6,800 29
Foster Wheeler Corp. 7,800 58
Gardner Denver, Inc.+ 2,900 53
Hughes Supply, Inc. 4,700 88
IDEX Corp. 6,000 194
Ionics, Inc.+ 3,100 65
JLG Industries, Inc. 8,700 121
Lennox International, Inc. 10,912 87
MascoTech, Inc. 8,600 144
Material Sciences Corp.+ 3,000 30
Milacron, Inc. 6,800 108
Oceaneering International, Inc.+ 4,500 63
Regal Beloit 4,000 67
Robbins & Myers, Inc. 2,100 51
Shaw Group, Inc.+ 3,800 310
SPS Technologies, Inc.+ 2,400 124
Standex International Corp.+ 2,400 44
Tenneco Automotive, Inc. 6,600 28
Ultratech Stepper, Inc.+ 4,000 94
Valmont Industries, Inc. 4,500 92
Watsco, Inc. 5,500 52
Watts Industries, Inc., Class A 4,900 55
------
2,597
------
RETAIL - 4.5%
Ames Department Stores, Inc.+ 5,600 22
AnnTaylor Stores Corp.+ 5,500 165
The Bombay Co., Inc.+ 6,600 17
Books-A-Million, Inc.+ 3,000 8
Burlington Coat Factory
Warehouse Corp. 8,500 134
Casey's General Stores, Inc. 9,700 121
The Cato Corp., Class A 5,100 61
Enesco Group, Inc. 2,500 17
Gottschalks, Inc.+ 2,400 12
Great Atlantic & Pacific
Tea Co., Inc. 7,300 73
Hancock Fabrics, Inc. 3,500 15
Lillian Vernon Corp. 1,700 16
Michaels Stores, Inc.+ 7,000 170
Pep Boys-Manny, Moe, & Jack 10,000 45
Pier 1 Imports, Inc. 18,600 246
School Specialty, Inc.+ 3,300 51
ShopKo Stores, Inc.+ 6,400 41
Stein Mart, Inc.+ 8,100 126
United Stationers, Inc.+ 6,700 201
Zale Corp.+ 6,800 230
------
1,771
------
</TABLE>
42
<PAGE> 47
<TABLE>
<CAPTION>
Number Value
of Shares (000s)
--------- ------
<S> <C> <C>
STEEL - 0.7%
Amcast Industrial Corp. 1,700 $ 17
Birmingham Steel Corp.+ 5,800 14
Cleveland-Cliffs, Inc. 2,000 41
Intermet Corp. 4,700 35
Quanex Corp. 2,700 53
Steel Dynamics, Inc.+ 8,900 107
Steel Technologies, Inc. 2,100 12
--------
279
--------
TELEPHONE - 0.5%
General Communication, Inc.,
Class A+ 10,300 80
Inter-Tel, Inc. 4,900 57
Telcom Semiconductor, Inc.+ 3,500 49
--------
186
--------
TOBACCO - 0.1%
Schweitzer-Mauduit International, Inc. 3,000 49
--------
TRAVEL & RECREATION - 1.7%
Anchor Gaming, Inc.+ 2,300 195
Aztar Corp.+ 7,600 115
Central Parking Corp. 7,300 140
K2, Inc.+ 3,500 33
Pinnacle Entertainment, Inc.+ 4,900 112
Prime Hospitality Corp.+ 8,400 80
--------
675
--------
TRUCKING & FREIGHT - 2.0%
American Freightways Corp.+ 6,300 102
Arkansas Best Corp.+ 3,800 61
Fritz Cos., Inc.+ 6,900 56
Frozen Food Express
Industries, Inc.+ 4,600 10
M.S. Carriers, Inc.+ 2,200 34
Roadway Express, Inc. 3,700 76
Rollins Truck Leasing Corp. 10,800 57
USFreightways Corp. 5,300 136
Wabash National Corp. 4,300 34
Werner Enterprises, Inc. 8,900 125
Yellow Corp.+ 4,700 85
--------
776
--------
UTILITIES - ELECTRIC & GAS - 6.9%
American States Water Co. 1,700 53
Atmos Energy Corp. 6,300 146
Avista Corp. 9,400 211
Bangor Hydro-Electric Co. 1,400 34
Cascade Natural Gas Corp. 2,100 39
Central Vermont Public
Service Corp. 2,200 22
CH Energy Group, Inc. 3,200 126
Energen Corp. 5,900 169
Green Mountain Power Corp. 900 7
Laclede Gas Co. 3,600 79
New Jersey Resources Corp. 3,400 136
Northwest Natural Gas Co. 4,800 113
Northwestern Corp. 4,400 97
NUI Corp. 2,500 78
Philadelphia Suburban Corp. 7,900 185
Piedmont Natural Gas Co., Inc. 6,200 189
RGS Energy Group, Inc. 6,700 198
Southern Union Co.+ 9,404 177
Southwest Gas Corp. 6,000 125
UGI Corp. 5,200 121
UIL Holdings Corp.+ 2,800 131
Unisource Energy Corp.
Holding Co. 6,200 93
Veritas DGC, Inc.+ 5,400 162
2,691
--------
TOTAL COMMON STOCK
(Cost $37,081) 39,089
--------
SHORT-TERM INVESTMENT - 0.2%
Provident Institutional
TempFund, 6.30%*, 11/1/00 98,287 98
--------
TOTAL SHORT-TERM INVESTMENT
(Cost $98) 98
--------
TOTAL INVESTMENTS - 100.2%
(Cost $37,179) 39,187
--------
OTHER ASSETS AND LIABILITIES, NET - (0.2%)
Other assets 590
Liabilities (674)
--------
(84)
--------
TOTAL NET ASSETS - 100.0% $ 39,103
========
</TABLE>
See accompanying Notes to Schedules of Investments and Notes to Financial
Statements.
43
<PAGE> 48
NOTES TO SCHEDULES OF INVESTMENTS
October 31, 2000
+ Non-income producing security.
* Interest rate represents the yield on report date.
ADR - American Depositary Receipt.
(a) Yields shown are effective yields at time of purchase.
(b) These securities, or portion thereof, are being used to collateralize
open futures contracts.
See accompanying Notes to Financial Statements.
44
<PAGE> 49
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except for net asset value per share)
October 31, 2000
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
-------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
--------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (Cost: $358,039, $122,226,
and $37,179, respectively) $ 381,471 $ 129,698 $ 39,187
Cash held as collateral for securities on loan (see Note 6) 2,438 173 557
Receivables:
Investments sold 185 -- --
Fund shares sold 131 186 8
Variation margin 22 8 --
Dividends 260 149 20
Interest 8 3 1
Securities lending income -- -- 1
Prepaid expenses 15 8 3
--------- --------- ---------
Total assets 384,530 130,225 39,777
--------- --------- ---------
LIABILITIES
Collateral held for securities on loan (see Note 6) 2,438 173 557
Payables:
Investments purchased -- 514 61
Fund shares redeemed 269 384 11
Transfer agency and shareholder service fees -- 2 --
Accrued expenses 96 88 45
--------- --------- ---------
Total liabilities 2,803 1,161 674
--------- --------- ---------
Net assets applicable to outstanding shares $ 381,727 $ 129,064 $ 39,103
========= ========= =========
NET ASSETS CONSIST OF:
Paid-in capital $ 358,549 $ 118,835 $ 34,779
Undistributed net investment income 2,967 1,411 246
Accumulated net realized gain (loss) on investments
sold and futures contracts (3,184) 1,365 2,070
Net unrealized appreciation on investments and futures
contracts 23,395 7,453 2,008
--------- --------- ---------
$ 381,727 $ 129,064 $ 39,103
========= ========= =========
PRICING OF SHARES:
Outstanding shares, $0.00001 par value (unlimited shares authorized) 33,887 11,283 3,483
Net asset value, offering and redemption price per share $ 11.26 $ 11.44 $ 11.23
</TABLE>
45
See accompanying Notes to Financial Statements.
<PAGE> 50
STATEMENTS OF OPERATIONS (in thousands)
For the year ended October 31, 2000
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
---------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividends (net of foreign tax withheld of
$18, $10, and $0, respectively) $ 3,714 $ 1,806 $ 403
Interest 284 73 12
Securities lending 36 10 11
-------- -------- --------
Total investment income 4,034 1,889 426
-------- -------- --------
Expenses:
Investment advisory and administration fees 615 200 87
Transfer agency and shareholder service fees 331 100 35
Custodian fees 73 99 44
Portfolio accounting fees 45 13 5
Registration fees 79 38 16
Professional fees 21 13 12
Shareholder reports 44 22 11
Trustees' fees 7 6 6
Interest expense 1 -- 1
Proxy fees 23 8 3
Other expenses 19 14 13
-------- -------- --------
1,258 513 233
Less:expenses reduced (see Note 4) (736) (255) (135)
-------- -------- --------
Net expenses incurred by fund 522 258 98
-------- -------- --------
Net investment income 3,512 1,631 328
-------- -------- --------
Net realized gain (loss) on investments and futures contracts:
Net realized gain (loss) on investments sold (2,996) 1,398 2,019
Net realized gain (loss) on futures contracts (43) (21) 45
-------- -------- --------
Net realized gain (loss) on investments and futures contracts (3,039) 1,377 2,064
-------- -------- --------
Change in net unrealized appreciation (depreciation) on investments and futures
contracts:
Net unrealized appreciation on investments 13,266 7,002 3,802
Net unrealized appreciation (depreciation) on futures contracts (171) (28) 14
-------- -------- --------
Net unrealized appreciation on investments and futures contracts 13,095 6,974 3,816
-------- -------- --------
Net gain on investments 10,056 8,351 5,880
-------- -------- --------
Increase in net assets resulting from operations $ 13,568 $ 9,982 $ 6,208
======== ======== ========
</TABLE>
See accompanying Notes to Financial Statements.
46
<PAGE> 51
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the periods ended October 31,
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
------------------------------------------------------------------------------
Large-Cap Small-Cap
S&P 500 Value Index Value Index
----------------------- ---------------------- -----------------------
2000 1999+ 2000 1999+ 2000 1999+
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 3,512 $ 1,563 $ 1,631 $ 573 $ 328 $ 221
Net realized gain (loss) on investments
and futures contracts (3,039) 309 1,377 873 2,064 1,310
Net unrealized appreciation (depreciation)
on investments and futures contracts 13,095 10,300 6,974 479 3,816 (1,808)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets resulting
from operations 13,568 12,172 9,982 1,925 6,208 (277)
--------- --------- --------- --------- --------- ---------
Dividends and distributions:
Dividends to shareholders from
net investment income (2,118) -- (802) -- (303) --
Distributions to shareholders
from net capital gains (454) -- (885) -- (1,304) --
--------- --------- --------- --------- --------- ---------
Total dividends and distributions
to shareholders (2,572) -- (1,687) -- (1,607) --
--------- --------- --------- --------- --------- ---------
Capital share transactions:
Proceeds from shares sold 211,355 245,377 74,538 73,458 14,346 33,450
Net asset value of shares issued in
reinvestment of dividends 2,148 -- 1,533 -- 1,279 --
Early withdrawal fees (see Note 8) 23 25 23 11 14 7
Payments for shares redeemed (81,271) (19,098) (26,810) (3,909) (12,781) (1,536)
--------- --------- --------- --------- --------- ---------
Increase in net assets from capital
share transactions 132,255 226,304 49,284 69,560 2,858 31,921
--------- --------- --------- --------- --------- ---------
Total increase in net assets 143,251 238,476 57,579 71,485 7,459 31,644
Net assets:
Beginning of period 238,476 -- 71,485 -- 31,644 --
--------- --------- --------- --------- --------- ---------
End of period (including undistributed
net investment income of $2,967, $1,563,
$1,411, $573, $246, and $221, respectively) $ 381,727 $ 238,476 $ 129,064 $ 71,485 $ 39,103 $ 31,644
========= ========= ========= ========= ========= =========
Number of fund shares:
Sold 18,781 24,038 6,975 7,066 1,425 3,351
Reinvested 193 -- 148 -- 134 --
Redeemed (7,297) (1,828) (2,535) (371) (1,275) (152)
--------- --------- --------- --------- --------- ---------
Net increase in shares outstanding 11,677 22,210 4,588 6,695 284 3,199
Shares outstanding:
Beginning of period 22,210 -- 6,695 -- 3,199 --
--------- --------- --------- --------- --------- ---------
End of period 33,887 22,210 11,283 6,695 3,483 3,199
========= ========= ========= ========= ========= =========
</TABLE>
+ For the period from February 1, 1999 (commencement of operations) to
October 31, 1999.
See accompanying Notes to Financial Statements.
47
<PAGE> 52
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SELECT(TM) 11/1/99- 2/1/99*-
S&P 500 FUND 10/31/00 10/31/99
<TABLE>
<CAPTION>
PER-SHARE DATA ($)
--------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period 10.74 10.00
-------------------------------
Income from investment operations:
Net investment income 0.11 0.07
Net realized and unrealized gain on investments 0.52 0.67
-------------------------------
Total income from investment operations 0.63 0.74
-------------------------------
Less distributions:
Dividends from net investment income (0.09) --
Distributions from capital gains (0.02) --
-------------------------------
Total distributions (0.11) --
-------------------------------
Net asset value at end of period 11.26 10.74
-------------------------------
Total return (%) 5.86 7.40 1
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.15 3 0.13 2
Expense reductions reflected in above ratio 0.22 0.42 2
Ratio of net investment income to average net assets 1.06 1.37 2
Portfolio turnover rate 6 1
Net assets, end of period ($ x 1,000,000) 382 238
</TABLE>
* Commencement of operations.
1 Not annualized.
2 Annualized.
3 Would have been 0.16% if certain non-routine expenses (proxy fees) had
been included.
See accompanying Notes to Financial Statements.
48
<PAGE> 53
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT(TM) 11/1/99- 2/1/99*-
Large-cap Value Index Fund 10/31/00 10/31/99
PER-SHARE DATA ($)
------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period 10.68 10.00
------------------------------
Income from investment operations:
Net investment income 0.15 0.09
Net realized and unrealized gain on investments 0.84 0.59
------------------------------
Total income from investment operations 0.99 0.68
------------------------------
Less distributions:
Dividends from net investment income (0.11) --
Distributions from capital gains (0.12) --
------------------------------
Total distributions (0.23) --
------------------------------
Net asset value at end of period 11.44 10.68
------------------------------
Total return (%) 9.48 6.80 1
RATIOS/SUPPLEMENTAL DATA (%)
------------------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.25 3 0.21 2
Expense reductions reflected in above ratio 0.25 0.49 2
Ratio of net investment income to average net assets 1.64 1.62 2
Portfolio turnover rate 27 19
Net assets, end of period ($ x 1,000,000) 129 71
</TABLE>
* Commencement of operations.
1 Not annualized.
2 Annualized.
3 Would have been 0.26% if certain non-routine expenses (proxy fees) had
been included.
See accompanying Notes to Financial Statements.
49
<PAGE> 54
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INSTITUTIONAL SELECT(TM) 11/1/99- 2/1/99*-
Small-Cap Value Index Fund 10/31/00 10/31/99
PER-SHARE DATA ($)
--------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period 9.89 10.00
-------------------------
Income from investment operations:
Net investment income 0.09 0.07
Net realized and unrealized gain (loss)
on investments 1.74 (0.18)
-------------------------
Total income (loss) from investment operations 1.83 (0.11)
-------------------------
Less distributions:
Dividends from net investment income (0.09) --
Distributions from capital gains (0.40) --
-------------------------
Total distributions (0.49) --
-------------------------
Net asset value at end of period 11.23 9.89
-------------------------
Total return (%) 19.42 (1.10) 1
RATIOS/SUPPLEMENTAL DATA (%)
--------------------------------------------------------------------------------
Ratio of net operating expenses to average net assets 0.27 3 0.00 2
Expense reductions reflected in above ratio 0.38 0.98 2
Ratio of net investment income to average net assets 0.94 1.25 2
Portfolio turnover rate 71 38
Net assets, end of period ($ x 1,000,000) 39 32
</TABLE>
* Commencement of operations.
1 Not annualized.
2 Annualized.
3 Would have been 0.28% if certain non-routine expenses (proxy fees) had
been included.
See accompanying Notes to Financial Statements.
50
<PAGE> 55
NOTES TO FINANCIAL STATEMENTS
For the year ended October 31, 2000
(All currency amounts are in thousands unless otherwise noted.)
1. DESCRIPTION OF THE FUNDS
The Institutional Select(TM) S&P 500 Fund, Institutional Select(TM) Large-Cap
Value Index Fund and Institutional Select(TM) Small-Cap Value Index Fund (the
"funds") are series of Schwab Capital Trust (the "trust"), a no-load, open-end
management investment company organized as a Massachusetts business trust on May
7, 1993, and registered under the Investment Company Act of 1940, as amended
(the "1940 Act").
In addition to the funds, the trust also offers the Schwab
Total Stock Market Index Fund(TM), 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, Schwab
MarketManager International Portfolio, Communications Focus Fund, Financial
Services Focus Fund, Health Care Focus Fund, and Technology Focus Fund. 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 -- The funds' 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 funds'
investment adviser pursuant to guidelines adopted in good faith by the Board of
Trustees. Futures contracts, 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 funds 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 the daily fluctuation in the value of
the contract. When the contract is closed, the funds record a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the time it was closed.
51
<PAGE> 56
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 statement of operations at any given time.
As of October 31, 2000, the Institutional Select(TM) S&P 500 Fund and the
Institutional Select(TM) Large-Cap Value Index Fund had the following open Index
futures contracts:
<TABLE>
<CAPTION>
Type of Number of Contract Unrealized
Fund Contract Contracts Value Expiration Depreciation
---- -------- --------- ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
Institutional Select S&P 500 Fund S&P 500 Index 3 $ 1,080 12/15/00 $(37)
Institutional Select Large-Cap
Value Index Fund S&P 500 Index 1 360 12/14/00 (19)
</TABLE>
The eligible securities on deposit with brokers available to cover margin
requirements for open futures positions at October 31, 2000, were $60 and $20,
respectively, for the Institutional Select S&P 500 Fund and the Institutional
Select Large-Cap Value Index Fund. The funds have segregated short-term
investments and other securities 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.
For Federal income tax purposes, the cost of securities owned at October 31,
2000 and the net realized gains or losses on securities sold for the period then
ended was different from the amounts reported for financial reporting purposes
as shown below. The aggregate gross unrealized appreciation and depreciation at
October 31, 2000 for the Funds is as follows:
<TABLE>
<CAPTION>
Federal Net Unrealized Appreciated Depreciated
Fund Tax Cost Appreciation Securities Securities
---- -------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Institutional Select S&P 500 Fund $360,795 $ 20,639 $ 65,167 $(44,528)
Institutional Select Large-Cap Value Index Fund 124,885 4,794 17,416 (12,622)
Institutional Select(TM) Small-Cap Value Index Fund 38,081 1,106 6,040 (4,934)
</TABLE>
At October 31, 2000, the unused capital loss carryforward, for Federal income
tax purposes with expiration date, was as follows:
<TABLE>
<CAPTION>
Institutional Select(TM) Funds
------------------------------
Capital Loss Expirations S&P 500
------------------------ -------
<S> <C>
10/31/08 $465
</TABLE>
52
<PAGE> 57
Reclassifications -- Generally accepted accounting principles require that
certain components of net assets be reclassified between financial and tax
reporting. These reclassifications have no effect on net assets or net asset
values per share.
On the statements of assets and liabilities, the following reclassifications
were made:
<TABLE>
<CAPTION>
Undistributed
Net Investment
Portfolio Income Paid-In Capital
--------- -------------- ---------------
<S> <C> <C>
Institutional Select(TM) S&P 500 Fund $ 10 $(10)
Institutional Select(TM) Large-Cap Value Index Fund 9 (9)
</TABLE>
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,
the Institutional Select S&P 500 Fund pays an annual fee, payable monthly, of
0.18% of the first $1 billion of average daily net assets and 0.15% of such net
assets over $1 billion, the Institutional Select Large-Cap Value Index Fund pays
0.20% of the first $1 billion of average daily net assets and 0.18% of such net
assets over $1 billion and the Institutional Select(TM) Small-Cap Value Index
Fund pays 0.25% of the first $1 billion of average daily net assets and 0.23% of
such net assets over $1 billion. The investment adviser has waived or reduced
its fee for the year ended October 31, 2000 (see Note 4).
Prior to February 29, 2000, the Institutional Select S&P 500 Fund paid an annual
fee, payable monthly, of 0.20% of the first $1 billion of average daily net
assets and 0.18% of such net assets over $1 billion for advisory services and
facilities furnished.
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 net assets for shareholder
services. Schwab has waived or reduced a portion of its transfer agency and
shareholder service fees for the year ended October 31, 2000 (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
year ended October 31, 2000, the trust made no direct payments to its officers
or trustees who are "interested persons" within the meaning of the 1940 Act. The
funds incurred fees aggregating $19 related to the trust's unaffiliated
trustees.
As of October 31, 2000, the Institutional Select S&P 500 Fund held common stock
of The Charles Schwab Corp., an affiliated issuer, with a current value of
$1,466.
Interfund transactions -- For the year ended October 31, 2000, the Institutional
Select S&P 500 Fund, the Institutional Select Large-Cap Value Index Fund and the
Institutional Select Small-Cap Value Index Fund engaged in purchase and sale
transactions with funds that have a common investment adviser, common trustees
and common officers. These purchases and sales transactions, made at current
market value pursuant to Rule 17a-7 under the 1940 Act, were $120, $2,391 and
$4,384, respectively.
53
<PAGE> 58
NOTES TO FINANCIAL STATEMENTS (concluded)
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(TM) S&P 500 Fund,
Institutional Select(TM) Large-Cap Value Index Fund and Institutional Select(TM)
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. For
the purpose of this guarantee, operating expenses do not include interest, taxes
and certain non-routine expenses. The actual operating expense ratio for the
year ended October 31, 2000 did include non-routine expenses.
For the year ended October 31, 2000, the total of such fees and expenses reduced
by the investment adviser was $404, $195, and $83, respectively, for the
Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value Index
Fund and Institutional Select Small-Cap Value Index Fund. In addition, the total
expenses reimbursed by the investment adviser was $152, $20, and $43 for the
Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value Index
Fund and Institutional Select Small-Cap Value Index Fund, respectively. The
total of such fees reduced by Schwab was $179, $41, and $9, respectively, for
the Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value
Index Fund and Institutional Select Small-Cap Value Index Fund.
5. BORROWING AGREEMENTS
The funds may obtain temporary bank loans through the trust to use for meeting
shareholder redemptions or for extraordinary or emergency purposes. The trust
has line of credit arrangements with PNC Bank, N.A., Bank of America, N.A. and
The Bank of New York. The funds pay interest on the amounts they borrow at rates
that are negotiated periodically. As of the end of the report period there were
no borrowings outstanding.
6. SECURITIES LENDING
The Institutional Select S&P 500 Fund, Institutional Select Large-Cap Value
Index Fund and Institutional Select Small-Cap Value Index Fund loaned securities
to certain brokers, dealers and other financial institutions who paid the funds
negotiated lenders' fees. The funds received cash collateral, letters of credit
or U.S. Government securities against the loaned securities in an amount equal
to 102% of the market value of the loaned securities at the inception of each
loan. The loans were and at all times will be collateralized in an amount equal
to at least 100% of the market value of the securities loaned.
<TABLE>
<CAPTION>
Market Value of Market Value of
Fund Securities Loaned Collateral
---- ----------------- ----------------
<S> <C> <C>
Institutional Select S&P 500 Fund $2,379 $2,438
Institutional Select Large-Cap Value Index Fund 169 173
Institutional Select Small-Cap Value Index Fund 549 557
</TABLE>
54
<PAGE> 59
7. INVESTMENT TRANSACTIONS
Purchases, sales and maturities of investment securities, other than short-term
obligations and U.S. Government securities, for the year ended October 31, 2000,
were as follows:
<TABLE>
<CAPTION>
Proceeds of Sales
Fund Purchases and Maturities
---- --------- -----------------
<S> <C> <C>
Institutional Select(TM) S&P 500 Fund $155,901 $ 18,975
Institutional Select(TM) Large-Cap Value Index Fund 76,016 26,541
Institutional Select(TM) Small-Cap Value Index Fund 27,173 24,776
</TABLE>
8. EARLY WITHDRAWAL FEES
The early withdrawal fees are retained by the funds and are treated as a
contribution to capital.
<TABLE>
Early withdrawal fees on Early withdrawal
Fund redemption proceeds* fees as of 10/31/00
---- ------------------------ -------------------
<S> <C> <C>
Institutional Select S&P 500 Fund 0.75% $23
Institutional Select Large-Cap Value Index Fund 0.75% 23
Institutional Select Small-Cap Value Index Fund 0.75% 14
</TABLE>
* Attributable to shares purchased and held less than 180 days. Prior to
May 1, 2000, the early withdrawal fees for Institutional Select S&P 500
Fund and Institutional Select Large-Cap Value Index Fund were 0.25% and
0.50%, respectively.
55
<PAGE> 60
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF:
Institutional Select(TM) S&P 500 Fund,
Institutional Select(TM) Large-Cap Value Index Fund and
Institutional Select(TM) Small-Cap Value Index Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Institutional Select S&P 500 Fund,
Institutional Select Large-Cap Value Index Fund and Institutional Select
Small-Cap Value Index Fund (three of the portfolios constituting Schwab Capital
Trust)(hereafter collectively referred to as the "funds") at October 31, 2000,
and the results of each of their operations for the year then ended, the changes
in each of their net assets and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
San Francisco, CA
December 12, 2000
56
<PAGE> 61
TAX DESIGNATIONS (UNAUDITED)
Pursuant to section 854(b)(2) of the Internal Revenue Code, the funds hereby
make the following designations as to the percentage of ordinary income
dividends qualifying for the dividends received deduction for the fiscal year
ended October 31, 2000.
<TABLE>
<CAPTION>
<S> <C>
Institutional Select(TM) S&P 500 Fund 79%
Institutional Select(TM) Large-Cap Value Fund 40%
Institutional Select(TM) Small-Cap Value Fund 13%
</TABLE>
57
<PAGE> 62
PROXY VOTING RESULTS (UNAUDITED)
SHAREHOLDERS OF THE FUNDS COVERED IN THIS REPORT APPROVED ALL PROPOSALS
DESCRIBED IN THE MOST RECENT SCHWABFUNDS(R) PROXY SOLICITATION. A special
meeting of the shareholders of Schwab Capital Trust was held on June 1, 2000.
The number of votes necessary to conduct the meeting and approve each proposal
was obtained. The results of the votes of shareholders are listed below by
proposal.
<TABLE>
<CAPTION>
FOR WITHHELD
--------------------------------------------------------------------------------
<S> <C> <C>
PROPOSAL 1
ELECTION OF TRUSTEES
Charles R. Schwab 289,830,691 68,146,593
Mariann Byerwalter 289,803,100 68,174,184
Jeremiah H. Chafkin 290,116,655 67,860,629
Donald F. Dorward 289,894,704 68,082,580
William A. Hasler 289,963,656 68,013,628
Robert G. Holmes 290,075,539 67,901,745
Steven L. Scheid 290,226,860 67,750,424
Gerald B. Smith 290,102,267 67,875,017
Donald R. Stephens 290,162,159 67,815,125
Michael W. Wilsey 290,227,986 67,749,298
</TABLE>
58
<PAGE> 63
INSTITUTIONAL SELECT(TM) FUNDS
FUNDS DESIGNED TO MEET YOUR NEEDS
The Institutional Select Funds were designed with input from Investment
Managers, who indicated a need for 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 low-cost index fund
alternatives that offer accurate tracking potential and a proven management
team. The Institutional Select Funds are a direct result of that research, and
offer real advantages designed specifically for institutional-type investors.
CSIM - THE RIGHT RESOURCES FOR INVESTMENT MANAGERS
When we began in 1989, CSIM's primary focus was the retail customer, and today
- with more than 40 funds, 5 million SchwabFunds(R) shareholder accounts and
over $120 billion in assets under management-we are a market leader.
Investment Managers represent a large and growing part of the overall customer
base for Charles Schwab & Co., Inc. (Schwab). The Institutional Select Funds are
the first of what we hope will be many new CSIM funds that will provide high
quality, cost-efficient portfolios for Investment Managers and their clients. We
continue to work closely with Investment Managers nationwide, aiming to provide
them with the best institutional investment tools.
CSIM serves as the investment adviser to the Institutional Select Funds and
SchwabFunds, and is an affiliate of Schwab. Schwab is the distributor for the
Institutional Select Funds and SchwabFunds. The Charles Schwab Corporation is
the parent company of CSIM and Schwab.
This report must be preceded by or accompanied by a current prospectus.
<PAGE> 64
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.
P.O. Box 7575, San Francisco, CA 94104-7575
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
(C) 2000 Charles Schwab & Co., Inc.
All rights reserved. Member SIPC/NYSE.
Printed on recycled paper. MKT-4310-1 (12/00)
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