LIGHT INDEX FUND INC, N-1A, 1997-12-04

LIGHT INDEX FUND INC
N-1A, 1997-12-04

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Securities Act Registration No. 333-__________
Investment Company Act Reg. No. 811-______

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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
--------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|

Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|

Amendment No.______ |_|

(Check appropriate box or boxes)
-----------------------

LIGHT INDEX FUND, INC.
(Exact Name of Registrant as Specified in Charter)

704 Court A
TACOMA, WA 98402
(Address of Principal Executive Offices)

(888) 463-3957
(Registrant's Telephone Number, including Area Code)

Copy to:
Henry Hewitt J. James Gallagher
Light Index Investment Company Gordon, Thomas, Honeywell,
704 Court A Malanca, Peterson & Daheim, P.L.L.C.
TACOMA, WA 98402 2200 Wells Fargo Plaza
(Name and Address of Agent for Service) TACOMA, WA 98402

Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.

The Exhibit Index is located at page ___ of the sequential numbering system.

- -------------------------------------------------------------------------------
Title of Securities Amount Being Proposed Maximum
Being Registered Registered Offering Price Per Unit
- -------------------------------------------------------------------------------

- ----------------------------------------------------------
Proposed Maximum Amount of
Aggregate Offering Registration Fee
- ----------------------------------------------------------

In accordance with Rule 24f-2(a)(1) under the Investment Company Act of 1940,
the Registrant declares that an indefinite number or amount of shares of its
common stock, $0.0001 par value, is being registered by this Registration
Statement.

<PAGE>

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.

THE LIGHT INDEX FUND, INC.

CROSS REFERENCE SHEET

(Pursuant to Rule 481 showing the location in the Prospectus and the Statement
of Additional Information of the responses to the Items of Parts A and B on Form
N-1A.

Caption or Subheading in Prospectus or
ITEM NO. ON FORM N-1A STATEMENT OF ADDITIONAL INFORMATION

PART A - INFORMATION REQUIRED IN PROSPECTUS
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fees and Expenses
3. Condensed Financial Information Total Return
4. General Description of Registrant Investment Objective; Investment
Policies; Investment Risks; Who Should
Invest; Implementation of Policies;
Investment Limitations; General
Information

5. Management of the Fund Management of the Fund;
Investment Adviser;
Administration of the Fund

5A. Management's Discussion of Fund *
Performance

6. Capital Stock and Other Securities Opening an Account and Purchasing
Shares; Selling Your Shares; Dividends,
Other Distributions and Taxes; General
Information

7. Purchase of Securities Being Offered Share Price; Opening an Account and
Purchasing Shares -- When Your Account
Will Be Credited

8. Redemption or Repurchase Selling Your Shares; Important
Information About Telephone
Transactions; Other Account Information

9. Legal Proceedings *

PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL
INFORMATION

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History General Information and History

13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Limitations

14. Management of the Registrant Management of the Fund; Directors and
Officers

15. Control Persons and Principal Holders of Ownership of Management and Principal
Securities Shareholders

16. Investment Advisory and Other Services Investment Adviser, Administrator,
Custodian, Transfer Agent and Account
Services Agent

17. Brokerage Allocation Brokerage Allocation

18. Capital Stock and Other Securities Purchase of Shares; Redemption of
Shares; Shareholder Meetings

19. Purchase, Redemption and Pricing of Purchase of Shares; Redemption of
Securities Being Offered Shares; Share Price; Systematic
Withdrawal Plan

20. Tax Status Dividends, Other Gain Distributions and
Taxes; Investment Policies and Objectives
-- Federal Tax Treatment of Future
Contracts

21. Underwriters Distribution Plan

22. Calculation of Performance Data Performance Measures

23. Financial Statements Financial Statement

- ---------------
*Answer negative or inapplicable

</TABLE>

<PAGE>

LIGHT INDEX FUND, INC.

704 Court A
Tacoma, WA 98402
Telephone: (253) 274-0766

Toll-Free Telephone: (888) INDEX57

PROSPECTUS -- _______, 1997

INVESTOR 1-888-INDEX-57
INFORMATION 1-888-463-3957
DEPARTMENT

INVESTMENT The Light Index Fund, Inc. (the "Company") is an open-end
OBJECTIVE AND management investment company consisting of a single
POLICIES portfolio, the Light Index Fund (the "Fund"), that invests in
common stocks in order to match the investment performance of
the Light Index, an index which is composed of fifty-seven
publicly traded companies that are selected to represent the
investment performance of the information and telecommunications
segment of the broad stock market. There is no assurance that
the Fund will achieve its stated objective. Shares of the Fund
are neither insured nor guaranteed by any agency of the U.S.
Government, including the FDIC.

OPENING AN To open a regular (non-retirement) account, please complete and
ACCOUNT return the Purchase Application. If you need assistance in
completing this Form, please call our Investor Information
Department. The minimum initial investment is $10,000 or $1,000
for Uniform Gifts/Transfers to Minors Act accounts and
Individual Retirement Accounts (IRAs). To open an IRA, please
use a Light Index IRA Application. To obtain a copy of this
form, call our Investor Information Department 1-888-Index57
(1-888-463-3957), Monday through Friday from 8:00 a.m. to 7:00
p.m. (Central time). The Fund is offered on a no-load basis
(i.e., there are no sales commissions, though there are 12b-1
fees). However, the Fund incurs expenses for investment advisory
and administrative services.

ABOUT THIS This Prospectus is designed to set forth concisely the
PROSPECTUS information you should know about the Fund before you invest.
It should be retained for future reference. A Statement of
Additional Information ("SAI") dated _______, 1997, containing
additional information about the Fund has been filed with the
Securities and Exchange Commission. The SAI is incorporated by
reference into this Prospectus. Copies may be obtained, along
with other information about the Fund, without charge by calling
our Investor Information Department.

No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the SAI incorporated
herein by reference, in connection with the offering made by this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Fund or First Data Distributors, Inc. This
Prospectus does not constitute an offering by the Fund or by First Data
Distributors, Inc., in any jurisdiction in which such offering may not lawfully
be made.

TABLE OF CONTENTS

Highlights........................ Investment Adviser........................
Fees and Expenses................. Administration of the Fund................
Total Return...................... Dividends, Other Distributions and Taxes
..........................................
Investment Objective.............. Share Price...............................
Investment Policies............... Distribution Plan.........................
Investment Risks.................. General Information.......................
Who Should Invest................. Opening an Account and
Purchasing Shares.........................
Implementation of Policies........ Selling Your Shares.......................
Investment Limitations............ Important Information About
Telephone Transactions....................
Management of the Fund............ Other Account Information.................

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<PAGE>

HIGHLIGHTS

This Prospectus describes the Light Index Fund. Unlike some other mutual funds
which generally attempt to beat market averages with often unpredictable
results, the Fund seeks to match the performance of the Light Index, an index
that attempts to represent the investment performance of the information and
telecommunication technology segment of the broad stock market. The Fund expects
to provide highly predictable returns roughly equivalent to the performance of
the Light Index. The Fund is similar to other index funds in offering investors
the advantages of a "passive" approach to investing which includes broad
diversification among securities, minimal portfolio turnover, and relative
predictability. As with any mutual fund there is no assurance that the Fund will
meet its objectives or that the index on which it is based will increase in
value.

INVESTMENT OBJECTIVE The Fund is an open end, non-diversified investment
AND POLICIES company designed as an "index" fund. For further
information, see "Investment Objective" and "Investment
Policies".

INVESTMENT RISKS The Fund is subject to stock market risk, which is the
possibility that common stock prices will decline over
short or even extended periods. Both U.S. and foreign
stock markets tend to be cyclical, with periods when stock
prices generally rise and periods when stock prices
generally decline. Because of the risks associated with
common stocks, the Fund is intended to be a long-term
investment vehicle and is not designed to provide
investors with a means of speculating on short-term market
movements. Investors should not consider an investment in
the Fund a complete investment program, but should
consider holdings of securities with different risk
characteristics -- including U.S. and foreign common
stocks, bonds and money market instruments. For further
information concerning the risks associated with investing
in the Fund, see "Investment Risks."

INVESTMENT ADVISER The Fund receives investment advisory services
from the Light Index Investment Company and is sponsored
and distributed by First Data Investors, Inc., which is
not affiliated with the Light Index Investment Company.
For further information, see "Investment Adviser" and
"Distribution Plan".

FEES AND EXPENSES

The following table illustrates all expenses and fees that you would incur as a
shareholder of the Fund. The Annual Fund Operating Expenses are based on the
estimated amount set forth in the table.

SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------------
Sales Load Imposed on Purchases......................................None
Sales Load Imposed on Reinvested Dividends...........................None
Redemption Fees.......................................................1.0%*
Exchange Fees........................................................None

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management Fees......................................................1.00%
12b-1 Fees (1).......................................................0.25
Other Expenses (after estimated reimbursements)......................0.45
TOTAL FUND OPERATING EXPENSES (AFTER ESTIMATED REIMBURSEMENTS)...... 1.70%
=====

*The Fund will deduct a redemption fee of 1% of the value of shares redeemed
only if shares are held for less than one year.

(1) The maximum level of distribution expenses is 0.25% per annum of the
Fund's average net assets. See "Distribution Plan." The distribution expenses
for long-term shareholders may total more than the maximum sales charge that
would have been permissible if imposed entirely as an initial sales charge.

The purpose of this table is to assist you in understanding the various costs
and expenses that you would bear directly or indirectly as an investor in the
Fund.

The following example illustrates the expenses that you would incur on a $1,000
investment over various periods, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each period. As noted in the table above, the Fund
charges a redemption fee only if shares are held for less than one year.

1 YEAR 3 YEAR
-------- --------
$17 $54

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.

TOTAL RETURN

From time to time the Fund may advertise its yield and total return. Both yield
and total return figures are based on historical earnings and are not intended
to indicate future performance. The "total return" of the Fund refers to the
average annual compounded rates of return over stated periods or for the life of
the Fund (as stated in the advertisement) that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment, assuming the reinvestment of all dividend and capital gains
distributions. Any advertised total returns for the Fund will take into account
the effect of all recurring fees.

Performance information for the Fund may be compared, in reports and promotional
literature to: (i) the Standard & Poors 500 Stock Index, the Dow Jones
Industrial Average, or various other unmanaged indices, and (ii) the performance
of other mutual funds. Unmanaged indices may assume the reinvestment of income
distributions, but generally do not reflect deductions for

<PAGE>

administrative and management costs and expenses. For an example of such a
comparison, see "Investment Adviser -- Prior Performance of Light Index.

INVESTMENT OBJECTIVE

The Fund is an open-end non-diversified investment company designed as an
"index" fund. It seeks to replicate the aggregate price performance, before Fund
expenses, of the Light Index, an index of publicly traded companies that are
chosen to represent the investment performance of the information and
telecommunications technology segment of the broader stock market. The Light
Index is comprised of fifty-seven companies that in a significant way use,
distribute or control some aspect of the electromagnetic spectrum and thus are
expected to be active participants in the rapid technological and business
changes characterized as the information technology revolution. On the first
trading day in January of each year, the Light Index is rebalanced so that each
company included in the Index represents approximately 1/57 of the total market
value of the Index. The Fund will likewise be rebalanced at that time to
replicate the Light Index such that each company included in the Fund will
represent approximately 1/57 of the total market value of the Fund. During the
calendar year, funds available for investment by the Fund will be used to
purchase securities of each company then-comprising the Light Index. Such funds
will be invested in each such company in accordance with its then-current market
weighting within the Light Index. Sales necessary to effect redemptions of Fund
shares will be effected in the same manner. The Adviser will seek to maintain
the correlation between the performance of the Fund and the Light Index at 0.90
or higher. A correlation of 1.00 would indicate perfect correlation. There is no
assurance that the Fund will achieve its stated objective. See "Implementation
of Policies" and "Investment Adviser--Companies Included in the Light Index" for
a further description of the Light Index.

The investment objective and certain investment limitations set forth in the SAI
are considered fundamental and cannot be changed without the approval of a
majority of the Fund's shareholders.

INVESTMENT POLICIES

The Fund is not managed according to traditional methods of "active" investment
management, which involve the buying and selling of securities based upon
economic, financial and market analysis and investment judgment. Instead, the
Fund utilizes a "passive" or indexing investment approach which attempts to
approximate the investment performance of the Light Index. The Fund is managed
without regard to tax ramifications. The Fund is responsible for voting the
shares of all securities it holds.

The Fund attempts to remain fully invested and under normal circumstances, it
will invest at least 95% of its assets in the common stocks of the Light Index
and in futures contracts and options on such stocks. The Fund may invest in
certain short-term fixed-income securities as cash reserves, although cash or
cash equivalents are normally expected to represent less than 10% of its assets.
The Fund may also invest up to 20% of its assets in stock futures contracts and
options in order to invest uncommitted cash balances, to maintain liquidity to
meet shareholder redemptions, or to minimize trading costs. The Fund will not
invest in cash reserves, futures contracts or options as part of a temporary
defensive strategy, such as lowering its investment in common stocks to protect
against potential stock market declines. Nor will the Fund use futures contracts
or options to leverage its net assets in an attempt to speculate on potential
stock market

<PAGE>

gains. See "Implementation of Policies" for a description of these and other
investment practices of the Fund.

The investment policies of the Fund are not deemed fundamental and may be
changed by the Board of Directors without shareholder approval. However,
shareholders would be notified prior to a material change.

INVESTMENT RISKS

As a mutual fund investing primarily in common stocks, the Fund is subject to
market risk, which is the possibility that common stock prices will decline over
short or even extended periods. Both U.S. and foreign stock markets tend to be
cyclical, with periods when stock prices generally rise and periods when prices
generally decline.

Although the Light Index has provided compounded annual rates of return through
December 31, 1996 of 24.89% (excluding dividend income) since 1994 when it was
first utilized, average returns for such a short period may not be useful for
forecasting future returns in any particular period, as stock returns may be
quite volatile from year to year.

The Adviser has no prior experience advising a mutual fund, but principals of
the Adviser act as investment advisers to individual and institutional clients
with investment portfolios of more than $90 million. The Adviser was organized
in 1997; its President, Mr. Henry Hewitt has been a registered investment
adviser since 1993 and a registered representative of a NASD member firm
beginning in 1985. Mr. Hewitt is the majority shareholder of the Adviser and
serves as the portfolio manager of the Fund. Mr. John Harrington serves as Vice
President of the Adviser. He is also President and CEO of Harrington
Investments, Inc., a Registered Investment Adviser in Napa, California. Mr.
Harrington was a founder and Chairman of the Board of Working Assets Management
Company and President of Working Assets Money Fund (now Citizens Trust Fund). He
is also the Manager of Global Partners, L.L.C., a venture capital fund.

The Fund differs from other funds designated "index funds" in that the Light
Index, as to which the Fund attempts to duplicate investment results, is
maintained by the Adviser. Thus, the Adviser selects and modifies the
composition of the Light Index in addition to investing proceeds from sale of
Fund shares in an attempt to duplicate the investment results of the Index. The
management fees charged by the Adviser are generally higher than those charged
by Advisers to other "index" type funds. See "Investment Adviser--Companies
included in the Light Index" and "Fees and Expenses."

WHO SHOULD INVEST

The Fund is designed for investors seeking to replicate the total return of the
Light Index. The Fund offers investors the advantages of a "passive" approach to
investing. These include diversification among fifty-seven stocks, minimal
portfolio turnover, and relative predictability. Unlike other mutual funds,
which generally attempt to "beat" market averages with often unpredictable
results, the Fund seeks to "match" the performance of the Light Index, and thus
is expected to provide a highly predictable return relative to that benchmark.

However, shareholders should expect to be fully exposed to the market risks
inherent in investing in stocks. As the prices of stocks may be volatile, only
investors able to tolerate possibly

<PAGE>

substantial fluctuations in the value of their investment, brought about by
generally declining stock prices, should contemplate an investment in the Fund.

Investors may wish to reduce the potential risk of investing in the Fund by
purchasing shares on a regular, periodic basis (dollar-cost averaging) rather
than making an investment in one lump sum.

The Fund is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculating on short-term market movements.
Investors who engage in excessive account activity generate additional costs
which are borne by all shareholders. In order to minimize such costs, the Fund
reserves the right to reject any purchase request that is reasonably deemed to
be disruptive to efficient portfolio management, either because of the timing of
the investment or previous excessive trading by the investor. Additionally, the
Fund reserves the right to suspend the offering of its shares.

Investors should not consider an investment in the Fund a complete investment
program, but should maintain holdings of securities with different risk
characteristics -- including common stocks, bonds and money market instruments.

IMPLEMENTATION OF POLICIES

The Fund attempts to duplicate the investment results of the Light Index by
holding all fifty- seven stocks which comprise the Index in approximately equal
dollar amounts. The Light Index is an index of publicly traded companies that
are chosen to represent the investment performance of the information and
telecommunications technology segment of the broader stock market. The Light
Index is comprised of fifty-seven companies that in a significant way use,
distribute or control some aspect of the electromagnetic spectrum and thus are
expected to be active participants in the rapid technological and business
changes characterized as the information technology revolution. At least 90% of
the fifty-seven securities will have a market capitalization of $1 billion or
more as of December 31 of each year. On the first trading day in January of each
year, the Light Index is rebalanced so that each company included in the Index
represents approximately 1/57 of the total market value of the Index. The Fund
will likewise be rebalanced at that time to replicate the Light Index such that
each company included in the Fund will represent approximately 1/57 of the total
market value of the Fund. During the calendar year, funds available for
investment by the Fund will be used to purchase securities of each company
then-comprising the Light Index. Such funds will be invested in each such
company in accordance with its then-current market weighting within the Light
Index. Sales necessary to effect redemptions of Fund shares will be effected in
the same manner. The Adviser will seek to maintain the correlation between the
performance of the Fund and the Light Index at 0.90 or higher. A correlation of
1.00 would indicate perfect correlation. There is no assurance that the Fund
will achieve its stated objective. For further information concerning companies
included in the Light Index and changes in composition of the Index since its
inception, see "Investment Advisor - Companies Included in the Light Index."

The Light Index Fund is sponsored by the Light Index Investment Company which
owns the trademark and all proprietary rights in the name "Light Index." Light
Index Investment Company may use the Light Index for other business purposes
unrelated to the Fund or the Company.

<PAGE>

Set forth below is a discussion concerning types of investments in which the
Fund may invest, strategies it may employ, and a summary of related risks. A
complete listing of the Fund's investment limitations and investment
considerations are contained in the Fund's SAI. Policies and limitations are
considered at the time of purchase; the sale of investments is not required in
the event of a subsequent change in circumstances.

Short-Term Money Market Instruments. Although it will seek to remain
substantially fully invested in securities in the Light Index, the Fund may
invest temporarily in certain short-term money market instruments. Such
securities may be used to invest uncommitted cash balances or to maintain
liquidity to meet shareholder redemptions. These securities include obligations
of the United States Government and its agencies or instrumentalities;
commercial paper, bank certificates of deposit, and bankers' acceptances; and
repurchase agreements collateralized by these securities.

Derivative Investing. Derivatives are instruments whose values are linked to or
derived from an underlying security or index. The most common and conventional
types of derivative securities are futures and options. The Fund may utilize
stock futures contracts, options, warrants, and swap agreements to a limited
extent. Specifically, the Fund may enter into futures contracts and options
provided that not more than 5% of its assets are required as a margin deposit
for futures contracts or options. Furthermore, not more than 20% of the Fund's
assets are to be invested in futures and options at any time. Additionally, the
Fund's investments in warrants will not exceed more than 5% of its assets (2%
with respect to warrants not listed on the New York or American Stock
Exchanges).

The Fund may invest in convertible securities but these investments are not
expected to exceed 5% of its assets.

The risk of loss associated with futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in an immediate and substantial
loss or gain. However, the Fund will not use futures contracts, options,
warrants, convertible securities or swap agreements for speculative purposes or
to leverage its net assets. Accordingly, the primary risks associated with the
Fund's use of these investments are: (i) imperfect correlation between the
change in market value of the stocks held by the Fund and the prices of futures
contracts and options; and (ii) possible lack of a liquid secondary market for a
futures contract and the resulting inability to close a futures position prior
to its maturity date. The risk of imperfect correlation will be minimized by
investing only in those contracts whose behavior is expected to resemble that of
the Fund's underlying securities. The risk that the Fund will be unable to close
out a futures position will be minimized by entering into such transactions on a
national exchange with an active and liquid secondary market. However, options,
warrants, convertible securities and swap agreements purchased or sold
over-the-counter may be less liquid than exchange-traded securities. Illiquid
securities, in general, may not represent more than 15% of the net assets of the
Fund.

Swap agreements are contracts between parties in which one party agrees to make
payments to the other party based on the change in market value of a specified
index or asset. In return, the other party agrees to make payments to the first
party based on the return of a different specified index or asset. Although swap
agreements entail the risk that a party will default on its payment

<PAGE>

obligations thereunder, the Fund will minimize this risk by entering into
agreements that mark to market no less frequently than quarterly. Swap
agreements also bear the risk that the Fund will not be able to meet its
obligation to the counter-party. This risk will be mitigated by the Fund's
investment in the specific asset for which it is obligated to pay a return.

Foreign Securities. Although at least 90% of the market value of securities held
by the Fund at anyone time will be securities listed on the New York Stock
Exchange or the American Stock Exchange or qualified for inclusion on the NASDAQ
Stock Market, the fund may invest in foreign securities. Investors should
consider carefully the substantial risks involved in investing in foreign
securities, whether made directly or through American Depository Receipts, which
are in addition to the usual risks inherent in domestic investments. There is
the possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations or other taxes imposed with respect
to investments in foreign nations, foreign exchange controls (which may include
suspension of the ability to transfer currency from a given country), foreign
investment controls on daily stock market movements, default in foreign
government securities, political or social instability, or diplomatic
developments which could affect investments in securities of issuers in foreign
nations. Some countries may withhold portions of interest and dividends at the
source. In addition, in many countries there is less publicly available
information about issuers that is available in reports about companies in the
United States. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to United States
companies. The Fund may encounter difficulties or be unable to vote proxies,
exercise shareholder rights, pursue legal remedies, and obtain judgments in
foreign courts.

Security Lending. The Fund may lend its investment securities to qualified
institutional investors for either short-term or long-term purposes of realizing
additional income. Loans of securities by the Fund will be collateralized by
cash, letters of credit, or securities issued or guaranteed by the U.S.
Government or its agencies. The collateral will equal at least 100% of the
current market value of the loaned securities. The Fund will limit such loans so
that they will not exceed 33 1/3% of the value of its securities.

Low Turnover. Although it generally seeks to invest for the long term, the Fund
retains the right to sell securities irrespective of how long they have been
held. It is anticipated that the annual portfolio turnover of the Fund will not
exceed 25%. A turnover rate of 25% would occur, for example, if one fourth of
the securities of the Fund were replaced within one year.

INVESTMENT LIMITATIONS

The Fund has adopted certain fundamental limitations on its investment practices
that may be changed only with the approval of a majority of the Fund's
shareholders. Specifically, without such approval, the Fund will not:

(a) Borrow money, except that the Fund may borrow from banks (or
through reverse repurchase agreements), for temporary or
emergency (not leveraging) purposes, including the meeting of
redemption requests which might otherwise require the untimely
disposition of securities, in an amount not exceeding 15% of
the value of the Fund's net assets (including the amount
borrowed and the value of any outstanding reverse repurchase
agreements) at the time the borrowing is made.

<PAGE>

Whenever borrowings exceed 5% of the value of the Fund's net
assets, the Fund will not make any additional investments;

(b) With respect to 50% of its assets, (i) purchase securities of
any issuer (except obligations of the U.S. Government and its
instrumentalities) if, as a result, more than 5% of the value
of the Fund's total assets would be invested in the securities
of such issuer; or (ii) purchase more than 10% of the
outstanding voting securities of any issuer.

A list of the Fund's policies and restrictions, both fundamental and
non-fundamental, is set forth in the SAI. In order to provide adequate
flexibility, the Fund's investment policies, as well as other policies that are
not deemed fundamental, may be modified by the Board of Directors without
shareholder approval.

MANAGEMENT OF THE FUND

The Officers of the Company manage the Fund's day-to-day operations, other than
portfolio decisions, and are responsible to the Company's Board of Directors.
The Directors set broad policies for the Fund and choose its Officers. A list of
Directors and Officers of the Company and a statement of their present positions
and principal occupations during the past five years can be found in the SAI.

INVESTMENT ADVISER

The Company employs The Light Index Investment Company (the "Adviser"), 704
Court A, Tacoma, WA 98402, as investment adviser to the Fund. Under an
investment advisory agreement dated ___________________________, 1997 (the
"Advisory Agreement"), the Adviser furnishes continuous investment advisory
services to the Fund. The Adviser discharges its responsibilities subject to the
control of the Officers and Directors of the Fund.

The Adviser has no prior experience advising a mutual fund, but principals of
the Adviser act as the investment advisers to individual and institutional
clients with investment portfolios of more than $90 million. The Adviser was
organized in 1997; its President, Mr. Henry Hewitt has been a registered
investment adviser since 1993 and a registered representative of a NASD member
firm beginning in 1985. Mr. Hewitt is the majority shareholder of the Adviser
and serves as the portfolio manager of the Fund. As such, he is responsible for
the day-to-day management of the Fund. Mr. John Harrington serves as Vice
President of the Adviser. He is also President and CEO of Harrington
Investments, Inc., a Registered Investment Adviser in Napa, California. Mr.
Harrington was founder and Chairman of the Board of Working Assets Management
Company and President of Working Asset Money Fund (now Citizens Trust Fund). He
is also the Manager of Global Partners, L.L.C., a venture capital fund.

The Adviser supervises and manages the investment portfolio of the Fund and,
subject to such policies as the Board of Directors of the Company may determine,
directs the purchase or sale of investment securities in the day-to-day
management of the Fund's investment portfolio. Under the Advisory Agreement, the
Adviser, at its own expense and without reimbursement from the Fund, furnishes
office space and all necessary office facilities, equipment and executive
personnel for managing the investments of the Fund and pays salaries and fees of
all Officers and Directors of the Company (except the fees paid to directors who
are not interested persons of the

[TA972810.223]

<PAGE>

Adviser). For the foregoing the Adviser receives a monthly fee based on the
Fund's average daily net assets at the annual rate of 1.0%.

Expenses not Assumed by Adviser. The Fund will pay all of its expenses not
assumed by the Adviser including, but not limited to, the costs of preparing and
printing its registration statements required under the Securities Act of 1993
and the Investment Company Act of 1940 and any amendments thereto, the expenses
of registering its shares with the Securities and Exchange Commission and in the
various states, the printing and distribution cost of prospectuses mailed to
existing shareholders, the cost of director and officer liability insurance,
reports to shareholders, reports to government authorities and proxy statements,
interest charges, brokerage commissions, and expenses incurred in connection
with portfolio transactions. The Fund will also pay the fees of directors who
are not officers of the Company, salaries of administrative and clerical
personnel, association membership dues, auditing and accounting services, fees
and expenses of any custodian or trustees having custody of Fund assets,
expenses of calculating the net asset value and repurchasing and redeeming
shares, and charges and expenses of dividend disbursing agents, registrars, and
share transfer agents, including the cost of keeping all necessary shareholder
records and accounts and handling any problems relating thereto. The Advisor has
undertaken to reimburse the Company to the extent that aggregate annual
operating expenses, including the investment advisory fee and the administration
fee but excluding interest, taxes, brokerage commissions and other costs
incurred in connection with the purchase or sale of portfolio securities, and
extraordinary items, exceed 2.00% of the Fund's daily net assets. Such voluntary
reimbursements to the Fund may be modified or discontinued at any time.

Portfolio Transactions. The Advisory Agreement authorizes the Adviser to select
brokers or dealers to execute purchases and sales of the Fund's portfolio
securities, and directs the Adviser to use its best efforts to obtain the best
available price and most favorable execution with respect to all transactions.
The full range and quality of brokerage services available are considered in
making these determinations.

The Fund has authorized the Adviser to pay higher commissions in recognition of
brokerage services felt necessary for the achievement of better execution,
provided the Adviser believes this to be in the best interest of the Fund. The
Fund may place orders with qualified broker-dealers who recommend the Fund to
clients if the Adviser of the Fund believes that the quality of the transaction
and the commission are comparable to what they would be with other qualified
brokerage firms.

Companies Included in the Light Index. The Adviser, as the portfolio manager of
the Fund, will seek to replicate the aggregate price performance, before Fund
expenses, of the Light Index, an Index that the Adviser considers to be unique.
The Light Index is an index of publicly traded companies that are chosen to
represent the investment performance of the information and telecommunications
technology segment of the broad stock market. The Light Index is comprised of
fifty-seven companies that in a significant way use, distribute or control some
aspect of the electromagnetic spectrum and thus are expected to be active
participants in the rapid technological and business changes characterized as
the information technology revolution. On the first trading day in January of
each year, the Light Index is rebalanced so that each company included in the
Index represents approximately 1/57 of the total market value of the Index. The
Fund will likewise be rebalanced at that time to replicate the Light Index such
that each company

<PAGE>

included in the Fund will represent approximately 1/57 of the total market value
of the Fund. During the calendar year, funds available for investment by the
Fund will be used to purchase securities of each company then-comprising the
Light Index. Such funds will be invested in each such company in accordance with
its then-current market weighting within the Light Index. Sales necessary to
effect redemptions of Fund shares will be effected in the same manner. The
Adviser will seek to maintain the correlation between the performance of the
Fund and the Light Index at 0.90 or higher. A correlation of 1.00 would indicate
perfect correlation. There is no assurance that the Fund will achieve its stated
objective.

The Fund is affiliated with the Light Index through ownership of all rights to
the trademark Light Index by the Light Index Investment Company, the investment
adviser to the Fund. Light Index Investment Company may use the Light Index for
other business purposes unrelated to the Fund or the Company.

The following lists the companies comprising the Light Index as of November 1,
1997.

INTERNET Cisco Systems
3 Com
Ascend Communications
Sun Microsystems
America Online
Netscape

WIRELESS Ericsson
Nokia
Comsat
GM Hughes
Motorola
Qualcomm

SOFTWARE Microsoft
T. Rowe Price
Parametric Technology
Oracle
First Data Corp.
Intuit
SAP

IMAGING & GRAPHICS
Electronics for Imaging
Kodak
Canon
Xerox
Fuji
Adobe Systems
Lexmark

ENTERTAINMENT & MEDIA
Reuters
Disney
Nintendo
Time Warner
News Corp.
Viacom

COMPUTER HARDWARE & ELECTRONICS
COMPAQ
Hewlett Packard
Philips
Sony
Toshiba
Apple
Dell Computers

INTEGRATED CIRCUITS/SEMICONDUCTORS
Intel
KLA Tencor
Xilinx
Texas Instruments
Maxim Integrated Products
Applied Materials
LSI Logic
Micron Technology
MEMC Electronics
Analog Devices

TELECOMMUNICATIONS
Lucent Technologies
Telebras
MCI
Symbol Technologies
Sprint
Bell Atlantic
TCI
DSC Communications

The Adviser, in its discretion and in its capacity as owner of the Light Index,
makes additions and deletions to the Light Index from time to time. In deciding
whether to add or delete a company from the Light Index, the Advisor considers
economic fundamentals which it gathers from the companies' financial statements,
including, but not limited to, sales growth, R&D spending, operating margins,
inventory turnover, days sales outstanding and market share. Deletions from the
Light Index occur when a company is acquired by or merged with another company
and is not the surviving entity or when, in the opinion of the Adviser, a
company is no longer a leading firm in its segment of the market or its economic
fundamentals have begun to deteriorate. From January 1, 1997 through November 1,
1997, five companies were added to and five companies were deleted from the
Light Index. During 1996, eight companies were added to, and eight companies
were deleted from the Light Index, and during 1995, nine companies were added
to, and eight companies were deleted from the Light Index. The greater number of
additions than deletions occurring during 1995 is attributable to the
acquisition of McCaw Cellular by AT&T which was completed on September 20, 1994.
McCaw Cellular was not replaced until 1995. A current list of the companies
comprising the Light Index at any one time, their performance and recent
additions and deletions to the Light Index can be found on the world wide web at
www.lightindex.com.

Performance of the Light Index. The data set forth is provided to illustrate
past performance of the Light Index. See "Investment Objective" and "Investment
Policies." All performance data presented is historical and investors should not
consider this performance data as an indication of the future performance of the
Fund or the results an individual investor might achieve by investing in the
Fund.

All returns quoted are time-weighted total rates of return and include the
reinvestment of dividends and interest except that data for the Light Index
excludes dividend income. Performance figures for the Light Index Portfolio
exclude the advisory fees charged by the Adviser. Consequently, the figures do
not reflect the assessment of the Fund's advisory fee or other expenses
equivalent to the Fund's operating expenses. The net effect of the deduction of
the Fund's advisory fee and the operation expenses on annualized performance,
including the compounded effect over time, may be substantial. Investors should
be aware that because the Fund will elect to qualify as a regulated investment
company under the Internal Revenue Code, the Fund will not be subject to taxes
on its investment income and capital gains. See "Dividends, Other Distributions
and Taxes."

Comparative data is presented for the Standard & Poors 500 Index since such data
also measures performance of portfolios of companies with capitalization greater
than $1 billion (though the business of many of the companies comprising the
Standard & Poors 500 Index is outside of the information and telecommunications
sector) and because 29 of the 57 companies comprising the Light Index as of
November 1, 1997 are also part of the Standard & Poors 500 Index. Comparative
data is also presented for the Lipper Science and Technology Fund Index (the
"Lipper Index") since such data measures the performance of companies whose
activities fall within the information and telecommunication sector (though many
of the companies comprising

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<PAGE>

the Lipper Index have a capitalization less than $1 billion). All information
presented is based on data supplied by the Adviser or from statistical services,
reports or other sources believed by the Adviser to be reliable. However, such
information has not been verified by any third party and is unaudited. See
"Total Return."

ANNUAL RATES OF RETURN (1)
Years Ended December 31.

1996 1995 1994
---- ---- ----
The Light Index 16.48 43.47 14.67
S&P 500 Index (2) 20.26 34.11 -1.54
Lipper Index 16.82 34.74 10.27

COMPOUNDED ANNUAL RATES OF RETURN (1)
(For the Period Ended December 31, 1996

3 YEARS 1 YEAR
------- ------
The Light Index 24.89% 16.48%
S&P 500 Index (2) 17.61% 20.26%
Lipper Index (3) 20.61% 16.82%

- --------------------------

(1) The calculation of the rates of return was performed in accordance
with the Performance Presentation Standards endorsed by the Association
for Investment Management and Research ("AIMR"). Other performance
calculation methods may produce different results. The AIMR performance
presentation criteria require the presentation of at least a ten-year
performance record or performance for the period since inception, if
shorter.

Total annual rate of return is the change in redemption value of units
purchased with an initial $10,000 investment, assuming no dividends on
the Light Index Portfolio. Compounded annual rate of return represents
the level annual rate which, if earned for each year in a multiple year
period, would produce the cumulative rate of return over that period.

(2) The S&P 500 Index is a widely recognized index of market activity
based on the aggregate performance of a selected, unmanaged portfolio
of publicly traded common stocks. The performance data includes
reinvested dividends.

(3) The Lipper Science and Technology Index consists of the top ten
technology funds as measured by dollars invested in those funds. The
performance data includes reinvested dividends.

Past performance may not be indicative of future rates or return.
Investors should also be aware that other performance calculation
methods may produce different results, and that comparisons of
investment results should consider qualitative circumstances and should
be made only for portfolios with generally similar investment
objectives.

ADMINISTRATION OF THE FUND

The Fund has entered into a Fund Administration Servicing Agreement (the
"Administration Agreement") with Firstar Trust Company, 615 East Michigan
Street, Milwaukee, Wisconsin

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<PAGE>

53202 (the "Administrator"). Under the Administration Agreement, the
Administrator prepares and maintains the books, accounts and other documents
required by the Act, responds to shareholder inquiries, prepares the Fund's
financial statements and tax returns, prepares certain reports and filings with
the Securities and Exchange Commission and with state Blue Sky authorities,
furnishes statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, keeps and maintains the Fund's
financial and accounting records and generally assists in all aspects of the
Fund's operations. The Administrator, at its own expense and without
reimbursement from the Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a fee, paid monthly at an
annual rate of .06% for the first $200 million of the Fund's average net assets,
.05% of the next $500 million of the Fund's average net assets, and .03% of the
Fund's average net assets in excess of $700 million. Notwithstanding the
foregoing, the minimum annual fee payable to the administrator is $30,000.

Firstar Trust Company also provides custodial, transfer agency and accounting
services for the Fund. Information regarding the fees payable by the Fund to
Firstar Trust Company for these services is provided in the Statement of
Additional Information.

Shares of the Fund are sold on a continuous basis by the Fund's distributor,
First Data Distributors, Inc. ("FDDI"), a wholly-owned subsidiary of First Data
Services Group, Inc. FDDI is a registered broker/dealer with principal offices
located at 4400 Computer Drive, Westboro, Massachusetts, 01581-5108.

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES

Dividends and Other Distributions. The Fund intends to declare and pay income
dividends on an annual basis. The Fund intends to distribute net capital gains,
if any, on an annual basis in December. Dividends and other distributions, if
any, will automatically be paid in additional shares of the Fund unless the
shareholder elects otherwise. Such election must be made in writing to the Fund.

Taxes. The Fund intends to qualify for taxation as a "regulated investment
company" ("RIC") under the Code, so that the Fund will not be subject to federal
income tax to the extent it distributes its income and gains to shareholders.
Dividends, whether paid in cash or reinvested in additional shares, from net
investment income and net short-term capital gains, if any, will be taxable to
shareholders as ordinary income (unless a shareholder is exempt from income tax
or entitled to a tax deferral), and will qualify, in part, for the 70%
dividends-received deduction for corporations, but the portion of the Fund's
dividends so qualified will depend on the aggregate qualifying dividend income
received by the Fund from domestic (U.S.) sources.

Distributions of net capital gain (the excess of net long-term capital gain over
net short-term capital loss) are taxable to shareholders as long-term capital
gain, whether paid in cash or additional shares, and regardless of the length of
time the shares have been owned by the shareholder. Under the Taxpayer Relief
Act of 1997 ("Tax Act"), different maximum tax rates apply to net capital gain
depending on the taxpayer's holding period and marginal rate of federal income
tax - generally, 28% for gain on capital assets held for more than one year but
not more than 18 months and 20% (10% for taxpayers in the 15% marginal tax
bracket) on capital assets held for more than 18 months. The Tax Act, however,
does not address the application of these

-14-

<PAGE>

rules to distributions of net capital gain by a RIC, including whether those
distributions may be treated by its shareholders in accordance with the RIC's
holding period for the assets it sold that generated the gain; the application
thereof must be determined by further legislation or future regulations that are
not available as this Prospectus is being prepared. Accordingly, shareholders
should consult their tax advisers as to the effect of the Tax Act on
distributions by the Fund to them of net capital gain. Capital gain
distributions are not eligible for the dividends-received deduction for
corporations. Shareholders are notified annually as to the federal tax status of
dividends and other distributions paid by the Fund. If a shareholder is not
required to pay taxes on income, such shareholder is generally not required to
pay federal income tax on the amounts distributed to him or her.

Any dividends and capital gain distributions declared in December to
shareholders of record on a date in that month will be deemed to have been paid
by the Fund and received by shareholders on December 31 if the distributions are
paid before February 1 of the following year.

When a shareholder redeems shares of the Fund, the redemption may result in a
taxable gain or loss, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the shares. In addition, if Fund
shares are bought within thirty days before or after selling other Fund shares
at a loss, all or a portion of the loss will not be deductible and will increase
the basis of the newly purchased shares. Capital gain on redeemed shares held
for more than one year will be long-term capital gain, in which event it will be
subject to federal income tax at the rates indicated above.

The Fund is required by federal law to withhold 31% of reportable payments
(which includes dividends, capital gain distributions, and redemptions) payable
to individual and certain other non-corporate shareholders who have not complied
with certain Internal Revenue Service ("IRS") regulations. In order to avoid
this withholding requirement, you must certify on the Account Registration Form
that your Social Security or other taxpayer identification number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.

Dividends and other distributions declared by the Fund, as well as redemptions
of shares, may also be subject to state and local taxes.

The foregoing summarizes some of the important income tax considerations
generally affecting the Fund and its shareholders. POTENTIAL INVESTORS IN THE
FUND SHOULD CONSULT THEIR TAX ADVISERS WITH SPECIFIC REFERENCE TO THEIR OWN TAX
SITUATION.

SHARE PRICE

The Fund's share price or "net asset value" per share is determined by dividing
the total market value of the Fund's investments and other assets, less any
liabilities, by the number of outstanding shares of the Fund. The Fund's net
asset value is determined at the close of regular trading (generally 4:00 p.m.
Eastern time) each day the New York Stock Exchange is open for trading.

Common stocks that are listed on a securities exchange are valued at the last
quoted sales price on the day the valuation is made. Price information on listed
stocks is taken from the exchange where the security is primarily traded.
Securities which are listed on an exchange but which are

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<PAGE>

not traded on the valuation date are valued at the most recent bid prices.
Unlisted securities for which market quotations are readily available are valued
at the latest quoted bid price. Debt securities are valued at the latest bid
prices furnished by independent pricing services. Other assets and securities
for which no quotations are readily available are valued at fair value as
determined in good faith by the Directors. Short-term instruments (those with
remaining maturities of 60 days or less) are valued at amortized cost, which
approximates market.

The Fund has adopted procedures pursuant to Rule 17a-7 under the Investment
Company Act of 1940 pursuant to which the Fund may effect a purchase and sale
transaction with an affiliated person of the Fund (or an affiliated person of
such an affiliated person) in which the Fund issues its shares in exchange for
securities of a type which are permitted investments for the Fund. For purposes
of determining the number of shares to be issued, the securities to be exchanged
will be valued in the manner described above.

DISTRIBUTION PLAN

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan authorizes payments by the Fund in connection with
the distribution of its shares at an annual rate, as determined from time to
time by the Board of Directors, of up to 0.25% of the Fund's average daily net
assets. Payments made pursuant to the Plan may only be used to pay distribution
expenses in the year incurred. Amounts paid under the Plan by the Fund may be
spent by the Fund on any activities or expenses primarily intended to result in
the sale of shares of the Fund as determined by the Board of Directors,
including but not limited to, advertising, compensation for sales and sales
marketing activities of financial institutions and others, such as dealers or
other distributors, shareholder account servicing, production and dissemination
of prospectuses and sales and marketing materials, and capital or other expenses
of associated equipment, rent salaries, bonuses, interest and other overhead. To
the extent any activity is one which the Fund may finance without a Plan, the
Fund may also make payments to finance such activity outside of the Plan and not
subject to its limitations.

GENERAL INFORMATION

The Company is a Maryland corporation. The Articles of Incorporation permit the
Directors of the Company to issue a total of one hundred million shares of
common stock with a $0.0001 par value, fifty million of which have been
classified as the shares which comprise the Fund. The Board of Directors of the
Company has the power to designate one or more classes ("series") of shares of
common stock and to classify or reclassify any unissued shares with respect to
such series. Currently the Company is offering one class of shares.

The shares of the Fund are fully paid and non-assessable; have no preference as
to conversion, exchange, dividends, retirement or other features; and have no
pre-emptive rights. Such shares have non-cumulative voting rights, meaning that
the holders of more than 50% of the shares voting for the election of Directors
can elect 100% of the Directors if they so choose.

Annual meetings of shareholders will not be held except as required by the
Investment Company Act of 1940 and other applicable law. An annual meeting will
be held to vote on the removal of a Director or Directors of the Fund if
requested in writing by the holders of not less than 10% of the outstanding
shares of the Fund.

-16-

<PAGE>

All securities and cash of the Fund are held by Firstar Trust Company, which
also serves as the Fund's Transfer and Dividend Disbursing Agent. Price
Waterhouse, LLP serves as independent accountants for the Fund and will audit
its financial statements annually. The Fund is not involved in any litigation.

OPENING AN ACCOUNT AND PURCHASING SHARES

You may open a regular (non-retirement) account, either by mail or wire. Simply
complete and return a Purchase Application and any required legal documentation,
indicating the amount you wish to invest. Your purchase must be equal to or
greater than the $10,000 minimum initial investment requirement or $1,000 for
Uniform Gifts/Transfers to Minors Act accounts and Individual Retirement
Accounts (IRAs). You must open a new IRA by mail (IRAs may not be opened by
wire) using a Light Index IRA Application. Your purchase must be equal to or
greater than the $1,000 minimum initial investment requirement, but no more than
$2,000 if you are making a regular IRA contribution. Rollover contributions are
generally limited to the amount withdrawn within the past 60 days from an IRA or
other qualified Retirement Plan. If you need assistance with the forms or have
any questions about the Fund, please call our Investor Information Department at
1-888-Index57 (1-888-463-3957). Note: For other types of account registrations
(e.g. corporations, associations, other organizations, trusts or powers of
attorney), please call us to determine which additional forms you may need.

All applications to purchase capital stock are subject to acceptance or
rejection by authorized officers of the fund and are not binding until accepted.
Applications will not be accepted unless accompanied by payment in U.S. funds.
Payment should be made by check drawn on a U.S. bank, savings and loan, or
credit union. The custodian will charge a $20 fee against a shareholder's
account, in addition to any loss sustained by the fund, for any payment check
returned to the custodian for insufficient funds, stop payment or account
closed. It is the policy of the fund not to accept applications under
circumstances or in amounts considered disadvantageous to shareholder; for
example, if an individual previously tried to purchase shares with a bad check.

Because of the risks associated with common stock and bond investments, the Fund
is intended to be a long-term investment vehicle and is not designed to provide
investors with a means of speculating on short-term market movements.
Consequently, the Fund reserves the right to reject any specific purchase
request. The Fund also reserves the right to suspend the offering of shares for
a period of time.

The Fund's shares are purchased at the next-determined net asset value after
your investment has been received. The Fund is offered on a no-load basis (i.e.
there are no sales commissions though there are charges for 12b-1 fees)

Purchasing by Mail. Complete and sign the enclosed Purchase Application.

- -NEW ACCOUNT. PLEASE INCLUDE THE AMOUNT OF YOUR INITIAL INVESTMENT ON THE
PURCHASE APPLICATION, MAKE YOUR CHECK PAYABLE TO LIGHT INDEX FUND AND MAIL TO:

Light Index Fund, Inc.
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
---------------------

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<PAGE>

For express or registered mail, sent to:

Light Index Fund, Inc.
c/o Firstar Trust Company
615 East Michigan Street
Milwaukee, WI 53202-5207

The Fund does not consider the U.S. Postal Service or other independent delivery
service to be its agent. Therefore, deposit in the mail or with such services,
or receipt at Firstar Trust Company's post office box of purchase applications
or redemption requests does not constitute receipt by Firstar Trust Company or
the Fund.

- -Additional investments. Subsequent investments to any account may be made by
mail or wire. The minimum subsequent investment is $100. Additional investments
should include the additional investment form attached to your fund confirmation
statements. Please make your check payable to Light Index Fund, write your
account number on your check and, using the return envelope provided, mail to
one of the addresses indicated for new accounts.

All written requests should be mailed to one of the addresses indicated for new
accounts. DO NOT send registered, overnight or express mail to the post office
box address.

Purchasing by wire. Money should be wired to:

Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA Number 0750-000-22

For credit to: Firstar Trust Company
Account Number 112-952-137

For further credit to: Light Index Fund,
[shareholder account number], [shareholder name].

Before Wiring. To assure proper receipt, please be sure to contact our Investor
Information Department at 1-888-Index57 (1-888-463-3957) before wiring and to
include the above-referenced information. If you are opening a new account,
please complete the Purchase Application and mail it to the "New Account"
address after completing your wire arrangement. Note: Federal Funds wire
purchase orders will be accepted only when the Fund and Custodian Bank are open
for Business.

Purchasing by Telephone. The Fund lets you move money from your bank account to
your Light Index Fund account by telephone transfer at your request. Only bank
accounts held at domestic financial institutions that are Automated Clearing
House (ACH) members can be used for telephone transactions. Telephone
transactions may not be used for initial purchases of Fund

-18-

<PAGE>

shares, and there is a minimum purchase requirement of $100 per telephone
transaction. Your account must already be established prior to initiating
telephone purchases. Your Fund shares will be purchased at the net asset value
determined as of the close of regular trading on the date that Firstar Trust
Company receives payment by Electronic Funds Transfer through the ACH System.
Most transfers are completed within 3 business days. To preserve flexibility,
the Fund may revise or remove the ability to purchase shares by phone, or may
charge a fee for such service, although currently the Fund does not expect to
charge a fee. Shareholders in the Fund may also request by telephone a change of
address, a change in investments made through an Automatic Investment Plan, and
a change in the manner in which dividends are received.

Automatic Investment Plan. The Automatic Investment Plan allows you to purchase
shares by an electronic transfer of funds at regular monthly intervals from your
bank checking account, money market account, NOW account or savings account.

There is no minimum initial investment if you enroll in the Automatic Investment
Plan when you open your account. Your account will be debited and shares will be
purchased at regular monthly intervals of your choosing at the then-current net
asset value. You may join the Automatic Investment Plan by completing that
portion of the Purchase Application or filling out a separate Automatic
Investment Plan Application which you may obtain from the Fund or from Firstar
Trust Company. You may cancel your participation in the Plan or change the
amount of purchase or the day of each month on which shares are purchased at any
time by calling our Investor Information Department at 1-888-Index57
(1-888-463-3957) or by writing to the Fund, c/o Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin 53201-0701. The change or cancellation by a
shareholder will be effective five business days following receipt.

Each investment through the Automatic Investment Plan must be at least $100 and
not more than $50,000. For you to participate in the Plan, your bank or other
financial institution must be an Automated Clearing House member. It will take
about 15 days for Firstar to process your Automatic Investment Plan enrollment.
The Fund may modify or terminate the Automatic Investment Plan at any time or
charge a service fee, although no such fee is currently contemplated.

Choosing a Distribution Option. You must select one of three distribution
options:

1. AUTOMATIC REINVESTMENT OPTION -- Both dividends and
capital gains distributions will be reinvested in
additional Fund shares. This option will be selected
for you unless you specify one of the other options.

2. CASH DIVIDEND OPTION -- Your dividends will be paid
in cash and your capital gains will be reinvested in
additional Fund shares.

3. ALL CASH OPTION -- Both dividend and capital gains distributions will
be paid in cash.

You may change your option by calling our Investor Information
Department at 1- 888-Index57 (1-888-463-3957).

Tax Caution. Investors should ask about the timing of capital gains and dividend
distributions before investing. Under Federal tax laws, the Fund is required to
distribute net capital gains and

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<PAGE>

dividend income to Fund shareholders. These distributions are made to all
shareholders who own Fund shares as of the distribution's record date,
regardless of how long the shares have been owned. Purchasing shares just prior
to the record date could have a significant impact on your tax liability for the
year. For example, if you purchase Fund shares immediately prior to the record
date of a sizable capital gain or income dividend distribution, you will be
assessed taxes on the amount of the capital gain and/or dividend distribution
later paid even though you owned the Fund shares for just a short period of
time. (Taxes are due on the distributions even if the dividend or gain is
reinvested in additional Fund shares.) While the total value of your investment
will be the same after the distribution -- the amount of the distribution will
offset the drop in the net asset value of the shares -- you should be aware of
the tax implications the timing of your purchase may have.

Prospective investors should, therefore, inquire about potential distributions
before investing. The Fund's annual capital gains distributions normally occur
in December, and income from dividends are generally paid annually in December.
For additional information on distributions and taxes, see the section entitled
"Dividends, Capital Gains, and Taxes."

Important Information. Certain optional Fund services may be selected when you
complete your Purchase Application. However, the easiest way to establish
optional Fund services on your account is to call our Investor Information
Department (1-888-Index57 (1-888-463-3957)) for assistance.

For our mutual protection, we may require a signature guarantee on certain
written transaction requests and will require a signature guarantee for all
written redemptions over $25,000 and when redemption proceeds are made payable
to other than the account owner(s) or are being sent to other than the address
of record. A signature guarantee verifies the authenticity of your signature and
may be obtained from banks, brokers and any other guarantor that the Fund deems
acceptable. A SIGNATURE GUARANTEE CANNOT BE PROVIDED BY A NOTARY PUBLIC.

Share certificates will be issued upon request. If a certificate is lost, you
may incur an expense to replace it.

If you purchase shares in the Fund through a registered broker-dealer or
investment adviser, the broker-dealer or adviser may charge a service fee.

The Fund will not cancel any trade (e.g., a purchase or redemption) believed to
be authentic, received in writing or by telephone, once the trade has been
received.

When Your Account Will Be Credited. Your trade date is the date on which your
account is credited. If your purchase is made by check or Federal Funds wire and
is received by the close of regular trading on the New York Stock Exchange
(generally 4:00 p.m. Eastern time), your trade date is the day of receipt. If
your purchase is received after the close of the Exchange, your trade date is
the next business day. Your shares are purchased at the net asset value
determined on your trade date. The Fund will not accept third-party checks to
open an account. Please be sure your purchase check is made payable to "The
Light Index Investment Fund."

-20-

<PAGE>

SELLING YOUR SHARES

You may withdraw any portion of the funds in your account by redeeming shares at
any time (please see "Important Redemption Information"). The Fund will deduct a
redemption fee of 1% of the value of the shares redeemed if the shares are held
for less than one year. You may initiate a request by writing or by telephone.
Your redemption proceeds will be mailed no later than the seventh day after the
receipt of the request in Good Order, except that when a purchase has been made
by check, the Fund can hold payment on redemption until it is reasonably
satisfied the check has cleared, which may take up to 12 days. If you redeem by
telephone and request wire payment, such payment will normally be made in
Federal Funds on the next business day. The transfer agent will charge a $12 fee
to wire redemption proceeds.

Selling by Mail. Requests should be mailed to The Light Index Fund, Inc., c/o
Firstar Trust Company, Shareholder Services Center, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 (For express or registered mail, send your request to The
Light Index Fund, Inc., c/o Firstar Trust Company, 615 East Michigan Street,
Milwaukee, WI 53202-5207.)

If you are requesting a redemption of shares from an Individual Retirement
Account (IRA), you must include instructions regarding federal income tax
withholding. Unless otherwise indicated, such a redemption, as well as
redemptions of other retirement plans not involving a direct rollover to an
eligible plan, will be subject to federal income tax withholding.

The redemption price of shares will be the Fund's net asset value next
determined after Firstar Trust Company has received all required documents in
Good Order.

Definition of Good Order. Good Order means that the request includes the
following:

1. The account number and Fund name.

2. The amount of the transaction (specified in dollars or shares).

3. Signatures of all owners exactly as they are registered on the account.

4. Any required signature guarantees.

5. Other supporting legal documentation that might be required in the case
of estates, corporations, trusts and certain other accounts.

6. Any certificates you hold for the account.

If you have questions about this definition as it pertains to your request,
please call our Investor Information Department at 1-888-Index57
(1-888-463-3957).

Selling by Telephone. To sell shares by telephone you or your pre-authorized
representative may call our Investor Information Department at 1-888-Index57
(1-888-463-3957). The proceeds will be sent to you by mail, unless you request
wire payment. If you redeem by telephone and request wire payment, such payment
will normally be made in Federal Funds on the next business day. Firstar Trust
Company will wire redemption proceeds only to the bank and account designated on
your Purchase Application or in written instructions subsequently received by
Firstar Trust Company and only if the bank is a commercial bank located within
the United States which is an

-21-

<PAGE>

ACH member. Firstar Trust Company charges a fee (currently $12, but subject to
change without notice) for each payment made by wire of redemption proceeds,
which fee will be deducted from your account. Please see "Important Information
About Telephone Transactions."

Systematic Withdrawal Plan. You may submit a systematic withdrawal plan which
provides for regular monthly or quarterly checks to be sent to you (or your
designee). Shareholders owning shares of the Fund with a value of $10,000 or
more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less that $50 per payment, by
authorizing Firstar Trust Company to redeem the necessary number of shares
either monthly or quarterly in order to make the payments requested. Proceeds
may either be mailed to you or moved to your bank account by ACH transfer.
Transfers by ACH generally take up to three business days to reach your bank
account. Share certificates for the shares being redeemed must be held for you
by the Firstar Trust Company. If the recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application. Corporations or other legal entities should call Firstar Trust
Company for special instructions. There is no charge for the use of this plan.
Shareholders should be aware that such systematic withdrawals could deplete or
use up entirely the initial investment and may result in realized long-term or
short-term capital gains or losses. The Systematic Withdrawal Plan may be
terminated at any time by the Fund upon 60 days written notice or by a
shareholder upon written notice to the Firstar Trust Company. An application may
be obtained from Firstar Trust Company by telephone at 1-888-Index57
(1-888-463-3957). A signature guarantee is required to convert an existing
account to systematic withdrawal.

Important Redemption Information. Shares purchased by check or telephone
transfer may be redeemed at any time. However, redemption will not be made until
payment for the purchase is collected, which may take up to ten calendar days.

Delivery of Redemption Proceeds. Redemption requests received by telephone prior
to the close of regular trading on the New York Stock Exchange (generally 4:00
p.m. Eastern time) are processed on the day of receipt and the redemption
proceeds are normally sent on the following business day.

Redemption requests received by telephone after the close of the Exchange are
processed on the business day following receipt and the proceeds are normally
sent on the second business day following receipt. The Fund reserves the right
to revise or terminate the telephone redemption privilege at any time.

Redemption proceeds must be sent to you within seven days of receipt of your
request in Good Order.

If you experience difficulty in making a telephone redemption during periods of
drastic economic or market changes, your redemption request may be made by
regular or express mail. It will be implemented at the net asset value next
determined after your request has been received by Firstar Trust Company in Good
Order.

The Fund may suspend the redemption right or postpone payment at times when the
New York Stock Exchange is closed or under any emergency circumstances as
determined by the United States Securities and Exchange Commission.

-22-

<PAGE>

If the Board of Directors determines that it would be detrimental to the best
interests of the Fund's remaining shareholders to make payment in cash, the Fund
may pay redemption proceeds in whole or in part by a distribution in kind of
readily marketable securities.

Minimum Account Balance Requirement. Due to the relatively high cost of
maintaining smaller accounts, the Fund reserves the right to redeem shares in
any account that is below $1,000. You will be notified if the value of your
account is below this minimum account balance requirement. You will then be
allowed 30 days to make an additional investment before the account is
liquidated. If an account is liquidated, the proceeds will be promptly paid to
the shareholder.

IMPORTANT INFORMATION ABOUT
TELEPHONE TRANSACTIONS

The ability to initiate redemptions (except wire redemptions) by telephone is
automatically established on your account unless you request in writing that
telephone transactions on your account not be permitted.

To protect your account from losses resulting from unauthorized or fraudulent
telephone instructions, the Fund adheres to the following security procedures:

1. SECURITY CHECK. To request a transaction by telephone, the caller must
know (i) the name of the Fund; (ii) the 10-digit account number; (iii)
the exact name and address used in the registration; and (iv) the Social
Security or Employer Identification number listed on the account.

2. PAYMENT POLICY. The proceeds of any telephone redemption by mail will
be made payable to the registered share owner and mailed to the address
of record only. The proceeds of any telephone redemption by wire
will be wired only to the bank and account designated on the Purchase
Application or in written instructions subsequently received by
Firstar Trust Company from the registered share owner and only if
the bank is a commercial bank located within the United States.

Neither the Fund nor Firstar Trust Company will be responsible for the
authenticity of transaction instructions received by telephone, provided that
reasonable security procedures have been followed. The Fund believes that the
security procedures described above are reasonable and that if such procedures
are followed, you will bear the risk of any losses resulting from unauthorized
or fraudulent telephone transactions on your account. If the Fund or Firstar
Trust Company fails to follow reasonable security procedures, it may be liable
for any losses resulting from unauthorized or fraudulent telephone transactions
on your account.

OTHER ACCOUNT INFORMATION

You may request transfer of the registration of any of your Fund shares to
another person by writing to: The Light Index Fund, Inc., c/o Firstar Trust
Company, Shareholder Services Center, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. The request must be in Good Order. For further instructions, please
call our Investor Information Department (1-888-Index57 (1-888-463- 3957)).

-23-

<PAGE>

For more information about any of these services, please call our Investor
Information Department at 1-888-Index57 (1-888-463-3957).

Firstar Trust Company will send you a confirmation statement each time you
initiate a transaction in your account. You will also receive a comprehensive
account statement at the end of each calendar quarter. The fourth-quarter
statement will be a year-end statement, listing all transaction activity for the
entire calendar year.

Financial Reports on the Fund will be mailed to you semi-annually, according to
the Fund's fiscal year-end.

-24-

<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED _____________,1997

PART B

LIGHT INDEX FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

This Statement is not a prospectus but should be read in conjunction with the
Light Index Fund's current Prospectus (which is dated __________, 1997), as may
be amended from time to time.
To obtain a Prospectus please call:

--------------------------------------------
1-888-INDEX57 (1-888-463-3957)

TABLE OF CONTENTS

PAGE
General Information and History....................................... B-2
Investment Objectives and Policies.................................... B-2
Investment Limitations................................................ B-2
Investment Considerations............................................. B-4
Purchase of Shares.................................................... B-9
Redemption of Shares.................................................. B-10
Management of the Fund; Directors and Officers........................ B-10
Ownership of Management and Principal Shareholders.................... B-12
Investment Adviser, Administrator, Custodian,
Transfer Agent and Account Services Agent........................ B-12
Distribution Plan..................................................... B-14
Share Price........................................................... B-14
Systematic Withdrawal Plan............................................ B-15
Brokerage Allocation.................................................. B-15
Dividends, Other Gain Distributions and Taxes......................... B-16
Shareholder Meetings.................................................. B-18
Performance Measures.................................................. B-29
Independent Accountant................................................ B-20
Financial Statement................................................... B-20

B-1

<PAGE>

GENERAL INFORMATION AND HISTORY

The Light Index Fund, Inc. (the "Company") employs The Light Index Investment
Company (the "Adviser"), 704 Court A, Tacoma, WA 98402, as investment adviser of
its single portfolio, the Light Index Fund (the "Fund"). Under an investment
advisory agreement dated ___________________________, 1997 (the "Advisory
Agreement"), the Adviser furnishes continuous investment advisory services to
the Fund. The Adviser discharges its responsibilities subject to the control of
the Officers and Directors of the Company.

The Adviser has no prior experience advising a mutual fund, but principals of
the Adviser act as investment advisers to individual and institutional clients
with investment portfolios of more than $90 million. The Adviser was organized
in 1997; its President, Mr. Henry Hewitt has been a registered investment
advisor since 1993 and a registered representative of a NASD member firm
beginning in 1985. Mr. Hewitt is the majority shareholder of the Adviser and
serves as the portfolio manager of the Fund. As such, he is responsible for the
day-to-day management of the Fund. Mr. John Harrington serves as Vice President
of the Adviser. He is also President and CEO of Harrington Investments, Inc., a
Registered Investment Adviser in Napa, California. Mr. Harrington was founder
and Chairman of the Board of Working Assets Management Company and President of
Working Asset Money Fund (now Citizens Trust Fund). He is also the Manager of
Global Partners, L.L.C., a venture capital fund.

INVESTMENT OBJECTIVE AND POLICIES

The Fund is an open-end non-diversified investment company designed as an
"index" fund. It seeks to replicate the aggregate price performance, before Fund
expenses, of the Light Index, an index of publicly traded companies that are
chosen to represent the investment performance of the information and
telecommunications technology segment of the broader stock market. The Light
Index is comprised of fifty-seven companies that in some significant way use,
distribute or control some aspect of the electromagnetic spectrum and thus are
expected to be active participants in the much discussed information technology
revolution. On the first trading day in January of each year, the Light Index is
rebalanced so that each company included in the Index represents approximately
1/57 of the total market value of the Index. The Fund will likewise be
rebalanced at that time to replicate the Light Index such that each company
included in the Fund will represent approximately 1/57 of the total market value
of the Fund. During the calendar year, funds available for investment by the
Fund will be used to purchase securities of each company then-comprising the
Light Index. Such funds will be invested in each such company in accordance with
its then-current market weighting within the Light Index. Sales necessary to
effect redemptions of Fund shares will be effected in the same manner. The
Adviser will seek to maintain the correlation between the performance of the
Fund and the Light Index at 0.90 or higher. A correlation of 1.00 would indicate
perfect correlation. There is no assurance that the Fund will achieve its stated
objective. See "Implementation of Policies" and "Investment Advisor - Companies
Included in the Light Index" in the Prospectus for a further description of the
Light Index.

B-2

<PAGE>

INVESTMENT LIMITATIONS

As set forth in the Prospectus dated __________, 1997, under the heading
"Investment Objective," the Fund has adopted certain fundamental limitations on
its investment practices that may be changed only with the approval of the
holders of a majority of the outstanding shares of the Fund (as defined in the
Investment Company Act of 1940 (the "Act")). Specifically, without such
approval, the Fund will not:

1) change its investment objective, which is to provide investment
results that correspond to the Light Index;

2) invest in commodities or purchase real estate, although it may
purchase securities of companies which deal in real estate or interests
therein, and the Fund may invest in stock index futures contracts,
stock options and options on stock index futures contracts to the
extent that not more than 5% of the Fund's assets are required as
margin deposit for futures contracts and not more than 20% of the
Fund's assets are invested in futures and options at any time;

3) lend money to any person except (i) by purchasing a portion of an
issue of short-term debt securities or similar obligations (including
repurchase agreements) which are publicly distributed or customarily
purchased by institutional investors, and (ii) as provided under
"Lending of Securities";

4) purchase securities on margin or sell securities short, except as set
forth in paragraph 2 above;

5) with respect to 50% of its assets, (i) purchase securities of any
issuer (except obligations of the U.S. Government and its
instrumentalities), if, as a result, more than 5% of the value of the
Fund's total assets would be invested in the securities of such issuer;
or (ii) purchase more than 10% of the outstanding voting securities of
any issuer;

6) borrow money, except from banks (or through reverse repurchase
agreements), for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests which might otherwise
require the untimely disposition of securities, in an amount not
exceeding 15% of the value of the Fund's net assets (including the
amount borrowed and the value of any outstanding reverse repurchase
agreements) at the time the borrowing is made. Whenever borrowings
exceed 5% of the value of the Fund's net assets, the Fund will not make
any additional investments;

7) pledge, mortgage, or hypothecate any of its assets to an extent
greater than 5% of the value of its total assets;

[TA972810.223] B-3

<PAGE>

8) engage in the business of underwriting securities issued by other
persons except to the extent that the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as amended, in disposing of
Fund securities;

9) purchase or otherwise acquire any security if, as a result, more than
15% of its net assets would be invested in securities that are illiquid;

10) invest for the purpose of controlling management of any company;

11) invest in securities of other investment companies, except as may
be acquired as a part of a merger, consolidation or acquisition of
assets approved by the Fund's shareholders, or otherwise to the extent
permitted by Section 12 of the Act. The Fund will invest only in
investment companies which have investment objectives and investment
policies consistent with those of the Fund;

12) invest in put, call, straddle or spread options or in interests in
oil, gas or other mineral exploration or development programs, except
as set forth in limitation number "2", above.

13) invest more than 5% of its total assets in securities of companies
which have (with predecessors) a record of less than three years' of
continuous operation;

14) purchase or retain securities of an issuer if Officers and
Directors of the Company owning more than 1/2 of 1% of such securities
each, or together own more than 5% of such securities.

The above-mentioned investment limitations are considered at the time investment
securities are purchased.

INVESTMENT CONSIDERATIONS

The Fund has adopted certain other investment policies which are not fundamental
policies and which may be changed by the Fund's Board of Directors without
shareholder approval.

Repurchase Agreements. The Fund may invest in repurchase agreements with
commercial banks, brokers or dealers either for defensive purposes due to market
conditions or to generate income from its excess cash balances. A repurchase
agreement is an agreement under which the Fund acquires a money market
instrument (generally a security issued by the U.S. Government or an agency
thereof, a banker's acceptance or a certificate of deposit) from a commercial
bank, broker or dealer, subject to resale to the seller at an agreed upon price
and date (normally, the next business day). A repurchase agreement may be
considered a loan collateralized by securities. The resale price reflects an
agreed upon interest rate effective for the period the instrument is held by the
Fund and is unrelated to the interest rate on the underlying instrument. In
these transactions, the securities acquired by the Fund (including accrued
interest earned thereon) must have a total value in excess of the value of the
repurchase agreement and are held

B-4

<PAGE>

by a custodian bank until repurchased. In addition, the Board of Directors will
monitor the Fund's repurchase agreement transactions generally and will
establish guidelines and standards for review of the credit worthiness of any
bank, broker or dealer party to a repurchase agreement with the Fund. No more
than an aggregate of 15% of a Fund's assets at the time of investment will be
invested in repurchase agreements having maturities longer than seven days and
securities subject to legal or contractual restrictions on resale, for which
there are no readily available market quotations. From time to time, the Fund's
Board of Directors may determine that certain restricted securities known as
Rule 144A securities, are liquid and not subject to the 15% limitation described
above.

The use of repurchase agreements involves certain risks. For example, if the
other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the Fund may not be able to substantiate its interest
in the underlying security and may be deemed an unsecured
creditor of the other party to the agreement. While the Fund's management
acknowledges these risks, it is expected that they can be controlled through
careful monitoring procedures.

Lending of Securities. The Fund may lend its securities to qualified
institutional investors who need to borrow securities in order to complete
certain transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending its Fund securities,
the Fund attempts to increase its net investment income through the receipt of
interest on the loan. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Fund. The Fund may lend its Fund securities to qualified brokers, dealers,
banks or other financial institutions, so long as the terms, the structure and
the aggregate amount of such loans are not inconsistent with the Investment
Company Act of 1940 (the "Act"), or the Rules and Regulations or interpretations
of the Securities and Exchange Commission (the "Commission") thereunder, which
currently require that (a) the borrower pledge and maintain with the Fund
collateral consisting of cash, a letter of credit issued by a domestic U.S.
bank, or securities issued or guaranteed by the United States Government having
at all times not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities loaned
rises (i.e. the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Fund at any time and (d) the Fund receive
reasonable interest on the loan (which may include the Fund's investing any cash
collateral in interest bearing short-term investments), any distribution on the
loaned securities and any increase in their market value. Loan arrangements made
by the Fund will comply with all other applicable regulatory requirements,
including the rules of the New York Stock Exchange, which rules presently
require the borrower, after notice, to redeliver the securities within the
normal settlement time of three business days. All relevant facts and
circumstances, including the credit-worthiness of the broker, dealer or
institution, will be considered in making decisions with respect to the lending
of securities, subject to review by the Board of Directors.

B-5

<PAGE>

At the present time, the Staff of the Commission does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities, so long as such fees are set forth in a written contract and
approved by the investment company's Directors. In addition, voting rights pass
with the loaned securities, but if a material event occurs which affects an
investment on loan, the loan must be called and the securities voted.

Futures Contracts. The Fund may enter into futures contracts, options, warrants,
options on futures contracts, convertible securities and swap agreements for the
purpose of simulating full investment and reducing transaction costs. The Fund
does not use futures or options for speculative purposes. The Fund will only use
futures and options to simulate full investment in the underlying index while
retaining a cash balance for fund management purposes. Futures contracts provide
for the future sale by one party and purchase by another party of a specified
amount of a specific security at a specified future time and at a specified
price. Futures contracts which are standardized as to maturity date and
underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government agency.
Assets committed to futures contracts will be segregated at the Fund's custodian
bank to the extent required by law.

Although futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out an
open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.

Futures traders are required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Futures contracts are customarily purchased and sold on deposits which
may range upward from less than 5% of the value of the contract being traded.

After a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, payment of additional
"variation" margin will be required. Conversely, change in the contract value
may reduce the required margin, resulting in a repayment of excess margin to the
contract holder. Variation margin payments are made to and from the futures
broker for as long as the contract remains open. The Fund expects to earn
interest income on its margin deposits.

Traders in futures contracts may be broadly classified as either "hedgers" or
"speculators." Hedgers use the futures markets primarily to offset unfavorable
changes in the value of securities otherwise held for investment purposes or
expected to be acquired by them. Speculators are less

B-6

<PAGE>

inclined to own the securities underlying the futures contracts which they
trade, and use futures contracts with the expectation of realizing profits from
fluctuations in the prices of underlying securities. The Fund intends to use
futures contracts only for bona fide hedging purposes.

Regulations of the CFTC applicable to the Fund require that all of its futures
transactions constitute bona fide hedging transactions. The Fund will only sell
futures contracts to protect against a decrease in the price of securities it
intends to sell, or purchase contracts to protect against an increase in the
price of securities it intends to purchase. As evidence of this hedging
interest, the Fund expects that approximately 75% of its futures contract
purchases will be "completed," that is, equivalent amounts of related securities
will have been purchased by the Fund upon sale of open futures contracts.

Although techniques other than the sale and purchase of futures contracts could
be used to control the Fund's exposure to market fluctuations, the use of
futures contracts may be a more effective means of hedging this exposure. While
the Fund will incur commission expenses in both opening and closing out futures
positions, these costs are lower than transaction costs incurred in the purchase
and sale of the underlying securities.

Restrictions on the Use of Futures Contracts. The Fund will not enter into
futures contract transactions to the extent that, immediately thereafter, the
sum of its initial margin deposits on open contracts exceeds 5% of the market
value of the Fund's total assets. In addition, the Fund will not enter into
futures contracts to the extent that its outstanding obligations to purchase
securities under these contracts would exceed 20% of the Fund's total assets.

Risk Factors in Futures Transactions. Positions in futures contracts may be
closed out only on an Exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements. the Fund would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if the Fund has insufficient
cash, it may have to sell Fund securities to meet daily margin requirements at a
time when it may be disadvantageous to do so. In addition, the Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge.

The Fund will minimize the risk that it will be unable to close out a futures
contract by only entering into futures which are traded on national futures
exchanges and for which there appears to be a liquid secondary market.

The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were

B-7

<PAGE>

closed out. Thus, a purchase or sale of a futures contract may result in losses
in excess of the amount invested in the contract. The Fund also bears the risk
that the adviser will incorrectly predict futures stock market trends. However,
because the futures strategies of the Fund are engaged in only for hedging
purposes, the Fund's Officers do not believe that the Fund is subject to the
risks of loss frequently associated with futures transactions. The Fund would
presumably have sustained comparable losses if, instead of the futures contract,
it had invested in the underlying financial instrument and sold it after the
decline.

Utilization of futures transactions by the Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the Fund securities being hedged.

It is also possible that the Fund could both lose money on futures contracts and
also experience a decline in value of its Fund securities. There is also the
risk of loss by the Fund of margin deposits in the event of bankruptcy of a
broker with whom the Fund has an open position in a futures contract or related
option.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.

Federal Tax Treatment of Futures Contracts. The Fund is required for federal
income tax purposes to recognize as income for each taxable year its net
unrealized gains and losses on certain futures contracts as of the end of the
year, as well as those actually realized during the year. In most cases, any
gain or loss recognized with respect to a futures contract is considered to be
60% long-term capital gain or loss and 40% short-term capital gain or loss,
without regard to the holding period of the contract. Furthermore, sales of
futures contracts which are intended to hedge against a change in the value of
securities held by the Fund may affect the holding period of such securities
and, consequently, the nature of the gain or loss on such securities upon
disposition. A Fund may be required to defer the recognition of losses on
futures contracts to the extent of any unrecognized gains on related positions
held by the Fund.

In order for each Fund to continue to qualify for Federal income tax treatment
as a regulated investment company, at least 90% of its gross income for a
taxable year must be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities, gains from the sale of securities or of
foreign currencies or other income derived with respect to the Fund's business
of investing in securities. Net gain realized from the closing out of futures
contracts will be considered gain from the sale of securities and therefore be
qualifying income for purposes of the 90% requirement.

B-8

<PAGE>

The Fund will distribute to shareholders annually any net capital gains which
have been recognized for federal income tax purposes (including unrealized gains
at the end of the Fund's fiscal year) on futures transactions. Such
distributions will be combined with distributions of capital gains realized on
the Fund's other investments and shareholders will be advised on the nature of
the distributions.

PURCHASE OF SHARES

The Fund reserves the right in its sole discretion (i) to suspend the offerings
of its shares, (ii) to reject purchase or exchange purchase orders when in the
judgment of management such rejection is in the best interest of the Fund, and
(iii) to reduce or waive the minimum investment for or any other restrictions on
initial and subsequent investments as well as redemption fees for certain
fiduciary accounts or under circumstances where certain economies can be
achieved in sales of the Fund's shares.

Exchange of Securities for Shares of the Fund. In certain circumstances, shares
of the Funds may be purchased in exchange for a minimum value of $1 million in
common stocks. Such common stocks must be included in the appropriate Index and
each position must have a market value in excess of $10,000. Additionally, such
securities will be acquired by the Fund for investment purpose and not for
resale and must be liquid securities which are not restricted as to transfer and
have a value which is readily ascertainable as evidenced by a listing on the
American Stock Exchange, the New York Stock Exchange or NASDAQ. Securities
accepted by the Fund will be valued as set forth under "Share Price" in the
Fund's prospectus as of the time of the next determination of net asset value
after such acceptance. Shares of the Fund are issued at net asset value
determined as of the same time. All dividends, subscription, or other rights
which are reflected in the market price of accepted securities at the time of
valuation become the property of the Fund and must be delivered to the Fund by
the investor upon receipt from the issuer. A gain or loss for Federal income tax
purposes would be realized by the investor upon the exchange depending upon the
cost of the securities tendered.

The Fund will not accept securities in exchange unless: (1) such securities are,
at the time of the exchange, included in the Fund; (2) such an exchange will not
cause the Fund's weightings to become unbalanced with respect to the stocks
included in the Light Index, (3) the investor represents and agrees that all
securities offered to the Fund are not subject to any restrictions upon their
sale by the Fund under the Securities Act of 1933, or otherwise; (4) such
securities are traded in an unrelated transaction with a quoted sales price on
the same day the exchange valuation is made; (5) the quoted sales price used as
a basis of valuation is representative (i.e., one that does not involve a trade
of substantial size which artificially influences the price of the security);
and (6) the value of any such security being exchanged will not exceed 5% of the
Fund's net assets immediately prior to the transaction.

Investors interested in such purchases should contact the Fund.

REDEMPTION OF SHARES

The Fund may suspend redemption privileges or postpone the date of payment (i)
during any period that the New York Stock Exchange is closed, or trading on the
Exchange is restricted as

B-9

<PAGE>

determined by the Commission, (ii) during any period when an emergency exists as
defined by the rules of the Commission as a result of which it is not reasonably
practicable for the Fund to dispose of securities owned by it, or fairly to
determine the value of its assets, and (iii) for such other periods as the
Commission may permit.

No charge is made by the Fund for redemptions except that the Fund will deduct a
redemption fee of 1% of the value of the shares redeemed if the shares are held
for less than one year. Any redemption may be more or less than the
shareholder's cost depending on the market value of the securities held by the
Fund.

The Fund has made an election with the Commission to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net assets of a Fund at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the Commission. Redemptions in excess of the above limits may be
paid in whole or in part, in investment securities or in cash, as the Directors
may deem advisable; however, payment will be made wholly in cash unless the
Directors believe that economic or market conditions exist which would make such
a practice detrimental to the best interests of the Fund. If redemptions are
paid in investment securities, such securities will be valued as set forth in
the Prospectus, and a redeeming shareholder would normally incur brokerage
expenses if he converted these securities to cash.

MANAGEMENT OF THE FUND; DIRECTORS AND OFFICERS

The Officers of the Company manage the Fund's day-to-day operations and are
responsible to the Company's Board of Directors. The Directors set broad
policies for the Company and choose its Officers. The following is a list of the
Directors and Officers of the Company and a statement of their present positions
and principal occupations during the past five years. The mailing address of the
Directors and Officers of the Fund is 704 Court A, Tacoma, WA 98402.

Henry Hewitt, 44, created the Light Index in 1994. He will be responsible for
the day-to-day management of the Light Index Fund. An Oxford graduate, he began
working in the securities business in 1985 as a broker for Merrill Lynch. He has
been a registered investment adviser since 1993 and has published a monthly
newsletter called The Light Revolution Herald(C) since September 1993. The Light
Revolution Herald(C) examines current technological and financial developments
surrounding the companies which are included in the Light Index. Mr. Hewitt will
serve as President and a Director of the Company.

Brian Hatch, 57, is a legislative advocate before the California legislature,
representing the California Professional Firefighters. Mr. Hatch is the founder
and a director of Working Assets Money Fund, an open end investment company
(money market fund) registered under the Investment Company Act of 1940. Mr.
Hatch will serve as a Director of the Company.

*John Hewitt Jr., 69, has been an investment adviser in Tacoma since 1964. He
will serve as a Director to the Fund. He is a Yale graduate and a retired Marine
Captain. Mr. Hewitt will serve as a Director of the Company.

B-10

<PAGE>

*Thomas Kinsman, 50, is a self-employed consultant who's business emphasizes
management training. His clients are principally companies involved in
technology. He was employed by Xerox Corporation for 20 years in management
training and general management positions. Mr. Kinsman is a graduate of
University of Arizona. He will serve as a Director of the Company.

Charles O'Herin is a retired Army officer and has been a small business owner
since 1990. Mr. O'Herin has over 25 years of experience developing, managing,
defining and reengineering high technology programs and information management
organizations and systems. He is co-founder of New Definitions, a Management
Consulting firm designed to improve businesses, and co-founder of Washington
Online Services (TM), an Internet Business Consulting firm designed to help
businesses and consumers benefit from the Internet through electronic commerce.
Mr. O'Herin will serve as Vice President, Secretary and Treasurer of the
Company.

*Indicates directors who are not "interested persons" as defined in Section
2(a)(19) of the Investment Company Act of 1940. Messrs. Henry Hewitt, Brian
Hatch and Charles O'Herin are "interested persons" of the Company (as defined in
the Investment Company Act of 1940.

The Company's standard method of compensating directors is to pay each director
who is not an interested person of the Company a fee of $500 for each meeting of
the Board of Directors attended. The Company also may reimburse its directors
for travel expenses incurred in order to attend meetings of the Board of
Directors.

The Company was incorporated on October 21, 1997. The table below sets forth the
compensation anticipated to be paid by the Company to each of the current
directors of the Company who are not "interested persons" during the fiscal year
ending October 31, 1998.
<TABLE>
<CAPTION>

PENSION OR
RETIREMENT ESTIMATED TOTAL
NAME OF AGGREGATE BENEFITS ANNUAL COMPENSATION
PERSON COMPENSATION ACCRUED AS BENEFITS FROM COMPANY
FROM COMPANY PART OF FUND UPON AND FUND
EXPENSES RETIREMENT PAID TO DIRECTORS

<S> <C> <C> <C> <C>
Henry Hewitt -0- -0- -0- -0-
Brian Hatch -0- -0- -0- -0-
Thomas Kinsman $2,000 -0- -0- $2,000
John Hewitt, Jr. $2,000 -0- -0- $2,000
</TABLE>

OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

Set forth below are the names and addresses of all holders of the Fund's shares
who, as of the date hereof, owned, beneficially or otherwise, more than 5% of
the Fund's then outstanding shares, as well as the number of shares of the Fund
owned, beneficially or otherwise, of all directors and officers of the Company:

NAME AND ADDRESS NUMBER OF SHARES PERCENT OWNED

Directors and Officers as a
Group (4 persons)

As of the date hereof, the shareholders listed above control the Fund and the
Company and own sufficient shares of the Fund to approve or disapprove all
matters brought before shareholders of the Company, including the election of
directors of the Company and the approval of auditors.
The Company does not control any person.

INVESTMENT ADVISER, ADMINISTRATOR, CUSTODIAN,
TRANSFER AGENT AND ACCOUNT SERVICES AGENT

As set forth in the Prospectus under the caption "Investment Adviser," the
investment adviser to the Fund is Light Index Investment Company, 704 Court A,
Tacoma, WA 98402 (the "Adviser"). Pursuant to the investment advisory agreement
entered into between the Company and the Adviser with respect to the Fund (the
"Advisory Agreement"), the Adviser furnishes continuous investment advisory
services to the Fund. The Adviser is controlled by Henry Hewitt, President and
majority shareholder.

The Advisor has undertaken to reimburse the Company to the extent that aggregate
annual operating expenses, including the investment advisory fee and the
administration fee but excluding interest, taxes, brokerage commissions and
other costs incurred in connection with the purchase or sale of portfolio
securities, and extraordinary items, exceed 2.00% of the Fund's daily net
assets. Such voluntary reimbursements to the Fund may be modified or
discontinued at any time. The Fund monitors its expense ratio on a monthly
basis. If the accrued amount of the expenses of the Fund exceeds the expense
limitations, the Fund creates an account receivable from the Adviser for the
amount of such excess. In such a situation the monthly payment of the Adviser's
fee will be reduced by the amount of such excess (and if the amount of such
excess in any month is greater than the monthly payment of the Adviser's fee,
the Adviser will pay the Fund the amount of such difference), subject to
adjustment month by month during the balance of the Fund's fiscal year if
accrued expenses thereafter fall below this limit.

The Advisory Agreement will remain in effect as long as its continuance is
specifically approved at least annually (i) by the Board of Directors of the
Company or by the vote of a majority (as defined in the Act) of the outstanding
shares of the Fund, and (ii) by the vote of a majority of the

B-11

<PAGE>

directors of the Fund who are not parties to the Advisory Agreement or
interested persons of the Adviser, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement provides that it may
be terminated at any time without the payment of any penalty, by the Board of
Directors of the Company or by vote of the majority of the Fund's shareholders
on sixty (60) days' written notice to the Adviser, and by the Adviser on the
same notice to the Company, and that it shall be automatically terminated if it
is assigned.

The Advisory Agreement provides that the Adviser shall not be liable to the
Company or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties. The
Advisory Agreement also provides that the Adviser and its officers, directors
and employees may engage in other businesses, devote time and attention to any
other business whether of a similar or dissimilar nature, and render services to
others.

As set forth in the Prospectus under the caption "Administration of the Fund,"
the administrator to the Company is Firstar Trust Company, 615 East Michigan
Street, Milwaukee, Wisconsin 53202 (the "Administrator"). The Fund
Administration Servicing Agreement entered into between the Company and the
Administrator relating to the Fund (the "Administration Agreement") will remain
in effect until terminated by either party. The Administration Agreement may be
terminated at any time, without the payment of any penalty, by the Board of
Directors of the Company upon the giving of ninety (90) days' written notice to
the Administrator, or by the Administrator upon the giving of ninety (90) days'
written notice to the Company.

Under the Administration Agreement, the Administrator shall exercise reasonable
care and is not liable for any error or judgment or mistake of law or for any
loss suffered by the Company in connection with the performance of the
Administration Agreement, except a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Administrator in the performance of its
duties under the Administration Agreement.

Firstar Trust Company also provides services to the Company and the Adviser
pursuant to a Fulfillment Servicing Agreement ("Fulfillment Agreement"). Under
the Fulfillment Agreement, Firstar Trust Company has agreed to answer telephone
calls and inquiries from and provide information and material to prospective
shareholders about the Fund, as well as compile and provide information about
such inquiries to the Company. For its services under the Fulfillment Agreement,
Firstar Trust Company is entitled to receive service fees of $.99 per minute,
with a $100 per month minimum and a one-time $780 set-up fee. Firstar is also
entitled to receive service fees in connection with its reporting of leads to
the Company of $.45 per lead, which includes the insertion of up to 4 items, and
$.15 per item for additional inserts.

Firstar Trust Company also serves as custodian of the Company's assets pursuant
to a Custodian Servicing Agreement ("Custodian Agreement"). Under the Custodian
Agreement, Firstar Trust Company has agreed to (i) maintain a separate account
in the name of the Fund, (ii) make receipts and disbursements of money on behalf
of the Fund, (iii) collect and receive all income and other payments and
distributions on account of the Fund's portfolio investments, (iv) respond to
correspondence from shareholders, security brokers and others relating to its
duties and (v)

B-12

<PAGE>

make periodic reports to the Fund concerning the Fund's operations. Firstar
Trust Company does not exercise any supervisory function over the purchase and
sale of securities. For its services as custodian, Firstar Trust Company is
entitled to receive a fee, payable monthly, based on the annual rate of .02% of
the market of the Fund (subject to a minimum annual $3,000 fee). In addition,
Firstar Trust Company, as custodian, is entitled to certain charges for
securities transactions and reimbursements for expenses.

Firstar Trust Company also serves as a transfer agent and dividend disbursing
agent for the Fund under a Transfer Agent Servicing Agreement. As transfer and
dividend disbursing agent, Firstar Trust Company has agreed to (i) issue and
redeem shares of the Fund, (ii) make dividend and other distributions to
shareholders of the Fund, (iii) respond to correspondence by Fund shareholders
and others relating to its duties, (iv) maintain shareholder accounts, and (v)
make periodic reports to the Fund. For its transfer agency and dividend
disbursing services, Firstar Trust Company is entitled to receive fees at the
rate of $14.00 per shareholder account (subject to a minimum annual fee of
$22,000). Also, Firstar Trust Company is entitled to certain other transaction
charges and reimbursement for expense.

In addition the Company has entered into a Fund Accounting Servicing Agreement
with Firstar Trust Company pursuant to which Firstar Trust Company has agreed to
maintain the financial accounts and records of the Fund and provide other
accounting services to the Fund. For its accounting services, Firstar Trust
Company is entitled to receive fees, payable monthly, based on the total annual
rate of $22,000 for the first $40 million in average net assets of the Fund,
.01% on the next $200 million of average net assets, and .005% on average net
assets exceeding $240 million. Firstar Trust Company is also entitled to certain
out of pocket expenses, including pricing expenses.

DISTRIBUTION PLAN

B-13

<PAGE>

SHARE PRICE

As set forth in the Prospectus under the caption "Share Price," the net asset
value of the Fund will be determined as of the close of regular trading
(currently 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
open for trading. The New York Stock Exchange is open for trading Monday through
Friday, except New Year's Day, Martin Luther King, Jr.'s Birthday, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. Additionally, when any of the aforementioned holidays falls
on a Saturday, the New York Stock Exchange will not be open for trading on the
preceding Friday, and when any such holiday falls on a Sunday, the New York
Stock Exchange will not be open for trading on the succeeding Monday, unless
unusual business conditions exist, such as the ending of a monthly or the yearly
accounting period. The New York Stock Exchange also may be closed on national
days of mourning.

SYSTEMATIC WITHDRAWAL PLAN

An investor who owns Fund shares worth at least $10,000 at the current net asset
value may, by completing an application which may be obtained from the Fund or
Firstar Trust Company, create a Systematic Withdrawal Plan from which a fixed
sum will be paid to the investor at the regular intervals. To establish the
Systematic Withdrawal Plan, the investor deposits Fund shares with the Company
and appoints it as an agent to effect redemptions of Fund shares held in the
account for the purpose of making monthly or quarterly withdrawal payments of a
fixed amount to the investor out of the account. Fund shares deposited by the
investor in the account need not be endorsed or accompanied by a stock power if
registered in the same name as the account; otherwise, a properly executed
endorsement or stock power, obtained from any bank, broker-dealer or the Company
is required. The investor's signature should be guaranteed by a bank, a member
firm of a national stock exchange or other eligible guarantor.

The minimum amount of a withdrawal payment is $50. These payments will be made
from the proceeds of periodic redemptions of shares in the account at net asset
value. Redemptions will be made in accordance with the schedule (e.g., monthly,
bimonthly (every other month), quarterly or yearly, but in no event more than
monthly) selected by the investor. If a scheduled redemption day is a weekend
day or a holiday, such redemption will be made on the next preceding business
day. Establishment of a Systematic Withdrawal Plan constitutes an election by
the investor to reinvest in additional Fund shares, at net asset value, all
income dividends and capital gains distributions payable by the Fund on shares
held in such account, and shares so acquired will be added to such account. The
investor may deposit additional Fund shares in his account at any time.

Withdrawal payments cannot be considered as yield or income on the investor's
investment, since portions of each payment will normally consist of a return of
capital. Depending on the size or the frequency of the disbursements requested,
and the fluctuation in the value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even exhaust the investor's
account.

B-14

<PAGE>

The investor may vary the amount or frequency of withdrawal payments,
temporarily discontinue them, or change the designated payee or payee's address,
by notifying Firstar Trust Company in writing thirty (30) days prior to the next
payment.

BROKERAGE ALLOCATION

The Fund's securities trading and brokerage policies and procedures are reviewed
by and subject to the supervision of the Company's Board of Directors. Decisions
to buy and sell securities for the Fund are made by the Adviser subject to
review by the Company's Board of Directors. In placing purchase and sale orders
for portfolio securities for the Fund, it is the policy of the Adviser to seek
the best execution of orders at the most favorable price in light of the overall
quality of brokerage and research services provided, as described in this and
the following paragraphs. Many of these transactions involve payment of a
brokerage commission by the Fund. In some cases, transactions are with firms who
act as principals of their own accounts. In selecting brokers to effect
portfolio transactions, the determination of what is expected to result in best
execution at the most favorable price involves a number of largely judgmental
considerations. Among these are the Adviser's evaluation of the broker's
efficiency in executing and clearing transactions, block trading capability
(including the broker's willingness to position securities) and the broker's
reputation, financial strength and stability. The most favorable price to the
Fund means the best net price without regard to the mix between purchase or sale
price and commission, if any. Over-the-counter securities may be purchased and
sold directly with principal market makers who retain the difference in their
cost in the security and its selling price. In some instances, the Adviser feels
that better prices are available from non-principal market makers who are paid
commissions directly. Although the Fund does not initially intend to market its
shares through intermediary broker-dealers, the Fund may place portfolio orders
with broker-dealers who recommend the purchase of Fund shares to clients (if the
Adviser believes the commissions and transaction quality are comparable to that
available from other brokers) and may allocate portfolio brokerage on that
basis.

In allocating brokerage business for the Fund, the Adviser also takes into
consideration the research, analytical, statistical and other information and
services provided by the broker such as general economic reports and
information, reports or analyses of particular companies or industry groups,
market timing and technical information, and the availability of the brokerage
firm's analysts for consultation. While the Adviser believes these services have
substantial value, they are considered supplemental to the Adviser's own efforts
in the performance of its duties under the Advisory Agreement. Other clients of
the Adviser may indirectly benefit from the availability of these services to
the Adviser, and the Fund may indirectly benefit from services available to the
Adviser as a result of transactions for other clients. The Advisory Agreement
provides that the Adviser may cause the Fund to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting the transaction, if the Adviser determines in good faith that such
amount of commissions is reasonable in relation to the value of brokerage and
research services provided by the executing broker viewed in terms of either the
particular transaction or the Adviser's overall responsibilities with respect to
the Fund and the other accounts as to which he exercises investment discretion.

B-15

<PAGE>

DIVIDENDS, OTHER GAIN DISTRIBUTIONS AND TAXES

The Fund intends to declare and pay income dividends on an annual basis. The
Fund intends to distribute net capital gains, if any, on an annual basis in
December. Dividends and other distributions, if any, will automatically be paid
in additional shares of the Fund unless the shareholder elects otherwise. Such
election must be made in writing to the Fund.

It is the policy of the Fund to distribute all of its net investment income, if
any, together with any net realized capital gains in the amount and at the times
that will avoid federal income tax on it and the imposition of the federal
excise tax on certain undistributed income and capital gain. The Fund intends to
qualify for taxation as a "regulated investment company" ("RIC") under the Code,
so that the Fund will not be subject to federal income tax to the extent it
distributes its income and gains to shareholders. To qualify as a RIC for that
treatment, the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income and net short-term capital gains) and must meet several
additional requirements. For the Fund, these requirements include the following:
(1) the Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures, and for ward contracts) derived
with respect to its business of investing in securities or those currencies; and
(2) at the close of each quarter of the Fund's taxable year, (i) at least 50% of
the value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities, with
these other securities limited, in respect of any one issuer, to an amount that
does not exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's voting securities, and (ii) not more
than 25% of the value of its total assets may be invested in securities (other
than U.S. Government securities or the securities of other RICs) of any one
issuer.

Any use of hedging strategies, such as writing (selling) and purchasing options
and futures and entering into forward contracts, involves complex rules that
will determine for income tax purposes the amount, character, and timing of
recognition of the gains and losses it realizes in connection therewith.

The Fund also intend to declare and pay dividends and capital gain distributions
so as to avoid imposition of federal excise tax.

Undistributed net investment income is included in the Fund's net assets for the
purpose of calculating net asset value per share. Therefore, on the
"ex-dividend" date, the net asset value per share excludes the dividend (i.e.,
is reduced by the per share amount of the dividend). Dividends and other
distributions paid shortly after the purchase of shares by an investor, although
in effect a return of capital, are taxable to the investor.

As stated above and in the Prospectus, unless the shareholder elects otherwise
in writing, all dividends and other distributions are automatically paid in
additional Fund shares at net asset value (as of the business day following the
record date). This will remain in effect until the Fund is notified by the
shareholder in writing at least three days prior to the record date that either
the Income Option (income dividends in cash and other distributions in
additional shares at net asset

B-16

<PAGE>

value) or the Cash Option (both income dividends and other distributions in
cash) has been elected. An account statement is sent to shareholders whenever an
income dividend or other distribution is paid. For additional information, see
"Investment Considerations--Federal Tax Treatment of Futures Contracts."

SHAREHOLDER MEETINGS

The Maryland General Corporation Law permits registered investment companies,
such as the Company, to operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required by the Act. The
Company has adopted appropriate provisions in its Bylaws and may, at its
discretion, not hold an annual meeting in any year in which the election of
directors is not required to be acted on by shareholders under the Act.

The Company's Bylaws also contain procedures for the removal of directors by its
shareholders. At any meeting of shareholders, duly called and at which a quorum
is present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.

Upon the written request of the holders of shares entitled to but not less than
ten percent (10%) of all the votes entitled to be cast at such meeting, the
Secretary of the Company shall promptly call a special meeting of shareholders
for the purpose of voting upon the question of removal of any director. Whenever
ten or more shareholders of record who have been such for at least six months
preceding the date of application, and who hold in the aggregate either shares
having a net asset value of at least $25,000 or at least one percent (1.0%) of
the total outstanding shares, whichever is less, shall apply to the Company's
Secretary on writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to a request for a meeting as
described above and accompanied by a form of communication and request which
they wish to transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of the Fund; or (2)
inform such applicants as to the approximately number of shareholders of record
and the approximate cost of mailing to them the proposed communication and form
of request.

If the Secretary elects to follow the course specified in clause (2) of the last
sentence of the preceding paragraph, the Secretary, upon the written request of
such applicants, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall with reasonable promptness, mail such
material to all shareholders of record at their addresses as recorded on the
books unless within five business days after such tender the Secretary shall
mail to such applicants and file with the Securities and Exchange Commission,
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits to
state facts necessary to make the statements contained therein not misleading,
or would be in violation of applicable law, and specifying the basis of such
opinion.

After opportunity for hearing upon the objections specified in the written
statement so filed, the Securities and Exchange Commission may, and if demanded
by the Board of Directors or by

B-17

<PAGE>

such applicants shall, enter an order either sustaining one or more of such
objections or refusing to sustain any of them. If the Securities and Exchange
Commission shall enter an order refusing to sustain any of such objections, or
if, after the entry of an order sustaining one or more of such objections, the
Securities and Exchange Commission shall find, after notice and opportunity for
hearing, that all objections so sustained have been met, and shall enter an
order so declaring, the Secretary shall mail copies of such material to all
shareholders with reasonable promptness after the entry of such order and the
renewal of such tender.

PERFORMANCE MEASURES

Average annual total return measures both the net investment income generated
by, and the effect of any realized or unrealized appreciation or depreciation
of, the underlying investments in the Fund's investment portfolio. The Fund's
average annual total return figures are computed in accordance with the
standardized method prescribed by the Securities and Exchange Commission by
determining the average annual compounded rates of return over the periods
indicated, that would equate the initial amount invested to the ending
redeemable value, according to the following formula:

P(1 - T)n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of
the end of the period of a
hypothetical $1,000 payment
made at the beginning of
such period

This calculation (i) assumes all dividends and distributions are reinvested at
net asset value or the appropriate reinvestment dates as described in the
Prospectus, and (ii) deducts all recurring fees, such as advisory fees, charged
as expenses to all investor accounts.

Total return is the cumulative rate of investment growth which assumes that
income dividends and capital gains are reinvested. It is determined by assuming
a hypothetical investment at the net asset value at the beginning of the period,
adding in the reinvestment of all income dividends and capital gains,
calculating the ending value of the investment at the net asset value as of the
end of the specified time period, subtracting the amount of the original
investment, and dividing this amount by the amount of the original investment.
This calculated amount is then expressed as a percentage by multiplying by 100.

Performance results are based on historical earnings and should not be
considered as representative of the performance of the Fund in the future. An
investment in the Fund will fluctuate in value and at redemption its value may
be more or less than the initial investment.

B-18

<PAGE>

INDEPENDENT ACCOUNTANT

Price Waterhouse, LLP has been selected as the independent accountant for the
Fund.

FINANCIAL STATEMENT

The following financial statement is attached hereto:

o Report of Independent Public Accountants

o Statement of Assets and Liabilities

o Notes to the Financial Statement

B-19

<PAGE>

B-20

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder and
Board of Directors of
Light Index Fund, Inc.

We have audited the statement of assets and liabilities of Light Index
Investment Fund (the "Fund"), a series of The Light Index Fund, Inc., a Maryland
corporation. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the net assets of the Fund as of
__________________________, 1997, in conformity with generally accepted
accounting principles.

---------------------

Tacoma, Washington
________________, 1997

B-21

<PAGE>

LIGHT INDEX FUND, INC.

Statement of Assets and Liabilities

_________________, 1997

Light Index Fund
ASSETS
Cash................................................. $
Unamortized organizational costs
Prepaid initial registration expenses................ ________
Total Assets......................................... ________

LIABILITIES
Payable to Adviser................................... ________
Total Liabilities.................................... ________

NET ASSETS

Capital Stock, $0.0001 par value; 50,000,000 shares
authorized;
_________shares outstanding.......................... $
======
Offering and redemption price/net asset value per
share (based on _______ shares of capital stock issued
and outstanding..................................... $
======
The accompanying notes to final statement are an integral part of this
statement.

NOTES TO FINANCIAL STATEMENT

1. The Light Index Fund, Inc. was incorporated under the laws of the State of
Maryland on October 21, 1997 and has had no operations to date other than those
relating to organizational matters and the sale of __________ shares of its
common stock to its original shareholders, who acquired the shares before any
distribution by the Fund.

2. The Light Index Fund, Inc., which consists solely of the Light Index Fund
(the "Fund"), has an agreement with the Adviser, with whom certain officers and
directors of the Fund are

B-22

<PAGE>

affiliated, to furnish investment advisory services to the Fund. Under the terms
of this agreement, the Fund will pay the Adviser a monthly fee based on the
Fund's average daily net assets at the annual rate of 1.0%.

Under the investment advisory agreement, the Advisor has undertaken to reimburse
the Company to the extent that aggregate annual operating expenses, including
the investment advisory fee and the administration fee but excluding interest,
taxes, brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items, exceed 2.00%
of the Fund's daily net assets. Such voluntary reimbursements to the Fund may be
modified or discontinued at any time.

3. Organizational costs and initial registration expenses are being deferred and
amortized over the period of benefit, but not to exceed sixty months from the
Fund's commencement of operations. These costs were advanced by the Adviser and
will be reimbursed by the Fund. The proceeds of any redemption of the initial
shares by the original shareholder of any transferee will be reduced by a
pro-rata portion of any then unamortized organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of such redemption.

B-23

<PAGE>

PART C
LIGHT INDEX FUND, INC.
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS

Financial Statement (included in Part B)

Report of Independent Accountants

Statement of Assets and Liabilities

Notes to Financial Statement

(b) EXHIBITS

1. Articles of Incorporation of Registrant*
2. Bylaws of Registrant*
3. Not Applicable
4. Specimen Stock Certificate for Class A Common Stock*
5. Investment Advisory Agreement between Light Index Investment
Company and Light Index Fund, Inc.**
6. Distribution Agreement between First Data Distributors, Inc. and
Light Index Fund, Inc.**
7. Not Applicable
8. Custodian Servicing Agreement between Light Index Fund, Inc., and
Firstar Trust Company*
9.1 Fund Administration Servicing Agreement between Light Index Fund,
Inc. and Firstar Trust Company*
9.2 Fund Accounting Servicing Agreement between Light Index Fund, Inc.
and Firstar Trust Company*
9.3 Fulfillment Servicing Agreement between Light Index Fund, Inc.
and Firstar Trust Company, Light Index Investment Company and
First Data Distributors, Inc.*
9.4 Transfer Agent Servicing Agreement*
10. Opinion and consent of Counsel*
11. Consent of Independent Accountants***
12. Not Applicable
13. Form of Subscription Agreement**
14. Individual Retirement Custodian Agreement**
15. Distribution Plan**
16. Not Applicable
17. Financial Data Schedule***
18. Not Applicable
19. Powers-of-Attorney.*

C-1

<PAGE>

* Filed herewith.
** To be filed by supplement.
***To be filed by supplement when financial information is filed supplementally.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT

Registrant is controlled by those persons listed the Statement of
Additional Information under the heading "Ownership of Management and Principal
Shareholders" which persons owned 100% of its voting securities as of
_______________, 1997. Registrant neither controls any person nor is under
common control with any person.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

TITLE OF CLASS Number of Record Holders
as of_______________, 1997
Class A Common Stock, $________
par value (Light Index Investment Fund)

ITEM 27. INDEMNIFICATION

Pursuant to the authority of the Maryland General Corporation Law,
particularly Section 2-418 thereof, Registrant's Board of Directors has adopted
the following bylaw which is in full force and effect and has not been modified
or canceled:

ARTICLE VII

GENERAL PROVISIONS

* * *

SECTION 7. INDEMNIFICATION

A. The Corporation shall indemnify all of its corporate representatives against
expenses, including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with the
defense of any action, suit or proceeding, or threat or claim of such action,
suit or proceeding, whether civil, criminal, administrative, or legislative, no
matter by whom brought, or in any appeal in which they or any of them are made
parties or a party by reason of being or having been a corporate representative,
if the corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation and
with respect to any criminal proceeding, if he had no reasonable cause to
believe his conduct was unlawful provided that the corporation shall not
indemnify corporate representatives in relation to matters as to which any such
corporate representative shall be adjudged in such action, suit or proceeding to
be liable for gross negligence, willful misfeasance, bad faith, reckless
disregard of the duties and obligations

C-2

<PAGE>

involved in the conduct of his office, or when indemnification is otherwise not
permitted by the Maryland General Corporation Law.

B. In the absence of an adjudication which expressly absolves the corporate
representative, or in the event of a settlement, each corporate representative
shall be indemnified hereunder only if there has been a reasonable determination
based on a review of the facts that indemnification of the corporate
representative is proper because he has met the applicable standard of conduct
set forth in paragraph A. Such determination shall be made (i) by the board of
directors, by a majority vote of a quorum which consists of directors who were
not parties to the action, suit or proceeding, or if such a quorum cannot be
obtained, then by a majority vote of a committee of the board consisting solely
of two or more directors, not, at the time, parties to the actions, suit or
proceeding and who are duly designated to act in the matter by the full board in
which the designated directors who are parties to the action, suit or proceeding
may participate; or (ii) by special legal counsel selected by the board of
directors or a committee of the board by vote as set forth in (i) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the full
board in which directors who are parties to the action, suit or proceeding may
participate.

C. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall create a rebuttable presumption that the person was guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard to the duties and
obligations involved in the conduct of his or her office, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.

D. Expenses, including attorneys' fees, incurred in the preparation of and/or
presentation of the defense of a civil or criminal action, suit or proceeding
may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding as authorized in the manner provided in Section
2-418(f) of the Maryland General Corporation Law upon receipt of: (i) an
undertaking by or on behalf of the corporate representative to repay such amount
unless it shall ultimately be determined that he or she is entitled to be
indemnified by the corporation as authorized in this bylaw; and (ii) a written
affirmation by the corporate representative of the corporate representative's
good faith belief that the standard of conduct necessary for indemnification by
the corporation has been met.

E. The indemnification provided by this bylaw shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under these bylaws,
any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person subject to
the limitations imposed from time to time by the Investment Company Act of 1940,
as amended.

F. This corporation shall have power to purchase and maintain insurance on
behalf of any corporate representative against any liability asserted against
him or her and incurred by him or her in such capacity or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under this bylaw provided that no
insurance may be purchased or maintained to protect any corporate representative
against

C-3

<PAGE>

liability for gross negligence, willful misfeasance, bad faith or reckless
disregard of the duties and obligations involved in the conduct of his or her
office.

G. "Corporate Representative" means an individual who is or was a director,
officer, agent or employee of the corporation or who serves or served another
corporation, partnership, joint venture, trust or other enterprise in one of
these capacities at the request of the corporation and who, by reason of his or
her position, is, was, or is threatened to be made, a party to a proceeding
described herein.

Insofar as indemnification for and with respect to liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer or controlling person or
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Incorporated by reference to pages ____ through ____ of the Statement
of Additional Information pursuant to Rule 411 under the Securities Act of 1933.

ITEM 29. PRINCIPAL UNDERWRITERS

Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the physical possession of Registrant
and Registrant's Administrator as follows: the documents required to be
maintained by paragraphs (5), (6), (7), (10) and (11) of Rule 31a- 1(b) will be
maintained by the Registrant at 704 Court A, Tacoma, Washington, 98402; and all
other records will be maintained by the Registrant's Administrator, Firstar
Trust Company, at 615 East Michigan Street, Milwaukee, Wisconsin 53202.

C-4

<PAGE>

ITEM 31. MANAGEMENT SERVICES

All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.

ITEM 32. UNDERTAKINGS

Registrant undertakes to file an amendment to the Registration
Statement with certified financial statements showing the initial capital
received before accepting any subscriptions from any persons in excess of 25.

Registrant undertakes to file a post-effective amendment to this
Registration Statement within four to six months of the effective date of this
Registration Statement which will contain financial statements (which need not
be certified) as of and for the time period reasonably close or as soon as
practicable to the date of such post-effective amendment.

C-5

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized on the
_______ day of December, 1997.

LIGHT INDEX FUND, INC.

By: /S/ HENRY HEWITT
Henry Hewitt, President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date(s) indicated.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in the
capacities and on the date indicated:

By: /S/ CHARLES O'HERIN
Charles O'Herin
Vice President/Secretary/Treasurer

A Majority of the Board of Directors:

/S/ THOMAS KINSMAN
Thomas Kinsman*

/S/ BRIAN HATCH
Brian Hatch*

/S/ JOHN HEWITT, JR.
John Hewitt, Jr.*

/S/ HENRY HEWITT
*Henry Hewitt
Attorney-in-Fact

C-6

<PAGE>

INDEX TO EXHIBITS

1. Articles of Incorporation of Registrant*
2. Bylaws of Registrant*
3. Not Applicable
4. Specimen Stock Certificate for Class A Common Stock*
5. Investment Advisory Agreement between Light Index Investment Company and
Light Index Fund, Inc.**
6. Distribution Agreement between First Data Distributors, Inc. and Light
Index Fund, Inc.**
7. Not Applicable
8. Custodian Servicing Agreement between Light Index Fund, Inc. and Firstar
Trust Company*
9.1 Fund Administration Servicing Agreement between Light Index Fund, Inc.
and Firstar Trust Company*
9.2 Fund Accounting Servicing Agreement between Light Index Fund, Inc. and
Firstar Trust Company*
9.3 Fulfillment Servicing Agreement between Light Index Fund, Inc. and Firstar
Trust Company, Light Index Investment Company and First Data Distributors,
Inc.*
9.4 Transfer Agent Servicing Agreement*
10. Opinion and consent of Counsel*
11. Consent of Independent Accountants***
12. Not Applicable
13. Form of Subscription Agreement**
14. Individual Retirement Custodial Account**
15. Distribution Plan**
16. Not Applicable
17. Financial Data Schedule***
18. Not Applicable
19. Powers-of-Attorney*

* Filed herewith.
** To be filed by supplement.
***To be filed by supplement when financial information is filed supplementally.

C-7

<PAGE>

ARTICLES OF INCORPORATION

LIGHT INDEX FUND, INC.

The undersigned incorporator, being at least eighteen years of age,
thereby adopts the following Articles of Incorporation for the purpose of
forming a Maryland corporation under the general laws of the State of Maryland:

ARTICLE I

The name of the corporation (hereinafter called "Corporation") is:

LIGHT INDEX FUND, INC.

ARTICLE II

The period of existence shall be perpetual

ARTICLE III

The purposes for which the Corporation is formed are to engage in any
lawful business for which corporations may be organized under the Maryland
General Corporation Law.

ARTICLE IV

A. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is one hundred million (100,000,000)
shares, all with a par value of One Hundredth of a Cent ($0.0001) per share, to
be known and designated as "Common Stock." The aggregate par value of the
authorized shares of the Corporation is ten thousand dollars ($10,000). The
Board of Directors of the Corporation may increase or decrease the aggregate
number of authorized shares of Common Stock pursuant to Section 2-105 of the
Maryland General Corporation Law or any successor provision thereto. The Board
of Directors of the Corporation may classify or reclassify any unissued shares
of Common Stock and may designate or redesignate the name of any class of
outstanding Common Stock. The Board of Directors may fix the number of shares of
Common Stock in any such class and, except as specifically set forth in these
Articles of Incorporation, may set or change the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of any class of unissued
shares of Common Stock. A total of fifty million (50,000,000) shares of Common
Stock shall initially be classified as "Class A Common Stock" (the "Light
Index(TM) Fund" or such other name designated by the Corporation's Board of
Directors).

<PAGE>

B. Notwithstanding the authority granted to the Board of Directors of the
Corporation with respect to the designation, classification and reclassification
of the unissued shares of Common Stock of the Corporation, each class of Common
Stock shall have the following preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption:

1. Each holder of shares of Common Stock of the Corporation,
irrespective of the class, shall be entitled to one (1) vote for each
full share (and a fractional vote for each fractional share) then
standing in his or her name on the books of the Corporation; provided,
however, that shares of any class of Common Stock owned, other than in
a fiduciary capacity, by the Corporation or by another corporation in
which the Corporation owns shares entitled to cast a majority of all
the votes entitled to be cast by all shares outstanding and entitled to
vote of such corporation, shall not be voted at any meeting of
shareholders. On any matter submitted to a vote of shareholders all
shares of the Corporation's Common Stock then issued and outstanding
and entitled to vote, irrespective of the class, shall be voted in the
aggregate and not by class, except that: (a) when otherwise expressly
provided by the Maryland General Corporation Law, the investment
Company Act of 1940 and regulations thereunder, or other applicable
law, shares shall be voted by individual class; and (b) when the matter
to be acted upon does not affect any interest of a particular class of
the Corporation's Common Stock, then only shares of the affected class
shall be entitled to vote thereon. At all elections of directors of the
Corporation, each shareholder shall be entitled to vote the shares
owned of record by him for as many persons as there are directors to be
elected, but shall not be entitled to exercise any right of cumulative
voting.

2. All consideration received by the Corporation for the issue
or sale of shares of any class of the Corporation's Common Stock,
together with all assets in which such consideration is invested and
reinvested, income, earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation thereof,
and any such funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to
the class of the Corporation's Common Stock with respect to which such
assets, payments or funds were received by the Corporation for all
purposes, subject only to the rights of creditors, and shall be so
handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, and any assets derived from any reinvestment of such proceeds
in whatever form, are herein referred to as "assets belonging to" such
class. Any assets, income, earnings, profits and proceeds thereof,
funds or payments which are not readily attributable to any particular
class of the Corporation's Common Stock shall be allocable among any
one or more of the classes of the Corporation's Common Stock in such
manner and on such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable. The power to make such
allocations may be delegated by the Board of Directors from time to
time to one or more of the officers of the Corporation.

-2-

<PAGE>

3. The assets belonging to any class of the Corporation's Common Stock
shall be charged with the liabilities in respect of such class of the
Corporation's Common Stock, and shall also be charged with the share of
the general liabilities of the Corporation allocated to such class
determined as hereinafter provided. The determination of the Board of
Directors shall be conclusive as to: (a) the amount of such
liabilities, including the amount of accrued expenses and reserves; (b)
any allocation of the same to a given class; and (c) whether the same
are allocable to one or more classes. The liabilities so allocated to a
class are herein referred to as "liabilities belonging to" such class.
Any liabilities which are not readily attributable to any particular
class of the Corporation's Common Stock shall be allocable among any
one or more of the classes of the Corporation's Common Stock in such
manner and on such basis as the Board of Directors, in its sole
discretion, shall deem fair and equitable. The power to make such
allocations may be delegated by the Board of Directors from time to
time to one or more of the officers of the Corporation.

4. Shares of a class of the Corporation's Common Stock shall
be entitled to such dividends and distributions, in stock or in cash or
both, as may be declared from time to time by the Board of Directors,
acting in its sole discretion, with respect to such class; provided,
however, that dividends and distributions on shares of a class of the
Corporation's Common Stock shall be paid only out of the lawfully
available "assets belonging to" such class as such phrase is defined in
this Article IV.

5. In the event of the liquidation or dissolution of the
Corporation, shareholders of a class of the Corporation's Common Stock
shall be entitled to receive, as a class, out of the assets of the
Corporation available for distribution to shareholders, but other than
general assets not belonging to any particular class, the assets
belonging to such class, and the assets so distributable to the holders
of any class of the Corporation's Common Stock shall be distributed
among such holders in proportion to the number of shares of such class
of the Corporation's Common Stock held by them and recorded on the
books of the Corporation. In the event that there are any general
assets not belonging to any particular class of the Corporation's
Common Stock and available for distribution, such distribution shall be
made to the holders of all classes of the Corporation's Common Stock in
proportion to the net asset value of the respective class of the
Corporation's Common Stock determined as set forth in the Bylaws of the
Corporation.

6. Each share of each class of Common Stock of the Corporation
now or hereafter issued shall be subject to redemption by the
shareholders of the Corporation and, subject to the suspension of such
right of redemption as provided in the Bylaws, each holder of shares of
any class of Common Stock of the Corporation, upon request to the
Corporation accompanied by surrender of the appropriate stock
certificate or certificates, if any, in proper form for transfer and
after complying with any other redemption procedures established by the
Board of Directors, shall be entitled to require the Corporation to
redeem all or

-3-

<PAGE>

any part of the shares of such class of Common Stock standing in the
name of such holder on the books of the Corporation at the net asset
value of such shares. In the event that no certificates have been
issued to the holder, the Board of Directors may require the submission
of a stock power with an appropriate signature guarantee. All shares of
any class of its Common Stock redeemed by the Corporation shall be
deemed to be canceled and restored to the status of authorized but
unissued shares. The method of computing the net asset value of shares
of each class of Common Stock of the Corporation for purposes of the
issuance and sale, or redemption, thereof, as well as the time as of
which such net asset value shall be computed, shall be as set forth in
the Bylaws. Payment of the net asset value of each share of each class
of Common Stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven (7) days after surrender
of such stock to the Corporation for such purpose, or within such other
reasonable period as may be determined from time to time by the Board
of Directors. The Board of Directors of the Corporation may, upon
reasonable notice to the shareholders of the Corporation impose a fee
for the privilege of redeeming shares, such fee to be not in excess of
one percent (1.0%) of the proceeds of any such redemption. The Board
shall have discretionary authority to rescind the imposition of any
such fee and to reimpose the redemption fee from time to time upon
reasonable notice. Any fee so imposed shall be uniform as to all
shareholders.

7. If, at any time when a request for transfer or redemption
of the shares of any class of Common Stock is received by the
Corporation or its agent, the value (computed as set forth in the
Bylaws) of the shares of such class in a shareholder's account is less
than one thousand dollars ($1,000), after giving effect to such
transfer or redemption, the Corporation may cause the remaining shares
of such class in such shareholder's account to be redeemed in
accordance with such procedures as the Board of Directors shall adopt.

8. Each holder of shares of the Corporation's Common Stock,
irrespective of the class, may, upon request to the Corporation
accompanied by surrender of the appropriate stock certificate or
certificates, if any, in proper form for transfer and after complying
with any other conversion procedures established by the Board of
Directors, convert such shares into shares of any other class of the
Corporation's Common Stock on the basis of their relative net asset
values (determined in accordance with the Bylaws of the Corporation)
less a conversion charge or discount determined by the Board of
Directors. Any fee so imposed shall be uniform as to all shareholders.

9. No holder of shares of any class of Common Stock of the
Corporation shall, as such holder, have any right to purchase or
subscribe for any shares of any class of the Common Stock of the
Corporation which it may issue or sell (whether out of the number of
shares authorized by these Articles of Incorporation, or out of any
shares of any class of Common Stock of the

-4-

<PAGE>

Corporation acquired by it after the issue thereof, or otherwise) other
than such right, if any, as the Board of Directors, in its discretion,
may determine.

ARTICLE V

The number of directors constituting the Board of Directors shall
initially be three, and the names of the initial directors are Brian Hatch,
Henry Hewitt, and John Hewitt Jr. Thereafter, the number of directors shall be
such number as is fixed from time to time by the Bylaws.

ARTICLE VI

The Corporation reserves the right to enter into, from time to time,
investment advisory and administration agreements providing for the management
and supervision of the investments of the Corporation, the furnishing of advice
to the Corporation with respect to the desirability of investing in, purchasing
or selling securities or other property and the furnishing of clerical and
administrative services to the Corporation. Such agreements shall contain such
other terms, provisions and conditions as the Board of Directors of the
Corporation may deem advisable and as are permitted by the Investment Company
Act of 1940.

The Corporation may designate custodians, transfer agents, registrars
and/or disbursing agents for the stock and assets of the Corporation and employ
and fix the powers, rights, duties, responsibilities and compensation of each
such custodian, transfer agent, registrar and/or disbursing agent.

ARTICLE VII

The following provisions define, limit and regulate the powers of the
Corporation, the Board of Directors and the shareholders:

A. The Corporation may issue and sell shares of any class of its own
Common Stock in such amounts and on such terms and conditions, for such purposes
and for such amount or kind of consideration now or hereafter permitted by the
laws of the State of Maryland, the Bylaws and these Articles of Incorporation,
as its Board of Directors may determine; provided, however, that the
consideration per share to be received by the Corporation upon the sale of any
shares of any class of its Common Stock shall not be less than the net asset
value per share of such class of Common Stock outstanding at the time as of
which the computation of said net asset value shall be made.

B. The Board of Directors may, in its sole and absolute discretion,
reject in whole or in part orders for the purchase of shares of any class of
Common Stock and may, in addition, require such orders to be in such minimum
amounts as the Board shall determine.

C. The holders of any fractional shares of any class Common Stock
shall be entitled to the payment of dividends on such fractional shares, to
receive the net asset

-5-

<PAGE>

value thereof upon redemption, to share in the assets of the Corporation upon
liquidation and to exercise voting rights with respect thereto.

D. The Board of Directors shall have full power in accordance with good
accounting practice: (a) to determine what receipts of the Corporation shall
constitute income available for payment of dividends and what receipts shall
constitute principal and to make such allocation of any particular receipt
between principal and income as it may deem proper; and (b) from time to time,
in its discretion (i) to determine whether any and all expenses and other
outlays paid or incurred (including any and all taxes, assessments or
governmental charges which the Corporation may be required to pay or hold under
any present or future law of the United States of America or of any other taxing
authority therein) shall be charged to or paid from principal or income or both,
and (ii) to apportion any and all of said expenses and outlays, including taxes,
between principal and income.

E. The Board of Directors shall have the power to determine from time
to time whether and to what extent and at what time and places and under what
conditions and regulations the books, accounts and documents of the Corporation
or any of them, shall be open to the inspection of shareholders, except as
otherwise provided by applicable law; and except as so provided, no shareholder
shall have any right to inspect any book, account or document of the Corporation
unless authorized to do so by resolution of the Board of Directors.

ARTICLE VIII

The address of the principal office of the Corporation is 704 Court A,
Tacoma, Washington 98402, and the address of the principal office in Maryland is
c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202.

ARTICLE IX

The address of the initial resident office is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202.

ARTICLE X

The name of the initial resident agent at such address is The
Corporation Trust, Incorporated, a Maryland corporation.

ARTICLE XI

The name and address of the incorporator is:

NAME ADDRESS
Henry Hewitt 704 Court A
Tacoma, WA 98402

IN WITNESS WHEREOF, the undersigned incorporator who executed the
foregoing Articles of Incorporation hereby acknowledges the same to be his act
and further acknowledges that, to the best of his knowledge, the matters and
facts set forth therein are true in all material respects under the penalties of
perjury.

Dated this 2nd day of October, 1997.

/S/ HENRY A. HEWITT
Incorporator

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BYLAWS
OF
LIGHT INDEX FUND, INC.

ARTICLE I
SHAREHOLDER MEETINGS

SECTION 1. PLACE OF MEETINGS. All meetings of shareholders shall be held at such
location as the Board of Directors shall direct.

SECTION 2. ANNUAL MEETING.

(a) The annual meeting of shareholders for the election of directors
and the transaction of such other business as may properly come before it, if
the annual meeting shall be held, shall be held during the month of April of
each year (or during such other month as the Board of Directors shall
determine), commencing in 1998, at such date and time as shall be fixed by the
Board of Directors and stated in the notice of such meeting, but in no event
more than one hundred twenty (120) days after the occurrence of the event
requiring the meeting to elect directors. Any business of the corporation may be
transacted at the annual meeting without being specifically designated in the
notice, except such business as is specifically required by statute to be stated
in the notice.

(b) The corporation shall not be required to hold an annual meeting in
any year in which the election of directors is not required to be acted on by
shareholders under the Investment Company Act of 1940.

SECTION 3. SPECIAL MEETING. Special meetings of the shareholders may be called
by the board of directors, the president, any vice president, or the secretary,
and shall be called by the secretary upon the written request of the holders of
shares entitled to not less than ten percent (10%) of all the votes entitled to
be cast at such meeting; provided that such holders prepay the costs to the
corporation of preparing and mailing the notice of the meeting. The business
transacted at any special meeting of shareholders shall be limited to the
purposes stated in the notice.

SECTION 4. NOTICE OF MEETING. Not less than ten (10) days nor more than ninety
(90) days before the date of every shareholders' meeting, the secretary shall
give to each shareholder entitled to vote at such meeting and to each other
shareholder entitled to notice of such meeting under applicable law, written or
printed notice stating the time and place of the meeting, and in the case of a
special meeting (or where required by applicable law) the purpose or purposes
for which the meeting is called, either by mail, by presenting it to him
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the shareholder at his post office address as it
appears on the records of the corporation, with postage thereon prepaid.

<PAGE>

SECTION 5. QUORUM. At any meeting of shareholders the presence in person or by
proxy of shareholders entitled to cast a majority of the votes thereat shall
constitute a quorum; but this section shall not affect any requirement under
statute or under the charter for the vote necessary for the adoption of any
measure. If at any meeting a quorum is not present or represented, the chairman
of the meeting or the holders of a majority of the stock present or represented
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or represented. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted which might have been transacted at the meeting as originally
called.

SECTION 6. STOCK ENTITLED TO VOTE. Each issued share of each class of stock
shall be entitled to vote at any meeting of shareholders except shares owned,
other than in a fiduciary capacity, by the corporation or by another corporation
in which the corporation owns shares entitled to cast a majority of all the
votes entitled to be cast by all shares outstanding and entitled to vote of such
corporation.

SECTION 7. VOTING. Each outstanding share of each class of stock entitled to
vote at a meeting of shareholders shall be entitled to one vote on each matter
submitted to a vote. In all elections for directors every shareholder shall have
the right to vote the shares of each class owned of record by him for as many
persons as there are directors to be elected, but shall not be entitled to
exercise any right of cumulative voting. A shareholder may vote the shares owned
of record by him either in person or by proxy executed in writing by the
shareholder or by his authorized attorney-in-fact. No proxy shall be valid after
eleven (11) months from its date unless otherwise provided in the proxy. At all
meetings of shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualification of voters, the validity of proxies and
the acceptance or rejection of votes shall be decided by the chairman of the
meeting. A majority of the votes cast at a meeting of shareholders, duly called
and at which a quorum is present, shall be sufficient to take or authorize any
action which may properly come before the meeting, unless a greater number is
required by statute or by the charter.

SECTION 8. INFORMAL ACTION. Any action required or permitted to be taken at any
meeting of shareholders may be taken without a meeting, if a consent in writing,
setting forth such action is signed by all the shareholders entitled to vote on
the subject matter thereof and such consent is filed with the records of the
corporation.

ARTICLE II
DIRECTORS

SECTION 1. NUMBER. The number of directors of the corporation shall be four (4).
By vote of a majority of the entire board of directors, the number of directors
fixed by the charter or by these bylaws may be increased or decreased from time
to time to not more than fifteen nor less than three, but the tenure of office
of a director shall not be affected by any decrease in the number of directors
so made by the board.

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SECTION 2. ELECTION AND QUALIFICATION. Until the first annual meeting of
shareholders and until successors are duly elected and qualify, the board of
directors shall consist of the persons named as such in the charter. At the
first annual meeting of shareholders, the shareholders shall elect directors to
hold office until their successors are elected and qualify. A director need not
be a shareholder of the corporation, but must be eligible to serve as a director
of a registered investment company under the Investment Company Act of 1940.

SECTION 3. VACANCIES. Any vacancy on the board of directors occurring between
shareholders' meetings called for the purpose of electing directors may be
filled, if immediately after filling any such vacancy at least two-thirds of the
directors then holding office shall have been elected to such office at an
annual or special meeting of shareholders, in the following manner: (i) for a
vacancy occurring other than by reason of an increase in directors, by a
majority of the remaining members of the board, although such majority is less
than a quorum; and (ii) for a vacancy occurring by reason of an increase in the
number of directors, by action of a majority of the entire board. A director
elected by the board to fill a vacancy shall be elected to hold office until the
next annual meeting of shareholders or until his successor is elected and
qualifies. If by reason of the death, disqualification or bona fide resignation
of any director or directors, more than sixty percent (60%) of the members of
the board of directors are interested persons of the corporation, as defined in
the Investment Company Act of 1940, such vacancy shall be filled within thirty
(30) days if it may be filled by the board, or within sixty (60) days if a vote
of shareholders is required to fill such vacancy; provided that such vacancy may
be filled within such longer period as the Securities and Exchange Commission
may prescribe by rules and regulations, upon its own motion or by order upon
application. In the event that at any time less than a majority of the directors
were elected by the shareholders, the board or proper officer shall board or
proper officer shall forthwith cause to be held as promptly as possible, and in
any event within sixty (60) days, a meeting of the shareholders for the purpose
of electing directors to fill any existing vacancies in the board, unless the
Securities and Exchange Commission shall by order extend such period.

SECTION 4. POWERS. The business and affairs of the corporation shall be managed
under the direction of the board of directors, which may exercise all of the
powers of the corporation, except such as are by law or by the charter or by
these bylaws conferred upon or reserved to the shareholders.

SECTION 5. REMOVAL.

(a) At any meeting of shareholders, duly called and at which a quorum
is present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.

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(b) Notwithstanding any other provisions of these bylaws, the secretary
of the corporation shall promptly call a special meeting of shareholders for the
purpose of voting upon the question of removal of any director upon the written
request of the holders of shares entitled to not less than ten percent (10%) of
all the votes entitled to be cast at such meeting.

(c) Whenever ten or more shareholders of record who have been such for
at least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
one percent (1%) of the total outstanding shares, whichever is less, shall apply
to the corporation's secretary in writing, stating that they wish to communicate
with other shareholders with a view to obtaining signatures to a request for a
meeting pursuant to subsection (b) above and accompanied by a form of
communication and request which they wish to transmit, the secretary shall
within five business days after such application either: (1) afford to such
applicants access to a list of the names and addresses of all shareholders as
recorded on the books of the corporation; or (2) inform such applicants as to
the approximate number of shareholders of record and the approximate cost of
mailing to them the proposed communication and form of request.

(d) If the secretary elects to follow the course specified in clause
(2) of subsection (c) above, the secretary, upon the written request of such
applicants, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall, with reasonable promptness, mail such
material to all shareholders of record at their addresses as recorded on the
books, unless within five (5) business days after such tender the secretary
shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the board of directors to the effect
that in their opinion either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion.

(e) After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may, and if
demanded by the board of directors or by such applicants shall, enter an order
either sustaining one or more of such objections or refusing to sustain any of
them. If the Securities and Exchange Commission shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order sustaining
one or more of such objections, the Securities and Exchange Commission shall
find, after notice and opportunity for hearing, that all objections so sustained
have been met, and shall enter an order so declaring, the secretary mail copies
of such material to all shareholders with reasonable promptness after the entry
of such order and the renewal of such tender.

SECTION 6. PLACE OF MEETINGS. Meetings of the board of directors, regular or
special, may be held at any place in or out of the State of Washington as the
board may from time to time determine or as may be specified in the notice of
meeting.

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SECTION 7. FIRST MEETING OF NEWLY ELECTED BOARD. The first meeting of each newly
elected board of directors shall be held without notice immediately after and at
the same general place as the annual meeting of the shareholders (or such other
time and place as the board shall determine), for the purpose of organizing the
board, electing officers and transacting any other business that may properly
come before the meeting.

SECTION 8. REGULAR. Regular meetings of the board of directors may be held
without notice at time and place as shall from time to time be determined by the
board.

SECTION 9. SPECIAL MEETINGS. Special meetings of the board of directors may be
called at any time either by the board, the president, a vice president or a
majority of the directors in writing with or without a meeting. Notice of
special meetings shall either be mailed by the secretary to each director at
least three (3) days before the meeting or shall be given personally or by
facsimile to each director at least one (1) day before the meeting. Such notice
shall set forth the time and place of such meeting but need not, unless
otherwise required by law, state the purposes of the meeting.

SECTION 10. QUORUM AND VOTE REQUIRED FOR ACTION. At all meetings of the board of
directors a majority of the entire board shall constitute a quorum for the
transaction of business, and the action of a majority of the directors present
at any meetings at which a quorum is present shall be the action of the board of
directors unless the concurrence of a greater proportion is required for such
action by statute, the articles of incorporation or these bylaws. If at any
meeting a quorum is not present, a majority of the directors present may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present. Members of the board of directors or a
committee of the board may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time; provided, however, that a
director may not participate in a meeting by means of a conference telephone or
similar communications equipment if the purpose of the meeting is to approve the
corporation's investment advisory agreement and/or to approve the selection of
the corporation's auditors, or if participation in such a manner would otherwise
violate the Investment Company Act of 1940 or other applicable laws. Except as
set forth in the preceding sentence, participation in a meeting by these means
constitutes presence in person at the meeting.

SECTION 11. EXECUTIVE AND OTHER COMMITTEES. The board of directors may appoint
from among its members an executive and other committees composed of two (2) or
more directors. The board may delegate to such committees in the intervals
between meetings of the board any of the powers of the board to manage the
business and affairs of the corporation, except the power to: (i) declare
dividends or distributions upon the stock of the corporation; (ii) issue stock
of the corporation; (iii) recommend to the shareholders any action which
requires shareholder approval; (iv) amend the bylaws; (v) approve any merger or
share exchange which does not require shareholder approval; or (vi) take any
action required by the investment Company Act of 1940 to be taken by the
independent directors of the corporation or by the full board of directors.

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<PAGE>

SECTION 12. INFORMAL ACTION. Except as set forth in the following sentence, any
action required or permitted to be taken at any meeting of the board of
directors or of a committee of the board may be taken without a meeting, if a
written consent to such action is signed by all members of the board or the
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the board or committee. Notwithstanding the preceding
sentence, no action may be taken by the board of directors pursuant to a written
consent with respect to the approval of the corporation's advisory agreement,
the approval of the selection of the corporation's auditors, or any action
required by the Investment Company Act of 1940 or other applicable laws to be
taken at a meeting of the board of directors to be held in person.

ARTICLE III

OFFICERS AND EMPLOYEES

SECTION 1. ELECTION AND QUALIFICATION. At the first meeting of each newly
elected board of directors there shall be elected a president, one or more vice
presidents, a secretary and a treasurer. The board may also elect one or more
assistant secretaries and assistant treasurers. No officer need be a director.
Any two or more offices, except the offices of president and vice president, may
be held by the same person but no officer shall execute, acknowledge or verify
any instrument in more than one capacity, if such instrument is required by law,
charter or these bylaws to be executed, acknowledged or verified by two or more
officers. Each officer must be eligible to serve as an officer of a registered
investment company under the Investment Company Act of 1940. Nothing herein
shall preclude the employment of other employees or agents by the corporation
from time to time without action by the board.

SECTION 2. TERM, REMOVAL AND VACANCIES. The officers shall be elected to serve
until the next first meeting of a newly elected board of directors and until
their successors are elected and qualify. Any officer may be removed by the
board, with or without cause, whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. A vacancy in any
office shall be filled by the board for the unexpired term.

SECTION 3. BONDING. Each officer and employee of the corporation who singly or
jointly with others has access to securities or funds of the corporation, either
directly or through authority to draw upon such funds, or to direct generally
the disposition of such securities shall be bonded against larceny and
embezzlement by a reputable fidelity insurance company authorized to do business
in Illinois and Wisconsin. Each such bond, which may be in the form of an
individual bond, a schedule or blanket bond covering the corporation's officers
and employees and the officers and employees of the investment adviser to the
corporation and other corporations to which said investment adviser also acts as
investment adviser, shall be in such form and for such amount (determined at
least annually) as the board of directors shall determine in compliance with the
requirements of Section 17(g) of the Investment Company Act of 1940, as amended
from

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<PAGE>

time to time, and the rules, regulations or orders of the Securities and
Exchange Commission thereunder.

SECTION 4. PRESIDENT. The president shall be the principal executive officer of
the corporation. He shall preside at all meetings of the shareholders and
directors, have general and active management of the business of the
corporation, see that all orders and resolutions of the board of directors are
carried into effect, and execute in the name of the corporation all authorized
instruments of the corporation, except where the signing shall be expressly
delegated by the board to some other officer or agent of the corporation.

SECTION 5. VICE PRESIDENTS. The vice president, or if there be more than one,
the vice presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president, and shall have such other duties and powers as the
board may from time to time prescribe or the president delegate.

SECTION 6. SECRETARY AND ASSISTANT SECRETARIES. The secretary shall give notice
of, attend and record the minutes of meetings of shareholders and directors,
keep the corporate seal and, when authorized by the board, affix the same to any
instrument requiring it, attesting to the same by his signature, and shall have
such further duties and powers as are incident to his office or as the board may
from time to time prescribe. The assistant secretary, if any, or, if there be
more than one, the assistant secretaries in the order determined by the board,
shall in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary, and shall have such other duties and
powers as the board may from time to time prescribe or the secretary delegate.

SECTION 7. TREASURER AND ASSISTANT TREASURERS. The treasurer shall be the
principal financial and accounting officer of the corporation. He shall be
responsible for the custody and supervision of the corporation's books of
account and subsidiary accounting records, and shall have such further duties
and powers as are incident to his office or as the board of directors may from
time to time prescribe. The assistant treasurer, if any, or, if there be more
than one, the assistant treasurers in the order determined by the board, shall
in the absence or disability of the treasurer, perform all duties and exercise
the powers of the treasurer, and shall have such other duties and powers as the
board may from time to time prescribe or the treasurer delegate.

ARTICLE IV
RESTRICTIONS ON COMPENSATION
TRANSACTIONS AND INVESTMENTS

SECTION 1. SALARY AND EXPENSES. Directors and executive officers as such shall
not receive any salary for their services or reimbursement for expenses from the
corporation; provided that the corporation may pay fees in such amounts and at
such times as the board of directors shall determine to directors who are not
interested persons of the corporation for attendance at meetings of the board of
directors. Clerical employees

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shall receive compensation for their services from the corporation in such
amounts as are determined by the board of directors.

SECTION 2. COMPENSATION AND PROFIT FROM PURCHASE AND SALES. No affiliated person
of the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person, shall, except as permitted by Section 17(e) of
the Act, or the rules, regulations or orders of the Securities and Exchange
Commission thereunder, (i) acting as agent, accept from any source any
compensation for the purchase or sale of any property or securities to or for
the corporation or any controlled company of the corporation, as defined in such
Act, or (ii) acting as a broker, in connection with the sale of securities to or
by the corporation or any controlled company of the corporation, receive from
any source a commission, fee or other remuneration for effecting such
transaction. The investment adviser to the corporation shall not profit directly
or indirectly from sales of securities to or from the corporation.

SECTION 3. TRANSACTIONS WITH AFFILIATED PERSONS. No affiliated person of the
corporation, as defined in the Investment Company Act of 1940, or affiliated
person of such person shall knowingly (i) sell any security or other property to
the corporation or to any company controlled by the corporation, as defined in
the Act, except shares of stock of the corporation or securities of which such
person is the issuer and which are part of a general offering to the holders of
a class of its securities, (ii) purchase from the corporation or any such
controlled company any security or property except shares of stock of the
corporation or securities of which such person is the issuer, (iii) borrow money
or other property from the corporation or any such controlled company, or (iv)
acting as a principal effect any transaction in which the corporation or
controlled company is a joint or joint and several participant with such person;
provided, however, that this section shall not apply to any transaction
permitted by Sections 17 (a), (b), (c), (d) or 21(b) of the Investment Company
Act of 1940 or the rules, regulations or orders of the Securities and Exchange
Commission thereunder, and shall not prohibit the joint participation by the
corporation and an affiliate in a fidelity bond arrangement.

SECTION 4. INVESTMENT ADVISER. The corporation shall employ one or more
investment advisers, the employment of which shall be pursuant to written
agreements in accordance with Section 15 of the Investment Company Act of 1940,
as amended from time to time.

ARTICLE V
STOCK CERTIFICATES AND TRANSFER BOOKS

SECTION 1. CERTIFICATES. Each holder of shares of any class of stock of the
corporation shall be entitled to a certificate or certificates, in such form, if
any, as the board of directors shall from time to time approve, representing and
certifying the number of shares of such class of stock owned by him in the
corporation. Each certificate shall be signed, manually or by facsimile
signature, by the president or a vice president, countersigned, manually or by
facsimile signature, by the secretary, an assistant secretary, the treasurer or
an assistant treasurer and sealed with the corporate seal or facsimile thereof.
In case any officer who has signed any certificate or whose facsimile

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signature appears thereon, ceases to be an officer of the corporation before the
certificate is issued, the certificate may nevertheless be issued with the same
effect as if the officer had not ceased to be such officer as of the date of its
issue. Each certificate shall contain on its face or back a full statement or
summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
term of each class of stock of the corporation or shall state that the
corporation will furnish such information to the shareholder on request and
without charge. Any certificate representing stock which is restricted or
limited as to transferability also shall have a full statement of such
restriction or limitation plainly stated thereon or shall state that the
corporation will furnish such information to the shareholder on request and
without charge.

SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen, destroyed or mutilated (or may delegate such authority to one or more
officers of the corporation) upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen, destroyed or mutilated. The
board or such officer may, in its or his discretion, require the owner of such
certificate or his legal representative to give bond with sufficient surety to
the corporation to indemnify it against any loss or claim which may arise or
expense which may be incurred by reason of the issuance of a new certificate.

SECTION 3. STOCK LEDGER. The corporation shall maintain at its office in Tacoma,
Washington, or at the office of its principal transfer agent, if any, an
original or duplicate stock ledger containing the names and addresses of all
shareholders and the number of shares of each class of stock held by each
shareholder.

SECTION 4. REGISTERED SHAREHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as such, as
the owner of shares for all purposes, and shall not be bound to recognize any
equities or other claim to or interest in such shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
other provided by the laws of Maryland.

SECTION 5. TRANSFER AGENT AND REGISTRAR. The corporation may maintain one or
more transfer offices or agencies, each in charge of a transfer agent designated
by the board of directors, where the shares of each class of stock of the
corporation shall be transferable. The corporation may also maintain one or more
registry offices, each in charge of a registrar designated by the board, where
the shares of such classes of stock shall be registered.

SECTION 6. TRANSFERS OF STOCK. Upon surrender to the corporation or a transfer
agent of a certificate for shares of any class duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.

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SECTION 7. FIXING OF RECORD DATES AND CLOSING OF TRANSFER BOOKS. The board of
directors may fix, in advance, a date as the record date for the purpose of
determining shareholders entitled to notice of, or to vote at, any meeting of
shareholders, or shareholders entitled to receive payment of any dividend or the
allotment of any rights, or in order to make a determination of shareholders for
any other proper purpose. Such date, in any case, shall be not more than ninety
(90) days, and in case of a meeting of shareholders not less than ten (10) days,
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. In lieu of fixing a record date, the board may
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, twenty (20) days. If the stock transfer books are
closed or a record date is fixed for the purpose of determining shareholders
entitled to vote at a meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such action.

ARTICLE VI
ACCOUNTS, REPORTS, CUSTODIAN AND INVESTMENT
ADVISER

SECTION 1. INSPECTION OF BOOKS. The board of directors shall determine from time
to time whether, and, if allowed, when and under what conditions and regulations
the accounts and books of the corporation (except such as may by statute be
specifically open to inspection) or any of them, shall be open to the inspection
of the shareholders, and the shareholders' rights in this respect are and shall
be limited accordingly.

SECTION 2. RELIANCE ON RECORDS. Each director and officer shall, in the
performance of his duties be fully protected in relying in good faith on the
books of account or reports made to the corporation by any of its officials or
by an independent public accountant.

Section 3. PREPARATION AND MAINTENANCE OF ACCOUNTS, RECORDS AND STATEMENTS. The
President, a vice president or the treasurer shall prepare or cause to be
prepared annually, a full and correct statement of the affairs of the
corporation, including a balance sheet of financial condition and a financial
statement of operations for the preceding fiscal year, which shall be submitted
at the annual meeting of the shareholders and filed within twenty (20) days
thereafter at the principal office of the corporation in the state of
Washington. If the corporation is not required to hold an annual meeting of
shareholders, the statement of affairs shall be placed on file at the
corporation's principal office within one hundred twenty (120) days after the
end of the fiscal year. The proper officers of the corporation shall also
prepare, maintain and preserve or cause to be prepared, maintained and preserved
the accounts, books and other documents required by Section 2-111 of the
Maryland General Corporation Law and Section 31 of the Investment Company Act of
1940 and shall prepare and file or cause to be prepared and filed the reports
required by Section 30 of such Act. No financial statement shall be filed with
the Securities and Exchange Commission unless the officers or employees who
prepared or participated in the preparation of such financial statement have
been specifically designated for such purpose by the board of directors.

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SECTION 4. AUDITORS. No independent public accountant shall be retained or
employed by the corporation to examine, certify or report on its financial
statements for any fiscal year unless such selection: (i) shall have been
approved by majority of the entire board of directors within thirty (30), days
before or after the beginning of such fiscal year or before the annual
ratification by the shareholders; (ii) shall have been ratified by the
shareholders, provided that any vacancy occurring between such annual
ratification due to the death or resignation of such accountant may be filled by
the board of directors; and (iii) shall otherwise meet the requirements of
Section 32 of the Investment Company Act of 1940.

SECTION 5. CUSTODIANSHIP. All securities owned by the corporation and all cash,
including, without limiting the generality of the foregoing, the proceeds from
sales of securities owned by the corporation and from the issuance of shares of
shares of the capital stock of the corporation, payments of principal upon
securities owned by the corporation, and distributions in respect of securities
owned by the corporation which at the time of payment are represented by the
distributing corporation to be capital distributions, shall be held by a
custodian or custodians which shall be a bank, as that term is defined in the
Investment Company Act of 1940, having capital, surplus and undivided profits
aggregating not less than $2,000,000. The terms of custody of such securities
and cash shall include provisions to the effect that the custodian shall deliver
securities owned by the corporation only (a) upon sales of such securities for
the account of the corporation and receipt by the custodian of payment therefor,
(b) when such securities are called, redeemed or retired otherwise become
payable, (c) for examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or upon conversion
into other securities alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization, recapitalization or readjustment,
or otherwise, (e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription, purchase or other
similar rights represented by such securities, (g) for the purpose of exchanging
interim receipts or temporary securities for definitive securities, for the
purpose of redeeming in kind shares of the capital stock of the corporation, or
(i) for other proper corporate purposes. Such terms of custody shall also
include provisions to the effect that the custodian shall hold the securities
and funds of the corporation in a separate account or accounts and shall have
sole power to release and deliver any such securities and draw upon any such
account, any of the securities or funds of the corporation only on receipt by
such custodian of written instruction from one or more persons authorized by the
board of directors to give such instructions on behalf of the corporation, and
that the custodian shall deliver cash of the corporation required by this
Section 5 to be deposited with the custodian only upon the purchase of
securities for the portfolio of the corporation and the delivery of such
securities to the custodian, for the purchase or redemption of shares of the
capital stock of the corporation, for the payment of interest, dividends, taxes,
management or supervisory fees or operating expenses, for payments in connection
with the conversion, exchange or surrender of securities owned by the
corporation, or for other proper corporate purposes. Upon the resignation or
inability to serve of any such custodian the corporation shall (a) use its best
efforts to obtain a successor custodian, (b) require the cash and securities of
the corporation held by the

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<PAGE>

custodian to be delivered directly to the successor custodian, and (c) in the
event that no successor custodian can be found, submit to the shareholders of
the corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the corporation
shall be dissolved or shall function without a custodian; provided, however,
that nothing herein contained shall prevent the termination of any agreement
between the corporation and any such custodian by the affirmative vote of the
holders of a majority of all the shares of the capital stock of the corporation
at the time outstanding and entitled to vote. Upon its resignation or inability
to serve, the custodian may deliver any assets of the corporation held by it to
a qualified bank or trust company selected by it, such assets to be held subject
to the terms of custody which governed such retiring custodian, pending action
by the corporation as set forth in this Section 5.

SECTION 6. TERMINATION OF CUSTODIAN AGREEMENT. Any employment agreement with a
custodian shall be terminable on not more than sixty (60) days' notice in
writing by the board of directors or the custodian and upon any such termination
the custodian shall turn over only to the succeeding custodian designated by the
board of directors all funds, securities and property and documents of the
corporation in its possession.

SECTION 7. CHECKS AND REQUISITIONS. Except as otherwise authorized by the board
of directors, all checks and drafts for the payment of money shall be signed in
the name of the corporation by a custodian, and all requisitions or orders for
the payment of money by a custodian or for the issue of checks and drafts
therefore, all promissory notes, all assignments of stock or securities standing
in the name of the corporation, and all requisitions or orders for the
assignment of stock or securities standing in the name of a custodian or its
nominee, or for the execution of powers to transfer the same, shall be signed in
the name of the corporation by not less than two persons (who shall be among
those persons, not in excess of five, designated for this purpose by the board
of directors) at least one of which shall be an officer. Promissory notes,
checks or drafts payable to the corporation may be endorsed only to the order of
a custodian or its nominee by the treasurer or president or by such other person
or persons as shall be thereto authorized by the board of directors.

SECTION 8. INVESTMENT ADVISORY CONTRACT. Any investment advisory contract in
effect after the first annual meeting of shareholders of the corporation, to
which the corporation is or shall become a party, whereby, subject to the
control of the board of directors of the corporation, the investment portfolio
with respect to any class of Common Stock of the corporation shall be managed or
supervised by the other party to such contract, shall be effective and binding
only upon the affirmative vote of a majority of the outstanding voting
securities of such class of Common Stock of the corporation (as defined in the
Investment Company Act of 1940), and the investment advisory contract currently
in effect with respect to any class of Common Stock shall be submitted to the
holders of shares of such class of Common Stock for ratification by the
affirmative vote of such majority. Any investment advisory contract to which the
corporation shall be a party whereby, subject to the control of the board of
directors of the corporation, the investment portfolio with respect to any class
of Common Stock of the corporation shall

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be managed or supervised by the other party, to such contract, shall provide,
among other things, that such contract cannot be assigned. Such investment
advisory contract shall prohibit the other party thereto from making short sales
of shares of capital stock of the corporation; and such investment advisory
contract shall prohibit such other party from purchasing shares otherwise than
for investment, and shall require such other party to advise the corporation of
any sales of shares of the capital stock of the corporation made by such person
or organization less than two months after the date of any purchase by him or it
of shares of the capital stock of the corporation. Unless any such contract
shall expressly otherwise provide, any provisions therein for the termination
thereof by action of the board of directors of the corporation shall be
construed to require that such termination can be accomplished only upon the
vote of a majority of the entire board.

ARTICLE VII
GENERAL PROVISIONS

SECTION 1. OFFICES. The resident office of the corporation in the State of
Maryland shall be in the City of Baltimore. The corporation shall also have an
office in Tacoma, Washington. The corporation may also have offices at such
other places within and without the State of Maryland as the board of directors
may from time to time determine. Except as otherwise required by statute, the
books and records of the corporation may be kept outside the State of Maryland.

SECTION 2. SEAL. The corporate seal, if any, shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal" and 'Maryland". The seal
may be used by causing it or a facsimile thereof to be impressed, affixed,
reproduced or otherwise.

SECTION 3. FISCAL YEAR. The fiscal year of the corporation shall be fixed by the
board of directors.

SECTION 4. NOTICE OF WAIVER OF NOTICE. Whenever any notice of the time, place or
purpose of any meeting of shareholders or directors is required to be given
under the statute, the charter or these bylaws, a waiver thereof in writing,
signed by the person or persons entitled to such notice and filed with the
records of the meeting, either before or after the holding thereof, or actual
attendance at the meeting of shareholders in person or by proxy or at the
meeting of directors in person, shall be deemed equivalent to the giving of such
notice to such person. No notice need be given to any person with whom
communication is made unlawful by any law of the United States or any rule,
regulation, proclamation or executive order issued by any such law.

SECTION 5. VOTING OF STOCK. Unless otherwise ordered by the board of directors,
the president shall have full power and authority, in the name and on behalf of
the corporation, (i) to attend, act and vote at any meeting of shareholders of
any company in which the corporation may own shares of stock of record,
beneficially (as the proxy or attorney-in-fact of the record holder) or of
record and beneficially, and (ii) to give voting directions to the record
shareholder of any such stock beneficially owned. At any such meeting, he shall
possess and may exercise any and all rights and powers incident to the ownership
of such shares which, as the holder or beneficial owner and proxy of the

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holder thereof, the corporation might possess and exercise if personally
present, and may delegate such power and authority to any officer, agent or
employee of the corporation.

SECTION 6. DIVIDENDS. Dividends upon any class of stock of the corporation,
subject to the provisions of the charter, if any, may be declared by the board
of directors in any lawful manner. The source of each dividend payment shall be
disclosed to the shareholders receiving such dividend, to the extent required by
the laws of the State of Maryland and by Section 19 of the Investment Company
Act of 1940 and the rules and regulations of the Securities and Exchange
Commission thereunder.

SECTION 7. INDEMNIFICATION.

A. The corporation shall indemnify all of its corporate representatives
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with the
defense of any action, suit or proceeding, or threat or claim of such action,
suit or proceeding, whether civil, criminal, administrative, or legislative, no
matter by whom brought, or in any appeal in which they or any of them are made
parties or a party by reason of being or having been a corporate representative,
if the corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, if he
received no improper benefit in money, property or services, and with respect to
any criminal proceeding, if he had no reasonable cause to believe his conduct
was unlawful; provided that the corporation shall not indemnify corporate
representatives in relation to matters as to which any such corporate
representative shall be adjudged in such action, suit or proceeding to be liable
for gross negligence, willful misfeasance, bad faith, reckless disregard of the
duties and obligations involved in the conduct of his office, or when
indemnification is otherwise not permitted by the Maryland General Corporation
Law.

B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that indemnification of
the corporate representative is proper because he has met the applicable
standard of conduct set forth in paragraph A. Such determination shall be made:
(i) by the board of directors, by a majority vote of a quorum, which consists of
directors who were not parties to the action, suit or proceeding, or if such a
quorum cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors, not, at the time, parties to the
action, suit or proceeding and who were duly designated to act in the matter by
the full board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel selected by
the board of directors or a committee of the board as set forth in (i) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the full
board in which directors who are parties to the action, suit or proceeding may
participate.

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<PAGE>

C. The termination of any action, suit or proceeding by judgment, order
or settlement shall not create a presumption that the corporate representative
did not meeting the requisite standard of conduct set forth in Paragraph A. The
termination of any action, suit or proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or upon an entry of an order of probation
prior to judgment, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
to the duties and obligations involved in the conduct of his or her office, and,
with respect to any criminal action or proceeding; and reasonable cause to
believe that his or her conduct was unlawful.

D. Expenses, including attorneys' fees, incurred in the preparation of
and/or presentation of the defense of a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized in the manner provided in Section
2-418(f) or the Maryland General Corporation Law upon receipt of: (i) an
undertaking by or on behalf of the corporate representative to repay such amount
unless it shall ultimately be determined that he or she is entitled to be
indemnified by the corporation as authorized in this bylaw; and (ii) a written
affirmation by the corporate representative of the corporate representative's
good faith belief that the standard of conduct necessary for indemnification by
the corporation has been met.

E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these bylaws, any agreement, vote of shareholders or disinterested directors or
otherwise, or as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person subject
to the limitations imposed from time to time by the Investment Company Act of
1940, as amended.

F. This corporation shall have power to purchase and maintain insurance
on behalf of any corporate representative against any liability asserted against
him or her and incurred by him or her in such capacity or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the bylaw, provided that no
insurance may be purchased or maintained to protect any corporate representative
against liability for gross negligence, willful misfeasance, bad faith or
reckless disregard of the duties and obligations involved in the conduct of his
or her office.

G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or served
another corporation, partnership, joint venture, trust or other enterprise in
one of these capacities at the request of the corporation and who, by reason of
his or her position, is, was, or is threatened to be made, a party to a
proceeding described herein.

SECTION 8. AMENDMENTS.

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A. These bylaws may be altered, amended or repealed and new bylaws may
be adopted by the shareholders by affirmative vote of not less than a majority
of the shares of all classes of stock present or represented at any annual or
special meeting of the shareholders at which a quorum is in attendance.

B. These bylaws may also be altered, amended or repealed and new bylaws
may be adopted by the Board of Directors by affirmative vote of a majority of
the number of directors present at any meeting at which a quorum is in
attendance; but no bylaw adopted by the shareholders shall be amended or
repealed by the Board of Directors if the bylaws so adopted so provides.

C. Any action taken or authorized by the shareholders or by the Board
of Directors, which would be inconsistent with the bylaws then in effect but is
taken or authorized by affirmative vote of not less than the number of shares or
the number of directors required to amend the bylaws so that the bylaws would be
consistent with such action, shall be given the same effect as though the bylaws
had been temporarily amended or suspended so far, but only so far, as was
necessary to permit the specific action so taken or authorized.

SECTION 9. REPORT TO SHAREHOLDERS. The books of account of the corporation shall
be examined by an independent firm of public accountants at the close of each
annual fiscal period of the corporation and at such other times, if any, as may
be directed by the Board of Directors of the corporation. A report to the
shareholders based upon each such examination shall be mailed to each
shareholder of the corporation of record on such date with respect to each
report as may be determined by the Board of Directors at his address as the same
appears on the books of the corporation. Each such report shall include the
financial information required to be transmitted to shareholders by rules or
regulations of the Securities and Exchange Commission under the Investment
Company Act of 1940 and shall be in such form as the Board of Directors shall
determine pursuant to rules and regulations of the Securities and Exchange
Commission.

SECTION 10. INFORMATION TO ACCOMPANY DIVIDENDS. At the time of the payment by
the corporation of any dividend to the holders of any class of stock of the
corporation, each shareholder to whom such dividend is paid shall be notified of
the account or accounts from which it is paid and the amount thereof paid from
each such account.

ARTICLE VIII
SALES, REDEMPTION AND
NET ASSET VALUE OF SHARES

SECTION 1. SALES OF SHARES. Shares of any class of Common Stock of the
corporation shall be sold by it for the net asset value per share of such class
of Common Stock outstanding at the time as of which the computation of said net
asset value shall be made as hereinafter provided in these bylaws.

SECTION 2. PERIODIC INVESTMENT AND DIVIDEND REINVESTMENT PLANS. The corporation
acting by and through the Board of Directors shall have the right to adopt and
to offer to

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the holders of each class of stock and to the public a periodic investment plan
and an automatic reinvestment of dividend plan subject to the limitations and
restrictions imposed thereon and as set forth in the Investment Company Act of
1940 and any rule or regulation adopted or issued thereunder.

SECTION 3. SHARES ISSUED FOR SECURITIES. In the case of shares of any class of
stock of the corporation issued in whole or in part in exchange for securities,
there may, at the discretion of the board of directors of the corporation, be
included in the value of said securities, for the purpose of determining the
number of shares of such class stock of the corporation issuable in exchange
therefor, the amount, if any, of brokerage commissions (not exceeding an amount
equal to the rates payable in connection with the purchase of comparable
securities on the New York Stock Exchange) or other similar costs of acquisition
of such securities paid by the holder of said securities in acquiring the same.

SECTION 4. REDEMPTION OF SHARES. Each share of each class of Common Stock of the
corporation now or hereafter issued shall be subject to redemption, as provided
in the Articles of Incorporation of the corporation.

SECTION 5. SUSPENSION OF RIGHT OF REDEMPTION. The Board of Directors of the
corporation may suspend the right of the holders of any class of Common Stock of
the corporation to require the corporation to redeem shares of such class:

(1) for any period (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings,
or (b) during which trading on the New York Stock Exchange is
restricted;

(2) for any period during which an emergency, as defined by
rules of the Securities and Exchange Commission or any successor
thereto, exists as a result of which (a) disposal by the corporation of
securities owned by it is not reasonably practicable, or (b) it is not
reasonably practicable for the corporation fairly to determine the
value of its net assets; or

(3) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the
protection of security holders of the corporation.

SECTION 6. COMPUTATION OF NET ASSET VALUE. For purposes of these bylaws, the
following rules shall apply:

A. The net asset value of each share of each class of Common Stock of
the corporation shall be determined at such time or times as may be disclosed in
the then currently effective Prospectus relating to such class of Common Stock
of this corporation. The Board of Directors may also, from time to time by
resolution, designate a time or times intermediate of the opening and closing of
trading on the New York Stock Exchange on each day that said Exchange is open
for trading as of which the net asset value of each share of each class of
Common Stock of the corporation shall be determined or estimated.

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<PAGE>

Any determination or estimation of net asset value as provided in this
subparagraph A shall be effective at the time as of which such determination or
estimation is made.

The net asset value of each share of each class of Common Stock of the
corporation for purposes of the issue of such class of Common Stock shall be the
net asset value which becomes effective as provided in this Subparagraph A, next
succeeding receipt of the subscription to such share of such class Common Stock.
The net asset value of each share of each class of Common Stock of the
corporation tendered for redemption shall be the net asset value which becomes
effective as provided in this Subparagraph A, next succeeding the tender of such
share of such class of Common Stock for redemption.

B. The net asset value of each share of each class of Common Stock of
the corporation, as of the close of business on any day, shall be the quotient
obtained by dividing the value at such close of the net assets belonging to such
class (meaning the assets belonging to such class and any other assets allocated
to such class less the liabilities belonging to such class and any other
liabilities allocated to such class excluding capital and surplus) of the
corporation by the total number of shares of such class outstanding at such
close.

(i) The assets belonging to any class of Common Stock shall be
that portion of the total assets of the corporation as determined in
accordance with the provisions of Article IV of the Articles of
Incorporation of the corporation. The assets of the corporation shall
be deemed to include (a) all cash on hand, on deposit, or on call, (b)
all bills and notes and accounts receivable, (c) all shares of stock
and subscription rights and other securities owned or contracted for by
the corporation, other than its own common stock, (d) all stock and
cash dividends and cash distributions, to be received by the
corporation, and not yet received by it but declared to shareholders of
record on a date on or before the date as of which the net asset value
is being determined, (e) all interest accrued on any interest-bearing
securities owned by the corporation, and (f) all other property of
every kind and nature including prepaid expenses; the value of such
assets to be determined in accordance with the corporation's
registration statement filed with the Securities and Exchange
Commission.

(ii) The liabilities belonging to any class of Common Stock
shall be that portion of the total liabilities of the corporation as
determined in accordance with the provisions of Article IV of the
Articles of Incorporation of the corporation. The liabilities of the
corporation shall be deemed to include (a) all bills and notes and
accounts payable, (b) all administration expenses payable and/or
accrued (including investment advisory fees), (c) all contractual
obligations for the payment of money or property including the amount
of any unpaid dividend declared upon the corporation's stock and
payable to shareholders of record on or before the day as of which the
value of the corporation's stock is being determined, (d) all reserves,
if any, authorized or approved by the Board of

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Directors for taxes, including reserves for taxes at current rates
based on any unrealized appreciation in the value of the assets of the
corporation, and (e) all other liabilities of the corporation of
whatever kind and nature except liabilities represented by outstanding
capital stock and surplus of the corporation.

(iii) For the purposes hereof: (a) shares of each class of
Common Stock subscribed for shall be deemed to be outstanding as of the
time of acceptance of any subscription and the entry thereon on the
books of the corporation and the net price thereof shall be deemed to
be an asset belonging to such class; and (b) shares of each class of
Common Stock surrendered for redemption by the corporation shall be
deemed to be outstanding until the time as of which the net asset value
for purposes of such redemption is determined or estimated.

C. The net asset value of each share of each class of Common Stock of
the corporation, as of any time other than the close of business on any day, may
be determined by applying to the net asset value as of the close of business on
the preceding business day, computed as provided in Paragraph B of this Section
of these bylaws, such adjustments as are authorized by or pursuant to the
direction of the Board of Directors and designed reasonably to reflect any
material changes in the market value of securities and other assets held and any
other material changes in the assets or liabilities of the corporation and in
the number of its outstanding shares which shall have taken place since the
close of business on such preceding business day.

D. In addition to the foregoing, the Board of Directors is empowered,
in its absolute discretion, to establish other bases or times, or both, for
determining the net asset value of each share of each class of the Common Stock
of the corporation.

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<PAGE>

The corporation will furnish a full statement of the designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each class which the corporation is authorized to
issue and the differences in the relative rights and preferences between the
shares of each series to the extent they have been set and the authority of the
board of directors to set the relative rights and preferences of subsequent
series, to any stockholder on request and without charge.

INCORPORATED UNDER THE LAWS OF

NO. _______________ STATE OF MARYLAND SHARES ______________

[PICTURE OF
EAGLE
APPEARS HERE] LIGHT INDEX FUND, INC.

Authorized Capital: 50,000,000 Class A Common Stock

This Certifies that (specimen) is the owner of _____________ shares of common
stock each of the Capital Stock of

LIGHT INDEX FUND, INC.

transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed

[SEAL
APPEARS
HERE]

IN WITNESS WHEREOF, the said Corporation hascused this Certificate to the be
signed by its duly autorized officers and to be sealed with the seal of the
Corporation

this ______________ day of _______________ A.D.

_________________ ___________________
President Secretary
------------------ SHARES (Par Value) EACH ----------------------
$0.0001

CERTIFICATE
FOR
SHARES
(PICTURE OF EAGLE APPEARS HERE)
OF THE
CAPITAL STOCK

ISSUED TO
-------------------------
DATED
-------------------------

-------------------------

For Value Received, __________ hereby sell, assign and transfer unto _____
_____________________________ Shares of the Capital Stock represented by the
within Certificate, and do hereby irrevocably constitute and appoint
______________________________________________________________________________
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

DATED ________________ 19______
in presence of

_____________________________________________
______________________________

PAGE 1

CUSTODIAN SERVICING AGREEMENT

THIS AGREEMENT is made and entered into as of January 1, 1998,
between Light Index Fund, Inc., a Maryland corporation (hereinafter called the
"Company"), and Firstar Trust Company, a corporation organized under the laws of
the State of Wisconsin (hereinafter called "Custodian").

WHEREAS, the Company is an open-end management investment company
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act");

WHEREAS, the Company is authorized to create separate series,
each with its own separate investment portfolio; and

WHEREAS, the Company desires that the securities and cash of the
Light Index Fund (the "Fund") and each additional series of the Company listed
on Exhibit A attached hereto, as may be amended from time to time, shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Company and Custodian agree as follows:

1. DEFINITIONS

The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.

The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Company by any
two of the President, a Vice President, the Secretary and the Treasurer of the
Company, or any other persons duly authorized to sign by the Board of Directors.

The word "Board" shall mean Board of Directors of the Light Index
Fund, Inc.

2. NAMES, TITLES, AND SIGNATURES OF THE COMPANY'S OFFICERS

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PAGE 2

An officer of the Company will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Directors, together with any changes which may occur from time to time.

<PAGE>

PAGE 3

3. RECEIPT AND DISBURSEMENT OF MONEY

A. Custodian shall open and maintain a separate account or
accounts in the name of the Company, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Company. Custodian shall make payments of cash
to, or for the account of, the Company from such cash only:

(a) for the purchase of securities for the portfolio of the Fund
upon the delivery of such securities to Custodian, registered in the name of the
Company or of the nominee of Custodian referred to in Section 7 or in proper
form for transfer;

(b) for the purchase or redemption of shares of the common stock
of the Fund upon delivery thereof to Custodian, or upon proper instructions from
the Company;

(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without limitation thereto,
fees for legal, accounting, auditing and custodian services and expenses for
printing and postage);

(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund held by or to be
delivered to Custodian; or

(e) for other proper corporate purposes certified by resolution
of the Board of Directors of the Company.

Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating that it
is for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such payment
is to be made, provided, however, that an officers' certificate need not precede
the disbursement of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Company
issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two business
days thereafter.

<PAGE>

PAGE 4

B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by Custodian
for the account of the Company.

C. Custodian shall, upon receipt of proper instructions, make
federal funds available to the Company as of specified times agreed upon from
time to time by the Company and the Custodian in the amount of checks received
in payment for shares of the Fund which are deposited into the Fund's account.

D. If so directed by the Company, Custodian will invest any and
all available cash in overnight cash-equivalent investments as specified by
the investment manager.

4. SEGREGATED ACCOUNTS

Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of the Fund,
into which account(s) may be transferred cash and/or securities.

5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES

Custodian shall have sole power to release or deliver any
securities of the Company held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder only:

(a) for sales of such securities for the account of the Fund
upon receipt by Custodian of payment therefore;

(b) when such securities are called, redeemed or retired or
otherwise become payable;

(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or otherwise;

(e) upon conversion of such securities pursuant to their terms
into other securities;

<PAGE>

PAGE 5

(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;

(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;

(h) for the purpose of redeeming in kind shares of common stock
of the Fund upon delivery thereof to Custodian; or

(i) for other proper corporate purposes.

As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange therefor
shall be deliverable to Custodian.

Before making any such transfer, exchange or delivery, Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose permitted
under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this
Section 5 and also, in respect of item (i), upon receipt of an officers'
certificate specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made, provided, however, that an officers' certificate need
not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Company
issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two business
days thereafter.

6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS

Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund; (b) collect interest and cash dividends received, with notice to
the Company, for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the Company, all necessary ownership certificates required by the Internal
Revenue Code of 1986, as amended (the "Code") or the Income Tax Regulations (the
"Regulations") of the United States Treasury Department (the "Treasury
Department") or under the

<PAGE>

PAGE 6

laws of any state now or hereafter in effect, inserting the Company's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.

7. REGISTRATION OF SECURITIES

Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of Custodian as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. All securities held by Custodian
hereunder shall be at all times identifiable in its records held in an account
or accounts of Custodian containing only the assets of the Company.

The Company shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Company and which may from
time to time be registered in the name of the Company.

8. VOTING AND OTHER ACTION

Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the Company
all notices, proxies and proxy soliciting materials with respect to such
securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Company), but
without indicating the manner in which such proxies are to be voted.

9. TRANSFER TAX AND OTHER DISBURSEMENTS

The Company shall pay or reimburse Custodian from time to time
for any transfer taxes payable upon transfers of securities made hereunder, and
for all other necessary and proper disbursements and expenses made or incurred
by Custodian in the performance of this Agreement.

Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exempt transfers and/or deliveries of any
such securities.

<PAGE>

PAGE 7

10. CONCERNING CUSTODIAN

Custodian shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto.

Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.

The Company agrees to indemnify and hold harmless Custodian and
its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including reasonable counsel fees) incurred or assessed against it
or by its nominee in connection with the performance of this Agreement, except
such as may arise from its or its nominee's own bad faith, negligent action,
negligent failure to act or willful misconduct. Custodian is authorized to
charge any account of the Fund for such items. In the event of any advance of
cash for any purpose made by Custodian resulting from orders or instructions of
the Company, or in the event that Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own bad faith, negligent action, negligent failure to act
or willful misconduct, any property at any time held for the account of the
Company shall be security therefor.

Custodian agrees to indemnify and hold harmless the Company from all charges,
expenses, assessments, and claims/liabilities (including reasonable counsel
fees) incurred or assessed against it in connection with the performance of this
Agreement, except such as may arise from the Fund's own bad faith, negligent
action, negligent failure to act, or willful misconduct.

11. SUBCUSTODIANS

Custodian is hereby authorized to engage another bank or trust
company as a subcustodian for all or any part of the Company's assets, so long
as any such bank or trust company is itself qualified under the 1940 Act and the
rules and regulations thereunder and provided further that, if the Custodian
utilizes the services of a subcustodian, the Custodian shall remain fully liable
and responsible for any losses caused to the Company by the subcustodian as
fully as if the Custodian was directly responsible for any such losses under the
terms of this Agreement.

Notwithstanding anything contained herein, if the Company
requires the Custodian to engage specific subcustodians for the safekeeping
and/or clearing of assets, the Company agrees to indemnify and hold harmless
Custodian from all claims, expenses and liabilities incurred or assessed

<PAGE>

PAGE 8

against it in connection with the use of such subcustodian in regard to the
Company's assets, except as may arise from Custodian's own bad faith, negligent
action, negligent failure to act or willful misconduct.

12. REPORTS BY CUSTODIAN

Custodian shall furnish the Company periodically as agreed upon
with a statement summarizing all transactions and entries for the account of
Company. Custodian shall furnish to the Company, at the end of every month, a
list of the portfolio securities for the Fund showing the aggregate cost of each
issue. The books and records of Custodian pertaining to its actions under this
Agreement shall be open to inspection and audit at reasonable times by officers
of, and by auditors employed by, the Company.

13. TERMINATION OR ASSIGNMENT

This Agreement may be terminated by the Company, or by Custodian,
on ninety (90) days notice, given in writing and sent by registered mail to:

Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202

or to the Company at:

Light Index Investment Company
Attn.: Henry Hewitt
704 Court A
Tacoma, WA 98402

as the case may be. Upon any termination of this Agreement, pending appointment
of a successor to Custodian or a vote of the shareholders of the Fund to
dissolve or to function without a custodian of its cash, securities and other
property, Custodian shall not deliver cash, securities or other property of the
Fund to the Company, but may deliver them to a bank or trust company of its own
selection that meets the requirements of the 1940 Act as a Custodian for the
Company to be held under terms similar to those of this Agreement, provided,
however, that Custodian shall not be required to make

<PAGE>

PAGE 9

any such delivery or payment until full payment shall have been made by the
Company of all liabilities constituting a charge on or against the properties
then held by Custodian or on or against Custodian, and until full payment shall
have been made to Custodian of all its fees, compensation, costs and expenses,
subject to the provisions of Section 10 of this Agreement.

This Agreement may not be assigned by Custodian without the
consent of the Company, authorized or approved by a resolution of its Board of
Directors.

14. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES

No provision of this Agreement shall be deemed to prevent the use
by Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Company approves by resolution
the use of such central securities clearing agency or securities depository.

15. RECORDS

Custodian shall keep records relating to its services to be
performed hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Company but not inconsistent with the rules
and regulations of appropriate government authorities, in particular Section 31
of the 1940 Act and the rules thereunder. Custodian agrees that all such records
prepared or maintained by the Custodian relating to the services performed by
Custodian hereunder are the property of the Company and will be preserved,
maintained, and made available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Company on and in accordance
with its request.

16. GOVERNING LAW

This Agreement shall be governed by Wisconsin law. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by a duly authorized officer or one or more counterparts as of
the day and year first written above.

<PAGE>

PAGE 10

LIGHT INDEX FUND, INC. FIRSTAR TRUST COMPANY

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

<PAGE>

PAGE 11

CUSTODY SERVICES
ANNUAL FEE SCHEDULE - DOMESTIC FUNDS

EXHIBIT A

Separate Series of Light Index Fund, Inc.

NAME OF SERIES ADDED AS OF

Light Index Fund January 1, 1998

Annual fee based upon market value
2 basis points per year
Minimum annual fee per fund - $3,000

Investment transactions (purchase, sale, exchange, tender, redemption, maturity,
receipt, delivery):

$10.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$15.00 per variation margin
$15.00 per Fed wire deposit or withdrawal

Variable Amount Demand Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is 1/4
of 1%, is deducted from the variable amount note income at the time it is
credited to your account.

Plus out-of-pocket expenses, and extraordinary expenses based upon complexity.

Fees and out-of-pocket expenses are billed to the fund monthly, based upon
market value at the beginning of the month.

<PAGE>

PAGE 1

FUND ADMINISTRATION SERVICING AGREEMENT

THIS AGREEMENT is made and entered into as of January 1, 1998, by and
between Light Index Fund, Inc., a Maryland corporation (hereinafter referred to
as the "Company") and Firstar Trust Company, a corporation organized under the
laws of the State of Wisconsin (hereinafter referred to as "FTC").

WHEREAS, the Company is an open-end management investment company which
is registered under the Investment Company Act of 1940, as amended (the "1940
Act");

WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio;

WHEREAS, FTC is a trust company and, among other things, is in the
business of providing fund administration services for the benefit of its
customers; and

WHEREAS, the Company desires to retain FTC to act as Administrator for
the Light Index Fund (the "Fund") and for each additional series of the Company
listed on Exhibit A attached hereto, as may be amended from time to time.

NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and FTC agree as follows:

1. APPOINTMENT OF ADMINISTRATOR

The Company hereby appoints FTC as Administrator of the Company on the
terms and conditions set forth in this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.

2. DUTIES AND RESPONSIBILITIES OF FTC

A. General Fund Management

1. Act as liaison among all Fund service providers

2. Coordinate board communication by:

a. Assisting Company counsel in establishing meeting agendas
b. Preparing board reports based on financial and administrative
data
c. Evaluating independent auditor

<PAGE>

PAGE 2

d. Securing and monitoring fidelity bond and director and officer
liability coverage, and making the necessary SEC filings
relating thereto
e. Preparing minutes of meetings of the board and shareholders

3. Audits

a. Prepare appropriate schedules and assist independent auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities

4. Assist in overall operations of the Fund

5. Pay Fund expenses upon written authorization from the Company

B. Compliance

1. Regulatory Compliance

a. Monitor compliance with 1940 Act requirements, including:

1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of Ethics for the disinterested directors of
the Fund

b. Monitor Fund's compliance with the policies and investment
limitations of the Company as set forth in its Prospectus and
Statement of Additional Information

2. Blue Sky Compliance

a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the registration of the securities of the Company so as to
enable the Company to make a continuous offering of its shares
in all states

b. Monitor status and maintain registrations in each state

3. SEC Registration and Reporting

a. Assist Company counsel in updating Prospectus and Statement of
Additional Information and in preparing proxy statements and
Rule 24f-2 notices

b. Prepare annual and semiannual reports

<PAGE>
PAGE 3

c. Coordinate the printing of publicly disseminated Prospectuses
and reports
d. File fidelity bond under Rule 17g-1
e. File shareholder reports under Rule 30b2-1

<PAGE>

PAGE 4

4. IRS Compliance

a. Monitor Company's status as a regulated investment company
under Subchapter M through review of the following:

1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements

b. Calculate required distributions (including excise tax
distributions)

C. Financial Reporting

1. Provide financial data required by Fund's Prospectus and Statement
of Additional Information

2. Prepare financial reports for shareholders, the board, the SEC,
and independent auditors

3. Supervise the Company's Custodian and the Company's Accountants in
the maintenance of the Company's general ledger and in the
preparation of the Fund's financial statements, including
oversight of expense accruals and payments, of the determination
of net asset value of the Company's net assets and of the
Company's shares, and of the declaration and payment of dividends
and other distributions to shareholders

D. Tax Reporting

1. Prepare and file on a timely basis appropriate federal and state
tax returns including Forms 1120/8610 with any necessary schedules

2. Prepare state income breakdowns where relevant

3. File Form 1099 Miscellaneous for payments to directors and other
service providers

4. Monitor wash losses

5. Calculate eligible dividend income for corporate shareholders

3. COMPENSATION

<PAGE>

PAGE 5

The Company, on behalf of the Fund, agrees to pay FTC for the performance
of the duties listed in this Agreement, the fees and out-of-pocket expenses as
set forth in the attached Exhibit A.

These fees may be changed from time to time, subject to mutual written
Agreement between the Company and FTC.

The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the receipt of the billing notice.

4. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY

A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Company in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
FTC's control, except a loss resulting from FTC's refusal or failure to comply
with the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Company shall
indemnify and hold harmless FTC from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in fact or law)
of any and every nature (including reasonable attorneys' fees) which FTC may
sustain or incur or which may be asserted against FTC by any person arising out
of any action taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in reliance
upon any written or oral instruction provided to FTC by any duly authorized
officer of the Company, such duly authorized officer to be included in a list of
authorized officers furnished to FTC and as amended from time to time in writing
by resolution of the Board of Directors of the Company.

FTC shall indemnify and hold the Company harmless from and
against any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Company may sustain or incur or which may
be asserted against the Company by any person arising out of any action taken or
omitted to be taken by FTC as a result of FTC's refusal or failure to comply
with the terms of this Agreement, its bad faith, negligence, or willful
misconduct.

<PAGE>

PAGE 6

make every reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FTC. FTC agrees that it
shall, at all times, have reasonable contingency plans with appropriate parties,
making reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives of
the Company shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon reasonable
notice to FTC.

Regardless of the above, FTC reserves the right to reprocess
and correct administrative errors at its own expense.

B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor may be
asked to indemnify or hold the indemnitee harmless, the indemnitor shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation which
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the indemnitee
against any claim which may be the subject of this indemnification. In the event
that the indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.

5. PROPRIETARY AND CONFIDENTIAL INFORMATION

FTC agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Company all
records and other information relative to the Company and prior, present, or
potential shareholders of the Company (and clients of said shareholders), and
not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Company, which approval shall not
be unreasonably withheld and may not be withheld where FTC may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Company.

6. DATA NECESSARY TO PERFORM SERVICES

The Company or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such form as
mutually agreed upon.

7. TERM OF AGREEMENT

<PAGE>

PAGE 7

This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue automatically in effect for
successive annual periods. The Agreement may be terminated by either party upon
giving ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. However, this Agreement may be
amended by mutual written consent of the parties.

8. NOTICES

Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows: Notice
to FTC shall be sent to:

Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202

and notice to the Company shall be sent to:

Light Index Investment Company
Attn.: Henry Hewitt
704 Court A
Tacoma, WA 98402

9. DUTIES IN THE EVENT OF TERMINATION

In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Company by
written notice to FTC, FTC will promptly, upon such termination and at the
expense of the Company, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by FTC under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FTC has maintained, the Company shall pay any expenses
associated with transferring the data to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FTC's personnel in the establishment of books, records, and other data by
such successor.

10. GOVERNING LAW

This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Wisconsin. However,
nothing herein shall be

<PAGE>

PAGE 8

construed in a manner inconsistent with the 1940 Act or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.

11. RECORDS

FTC shall keep records relating to the services to be performed hereunder,
in the form and manner, and for such period as it may deem advisable and is
agreeable to the Company but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Company and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Company on and in accordance with its request.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.

LIGHT INDEX FUND, INC. FIRSTAR TRUST COMPANY

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

<PAGE>

PAGE 9

FUND ADMINISTRATION AND COMPLIANCE
ANNUAL FEE SCHEDULE - DOMESTIC FUNDS

EXHIBIT A

Separate Series of Light Index Fund, Inc.

NAME OF SERIES ADDED AS OF

Light Index Fund January 1, 1998

Annual fee based upon average net assets per fund or class
6 basis points on the first $200 million
5 basis points on the next $500 million
3 basis points on the balance Minimum annual fee:
$30,000 first fund
$20,000 /fund next three funds
$15,000 /fund additional funds

Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses

Fees and out-of-pocket expense reimbursements are billed monthly.

<PAGE>

PAGE 1

FUND ACCOUNTING SERVICING AGREEMENT

WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");

WHEREAS, the Company is authorized to create separate series, each with
its own separate investment portfolio;

WHEREAS, FTC is in the business of providing, among other things, mutual
fund accounting services to investment companies; and

WHEREAS, the Company desires to retain FTC to provide accounting
services to the Light Index Fund (the "Fund") and each additional series of the
Company listed on Exhibit A attached hereto, as it may be amended from time to
time.

NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and FTC agree as follows:

1. APPOINTMENT OF FUND ACCOUNTANT

The Company hereby appoints FTC as Fund Accountant of the Company on
the terms and conditions set forth in this Agreement, and FTC hereby accepts
such appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.

2. DUTIES AND RESPONSIBILITIES OF FTC

A. Portfolio Accounting Services:

(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the
investment manager.

(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors of the Company
and apply those prices to the portfolio positions. For
those securities where market quotations are not readily
available, the Board of

<PAGE>

PAGE 2

Directors of the Company shall approve, in good faith, the
method for determining the fair value for such securities.

(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments
for the accounting period.

(4) Determine gain/loss on security sales and identify them
as, short-term or long-term; account for periodic
distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of each
valuation date.

B. Expense Accrual and Payment Services:

(1) For each valuation date, calculate the expense accrual
amounts as directed by the Company as to methodology, rate
or dollar amount.

(2) Record payments for Fund expenses upon receipt of written
authorization from the Company.

(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon
by FTC and the Company.

(4) Provide expense accrual and payment reporting.

C. Fund Valuation and Financial Reporting Services:

(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share
activity as reported by the transfer agent on a timely
basis.

(2) Apply equalization accounting as directed by the Company.

(3) Determine net investment income (earnings) for the Fund as
of each valuation date. Account for periodic distributions
of earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.

(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.

(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's
Prospectus.

<PAGE>

PAGE 3

(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund
operations at such time as required by the nature and
characteristics of the Fund.

(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from
time to time.

(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.

D. Tax Accounting Services:

(1) Maintain accounting records for the investment portfolio
of the Fund to support the tax reporting required for
IRS-defined regulated investment companies.

(2) Maintain tax lot detail for the investment portfolio.

(3) Calculate taxable gain/loss on security sales using the
tax lot relief method designated by the Company.

(4) Provide the necessary financial information to support the
taxable components of income and capital gains
distributions to the transfer agent to support tax
reporting to the shareholders.

E. Compliance Control Services:

(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Fund's
accounting records available to the Company, the
Securities and Exchange Commission, and the outside
auditors.

(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.

3. PRICING OF SECURITIES

For each valuation date, obtain prices from a pricing source selected by FTC but
approved by the Company's Board of Directors and apply those prices to the
portfolio positions of the Fund. For those securities where market quotations
are not readily available, the Company's Board of Directors shall approve, in
good faith, the method for determining the fair value for such securities.

If the Company desires to provide a price which varies from the pricing source,
the Company shall promptly notify and supply FTC with the valuation of any such
security on each valuation date. All pricing changes made by the Company will be
in writing and must specifically identify the securities

<PAGE>

PAGE 4

to be changed by CUSIP, name of security, new price or rate to be applied, and,
if applicable, the time period for which the new price(s) is/are effective.

4. CHANGES IN ACCOUNTING PROCEDURES

Any resolution passed by the Board of Directors of the Company that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FTC.

5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.

FTC reserves the right to make changes from time to time, as it deems advisable,
relating to its services, systems, programs, rules, operating schedules and
equipment, so long as such changes do not adversely affect the service provided
to the Company under this Agreement.

6. COMPENSATION

FTC shall be compensated for providing the services set forth in this Agreement
in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. The Company agrees to pay all fees
and reimbursable expenses within ten (10) business days following the receipt of
the billing notice.

7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY

A. FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
FTC's control, except a loss resulting from FTC's refusal or failure to comply
with the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Company shall
indemnify and hold harmless FTC from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in fact or law)
of any and every nature (including reasonable attorneys' fees) which FTC may
sustain or incur or which may be asserted against FTC by any person arising out
of any action taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in reliance
upon any written or oral instruction provided to FTC by any duly authorized
officer of the

<PAGE>

PAGE 5

Company, such duly authorized officer to be included in a list of authorized
officers furnished to FTC and as amended from time to time in writing by
resolution of the Board of Directors of the Company.

FTC shall indemnify and hold the Company harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Company may sustain or incur or which may be asserted
against the Company by any person arising out of any action taken or omitted to
be taken by FTC as a result of FTC's refusal or failure to comply with the terms
of this Agreement, its bad faith, negligence, or willful misconduct.

In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FTC shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FTC's control. FTC will make every reasonable effort to restore any lost
or damaged data and correct any errors resulting from such a breakdown at the
expense of FTC. FTC agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Company shall be entitled to
inspect FTC's premises and operating capabilities at any time during regular
business hours of FTC, upon reasonable notice to FTC.

Regardless of the above, FTC reserves the right to reprocess and correct
administrative errors at its own expense.

B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor may be
asked to indemnify or hold the indemnitee harmless, the indemnitor shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation which
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the indemnitee
against any claim which may be the subject of this indemnification. In the event
that the indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. Indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.

8. NO AGENCY RELATIONSHIP

<PAGE>

PAGE 6

Nothing herein contained shall be deemed to authorize or empower FTC to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.

9. RECORDS

FTC shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Company but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Company and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Company on and in accordance with its request.

10. DATA NECESSARY TO PERFORM SERVICES

The Company or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FTC is also acting as the transfer agent for
the Company, nothing herein shall be deemed to relieve FTC of any of its
obligations under the Transfer Agent Servicing Agreement.

11. NOTIFICATION OF ERROR

The Company will notify FTC of any balancing or control error caused by FTC
within three (3) business days after receipt of any reports rendered by FTC to
the Company, or within three (3) business days after discovery of any error or
omission not covered in the balancing or control procedure, or within three (3)
business days of receiving notice from any shareholder.

12. PROPRIETARY AND CONFIDENTIAL INFORMATION

FTC agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Company all records
and other information relative to the Company and prior, present, or potential
shareholders of the Company (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company.

13. TERM OF AGREEMENT

This Agreement shall become effective as of the date hereof and, unless sooner
terminated as provided herein, shall continue automatically in effect for
successive annual periods. This

<PAGE>

PAGE 7

Agreement may be terminated by either party upon giving ninety (90) days prior
written notice to the other party or such shorter period as is mutually agreed
upon by the parties. However, this Agreement may be replaced or modified by a
subsequent agreement between the parties.

14. NOTICES

Notices of any kind to be given by either party to the other party shall be in
writing and shall be duly given if mailed or delivered as follows: Notice to FTC
shall be sent to:

Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202

and notice to the Company shall be sent to:

Light Index Investment Company
Attn.: Henry Hewitt
704 Court A
Tacoma, WA 98402

15. DUTIES IN THE EVENT OF TERMINATION

In the event that in connection with termination, a successor to any of FTC's
duties or responsibilities hereunder is designated by the Company by written
notice to FTC, FTC will promptly, upon such termination and at the expense of
the Company transfer to such successor all relevant books, records,
correspondence and other data established or maintained by FTC under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FTC has maintained the same, the Company shall pay any
expenses associated with transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities, including provision for
assistance from FTC's personnel in the establishment of books, records and other
data by such successor.

16. GOVERNING LAW

This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.

<PAGE>

PAGE 8

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.

LIGHT INDEX FUND, INC. FIRSTAR TRUST COMPANY

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

<PAGE>

PAGE 9

FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE

EXHIBIT A

Separate Series of Light Index Fund, Inc.

NAME OF SERIES ADDED AS OF

Light Index Fund January 1, 1998

Domestic Equity Funds
$22,000 for the first $40 million
1/100 of 1% (1 basis point)
on the next $200 million
.5/100 of 1% (.5 basis point) on assets exceeding
$240 million

Plus out-of-pocket expenses, including pricing service:

Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80

Fees and out-of-pocket expenses are billed to the fund monthly.

<PAGE>

PAGE 1

FULFILLMENT SERVICING AGREEMENT

THIS AGREEMENT is made and entered into as of January 1, 1998, by and
between Light Index Fund, Inc., a Maryland corporation (hereinafter referred to
as the "Company"), Firstar Trust Company, a corporation organized under the laws
of the State of Wisconsin (hereinafter referred to as "FTC"), Light Index
Investment Company, a Washington corporation (hereinafter referred to as the
"Adviser"), and First Data Distributors, Inc., a Massachusetts corporation
(hereinafter referred to as the "Distributor").

WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended;

WHEREAS, the Adviser serves as investment adviser to the Company, a
registered investment company under the Investment Company Act of 1940, as
amended, which is authorized to create separate series of funds;

WHEREAS, the Distributor is a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and serves as principal distributor
of Company shares;

WHEREAS, FTC provides fulfillment services to mutual funds;

WHEREAS, the Adviser, the Distributor, and the Company desire to retain
FTC to provide fulfillment services for the Light Index Fund (the "Fund") and
each additional series of the Company listed on Exhibit A attached hereto, as
may be amended from time to time.

NOW, THEREFORE, the parties agree as follows:

1. DUTIES AND RESPONSIBILITIES OF FTC

1. Answer all prospective shareholder calls concerning the Fund.
2. Send all available Fund material requested by the prospect within 24
hours from time of call.
3. Receive and update all Fund fulfillment literature so that the most
current information is sent and quoted.
4. Provide 24 hour answering service to record prospect calls made
after hours (7 p.m. to 8 a.m. CT).
5. Maintain and store Fund fulfillment inventory.
6. Send periodic fulfillment reports to the Company as agreed upon
between the parties.

<PAGE>

PAGE 2

2. DUTIES AND RESPONSIBILITIES OF THE COMPANY

1. Provide Fund fulfillment literature updates to FTC as necessary.
2. File with the NASD, SEC and State Regulatory Agencies, as
appropriate, all fulfillment literature that the Fund requests FTC send to
prospective shareholders.
3. Supply FTC with sufficient inventory of fulfillment materials as
requested from time to time by FTC.
4. Provide FTC with any sundry information about the Fund in order to
answer prospect questions.

3. INDEMNIFICATION

The Company agrees to indemnify FTC from any liability arising out of the
distribution of fulfillment literature which has not been approved by the
appropriate Federal and State Regulatory Agencies. FTC agrees to indemnify the
Company from any liability arising from the improper use of fulfillment
literature during the performance of duties and responsibilities identified in
this agreement.

4. COMPENSATION

The Company, if permissible under any Rule 12b-1 plan in effect from time to
time for the benefit of the Fund and only to the extent consistent with the
terms of such plan, or the Adviser, or the Distributor, agrees to compensate FTC
for the services performed under this Agreement in accordance with the attached
Exhibit A. All invoices shall be paid within ten days of receipt.

5. PROPRIETARY AND CONFIDENTIAL INFORMATION

FTC agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Company all records
and other information relative to the Company and prior, present, or potential
shareholders of the Company (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company.

6. TERMINATION

This Agreement may be terminated by either party upon 30 days written notice.

<PAGE>

PAGE 3

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.

LIGHT INDEX FUND, INC. FIRSTAR TRUST COMPANY

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

LIGHT INDEX INVESTMENT COMPANY FIRST DATA DISTRIBUTORS, INC.

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

<PAGE>

PAGE 4

LITERATURE FULFILLMENT SERVICES
ANNUAL FEE SCHEDULE

EXHIBIT A

Separate Series of Light Index Fund, Inc.

NAME OF SERIES ADDED AS OF

Light Index Fund January 1, 1998

Customer Service
State registration compliance edits
Literature database
Record prospect request and profile
Prospect servicing 8:00 am to 7:00 pm CT
Recording and transcription of requests received off-hours
Periodic reporting of leads to client

Service Fee: $.99 / minute
$100 / month minimum
$780 one-time setup

Assembly and Distribution of Literature Requests
Generate customized prospect letters
Assembly and insertion of literature items
Inventory tracking
Inventory storage, reporting
Periodic reporting of leads by state, items requested, market source

Service Fee: $.45 / lead - insertion of up to 4 items/lead
$.15 / additional inserts

Fees and out-of-pocket expenses are billed to the fund monthly.

<PAGE>

PAGE 1

TRANSFER AGENT SERVICING AGREEMENT

WHEREAS, the Company is an open-end management investment company which
is registered under the Investment Company Act of 1940, as amended (the "1940
Act");

WHEREAS, the Company is authorized to create separate series, each with
its own separate investment portfolio;

WHEREAS, FTC is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers; and

WHEREAS, the Company desires to retain FTC to provide transfer and
dividend disbursing agent services to the Light Index Fund (the "Fund") and each
additional series of the Company listed on Exhibit A attached hereto, as may be
amended from time to time.

NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and FTC agree as follows:

1. APPOINTMENT OF TRANSFER AGENT

The Company hereby appoints FTC as Transfer Agent of the Company on the
terms and conditions set forth in this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.

2. DUTIES AND RESPONSIBILITIES OF FTC

FTC shall perform all of the customary services of a transfer agent and
dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:

A. Receive orders for the purchase of shares;

B. Process purchase orders with prompt delivery, where appropriate, of
payment and supporting documentation to the Company's custodian, and issue the
appropriate

<PAGE>

PAGE 2

number of uncertificated shares with such uncertificated shares being held in
the appropriate shareholder account;

C. Process redemption requests received in good order and, where relevant,
deliver appropriate documentation to the Company's custodian;

D. Pay monies upon receipt from the Company's custodian, where relevant,
in accordance with the instructions of redeeming shareholders;

E. Process transfers of shares in accordance with the shareholder's
instructions;

F. Process exchanges between funds and/or classes of shares of funds both
within the same family of funds and with the Portico Money Market Fund, if
applicable;

G. Prepare and transmit payments for dividends and distributions declared
by the Company with respect to the Fund;

H. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic investment,
dividend reinvestment, etc.);

I. Record the issuance of shares of the Fund and maintain, pursuant to
Rule 17ad-10(e) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a record of the total number of shares of the Fund
which are authorized, issued and outstanding;

J. Prepare shareholder meeting lists and, if applicable, mail, receive and
tabulate proxies;

K. Mail shareholder reports and prospectuses to current shareholders;

L. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;

M. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all purchases,
redemptions and other confirmable transactions as agreed upon with the Company;

N. Provide a Blue Sky System which will enable the Company to monitor the
total number of shares of the Fund sold in each state. In addition, the Company
or its agent, including FTC, shall identify to FTC in writing those transactions
and assets to be treated as exempt from the Blue Sky reporting for each state.
The responsibility of FTC for the

<PAGE>

PAGE 3

Company's Blue Sky state registration status is solely limited to the initial
compliance by the Company and the reporting of such transactions to the Company
or its agent;

3. COMPENSATION

The Company agrees to pay FTC for the performance of the duties listed
in this agreement as set forth on Exhibit A attached hereto; the fees and
out-of-pocket expenses include, but are not limited to the following: printing,
postage, forms, stationery, record retention (if requested by the Company),
mailing, insertion, programming (if requested by the Company), labels,
shareholder lists and proxy expenses.

These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Company and FTC.

The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the receipt of the billing notice.

4. REPRESENTATIONS OF FTC

FTC represents and warrants to the Company that:

A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;

B. It is a registered transfer agent under the Exchange Act.

C. It is duly qualified to carry on its business in the State of Wisconsin;

D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;

E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement;

F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement; and

G. It will comply with all applicable requirements of the Securities Act
of 1933, as amended, and the Exchange Act, the 1940 Act, and any laws, rules,
and regulations of governmental authorities having jurisdiction.

<PAGE>

PAGE 4

5. REPRESENTATIONS OF THE COMPANY

The Company represents and warrants to FTC that:

A. The Company is an open-ended non-diversified investment company under
the 1940 Act;

B. The Company is a corporation organized, existing, and in good standing
under the laws of Maryland;

C. The Company is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform this Agreement;

D. All necessary proceedings required by the Articles of Incorporation
have been taken to authorize it to enter into and perform this Agreement;

E. The Company will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws, rules and
regulations of governmental authorities having jurisdiction; and

F. A registration statement under the Securities Act will be made effective and
will remain effective, and appropriate state securities law filings have been
made and will continue to be made, with respect to all shares of the Company
being offered for sale.

6. COVENANTS OF THE COMPANY AND FTC

The Company shall furnish the Agent a certified copy of the resolution
of the Board of Directors of the Fund authorizing the appointment of FTC and the
execution of this Agreement. The Company shall provide to the Agent a copy of
its Articles of Incorporation and Bylaws, and all amendments thereto.

FTC shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, and the rules thereunder, FTC agrees
that all such records prepared or maintained by FTC relating to the services to
be performed by FTC hereunder are the property of the Company and will be
preserved, maintained and made available in accordance with such section and
rules and will be surrendered to the Company on and in accordance with its
request.

7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY

FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with
matters to which this Agreement relates, including losses resulting from

<PAGE>

PAGE 5

mechanical breakdowns or the failure of communication or power supplies beyond
FTC's control, except a loss resulting from the Agent's refusal or failure to
comply with the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, the Company
shall indemnify and hold harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys' fees)
which FTC may sustain or incur or which may be asserted against FTC by any
person arising out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided to
FTC by any duly authorized officer of the Company, such duly authorized officer
to be included in a list of authorized officers furnished to FTC and as amended
from time to time in writing by resolution of the Board of Directors of the
Company.

FTC shall indemnify and hold the Company harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Company may sustain or incur or which may be asserted
against the Company by any person arising out of any action taken or omitted to
be taken by FTC as a result of FTC's refusal or failure to comply with the terms
of this Agreement, its bad faith, negligence, or willful misconduct.

Regardless of the above, FTC reserves the right to reprocess and correct
administrative errors at its own expense.

In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over

<PAGE>

PAGE 6

complete defense of the claim, and the indemnitee shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. The indemnitee shall in no case confess any
claim or make any compromise in any case in which the indemnitor will be asked
to indemnify the indemnitee except with the indemnitor's prior written consent.

8. PROPRIETARY AND CONFIDENTIAL INFORMATION

FTC agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Company
all records and other information relative to the Company and prior, present, or
potential shareholders (and clients of said shareholders) and not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities, or when so requested by the
Company.

9. TERM OF AGREEMENT

10. NOTICES

Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to:

Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202

and notice to the Company shall be sent to:

Light Index Investment Company
Attn.: Henry Hewitt
704 Court A
Tacoma, WA 98402

<PAGE>

PAGE 7

11. DUTIES IN THE EVENT OF TERMINATION

In the event that, in connection with termination, a successor to any
of FTC's duties or responsibilities hereunder is designated by the Company by
written notice to FTC, FTC will promptly, upon such termination and at the
expense of the Company, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by FTC under this
Agreement in a form reasonably acceptable to the Company (if such form differs
from the form in which FTC has maintained, the Company shall pay any expenses
associated with transferring the data to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FTC's personnel in the establishment of books, records, and other data by
such successor.

12. GOVERNING LAW

This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.

LIGHT INDEX FUND, INC. FIRSTAR TRUST COMPANY

By:______________________________ By: ________________________________

Attest: __________________________ Attest:______________________________

<PAGE>

PAGE 8

TRANSFER AGENT AND SHAREHOLDER SERVICING
ANNUAL FEE SCHEDULE

EXHIBIT A

Separate Series of Light Index Fund, Inc.

NAME OF SERIES ADDED AS OF

Light Index Fund January 1, 1998

Annual Fee
$14.00 per shareholder account -- no-load fund

Minimum annual fees of $22,500
Minimum annual fees of $10,000 for each additional fund or class

Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll-free lines Proxies
Postage Retention of records (with prior approval)
Programming (with prior approval) Microfilm/fiche of records
Stationery/envelopes Special reports
Mailing ACH fees
Insurance NSCC charges

ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per item for AIP purchases
$ .35 per item for EFT payments and purchases
$3.50 per correction, reversal, return item

Qualified Plan Fees (Billed to Investors)
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.

Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $20.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous]
to the request)(Cap at $25.00)

<PAGE>

PAGE 9

NSCC AND DAZL
OUT-OF-POCKET CHARGES

(IF REQUESTED BY LIGHT INDEX FUND, INC. FOR BROKER/DEALER AND/OR FINANCIAL
PLANNER ACCESS AND TRADING)

NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50 / month
Networking $250 / month
CPU Access $ 40 / month
Fund/SERV Transactions $.35 / trade
Networking - per item $.025/monthly dividend fund
Networking - per item $.015/non-mo. dividend fund
First Data $.10 / next-day Fund/SERV trade
First Data $.15 / same-day Fund/SERV trade

NSCC Implementation
8 to 10 weeks lead time

DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor
network)
Setup $5,000 / interface
Monthly Usage $1,000 / month / interface
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour

Fees and out-of-pocket expenses are billed to the fund monthly.

<PAGE>

December 4, 1997

Light Index Fund, Inc.
704 Court A
Tacoma, WA 98402

Ladies and Gentlemen:

We have acted as counsel for you in connection with the preparation of
a Registration Statement on Form N-1A relating to the sale by you of an
indefinite amount of shares of Class A Common Stock, $0.0001 par value, of Light
Index Fund, Inc. (such class of Common Stock being hereinafter referred to as
the "Stock") in the manner set forth in the Registration Statement to which
reference is made. In this connection we have examined: (a) the Registration
Statement on Form N-1A including the Prospectus constituting a part thereof; (b)
your Articles of Incorporation and Bylaws, as amended to date; (c) corporate
proceedings relative to the authorization for issuance of the Stock; and (d)
such other proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.

Based upon the foregoing, we are of the opinion that the shares of
Stock when sold as contemplated in the Registration Statement will be legally
issued, fully paid and nonassessable.

We hereby consent to the use of this opinion as an exhibit to the Form
N-1A Registration Statement. In giving this consent, we do not admit that we are
experts within the meaning of Section 11 of the Securities Act of 1933, as
amended, or within the category of persons whose consent is required by Section
7 of said Act.

Very truly yours,

GORDON, THOMAS, HONEYWELL
MALANCA, PETERSON & DAHEIM

/s/ J. James Gallagher
By: J. James Gallagher
MAR:vm

<PAGE>

POWER OF ATTORNEY

Each director of Light Index Fund, Inc. (the "Company"), whose signature appears
below, hereby appoints Henry Hewitt and/or J. James Gallagher, as his or her
attorney to sign, in his or her name and behalf and in the capacity stated
below, (i) the Company's Registration Statement on Form N-IA filed pursuant to
the Investment Company Act of 1940 and the Securities Act of 1933 (the
"Registration Statement") for the registration of securities in connection with
the Company's continuous offering of shares of the Light Index Fund, no par
value, ("Fund Shares"), as described in the Prospectus included in the
Registration Statement, and likewise to sign any and all amendments and other
documents relating thereto as shall be necessary to cause the Registration
Statement to become effective (including post-effective amendments), and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission; (ii) any document deemed
necessary by such attorney to cause the issuance of Fund Shares to be made in
compliance with the Blue Sky and securities laws of any state or foreign
jurisdiction (the signing of any such document to be conclusive evidence that
the attorney considers such document necessary or desirable); and (iii) any and
all such documents upon the advice of legal counsel to carry out the offering of
the Fund Shares to the public, each such person hereby granting to each such
attorney power to act with our without the other and with full power of
substitution and revocation, and hereby ratifying all that any such attorney or
his substitute may do by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Power of Attorney has been signed by the following
persons in the capacities indicated, on the _____ day of November, 1997.

SIGNATURE TITLE

/s/Henry Hewitt Director
Henry Hewitt

/s/Thomas Kinsman Director
Thomas Kinsman

/s/Brian Hatch Director
Brian Hatch

/s/John Hewitt, Jr. Director
John Hewitt, Jr.