LIGHT INDEX FUND INC, N-1A/A, 1998-02-12

LIGHT INDEX FUND INC
N-1A/A, 1998-02-12

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Securities Act Registration No. 333-45509
Investment Company Act Reg. No. 811-08535
--------------------------------------------------------

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. 1
(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.

<S> <C> <C> <C> <C>
- ----------------------- ------------------- ---------------------------- -------------------------- --------------------------
Title of Securities Amount Being Proposed Maximum Proposed Maximum Amount of
Being Registered Registered Offering Price Per Unit Aggregate Offering Registration Fee
- ----------------------- ------------------- ---------------------------- -------------------------- --------------------------

</TABLE>

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
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 Securities Ownership of Management and Principal 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 Securities Being Purchase of Shares; Redemption of Shares; Share
Offered 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 -- _______, 1998

INVESTOR 1-888-INDEX57
INFORMATION 1-888-463-3957
DEPARTMENT

INVESTMENT
OBJECTIVE AND The Light Index Fund, Inc.
POLICIES (the "Company") is an open-end
management investment company consisting
of a single portfolio, the Light Index
Fund (the "Fund"), that invests in common

stocks in order to approximate the
aggregate price performance, before Fund
expenses, 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,
ACCOUNT please complete and 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.

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<PAGE>

ABOUT THIS PROSPECTUS This Prospectus is designed to set forth
concisely the information you should know
about the Fund before you invest. It
should be retained for future reference.
A Statement of Additional Information
("SAI") dated _______, 1998, 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.

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<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 returns which approximate 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 and minimal portfolio turnover. 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
AND POLICIES The Fund is an open end, non-diversified investment
company designed as an "index" fund. The Fund
seeks to approximate 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.
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".

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<PAGE>

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 (2)........................................................0.45
TOTAL FUND OPERATING EXPENSES (2).........................................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. Also, a fee of $12.00 is
charged for each wire redemption.

(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.

(2) The Adviser has voluntarily undertaken to reimburse the Company to the
extent that aggregate annual operating expenses, including the investment
advisory fee, but excluding interest, taxes, brokerage commissions and other
costs incurred in connection with the purchase and 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 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

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<PAGE>

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 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. The Fund seeks to approximate 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. That segment
is generally comprised of stocks of the type purchased by mutual funds listed in
the Lipper Science and Technology Index. The Light Index is comprised of
fifty-seven companies that in a significant way use, distribute or control some
aspect of the electromagnetic spectrum (i.e., the entire range of wavelengths or
frequencies of electromagnetic radiation, extending from gamma rays to the
longest radio waves, and including microwaves and visible light) and thus are
expected to be active participants in the rapid technological and business
changes characterized as the information technology revolution. When evaluating
whether a company is suitable for inclusion in the Light Index, the Adviser
analyzes the business of such company and considers the amount of revenue
produced by the use, distribution or control of some aspect of the
electromagnetic spectrum, including, but not limited to, technology. data
processing, telecommunications equipment or software. Companies are selected if,
in the opinion of the Adviser, they are or are expected to become leaders in
their respective fields.

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<PAGE>

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 as
close a correlation between the performance of the Fund and the Light Index as
is reasonably practical, and, absent unusual circumstances, anticipates that the
correlation between the performance of the Fund and the Light Index will be at
0.90 or higher. A correlation of 1.00 would indicate perfect correlation. The
Adviser will track the performance of the Fund to the performance of the Light
Index on a regular basis, but not less frequently than quarterly. In the event
that the anticipated 0.90 or higher correlation is not achieved, the Adviser
will review and seek to correct, as appropriate, the employment of invested
funds, the use of futures and other aspects of the Fund's operations that might
improve the correlation of the Fund's performance to that of the Index. However,
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 5% 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 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

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<PAGE>

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, 1997 of 25.11% (excluding dividend income) since January 1, 1994,
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 approximate 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 approximate 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 approximate the total return of
the Light Index, before Fund expenses. The Fund offers investors the advantages
of a "passive" approach to investing. These include diversification among
fifty-seven stocks and minimal portfolio turnover. 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 return which approximates 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 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.

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<PAGE>

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. That segment
is generally comprised of stocks of the type purchased by mutual funds listed in
the Lipper Science and Technology Index. The Light Index is comprised of
fifty-seven companies that in a significant way use, distribute or control some
aspect of the electromagnetic spectrum (i.e., the entire range of wavelengths or
frequencies of electromagnetic radiation, extending from gamma rays to the
longest radio waves, and including microwaves and visible light) and thus are
expected to be active participants in the rapid technological and business
changes characterized as the information technology revolution. When evaluating
whether a company is suitable for inclusion in the Light Index, the Adviser
analyzes the business of such company and considers the amount of revenue
produced by the use, distribution or control of some aspect of the
electromagnetic spectrum, including, but not limited to, technology, data
processing, telecommunications equipment or software. Companies are selected if,
in the opinion of the Adviser, they are or are expected to become leaders in
their respective fields. 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 approximate 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 as
close a correlation between the performance of the Fund and the Light Index as
is reasonably practical, and, absent unusual circumstances, anticipates that the
correlation between the performance of the Fund and the Light Index will be at
0.90 or higher. A correlation of 1.00 would indicate perfect correlation. The
Adviser will track the performance of the Fund to

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<PAGE>

the performance of the Light Index on a regular basis, but not less frequently
than quarterly. In the event that the anticipated 0.90 or higher correlation is
not achieved, the Adviser will review and seek to correct, as appropriate, the
employment of invested funds, the use of futures and other aspects of the
Fund's operations that might improve the correlation of the Fund's performance
to that of the Index. However, 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.

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

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<PAGE>

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 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

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<PAGE>

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. 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 ___________________________, 1998 (the
"Advisory Agreement"), the

-11-

<PAGE>

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 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.

-12-

<PAGE>

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 approximate 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. That segment is generally
comprised of stocks of the type purchased by mutual funds listed in the Lipper
Science and Technology Index. The Light Index is comprised of fifty-seven
companies that in a significant way use, distribute or control some aspect of
the electromagnetic spectrum (i.e., the entire range of wavelengths or
frequencies of electromagnetic radiation, extending from gamma rays to the
longest radio waves, and including microwaves and visible light) and thus are
expected to be active participants in the rapid technological and business
changes characterized as the information technology revolution. When evaluating
whether a company is suitable for inclusion in the Light Index, the Adviser
analyzes the business of such company and considers the amount of revenue
produced by the use, distribution or control of some aspect of the
electromagnetic spectrum, including, but not limited to, technology, data
processing, telecommunications equipment or software. Companies are selected if,
in the opinion of the Adviser, they are or are expected to become leaders in
their respective fields.

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 approximate 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 as
close a correlation between the performance of the Fund and the Light Index as
is reasonably practical, and, absent unusual circumstances, anticipates that the
correlation between the performance of the Fund and the Light Index will be at
0.90 or higher. A correlation of 1.00 would indicate perfect correlation. The
Adviser will track the performance of the Fund to the performance of the Light
Index on a regular basis, but not less frequently than quarterly. In the event
that the anticipated 0.90 or higher correlation is not achieved, the Adviser
will review and seek to correct, as appropriate, the

-13-

<PAGE>

employment of invested funds, the use of futures and other aspects of the
Fund's operations that might improve the correlation of the Fund's performance
to that of the Index. However, 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 January 2,
1998.

INTERNET Cisco Systems
3 Com
Sun Microsystems
America Online
Netscape

WIRELESS Ericsson
Nokia
Global Star
GM Hughes
Motorola
Qualcomm

SOFTWARE Microsoft
T. Rowe Price
Parametric Technology
Oracle
J.P. Morgan
Intuit
SAP
Cadence Design

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

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
Analog Devices

TELECOMMUNICATIONS
Lucent Technologies
Telebras
MCI
Symbol Technologies
TCI
DSC Communications
Ciena Corp.

-14-

<PAGE>

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. On January 2, 1998, four companies were
added to and four companies were deleted from the Light Index. During 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 30 of the 57 companies comprising the Light Index as of

January 2, 1998 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

-15-

<PAGE>

companies whose activities fall within the information and telecommunication
sector (though many of the companies comprising 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 FOR THE LIGHT INDEX(1)
Years Ended December 31.

1997 1996 1995 1994
---- ---- ---- ----

The Light Index 25.84 16.48 43.47 14.67

S&P 500 Index (2) 31.01 20.26 34.11 -1.54

Lipper Index 7.75 16.82 34.74 10.27

</TABLE>
<TABLE>
<CAPTION>

COMPOUNDED ANNUAL RATES OF RETURN FOR THE LIGHT INDEX(1)
(For the Period Ended December 31, 1997

4 YEARS 1 YEAR
------- ------

The Light Index 25.11% 25.84%

S&P 500 Index (2) 20.96% 31.01%

Lipper Index (3) 17.39% 7.75%
- --------------------------

</TABLE>

(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"). The AIMR Performance
Presentation Standards differ from the SEC standardized method for
calculating rates of return. Other performance calculation methods,
including the SEC standardized method, 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.

The Fund will use the SEC standardized method for calculating its total
returns, which method generally reflects 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.

(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.

-16-

<PAGE>

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 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

-17-

<PAGE>

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 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.

-18-

<PAGE>

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 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

-19-

<PAGE>

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.

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.

<PAGE>

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

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

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<PAGE>

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 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

-22-

<PAGE>

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 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

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<PAGE>

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."

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:

-24-

<PAGE>

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 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. A signature guarantee verifies the
authenticity of your signature and may be

-25-

<PAGE>

obtained from banks, brokers and any other guarantor that the Fund deems
acceptable. A SIGNATURE GUARANTEE CANNOT BE PROVIDED BY A NOTARY PUBLIC.

Important Redemption Information. Shares purchased by check or telephone
transfer may be redeemed at any time. However, redemption proceeds will not be
paid 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.

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.

-26-

<PAGE>

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)).

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.

-27-

<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED _____________,1998

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 __________, 1998), 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-3
Investment Considerations........................................... B-5
Purchase of Shares.................................................. B-10
Redemption of Shares................................................ B-10
Management of the Fund; Directors and Officers...................... B-11
Ownership of Management and Principal Shareholders.................. B-13
Investment Adviser, Administrator, Custodian,
Transfer Agent and Account Services Agent...................... B-13
Distribution Plan................................................... B-15
Share Price......................................................... B-16
Systematic Withdrawal Plan.......................................... B-16
Brokerage Allocation................................................ B-17
Dividends, Other Gain Distributions and Taxes....................... B-18
Shareholder Meetings................................................ B-19
Performance Measures................................................ B-20
Independent Accountant.............................................. B-21
Financial Statement................................................. B-21

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 ___________________________, 1998 (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. The Fund seeks to approximate 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. That segment
is generally comprised of stocks of the type purchased by mutual funds listed in
the Lipper Science and Technology Index. The Light Index is comprised of
fifty-seven companies that in some significant way use, distribute or control
some aspect of the electromagnetic spectrum (i.e., the entire range of
wavelengths or frequencies of electromagnetic radiation, extending from gamma
rays to the longest radio waves, and including microwaves and visible light) and
thus are expected to be active participants in the much discussed information
technology revolution. When evaluating whether a company is suitable for
inclusion in the Light Index, the Adviser analyzes the business of such company
and considers the amount of revenue produced by the use, distribution or control
of some aspect of the electromagnetic spectrum, including, but not limited to,
technology, data processing, telecommunications equipment or software. Companies
are selected if, in the opinion of the Adviser, they are or are expected to
become leaders in their respective fields.

B-2

<PAGE>

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 as close a correlation
between the performance of the Fund and the Light Index as is reasonably
practical, and, absent unusual circumstances, anticipates that the correlation
between the performance of the Fund and the Light Index will be at 0.90 or
higher. A correlation of 1.00 would indicate perfect correlation. The Adviser
will track the performance of the Fund to the performance of the Light Index on
a regular basis, but not less frequently than quarterly. In the event that the
anticipated 0.90 or higher correlation is not achieved, the Adviser will review
and seek to correct, as appropriate, the employment of invested funds, the use
of futures and other aspects of the Fund's operations that might improve the
correlation of the Fund's performance to that of the Index. However, 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.

INVESTMENT LIMITATIONS

As set forth in the Prospectus dated __________, 1998, 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;

B-3

<PAGE>

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) issue senior securities or 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;

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;

B-4

<PAGE>

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.

Additionally, the Fund does not intend to concentrate investment of its assets
in a particular industry or group of industries. However, because the Fund's
investment objective is to track the performance of the Light Index by holding
all fifty seven stocks comprising that Index, it is possible that temporary
concentrations in certain industries or groups of industries represented by the
companies comprising the Index will occur as a result of market fluctuations in
the value of the securities of those companies and the Fund's method of
investing in each such company based upon its then current market weighting
within the Light Index. Those industries or groups of industries are generally
set forth in the prospectus in the section entitled "INVESTMENT
ADVISER--Companies Included in the Light Index." Because of the annual
rebalancing of the Fund, any such concentration will likely be temporary. See
"INVESTMENT OBJECTIVE" in the prospectus.

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 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.

B-5

<PAGE>

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.

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

B-6

<PAGE>

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 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

B-7

<PAGE>

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 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

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<PAGE>

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.

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

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<PAGE>

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 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

B-10

<PAGE>

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, 45, created the Light Index. 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
serves as President, Chief Executive Officer and a Director of the Adviser, and
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-11

<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 serves as a Vice President, Secretary, Treasurer and a Director of
the Adviser, and 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.

Pension or
Retirement Estimated Total
Name of Aggregate Benefits Accrued Annual Compensation
Person Compensation from as Part of Fund Benefits Upon from Company
---------- Company Expenses Retirement and Fund
------------------ ---------------- --------------- Paid to Directors
-------------------

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>

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<PAGE>

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

Light Index Investment Company 1,000 100%
(Adviser)
704 Court A
Tacoma, WA 98402

Directors and Officers as a Group 0 0%
(4 persons)

As of the date hereof, the shareholder listed above controls the Fund and the
Company and owns 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

B-13

<PAGE>

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 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

B-14

<PAGE>

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) 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

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<PAGE>

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.

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

B-16

<PAGE>

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.

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.

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<PAGE>

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.

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 forward 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

B-18

<PAGE>

purposes the amount, character, and timing of recognition of the gains and
losses it realizes in connection therewith.

The Fund also intends 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 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

B-19

<PAGE>

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 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

B-20

<PAGE>

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.

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-21

<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 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
__________________________, 1998, in conformity with generally accepted
accounting principles.

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

Tacoma, Washington
________________, 1998

B-22

<PAGE>

LIGHT INDEX FUND, INC.

Statement of Assets and Liabilities

_________________, 1998

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; $
=
1,000 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 1,000 shares of its
common stock to its original shareholder, 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

B-23

<PAGE>

Fund are 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.

<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

C-1

<PAGE>

19. Powers-of-Attorney.*

* Previously Filed.
** Filed herewith.
***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 the Adviser (as set forth in the Statement
of Additional Information under the heading "Ownership of Management and
Principal Shareholders") which owned 100% of Registrant's voting securities as
of _______________, 1998. 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 , 1998
------------------------

Class A Common Stock, $0.0001
par value (Light Index Investment Fund) 1

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, if he
received no improper benefit in

C-2

<PAGE>

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 actions, 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 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 or
settlement shall not create a presumption that the corporate representative did
not meet 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, 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 shareholders or disinterested directors or otherwise,
both as to action in his or her official

C-3

<PAGE>

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 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 6 through 7 and 11 through 12 of the
Prospectus and pages B-11 through B-12 of the Statement of Additional
Information pursuant to Rule 411 under the Securities Act of 1933.

ITEM 29. PRINCIPAL UNDERWRITERS

Not applicable.

C-4

<PAGE>

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.

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 Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized on the 12th day of February, 1998.

LIGHT INDEX FUND, INC.

By: -----------------------
Henry Hewitt, President

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:
--------------------------------------------
Charles O'Herin
Vice President/Secretary/Treasurer

A Majority of the Board of Directors:

- ------------------------------
Thomas Kinsman*

- ------------------------------
Brian Hatch*

- ------------------------------
John Hewitt, Jr.*

- ------------------------------
*Henry Hewitt
Attorney-in-Fact

C-6

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*

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

LIGHT INDEX FUND, INC.
INVESTMENT ADVISORY AGREEMENT

The INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the ____
day of ________, 1998, by and between LIGHT INDEX FUND, INC., a Maryland
corporation (the "Company"), with respect to its series of shares known as the
LIGHT INDEX FUND (the "Fund"), and THE LIGHT INDEX INVESTMENT COMPANY, a
Washington corporation (the "Adviser").

RECITALS

1. The Company is an open-end diversified, management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "Act").

2. The Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged in the
business of supplying investment advice, investment management and
administrative services, as an independent contractor.

3. The Company desires to retain the Adviser to render advice and
services to the Company and Fund pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said advice and services;

NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto mutually agree as follows:

1. EMPLOYMENT OF ADVISER. (a) The Company hereby employs the Adviser,
and the Adviser hereby accepts such employment, to render continuous investment
advice and investment management services with respect to the assets of the
Fund, consistent with the investment objectives and policies of the Fund and
subject to the supervision and direction of the Company's Board of Directors. As
part of such advice and services, the Adviser agrees to (i) furnish the Company
with investment advice, research and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of its portfolio
securities, including the taking of such other steps as may be necessary to
implement such advice and recommendations, (ii) furnish the Company and Fund
with reports, statements and other data on securities, economic conditions and
other pertinent subjects which the Company's Board of Directors may request,
(iii) furnish such office space and personnel as are needed by the Fund, and
<PAGE>
(iv) in general superintend and manage the investments of the Fund, subject to
the ultimate supervision and direction of the Company's Board of Directors.

(b) The Adviser shall determine the securities to be purchased
or sold by the Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers in conformity with the policy with
respect to brokerage as set forth in the Company's Registration Statement and
the Fund's Prospectus and Statement of Additional Information or as the
Company's Directors may direct from time to time. The Advisor may also pay
higher commissions in recognition of brokerage services necessary for the
achievement of better execution, provided that the Advisor believes such
payments are in the best interest of the Fund, and the Adviser shall at all
times use its best efforts to obtain the best available price and most favorable
execution with respect to all transactions, considering the full range and
availability of brokerage services available. The Adviser shall not execute
portfolio transactions for the account of the Fund with a broker or dealer which
is an "affiliated person" (as defined in the Act) of the Adviser or the Company,
except pursuant to procedures adopted by the Directors in accordance with Rule
17e-1 under the Act. The Adviser shall render regular reports to the Directors
of the total brokerage business placed and the manner in which the allocation
has been accomplished.

2. SUB-ADVISERS AND CONSULTANTS. The Adviser may from time to time, in
its discretion, delegate certain of its responsibilities under this Agreement to
one or more qualified companies, each of which is registered under the Advisers
Act, provided that the separate costs of employing such companies and of the
companies themselves are borne by the Adviser and not by the Fund.

3. ADVISER IS INDEPENDENT CONTRACTOR. The Adviser, for all purposes
herein, shall be deemed to be an independent contractor, and unless otherwise
expressly provided and authorized, shall have no authority to act for or
represent the Company or Fund in any way, or in any way be deemed an agent for
the Company or Fund. It is expressly understood and agreed that the services to
be rendered by the Adviser to the Company and Fund under the provisions of this
Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.

4. RESPONSIBILITIES AND PERSONNEL OF ADVISER. The Adviser agrees to use
its best efforts in the furnishing of investment advice, research and
recommendations to the Fund, in the preparation of reports and information, and
in the management of the Fund's assets, all pursuant to this Agreement, and for
this purpose the Adviser shall, at
<PAGE>
its own expense, maintain such staff and employ or retain such personnel
and consult with such other persons as it shall from time to time determine to
be necessary to the performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, the staff and personnel of the Adviser
shall be deemed to include persons employed or retained by the Adviser to
furnish statistical, research, and other factual information, advice regarding
economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser may desire and request.

5. FURNISHING OF STATEMENTS AND REPORTS. The Company shall from time to
time furnish to the Adviser detailed statements of the portfolio investments and
assets of the Fund and information as to its investment objectives and needs,
and shall make available to the Adviser such financial reports, business
descriptions and plans, proxy statements, legal and other information relating
to its investments as may be in the possession of the Company or available to
it, and shall provide such other information as the Adviser may reasonably
request.

6. EXPENSES OF EACH PARTY. (a) The Adviser shall bear all expenses in
connection with the performance of its services under this Agreement. The
Adviser shall also pay (i) all compensation, if any, to the executive officers
of the Fund and their related expenses and (ii) all compensation, if any, and
out-of-pocket expenses of the Company's directors, who are "interested persons"
of the Company (as defined in the Act). 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 may be modified or
discontinued at any time by the Adviser. 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 if accrued expenses
thereafter fall below this limit.

(b) The Company shall bear all expenses of the Fund's
organization, operations, and business not specifically assumed or agreed to be
paid by the Adviser as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Company on behalf of the Fund and
out of its assets shall pay:
<PAGE>
(A) Custody and Accounting Services. All expenses of
the transfer, receipt, safekeeping, servicing and accounting for the
cash, securities, and other property of the Fund, including all charges
of depositories, custodians, and other agents, if any;

(B) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts, including all charges
for transfer, shareholder record keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund;

(C) Books and Records. All costs and expenses
associated with the maintenance of the Fund's books of accounts and
records as required by the Act;

(D) Shareholder Communications. All expenses of
preparing, printing, and distributing reports and other communications
to shareholders;

(E) Shareholder Meetings. All fees and expenses
incidental to holding meetings of shareholders, including the printing
of notices and proxy material, and proxy solicitation therefor,
provided that the Adviser shall be responsible for and assume all
expenses and fees with respect to meetings of the Fund's shareholders
held solely for the benefit of the Adviser;

(F) Prospectuses and Statements of Additional
Information. All expenses of preparing and printing of annual or more
frequent revisions of the Prospectus and Statement of Additional
Information relating to the offering of Fund's shares and of mailing
them to shareholders;

(G) Pricing. All expenses of computing the Fund's net
asset value per share, including the costs of any equipment or services
used for obtaining price quotations;

(H) Communication Equipment. All charges for
equipment or services for communication between the Adviser or the
Company and the custodian, transfer agent or any other agent selected
by the Company;

(I) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Company's legal counsel and
independent auditors for the benefit of the Company;
<PAGE>
(J) Directors' Fees and Expenses. All compensation of
directors, other than those who are interested persons of or affiliated
with the Adviser, and all expenses incurred in connection with their
service and meetings;

(K) Federal Registration Fees. All fees and expenses
of registering and maintaining the registration of the Company under
the Act and the registration of Fund shares under the Securities Act of
1933, as amended (the "1933 Act"), including all fees and expenses
incurred in connection with the preparation, printing, and filing of
any registration statement, Prospectus and Statement of Additional
Information under the 1933 Act or the Act, and any amendments or
supplements thereto that may be made from time to time;

(L) State Registration Fees. All fees and expenses
(including the compensation of personnel who may be employed by the
Adviser or an affiliate) of qualifying and maintaining qualification of
the Company and of the Fund shares for sale under securities laws of
various states of jurisdictions, and of registration and qualification
of the Company, under all other laws applicable to the Company or its
business activities (including registering the Company as a
broker-dealer, or any officer of the Company or any person as agent or
salesman of the Company in any state);

(M) Issue and Redemption of Company Shares. All
expenses incurred in connection with the issue, redemption, and
transfer of Fund shares, including the expense of confirming all Fund
share transactions, and of preparing and transmitting the Fund's share
certificates;

(N) Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by law or deemed
advisable by the Board of Directors;

(O) Brokerage Commissions. All brokerage commissions
and other charges incident to the purchase, sale or lending of the
Fund's portfolio securities;

(P) Taxes. All taxes of governmental fees payable by
or with respect of the Company or Fund to federal, state, or other
governmental agencies, domestic or foreign, including stamp or other
transfer taxes;
<PAGE>
(Q) Trade Association Fees. All fees, dues and other
expenses incurred in connection with the Company's membership in any
trade association or other investment organization;

(R) Interest. All interest which may accrue and be
payable as a result of the Fund's activities;

(S) Stationery and Postage. The cost of all
stationery and postage required by the Fund, unless otherwise payable
by another party with respect to an activity or expense referred to
above; and

(T) Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the costs of actions,
suits or proceedings to which the Company on behalf of the Fund is a
party and the expenses the Company on behalf of the Fund may incur as a
result of its legal obligation to provide indemnification to its
officers, directors, and agents.

(c) In the event that the Company offers other series of its
shares in the future, then the Fund shall only be responsible for expenses
directly attributable to it and its operations and for such other costs and
expenses of the Company as the Board of Directors may by resolution or otherwise
direct.

7. REIMBURSEMENT FOR ADVANCED COSTS AND EXPENSES. To the extent the
Adviser incurs any costs or performs any services which are an obligation of the
Company or Fund, as set forth herein, the Company on behalf of the Fund and out
of the Fund's assets shall promptly reimburse the Adviser for such costs and
expenses. To the extent the services for which the Fund is obligated to pay are
performed by the Adviser, the Adviser shall be entitled to recover from the Fund
only to the extent of its actual costs for such services.

8. FEES. (a) The Company on behalf of the Fund and out of the Fund's
assets agrees to pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all services furnished or provided to the Company and Fund
hereunder, and as full reimbursement for all expenses assumed by the Adviser, a
management fee computed at the rate of 1.00% per annum of the average daily net
assets of the Fund.

(b) The management fee shall be accrued daily during each
month by the Company on behalf of the Fund and paid to the Adviser on the first
business day of the succeeding month. The initial monthly fee under this
Agreement shall be payable on the first business day of the first month
following the effective date of this Agreement. The fee to the Adviser shall be
prorated for the portion of any month in
<PAGE>
which this Agreement is in effect which is not a complete month according
to the proportion which the number of calendar days in the month during which
the Agreement is in effect bears to the number of calendar days in the month. If
this Agreement is terminated prior to the end of any month, the fee to the
Adviser shall be payable within ten (10) days after the date of termination.

(c) The Adviser may reduce or waive any portion of the
compensation due to it hereunder, or for reimbursement of expenses by the
Company pursuant to Paragraph 7 of this Agreement, and any such reduction or
waivers shall be applicable only with respect to the specific items waived and
shall not constitute a waiver of any future compensation or reimbursement due to
the Adviser hereunder.

(d) The Adviser may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Company. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not
constitute an agreement not to require payment of any future compensation or
reimbursement due to the Adviser hereunder.

(e) Any fees payable by the Fund under this Agreement during
the period commencing on the effective date of this Agreement and ending on the
date of the initial approval of this Agreement by a majority of the outstanding
voting securities of the Fund shall be paid by the Company, on behalf of the
Fund, into an interest-bearing escrow account with an unaffiliated financial
institution, as the Company and the Adviser may establish, to be released to the
Adviser only upon such initial approval of this Agreement, or, if such approval
shall not occur within the sixty (60) days following the execution and delivery
of this Agreement to the Fund.

9. SHORT POSITIONS IN FUND'S SHARES. The Adviser agrees that neither it
nor any of its officers or employees shall (i) take any short position in the
shares of the Fund, or (ii) purchase any of such shares other than for
investment. The Adviser agrees to promptly notify the Company of any sales of
such shares by the Advisor or any of its officers or employees within two months
of their purchase of such shares. This prohibition shall not prevent the
purchase of such shares by any of the officers and directors or employees of the
Advisers or any trust, pension, profit-sharing or other benefit plan for such
persons or affiliates thereof, at a price not less than the net asset value
thereof at the time of purchase, as allowed pursuant to rules promulgated under
the Act.
<PAGE>
10. RELATIONSHIP TO PROVISIONS OF AGREEMENT. Nothing herein contained
shall be deemed to require the Company to take any action, contrary to its
Articles of Incorporation, Bylaws or any applicable statute or regulation, or to
relieve or deprive the Board of Directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company and Fund.

11. DUTIES AND STANDARDS OF CARE. (a) In the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Fund.

(b) No provision of this Agreement shall be construed to
protect any director or officer of the Company or director or officer of the
Adviser from liability in violation of Sections 17(h) and (i) of the Act.

12. TERM AND RENEWAL. This Agreement shall remain in effect for a
period of two (2) years, unless sooner terminated in accordance with Paragraph
13 hereof, and shall continue in effect from year to year thereafter so long as
such continuation is approved at least annually by (i) the Board of Directors of
the Company or by the vote of a majority of the outstanding voting securities of
the Fund, and (ii) the vote of a majority of the directors of the Company who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting for the purpose of voting on such approval.

13. TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Directors of the Company or by a vote of
a majority of its outstanding voting securities, upon sixty (60) days' written
notice to the Adviser, and by the Adviser upon sixty (60) days' written notice
to the Company. This Agreement shall also terminate in the event of any transfer
or assignment thereof, as defined in the Act.

14. CERTAIN DEFINITIONS. The terms "majority of the outstanding voting
securities" of the Company or Fund and "interested persons" shall have the
meanings as set forth in the Act. The term "net assets" shall have the meaning
and shall be calculated as set forth in the Company's Registration Statement
from time to time.

15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
<PAGE>
16. HEADINGS. The headings used herein are for convenience and ease of
reference only. No legal effect is intended, nor is to be derived from such
headings.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all as of the day
and year first above written.

LIGHT INDEX FUND, INC.

By:_______________________
Its: President

ATTEST:

___________________________
Secretary

LIGHT INDEX INVESTMENT COMPANY

By:_______________________
Its: President

ATTEST:

___________________________
Secretary

-9-

DISTRIBUTION AGREEMENT

THIS AGREEMENT is made as of this ____ day of ________, 1998 (the
"Agreement") by and between the Light Index Fund, Inc. (the "Company") and
First Data Distributors, Inc. (the "Distributor"), a Massachusetts corporation.

WHEREAS, the Company is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and is currently offering units of beneficial interest
(such units of all series are hereinafter called the "Shares"), representing
interests in investment portfolios of the Company identified on Schedule A
hereto (the "Funds") which are registered with the Securities and Exchange
Commission (the "SEC") pursuant to the Company's Registration Statement on Form
N-1A (the "Registration Statement"); and

WHEREAS, the Company desires to retain the Distributor as distributor
for the Funds to provide for the sale and distribution of the Shares of the
Funds identified on Schedule A and for such additional classes or series as the
Company may issue, and the Distributor is prepared to provide such services
commencing on the date first written above.

NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein and intending to be legally bound hereby the parties hereto
agree as follows:

1. SERVICE AS DISTRIBUTOR

1.1 The Distributor will act on behalf of the Company for the distribution
of the Shares covered by the Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"). The Distributor
will have no liability for payment for the purchase of Shares sold
pursuant to this Agreement or with respect to redemptions or
repurchases of Shares. For the services rendered under this Agreement,
the Company agrees to pay the Distributor the fees set forth in
Schedule B to this Agreement.

1.2 The Distributor agrees to use efforts deemed appropriate by the
Distributor to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in
connection with such solicitation; provided, however, that each Fund
will bear the expenses incurred and other payments made in accordance
with the provisions of the Agreement and any plan now or hereafter
adopted with respect to any Fund pursuant to Rule 12b-1 under the 1940
Act (the "Plans"). To the extent that the Distributor receives
shareholder services fees under any shareholder services plan adopted
by the Company, the Distributor agrees to furnish, and/or enter into
arrangements with others for the furnishing of, personal and/or account
maintenance services with respect to the relevant shareholders of the
Company as may be required pursuant to such plan. It is contemplated
that the Distributor will enter into sales or servicing agreements with
securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate
planning firms. The Distributor agrees to provide to the Company and
its Board of Directors at least
<PAGE>
quarterly a written report of the amounts expended under the Plans and
the purposes for which such expenditures were made.

1.3 The Company understands that the Distributor is now, and may in the
future be, the distributor of the shares of several investment
companies or series (collectively, the "Investment Entities"),
including Investment Entities having investment objectives similar to
those of the Company. The Company further understands that investors
and potential investors in the Company may invest in shares of such
other Investment Entities. The Company agrees that the Distributor's
duties to such Investment Entities shall not be deemed in conflict with
its duties to the Company under this Section 1.3.

1.4 The Distributor shall not utilize any materials in connection with the
sale or offering of Shares except the Company's prospectus and
statement of additional information and such other materials as the
Company shall provide or approve. The Distributor agrees to provide
legal/compliance review of all sales literature and advertisements
("Sales Material") prepared for use by the Company in advance of the
use of such Sales Material. The Company agrees to incorporate such
changes to such Sales Materials as the Distributor shall reasonably
request. The Distributor will file such Sales Materials and obtain such
approvals for their use as may be required by the SEC, NASD or state
securities commissioners.

1.5 All activities by the Distributor and its employees, as distributor of
the Shares, shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations
made or adopted by the SEC or the National Association of Securities
Dealers.

1.6 The Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent for the Company.

1.7 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any kind,
the Company may decline to accept any orders for, or make any sales of,
the Shares until such time as the Company deems it advisable to accept
such orders and to make such sales, and the Company advises the
Distributor promptly of such determination.

1.8 The Distributor may enter into selling agreements with selected dealers
or other institutions with respect to the offering of Shares to the
public. Each such selling agreement will provide (a) that all payments
for purchases of Shares will be sent directly from the dealer or such
other institution to the Funds' transfer agent and (b) that, if payment
is not made with respect to purchases of Shares at the customary or
required time for settlement of the transaction, the Distributor will
have the right to cancel the sale of the Shares ordered by the dealer
or such other institution, in which case the dealer or such other
institution will be responsible for any loss suffered by any Fund or
the Distributor resulting from such cancellation. The Distributor may
also act as disclosed agent for a Fund and sell Shares of that Fund to
individual investors, such transactions to be specifically approved by
an officer of that Fund.
<PAGE>
1.9 The Company agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended,
and all expenses in connection with maintaining facilities for the
issue and transfer of Shares and for supplying information, prices and
other data to be furnished by the Fund hereunder, and all expenses in
connection with the preparation and printing of the Fund's prospectuses
and statements of additional information for regulatory purposes and
for distribution to shareholders.

1.10 The Company agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the
qualification of the Shares for sale in such states as the Distributor
may designate. The Company shall notify the Distributor in writing of
the states in which the Shares may be sold and shall notify the
Distributor in writing of any changes to the information contained in
the previous notification.

1.11 The Company shall furnish from time to time, for use in connection with
the sale of the Shares, such information with respect to the Company
and the Shares as the Distributor may reasonably request; and the
Company warrants that the statements contained in any such information
shall fairly show or represent what they purport to show or represent.
The Company shall also furnish the Distributor upon request with: (a)
audited annual statements and unaudited semi-annual statements of a
Fund's books and accounts prepared by the Company, (b) quarterly
earnings statements prepared by the Company, (c) a monthly itemized
list of the securities in the Funds, (d) monthly balance sheets as soon
as practicable after the end of each month, and (e) from time to time
such additional information regarding the financial condition of the
Company as the Distributor may reasonably request.

1.12 The Company represents to the Distributor that all Registration
Statements and prospectuses filed by the Company with the SEC under the
1933 Act with respect to the Shares have been prepared in conformity
with the requirements of the 1933 Act and the rules and regulations of
the SEC thereunder. As used in this Agreement, the term "Registration
Statement" shall mean any Registration Statement and any prospectus and
any statement of additional information relating to the Company filed
with the SEC and any amendments or supplements thereto at any time
filed with the SEC. Except as to information included in the
Registration Statement in reliance upon information provided to the
Company by the Distributor or any affiliate of the Distributor
expressly for use in the Registration Statement, the Company represents
and warrants to the Distributor that any Registration Statement, when
such Registration Statement becomes effective, will contain statements
required to be stated therein in conformity with the 1933 Act and the
rules and regulations of the SEC; that all statements of fact contained
in any such Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement when such Registration Statement becomes effective will
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The
Company may but shall not
<PAGE>
be obligated to propose from time to time such amendment or amendments
to any Registration Statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the
opinion of the Company's counsel, be necessary or advisable. The
Company shall promptly notify the Distributor of any advice given to
it by its counsel regarding the necessity or advisability of amending
or supplementing such Registration Statement. If the Company shall not
propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Company of a written request
from the Distributor to do so, the Distributor may, at its option,
terminate this Agreement. The Company shall not file any amendment to
any Registration Statement or supplement to any prospectus without
giving the Distributor reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way
limit the Company's right to file at any time such amendments to any
Registration Statements and/or supplements to any prospectus, of
whatever character, as the Company may deem advisable, such right
being in all respects absolute and unconditional.

1.13 The Company authorizes the Distributor to use any prospectus or
statement of additional information in the form furnished from time to
time in connection with the sale of the Shares. The Company agrees to
indemnify and hold harmless the Distributor, its officers, directors,
and employees, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless (a) from and
against any and all claims, costs, expenses (including reasonable
attorneys' fees) losses, damages, charges, payments and liabilities of
any sort or kind which the Distributor, its officers, directors,
employees or any such controlling person may incur under the 1933 Act,
under any other statute, at common law or otherwise, arising out of or
based upon: (i) any untrue statement, or alleged untrue statement, of a
material fact contained in the Company's Registration Statement,
prospectus, statement of additional information, or sales literature
(including amendments and supplements thereto), or (ii) any omission,
or alleged omission, to state a material fact required to be stated in
the Company's Registration Statement, prospectus, statement of
additional information or sales literature (including amendments or
supplements thereto), necessary to make the statements therein not
misleading, provided, however, that insofar as losses, claims, damages,
liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished to the Company
by the Distributor or its affiliated persons for use in the Company's
Registration Statement, prospectus, or statement of additional
information or sales literature (including amendments or supplements
thereto), such indemnification is not applicable; and (b) from and
against any and all such claims, demands, liabilities and expenses
(including such costs and counsel fees) which the Distributor, its
officers and directors, or such controlling person, may incur in
connection with this Agreement or the Distributor's performance
hereunder, unless such claims, demands, liabilities and expenses
(including such costs and counsel fees) arise by reason of the
Distributor's willful misfeasance, bad faith or negligence in the
performance of the Distributor's duties hereunder. The Company
acknowledges and agrees that in the event that the
<PAGE>
Distributor, at the request of the Company, are required to give
indemnification comparable to that set forth in clause (a) of this
Section 1.13 to any entity selling Shares of the Company or providing
shareholder services to shareholders of the Company and such entity
shall make a claim for indemnification against the Distributor, the
Distributor shall make a similar claim for indemnification against
the Company.

1.14 The Distributor agrees to indemnify and hold harmless the Company, its
several officers and Directors and each person, if any, who controls a
Fund within the meaning of Section 15 of the 1933 Act against any and
all claims, costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind
which the Company, its officers, Directors or any such controlling
person may incur under the 1933 Act, under any other statute, at common
law or otherwise, but only to the extent that such liability or expense
incurred by the Company, its officers or Directors, or any controlling
person resulting from such claims or demands arose out of the
acquisition of any Shares by any person which may be based upon any
untrue statement, or alleged untrue statement, of a material fact
contained in the Company's Registration Statement, prospectus or
statement of additional information (including amendments and
supplements thereto), or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished or confirmed in writing to
the Company by the Distributor or its affiliated persons (as defined in
the 1940 Act), or as a result of the Distributor's failure to comply
with the terms of this Agreement.

1.15 In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified
Party") harmless, the Indemnified Party will notify the Indemnifying
Party promptly after identifying any situation which it believes
presents or appears likely to present a claim for indemnification (an
"Indemnification Claim") against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party,
and shall keep the Indemnifying Party advised with respect to all
developments concerning such situation. The Indemnifying Party shall
have the option to defend the Indemnified Party against any
Indemnification Claim which may be the subject of this indemnification,
and, in the event that the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying
Party shall take over complete defense of the Indemnification Claim and
the Indemnified Party shall sustain no further legal or other expenses
in respect of such Indemnification Claim. The Indemnified Party will
not confess any Indemnification Claim or make any compromise in any
case in which the Indemnifying Party will be asked to provide
indemnification, except with the Indemnifying Party's prior written
consent. The obligations of the parties hereto under this Section 1.15
and Section 3.1 shall survive the termination of this Agreement.
<PAGE>
In the event that the Company is the Indemnifying Party and the
Indemnifying Party does not elect to assume the defense of any such
suit, or in case the Distributor reasonably does not approve of counsel
chosen by the Company, or in case there is a conflict of interest
between the Company or the Distributor, the Company will reimburse the
Distributor, its officers, directors and employees, or the controlling
person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by the Distributor or
them. The Company's indemnification agreement contained in this Section
1.15 and Section 3.1 and the Company's representations and warranties
in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Distributor, its officers, directors and employees, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to the
benefit of its several officers, directors and employees, and their
respective estates and to the benefit of the controlling persons and
their successors. The Company agrees promptly to notify the Distributor
of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the
issue and sale of any Shares.

1.16 No Shares shall be offered by either the Distributor or the Company
under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Company
if and so long as effectiveness of the Registration Statement then in
effect or any necessary amendments thereto shall be suspended under any
of the provisions of the 1933 Act, or if and so long as a current
prospectus as required by Section 5(b)(2) of the 1933 Act is not on
file with the SEC; provided, however, that nothing contained in this
Section 1.16 shall in any way restrict or have any application to or
bearing upon the Company's obligation to redeem Shares tendered for
redemption by any shareholder in accordance with the provisions of the
Company's Registration Statement, Declaration of Company, or bylaws.

1.17 The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:

(a) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, prospectus
or statement of additional information then in effect or the initiation
by service of process on the Company of any proceeding for that
purpose;

(b) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement,
prospectus or statement of additional information then in effect or
that requires the making of a change in such Registration Statement,
prospectus or statement of additional information in order to make the
statements therein not misleading; and
<PAGE>
(c) of all actions of the SEC with respect to any amendments
to any Registration Statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.

For purposes of this section, informal requests by or acts of the Staff
of the SEC shall not be deemed actions of or requests by the SEC.

1.18 The Distributor agrees to coordinate the registration of the Company
with the National Securities Clearing Corporation ("NSCC") and file
required Fund/SERV reports with NSCC.

2. TERM

2.1 This Agreement shall become effective on the date first written above
and, unless sooner terminated as provided herein, shall continue for an
initial one-year term and thereafter shall be renewed for successive
one-year terms, provided such continuance is specifically approved at
least annually by (i) the Company's Board of Directors or (ii) by a
vote of a majority (as defined in the 1940 Act and Rule 18f-2
thereunder) of the outstanding voting securities of the Company,
provided that in either event the continuance is also approved by a
majority of the Directors who are not parties to this Agreement and who
are not interested persons (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable
without penalty, on sixty days' written notice, by the Company's Board
of Directors, by vote of a majority (as defined in the 1940 Act and
Rule 18f-2 thereunder) of the outstanding voting securities of the
Company, or by the Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940
Act and the rules thereunder).

2.2 In the event a termination notice is given by the Company, all
reasonable expenses associated with movement of records and materials
and conversion thereof will be borne by the Company.

3. LIMITATION OF LIABILITY

3.1 The Distributor shall not be liable to the Company for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with the performance of its obligations and duties under
this Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof.

3.2 Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings)
alleging such cause of action.
<PAGE>
3.3 Each party shall have the duty to mitigate damages for which the other
party may become responsible.

3.4 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR LOST
PROFITS OR CONSEQUENTIAL DAMAGES.

4. EXCLUSION OF WARRANTIES

THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE DISTRIBUTOR DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY, A FUND OR ANY
OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF
TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. THE DISTRIBUTOR DISCLAIMS ANY WARRANTY
OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.

5. MODIFICATIONS AND WAIVERS

No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by
each party. No such writing shall be effective as against the
Distributor unless said writing is executed by a Senior Vice President,
Executive Vice President or President of the Distributor. A party's
waiver of a breach of any term or condition in the Agreement shall not
be deemed a waiver of any subsequent breach of the same or another term
or condition.

6. NO PRESUMPTION AGAINST DRAFTER

The Distributor and the Company have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Company and the Distributor, and
no presumptions arise favoring any party by virtue of the authorship of
any provision of this Agreement.

7. PUBLICITY

Neither the Distributor nor the Company shall release or publish news
releases, public announcements, advertising or other publicity relating
to this Agreement or to the transactions contemplated by it without
prior review and written approval of the other party; provided,
however, that either party may make such disclosures as are required
<PAGE>
by legal, accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other
party.

8. SEVERABILITY

The parties intend every provision of this Agreement to be severable.
If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or
invalidity shall not affect the validity of the remainder of this
Agreement. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the
parties. Without limiting the generality of this paragraph, if a court
determines that any remedy stated in this Agreement has failed of its
essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall
remain fully effective.

9. FORCE MAJEURE

No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default
or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or
escalation of hostilities, war, riots or civil disorders in any
country, (iii) any act or omission of the other party or any
governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause
beyond the reasonable control of such party, including without
limitation, failures or fluctuations in telecommunications or other
equipment. In any such event, the non-performing party shall be excused
from any further performance and observance of the obligations so
affected only for so long as such circumstances prevail and such party
continues to use commercially reasonable efforts to recommence
performance or observance as soon as practicable.

10. MISCELLANEOUS

10.1 Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Company or the Distributor shall be
sufficiently given if addressed to the party and received by it at its
office set forth below or at such other place as it may from time to
time designate in writing.

To the Company:

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

To the Distributor:
<PAGE>
First Data Distributors, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President

with a copy to the Distributor's Chief Legal Officer

10.2 The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, and the applicable provisions of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement.
To the extent the provisions of Massachusetts law or the provisions
hereof conflict with the 1940 Act, the 1940 Act shall control.

10.3 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.

10.4 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.

10.5 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and is not intended
to confer upon any other person any rights or remedies hereunder.

11. CONFIDENTIALITY

11.1 The parties agree that the Proprietary Information (defined below) and
the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their
respective licensers. The Company and the Distributor shall exercise
reasonable care to safeguard the confidentiality of the Confidential
Information of the other. The Company and the Distributor may each use
the Confidential Information only to exercise its rights or perform its
duties under this Agreement. The Company and the Distributor shall not
duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of
the other party. The Company and the Distributor may, however, disclose
Confidential Information to its employees who have a need to know the
Confidential Information to perform work for the other, provided that
each shall use reasonable efforts to ensure that the Confidential
Information is not duplicated or disclosed by its employees in breach
of this Agreement. The Company and the Distributor may also disclose
the Confidential Information to independent contractors, auditors and
professional advisors, provided they first agree in writing to be bound
by the confidentiality obligations substantially similar to this
Section 11. Notwithstanding the previous sentence, in no event shall
either the Company or the Distributor disclose
<PAGE>
the Confidential Information to any competitor of the other without
specific, prior written consent.

11.2 Proprietary Information means:

(a) any data or information that is completely sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Company or the
Distributor, their respective subsidiaries and affiliated companies and
the customers, clients and suppliers of any of them;

(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or
the Distributor a competitive advantage over its competitors: and

(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.

11.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the
other.

11.4 The Company acknowledges that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information would
result in immediate and irreparable harm, and money damages would be
inadequate to compensate the Distributor for that harm. The Distributor
shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.

12. The Company and the Distributor agree that the obligations of the
Company under the Agreement shall not be binding upon any of the
Directors, shareholders, nominees, officers, employees or agents,
whether past, present or future, of the Company individually, but are
binding only upon the assets and property of the Company, as provided
in the Declaration of Trust. The execution and delivery of this
Agreement have been authorized by the Directors of the Company, and
signed by an authorized officer of the Company, acting as such, and
neither such authorization by such Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of
them or any shareholder of the Company individually or to impose any
liability on any of them or any shareholder of the Company personally,
but shall bind only the assets and property of the Company as provided
in the Declaration of Trust.
<PAGE>
13. ENTIRE AGREEMENT

This Agreement, including all Schedules hereto, constitutes
the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether
written or oral, between the parties with respect to the subject matter
hereof.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first above written.

LIGHT INDEX FUND, INC.

By:_________________________

Name:_______________________

Title:______________________

FIRST DATA DISTRIBUTORS, INC.

By:_________________________

Name:_______________________

Title:______________________

<PAGE>

SCHEDULE A

to the Distribution Agreement

between the Light Index Fund, Inc. and

First Data Distributors, Inc.

NAME OF FUNDS

Light Index Fund

<PAGE>

SCHEDULE B

to the Distribution Agreement

between the Light Index Fund, Inc. and

First Data Distributors, Inc.

FEES

Notwithstanding anything contained in Section 1.2 to the
contrary, the Company shall pay to the Distributor an annual fee equal to the
lesser of (a) $10,000 per Fund or (b) 0.01% of the aggregate average net assets
of the Funds. Such fee shall be payable in equal monthly installments on the
first business day of each month. Compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly in arrears.

In addition, the Company agrees to reimburse the Distributor
for its reasonable out-of-pocket expenses in providing services hereunder as
mutually agreed to by the parties from time to time.

SUBSCRIPTION AGREEMENT

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

Ladies and Gentlemen:

The undersigned hereby subscribes for ______ shares of Class A Common Stock
(Light Index Fund), $10.00 per share of Light Index Fund, Inc., in consideration
for which the undersigned agrees to transfer to you upon demand cash in the
amount of $______.

It is understood that a certification or certificates representing the shares
subscribed for shall be issued to the undersigned upon request at any time after
receipt by you of payment therefore, and that said shares shall be deemed to be
fully paid and nonassessable.

The undersigned agrees that the shares are being purchased for investment with
no present intention of reselling or redeeming said shares.

Dated and effective as of this ______ day of _______, 199__.

By: _____________________________

ACCEPTANCE

The foregoing subscription is hereby accepted. Dated and effective as of this
________ day of ______________________, 199__.

By: _______________________________

Henry Hewitt, President
Light Index Fund, Inc.

Attest:

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

Charles O'Herin
Secretary/Treasurer

LOGO: Light Index Fund

Light Index(TM) Fund

Individual Retirement Account
Disclosure Statement & Custodial Account Agreement
<PAGE>
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT

GENERAL INFORMATION
Please read the following information together with the Individual Retirement
Account Custodial Agreement and the Prospectus(es) for the fund(s) you select
for investment of IRA contributions.

GENERAL PRINCIPLES
1. ARE THERE DIFFERENT TYPES OF IRAS?
Yes. Upon creation of an IRA, you must designate whether the IRA will be a
Traditional IRA, a Roth IRA, or an Education IRA. (In addition, there are
SEP-IRAs and SIMPLE IRAs, which are discussed in the Disclosure Statement for
Traditional IRAs).
o In a Traditional IRA, amounts contributed to the IRA may be tax deductible
at the time of contribution. Distributions from the IRA will be taxed at
distribution except to the extent that the distribution represents a return
of your own contributions for which you did not claim (or where not eligible
to claim) a deduction.

o In a Roth IRA, amounts contributed to your IRA are taxed at the time of
contribution, but distributions from the IRA are not subject to tax if you
have held the IRA for certain minimum periods of time (generally, until age
59 1/2 but in some cases longer).

o In an Education IRA, you contribute to an IRA maintained on behalf of a
beneficiary and do not receive a current deduction. However, if amounts are
used for certain educational purposes, neither you nor the beneficiary of
the IRA are taxed upon distribution.

Each type of IRA is a custodial account created for the exclusive benefit of the
beneficiary you (or your spouse) in the case of the Traditional IRA and Roth
IRA, and a named beneficiary in the case of an Education IRA. Firstar Trust
Company serves as custodian of the IRA. Your, your spouse's or your
beneficiary's (as applicable) interest in the account is nonforfeitable.

2. CAN I REVOKE MY ACCOUNT?
This account may be revoked any time within seven calendar days after it is
established by mailing or delivering a written request for revocation to: Light
Index Fund, c/o Firstar Trust Company, 615 East Michigan Street, 3rd Floor,
Milwaukee, Wisconsin 53202, Attention: Mutual Fund Department. If the revocation
is mailed, the date of the postmark (or the date of certification if sent by
certified or registered mail) will be considered the revocation date. Upon
proper revocation, a full refund of the initial contribution will be issued,
without any adjustments for items such as administrative fees or fluctuations in
market value. You may always revoke your account after this time, but the
amounts distributed to you will be subject to the tax rules applicable upon
distribution from an IRA account as discussed below. (While current regulations
technically only extend the right to revoke to Traditional IRAs, it has been
assumed that that right applies to all Roth and Education IRAs as well and such
IRAs will thus be administered consistent with that interpretation until the IRS
issues guidance to the contrary.)

3. HOW WILL MY ACCOUNT BE INVESTED?
Contributions made to an IRA will be invested, at your election, in one or more
of the regulated investment companies for which Light Index Investment Co.
serves as Investment Advisor or any other regulated investment company
designated by Light Index Investment Co.. No part of the IRA may be invested in
life insurance contracts; further, the assets of the IRA may not be commingled
with other property. Information about the shares of each mutual fund available
for investment by your IRA must be furnished to you in the form of a prospectus
governed by rules of the Securities and Exchange Commission. Please refer to the
prospectus for detailed information concerning your mutual fund. You may obtain
further information concerning IRAs from any District Office of the Internal
Revenue Service.
Fees and other expenses of maintaining the account may be charged to you or
the account. The Custodian's current fee schedule follows. The fee schedule may
be changed from time to time.

Transfer to successor trustee.............$ 15.00
Distribution to a participant............. 15.00
(exclusive of systematic withdrawal plans)
Refund of excess contribution............. 15.00
Federal wire fee.......................... 12.00
Traditional & Roth IRA annual maintenance fee
per account............................. 12.50*
Education IRA annual maintenance fee
per account.............................. 5.00*
*capped at $25.00 per social security number.

- -------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT FOR TRADITIONAL IRAS

1. AM I ELIGIBLE TO CONTRIBUTE TO A TRADITIONAL IRA?
Employees with compensation income and self-employed individuals with earned
income are eligible to contribute to a Traditional IRA. (For convenience, all
future references to compensation are deemed to mean "earned income" in the case
of a self-employed individual.) Employers may also contribute to Traditional
IRAs established for the benefit of their employees. In addition, you may
establish a Traditional IRA to receive rollover contributions and transfers from
the trustee or custodian of another Traditional IRA or the custodian or trustee
of certain other retirement plans.

2. WHEN CAN I MAKE CONTRIBUTIONS? You may
make regular contributions to your Traditional IRA any time up to and including
the due date for filing your tax return for the year, not including extensions.
You may continue to make regular contributions to your Traditional IRA up to
(but not including) the calendar year in which you reach age 70 1/2. (If you
are over age 70 1/2 but your spouse has not yet attained that age,
contributions to your spouse's Traditional IRA may continue so long as you and
your spouse, based on a joint tax return, have sufficient compensation income.)
Employer contributions to a Simplified Employee Pension Plan or a SIMPLE Plan
<PAGE>
may be continued after you attain age 70 1/2. Eligible rollover contributions
and transfers may be made at any time, including after you reach age 70 1/2.

3. HOW MUCH MAY I CONTRIBUTE TO A TRADITIONAL IRA?
You may make annual contributions to a Traditional IRA in any amount up to 100%
of your compensation for the year or $2,000, whichever is less. The $2,000
limitation is reduced by contributions you make to a Roth IRA, but is not
reduced by contributions to an Educational IRA for the benefit of another
taxpayer. Qualifying rollover contributions and transfers are not subject to
these limitations.

In addition, if you are married and file a joint return, you may make
contributions to your spouse's Traditional IRA. However, the maximum amount
contributed to both your own and to your spouse's Traditional IRA may not exceed
100% of your combined compensation or $4,000, whichever is less. The maximum
amount that may be contributed to either your Traditional IRA or your spouse's
Traditional IRA is $2,000. Again, these dollar limits are reduced by any
contributions you or your spouse make to a Roth IRA, but are not affected by
contributions either of you make to an Education IRA for the benefit of another
taxpayer. If you are the beneficiary of an Education IRA, certain additional
limits may apply to you. Please contact your tax advisor for more information.

4. CAN I ROLL OVER OR TRANSFER AMOUNTS FROM OTHER IRAS OR EMPLOYER PLANS?
You are allowed to "roll over" a distribution or transfer your assets from
one Traditional IRA to another without any tax liability. Rollovers between
Traditional IRAs may be made once per year and must be accomplished within 60
days after the distribution. Also, under certain conditions, you may roll over
(tax-free) all or a portion of a distribution received from a qualified plan or
tax-sheltered annuity in which you participate or in which your deceased spouse
participated. However, strict limitations apply to such rollovers, and you
should seek competent advice in order to comply with all of the rules governing
rollovers.

Most distributions from qualified retirement plans will be subject to a 20%
withholding requirement. The 20% withholding can be avoided by electing a
"direct rollover" of the distribution to a Traditional IRA or to certain other
types of retirement plans. You should receive more information regarding these
withholding rules and whether your distribution can be transferred to a
Traditional IRA from the plan administrator prior to receiving your
distribution. (Note that legislation pending as of this printing would deny your
ability to roll over a hardship distribution from an employer's plan to your
IRA.)

5. ARE MY CONTRIBUTIONS TO A TRADITIONAL IRA TAX DEDUCTIBLE?
Although you may make a contribution to a Traditional IRA within the
limitations described above, all or a portion of your contribution may be
nondeductible. No deduction is allowed for a rollover contribution (including a
"direct rollover") or transfer. For "regular" contributions, the taxability of
your contribution depends upon your tax filing status, whether you (and in some
cases your spouse) are an "active participant" in an employer-sponsored
retirement plan, and your income level.

If you are not married (including a taxpayer filing under the "head of
household" status), the following rules apply:

o If you are not an "active participant" in an employer-sponsored
retirement plan, you may make a fully deductible contribution to a
Traditional IRA (up to the contribution limits described above).

o If you are an "active participant" in an employer-sponsored retirement
plan, you may make a fully deductible contribution to a Traditional IRA (up
to the contribution limits described above) if your adjusted gross income
(as defined below) does not exceed $30,000 for 1998. If your 1998 adjusted
gross income is between $30,000 and $40,000, your deduction will be limited
as described below. If your adjusted gross income exceeds $40,000, your
contribution will not be deductible. After 1998, the deductibility of a
contribution is as follows:
<TABLE>
<CAPTION>
Eligible To Make A Eligible To Make A Not Eligible To
Year Deductible Partially Deductible Make A Deductible
Contribution If AGI Contribution If AGI Contribution If AGI
Less Than Or Between Over
Equal To
<S> <C> <C> <C>
1999 $31,000 $31,001 - $40,999 $41,000
2000 $32,000 $32,001 - $41,999 $42,000
2001 $33,000 $33,001 - $42,999 $43,000
2002 $34,000 $34,001 - $43,999 $44,000
2003 $40,000 $40,001 - $49,999 $50,000
2004 $45,000 $45,001 - $54,999 $55,000
2005 and thereafter $50,000 $50,001 - $59,999 $60,000
</TABLE>

If you are married, the following rules apply:
o If you and your spouse file a joint tax return and neither you nor your
spouse is an "active participant" in an employer-sponsored retirement plan,
you and your spouse may make a fully deductible contribution to a
Traditional IRA (up to the contribution limits described above).

o If you and your spouse file a joint tax return and both you and your
spouse are "active participants" in employer-sponsored retirement plans,
you and your spouse may make fully deductible contributions to a
Traditional IRA (up to the contribution limits described above, if your
1998 combined adjusted gross income (as defined below) does not exceed
$50,000. If your 1998 adjusted gross income is between $50,000 and $60,000,
your deduction will be limited as described below. If your adjusted gross
income exceeds $60,000, your contribution will not be deductible. After
1998, the deductibility of a contribution is as follows:
<TABLE>
<CAPTION>
Eligible To Make A Eligible To Make A Not Eligible To
Deductible Partially Make A Deductible
Year Contribution If AGI Deductible Contribution If AGI
Less Than Or Contribution If AGI Over
Equal To Between
<S> <C> <C> <C>
1999 $51,000 $51,001 - $60,999 $61,000
2000 $52,000 $52,001 - $61,999 $62,000
2001 $53,000 $53,001 - $62,999 $63,000
2002 $54,000 $54,001 - $63,999 $64,000
2003 $60,000 $60,001 - $69,999 $70,000
2004 $65,000 $65,001 - $74,999 $75,000
2005 $70,000 $71,001 - $79,999 $80,000
2006 $75,000 $75,001 - $84,999 $85,000
2007 and thereafter $80,000 $80,001 - $99,999 $100,000
</TABLE>
o If you and your spouse file a joint tax return and only one of you is an
"active participant" in an employer-sponsored retirement plan, special rules
apply. If your spouse is the "active participant", a fully deductible
contribution can be made to your IRA (up to the contribution limits
described above) if your combined adjusted gross income does not exceed
$150,000. If your combined adjusted gross income is between $150,000 and
$160,000, your deduction will be limited as described below. If your
combined adjusted gross income exceeds $160,000, your contribution will not
be deductible. Your spouse, as an active participant in an
employer-sponsored retirement plan, may make a fully deductible contribution
to a Traditional IRA if your 1998 combined adjusted gross income does not
exceed $50,000 (with a partial deduction being available if 1998 combined
adjusted gross income is between $50,000 and $60,000). Conversely, if you
are an "active participant" and your spouse is not, a contribution to your
Traditional IRA will be deductible if your 1998 combined adjusted gross
income does not exceed $50,000 (with a partial deduction being available if
1998 combined adjusted gross income is between $50,000 and $60,000). After
1998, the $50,000 and $60,000 amounts are adjusted in the manner described
in the preceding table; the $150,000 and $160,000 amounts are not adjusted.

o If you are married and file a separate return and are not an "active
participant" in an employer-sponsored retirement plan, you may make a fully
deductible contribution to a Traditional IRA (up to the contribution limits
described above). If you are married and filing separately and are an
"active participant" in an employer-sponsored retirement plan, you may not
make a fully deductible contribution to a Traditional IRA. A partial
deduction is available if your 1998 adjusted gross income is less than
$10,000. This amount is not adjusted for cost-of-living changes or
otherwise.

An employer-sponsored retirement plan includes any of the following types
of retirement plans:

o a qualified pension, profit-sharing, or stock bonus plan established in
accordance with IRC 401(a) or 401(k);

o a Simplified Employee Pension Plan (SEP) (IRC 408(k));

o a deferred compensation plan maintained by a governmental unit or agency;

o tax-sheltered annuities and custodial accounts (IRC 403(b) and
403(b)(7));

o a qualified annuity plan under IRC Section 403(a); or

o a Savings Incentive Match Plan for Employees of Small Employers
(SIMPLE Plan).

Generally, you are considered an "active participant" in a defined contribution
plan if an employer contribution or forfeiture was credited to your account
during the year. You are considered an "active participant" in a defined benefit
plan if you are eligible to participate in a plan, even though you elect not to
participate. You are also treated as an "active participant" if you make a
voluntary or mandatory contribution to any type of plan, even if your employer
makes no contribution to the plan.

For purposes of these rules, adjusted gross income (1) is determined
without regard to the exclusions from income arising under Section 135
(exclusion of certain savings bond interest), Section 137 (exclusion of certain
employer provided adoption expenses) and Section 911 (certain exclusions
applicable to U.S. citizens or residents living abroad) of the Code, (2) is not
reduced for any deduction that you may be entitled to for IRA contributions, and
(3) takes into account the passive loss limitations under Section 469 of the
Code and any taxable benefits under the Social Security Act and Railroad
Retirement Act as determined in accordance with Section 86 of the Code.

Please note that the deduction limits are not the same as the contribution
limits. You can contribute to your Traditional IRA in any amount up to the
contribution limits described above (the lesser of $2,000 or 100 percent of your
compensation income). The amount of your contribution that is deductible for
federal income tax purposes is based upon the rules described in this section.
If you (or where applicable, your spouse) is an "active participant" in an
employer-sponsored retirement plan, you can use the following steps to calculate
whether your contribution will be fully or partially deductible:

(a) Subtract the applicable income limit from your adjusted gross income as
determined above. (For example, if you are a single taxpayer, your 1998
income limit is $30,000.) If the result is $10,000 or more (after 2006,
$20,000 or more for a married individual filing jointly), you can only make
a nondeductible contribution to your Traditional IRA.

(b) Divide the above figure by $10,000 (after 2006, $20,000 for a married
individual filing jointly), and multiply that percentage by $2,000.

If the deduction limit is not a multiple of $10 then it should be rounded up to
the next $10. If you are eligible to make any deductible contribution, you may
make a $200 minimum deductible contribution.

Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the contribution limitations described in Item 3
above. To the extent that your contribution exceeds the deductible limits, it
will be nondeductible. However, earnings on all IRA contributions are tax
deferred until distribution.

6. WHAT IF I MAKE AN EXCESS CONTRIBUTION?
Contributions that exceed the allowable maximum for federal income tax
purposes are treated as excess contributions. A nondeductible penalty tax of 6%
of the excess amount contributed will be added to your income tax for each year
in which the excess contribution remains in your account.

7. HOW DO I CORRECT AN EXCESS CONTRIBUTION?
If you make a contribution in excess of your allowable maximum, you may
correct the excess contribution and avoid the 6% penalty tax for that year by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for the tax year for which the
contribution was made. Any earnings on the withdrawn excess contribution may be
subject to a 10% early distribution penalty tax if you are under age 591 1/42.
In addition, in certain cases an excess contribution may be withdrawn after the
time for filing your tax return. Finally, excess contributions for one year may
be carried
<PAGE>
forward and applied against the contribution limitation in succeeding years.

8. CAN A SIMPLIFIED EMPLOYEE PENSION PLAN BE USED IN CONJUNCTION WITH A
TRADITIONAL IRA?
A Traditional IRA may also be used in connection with a Simplified Employee
Pension Plan established by your employer (or by you if you are self-employed).
In addition, if your SEP Plan as in effect on December 31, 1996 permitted salary
reduction contributions, you may elect to have your employer make salary
reduction contributions. Several limitations on the amount that may be
contributed apply. First, salary reduction contributions (for plans that are
eligible) may not exceed $10,000 per year (certain lower limits may apply for
highly compensated employees). The $10,000 limit applies for 1998 and is
adjusted periodically for cost of living increases. Second, the combination of
all contributions for any year (including employer contributions and, if your
SEP Plan is eligible, salary reduction contributions) cannot exceed 15 percent
of compensation (disregarding for this purpose compensation in excess of
$160,000 per year). The $160,000 compensation limit applies for 1998 and is
adjusted periodically for cost of living increases. A number of special rules
apply to SEP Plans, including a requirement that contributions generally be made
on behalf of all employees of the employer (including for this purpose a sole
proprietorship or partnership) who satisfy certain minimum participation
requirements. It is your responsibility and that of your employer to see that
contributions in excess of normal IRA limits are made under and in accordance
with a valid SEP Plan.

9. CAN A SAVINGS AND INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS
("SIMPLE") BE USED IN CONJUNCTION WITH A TRADITIONAL IRA?
A Traditional IRA may also be used in connection with a SIMPLE Plan
established by your employer (or by you if you are self-employed). When this is
done, the IRA is known as a SIMPLE IRA, although it is similar to a Traditional
IRA with the exceptions described below. Under a SIMPLE Plan, you may elect to
have your employer make salary reduction contributions of up to $6,000 per year
to your SIMPLE IRA. The $6,000 limit applies for 1998 and is adjusted
periodically for cost of living increases. In addition, your employer will
contribute certain amounts to your SIMPLE IRA, either as a matching contribution
to those participants who make salary reduction contributions or as a
non-elective contribution to all eligible participants whether or not making
salary reduction contributions. A number of special rules apply to SIMPLE Plans,
including (1) a SIMPLE Plan generally is available only to employers with fewer
than 100 employees, (2) contributions must be made on behalf of all employees of
the employer (other than bargaining unit employees) who satisfy certain minimum
participation requirements, (3) contributions are made to a special SIMPLE IRA
that is separate and apart from your other IRAs, (4) if you withdraw from your
SIMPLE IRA during the two-year period during which you first began participation
in the SIMPLE Plan, the early distribution excise tax (if otherwise applicable)
is increased to 25 percent; and (5) during this two-year period, any amount
withdrawn may be rolled over tax-free only into another SIMPLE IRA (and not to a
Traditional IRA (that is not a SIMPLE IRA) or to a Roth IRA). It is your
responsibility and that of your employer to see that contributions in excess of
normal IRA limits are made under and in accordance with a valid SIMPLE Plan.

10. WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM A TRADITIONAL IRA?
You may at any time request distribution of all or any portion of your
account. However, distributions made prior to your attainment of age 591 1/42
may be subject to an additional 10 percent penalty tax. Once you reach your
"required beginning date" (see Item 11 below), distribution of your account may
be made in any one of three methods:

(a) a lump-sum distribution,

(b) installments over a period not extending beyond your life expectancy (as
determined by actuarial tables), or

(c) installments over a period not extending beyond the joint life
expectancy of you and your designated beneficiary (as determined by
actuarial tables).

You may also use your account balance to purchase an annuity contract, in which
case your custodial account will terminate.

11. WHEN MUST DISTRIBUTIONS FROM A TRADITIONAL IRA BEGIN?
You must begin receiving the assets in your account no later than April 1
following the calendar year in which you reach age 70 1/2 (your "required
beginning date"). In general, the minimum amount that must be distributed each
year is equal to the amount obtained by dividing the balance in your Traditional
IRA on the last day of the prior year (or the last day of the year prior to the
year in which you attain age 70 1/2) by your life expectancy, the joint life
expectancy of you and your beneficiary, or the specified payment term, whichever
is applicable. A federal tax penalty may be imposed against you if the required
minimum distribution is not made for the year you reach age 70 1/2 and for
each year thereafter. The penalty is equal to 50% of the amount by which the
actual distribution is less than the required minimum.

Unless you or your spouse elects otherwise, your life expectancy and/or the
life expectancy of your spouse will be recalculated annually. (The election, if
you choose to make it, must be made by your required beginning date.) Once you
reach your required beginning date, an election not to recalculate life
expectancy(ies) is irrevocable and will apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.

If you have two or more Traditional IRAs, you may satisfy the minimum
distribution requirements by receiving a distribution from one of your
Traditional IRAs in an amount sufficient to satisfy the minimum distribution
requirements for your other Traditional IRAs. You must still calculate the
required minimum distribution separately for each Traditional IRA, but then such
amounts may be totaled and the total distribution taken from one or more of your
individual Traditional IRAs.

Distribution from your Traditional IRA must satisfy the special "incidental
death benefit" rules of the Internal Revenue Code. These provisions set forth
certain limitations on the joint life expectancy of you and your beneficiary. If
your beneficiary is not your spouse, your beneficiary will be generally
considered to be no more than 10 years younger than you for the purpose of
calculating the minimum amount that must be distributed.
<PAGE>
12. ARE THERE DISTRIBUTION RULES THAT APPLY AFTER MY DEATH?
Yes. If you die before receiving the balance of your Traditional IRA,
distribution of your remaining account balance is subject to several special
rules. If you die on or after your required beginning date, distribution must
continue in a method at least as rapid as under the method of distribution in
effect at your death. If you die before your required beginning date, your
remaining interest will, at the election of your beneficiary or beneficiaries,
(i) be distributed by December 31 of the year in which occurs the fifth
anniversary of your death, or (ii) commence to be distributed by December 31 of
the year following your death over a period not exceeding the life or life
expectancy of your designated beneficiary or beneficiaries.

Two additional distribution options are available if your spouse is the
beneficiary: (i) payments to your spouse may commence as late as December 31 of
the year you would have attained age 70 1/2 and be distributed over a period
not exceeding the life or life expectancy of your spouse, or (ii) your spouse
can simply elect to treat your Traditional IRA as his or her own, in which case
distributions will be required to commence by April 1 following the calendar
year in which your spouse attains age 70 1/2.

13. HOW ARE DISTRIBUTIONS FROM A TRADITIONAL IRA TAXED FOR FEDERAL INCOME
TAX PURPOSES?
Amounts distributed to you are generally includable in your gross income in
the taxable year you receive them and are taxable as ordinary income. To the
extent, however, that any part of a distribution constitutes a return of your
nondeductible contributions, it will not be included in your income. The amount
of any distribution excludable from income is the portion that bears the same
ratio as your aggregate nondeductible contributions bear to the balance of your
Traditional IRA at the end of the year (calculated after adding back
distributions during the year). For this purpose, all of your Traditional IRAs
are treated as a single Traditional IRA. Furthermore, all distributions from a
Traditional IRA during a taxable year are to be treated as one distribution. The
aggregate amount of distributions excludable from income for all years cannot
exceed the aggregate nondeductible contributions for all calendar years.

No distribution to you or anyone else from a Traditional IRA can qualify
for capital gains treatment under the federal income tax laws. Similarly, you
are not entitled to the special five- or ten-year averaging rule for lump-sum
distributions that may be available to persons receiving distributions from
certain other types of retirement plans. All distributions are taxed to the
recipient as ordinary income except the portion of a distribution that
represents a return of nondeductible contributions. Historically, so-called
"excess distributions" to you as well as "excess accumulations" remaining in
your account as of your date of death were subject to additional taxes. These
additional taxes no longer apply.

You must indicate on distribution requests whether or not federal income
taxes should be withheld. Redemption requests not indicating an election not to
have federal income tax withheld will be subject to withholding.

Any distribution that is properly rolled over will not be includable in
your gross income.

14. ARE THERE PENALTIES FOR EARLY DISTRIBUTION FROM A TRADITIONAL IRA?

Distributions from your Traditional IRA made before age 59 1/2 will be
subject (in addition to ordinary income tax) to a 10% nondeductible penalty tax
unless (i) the distribution is a return of nondeductible contributions, (ii) the
distribution is made because of your death, disability, or as part of a series
of substantially equal periodic payments over your life expectancy or the joint
life expectancy of you and your beneficiary, (iii) the distribution is made for
medical expenses in excess of 7.5% of adjusted gross income or is made for
reimbursement of medical premiums while you are unemployed, (iv) the
distribution is made to pay for certain higher education expenses for you, your
spouse, your child, your grandchild, or the child or grandchild of your spouse,
(v) subject to various limits, the distribution is used to purchase a first home
or, in limited cases, a second or subsequent home for you, your spouse, or your
or your spouse's child, grandchild or ancestor, or (vi) the distribution is an
exempt withdrawal of an excess contribution. The penalty tax may also be avoided
if the distribution is rolled over to another individual retirement account. See
Item 9 above for special rules applicable to distributions from a SIMPLE IRA.

15. WHAT IF I ENGAGE IN A PROHIBITED TRANSACTION?

If you engage in a "prohibited transaction," as defined in Section 4975 of
the Internal Revenue Code, your account will be disqualified, and the entire
balance in your account will be treated as if distributed to you and will be
taxable to you as ordinary income. Examples of prohibited transactions are:

(a) the sale, exchange, or leasing of any property between you and your
account,

(b) the lending of money or other extensions of credit between you
and your account,

If you are under age 59 1/2, you may also be subject to the 10% penalty tax
on early distributions.

16. WHAT IF I PLEDGE MY ACCOUNT?
If you use (pledge) all or part of your Traditional IRA as security for a loan,
then the portion so pledged will be treated as if distributed to you and will be
taxable to you as ordinary income during the year in which you make such pledge.
The 10% penalty tax on early distributions may also apply.

17. HOW ARE CONTRIBUTIONS TO A TRADITIONAL IRA REPORTED FOR FEDERAL
TAX PURPOSES?

Deductible
contributions to your Traditional IRA may be claimed as a deduction on your IRS
Form 1040 for the taxable year contributed. If any nondeductible contributions
are made by you during a tax year, such amounts must be reported on Form 8606
and attached to your Federal Income Tax Return for the year contributed. If you
report a nondeductible contribution to your Traditional IRA and do not make the
contribution, you will be subject to a $100 penalty for each overstatement
unless a reasonable cause is shown for not contributing. Other reporting will be
required by you in the event that special taxes or penalties described herein
are due. You must also file Form 5329 with the IRS for each taxable year in
which the contribution limits are
<PAGE>
exceeded, a premature distribution takes place, or less than the required
minimum amount is distributed from your Traditional IRA.

18. HOW ARE EARNINGS ON MY ACCOUNT CALCULATED AND ALLOCATED?
The method of computing and allocating annual earnings is set forth in Article
VIII, Section 1 of the Individual Retirement Account Custodial Agreement. The
growth in value of your IRA is neither guaranteed nor projected.

Your Individual Retirement Account Plan has been approved as to form by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form of the Plan and does not represent a
determination of the merits of the Plan as adopted by you. You may obtain
further information with respect to your Individual Retirement Account from any
district office of the Internal Revenue Service.

19. INCOME TAX WITHHOLDING
You must indicate on distribution requests whether or not federal income
taxes should be withheld. Redemption requests not indicating an election not to
have federal income tax withheld will be subject to withholding.

20. OTHER INFORMATION
Information about the shares of each mutual fund available for investment
by your IRA must be furnished to you in the form of a prospectus governed by
rules of the Securities and Exchange Commission. Please refer to the prospectus
for detailed information concerning your mutual fund. You may obtain further
information concerning IRAs from any District Office of the Internal Revenue
Service.

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TRADITIONAL INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT

The following constitutes an agreement establishing an Individual Retirement
Account (under Section 408(a) of the Internal Revenue Code) between the
Depositor and the Custodian.

ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in Section
408(k).

ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.

ARTICLE III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of Section 408(a)(5)).

2. No part of the custodial funds may be invested in collectibles (within the
meaning of Section 408(m)) except as otherwise permitted by Section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.

ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise
comply with Section 408(a)(6) and Proposed Regulations Section 1.408-8,
including the incidental death benefit provisions of Proposed Regulations
Section 1.401(a)(9)-2, the provisions of which are herein incorporated by
reference.

2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under Item 3, or to the surviving spouse under Item 4, other
than in the case of a life annuity, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Depositor and the
surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.

3. The Depositor's entire interest in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date, April 1
following the calendar year end in which the Depositor reaches age 70 1/2.
By that date, the Depositor may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:

(a) A single sum payment.

(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.

(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.

(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.

(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of
the Depositor and his or her designated beneficiary.

4. If the Depositor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:

(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with Item 3.

(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor
or, if the Depositor has not so elected, at the election of the beneficiary
or beneficiaries, either:

(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
<PAGE>
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year of
the Depositor's death. If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not required to begin before
December 31 of the year in which the Depositor would have turned
age 70 1/2.

(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually have
been made before that date.

(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the account.

5. In the case of a distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the custodial account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under Item 3,
determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the
case of a distribution in accordance with Item 4(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.

6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.

ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under Section 408(i) and
Regulations Section 1.408-5 and 1.408-6.

2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.

ARTICLE VI
Notwithstanding any other articles which may be added or
incorporated, the provisions of Articles I through III and this sentence will be
controlling. Any additional articles that are not consistent with Section 408(a)
and related regulations will be invalid.

ARTICLE VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations.

ARTICLE VIII
1. Investment of Account Assets
(a) All contributions to the custodial account shall be invested in the
shares of the Light Index Fund or, if available, any other series of Light
Index Fund or other regulated investment companies for which Light Index
Investment Co. serves as Investment Advisor or designates as being eligible
for investment ("Investment Company"). Shares of stock of an Investment
Company shall be referred to as "Investment Company Shares." To the extent
that two or more funds are available for investment, contributions shall be
invested in accordance with the Depositor's investment election.

(b) Each contribution to the custodial account shall identify the
Depositor's account number and be accompanied by a signed statement
directing the investment of that contribution. The Custodian may return to
the Depositor, without liability for interest thereon, any contribution
which is not accompanied by adequate account identification or an
appropriate signed statement directing investment of that contribution.

(c) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to
the public. All distributions received on Investment Company Shares,
including both dividend and capital gain distributions, held in the
custodial account shall be reinvested in like shares. If any distribution
of Investment Company Shares may be received in additional like shares or
in cash or other property, the Custodian shall elect to receive such
distribution in additional like Investment Company Shares.

(d) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its nominee. The Depositor shall
be the beneficial owner of all Investment Company Shares held in the
custodial account and the Custodian shall not vote any such shares, except
upon written direction of the Depositor, timely received, in a form
acceptable to the Custodian. The Custodian agrees to forward to the
Depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held in the
custodial account received by the Custodian.

(e) The Depositor may, at any time, by written notice to the Custodian, in
a form acceptable to the Custodian, redeem any number of shares held in the
custodial account and reinvest the proceeds in the shares of any other
Investment Company upon the terms and within the limitations imposed by
then current prospectus of such other Investment Company in which the
Depositor elects to invest. By giving such instructions, the Depositor will
be deemed to have acknowledged receipt of such prospectus. Such redemptions
and reinvestments shall be done at the price and in the manner such shares
are then being redeemed or offered by the respective Investment Companies.

2. Amendment and Termination
(a) Light Index Investment Co., the Investment Advisor for Light Index
Investment Co., may amend the Custodial Account (including retroactive
amendments) by delivering to Custodian and to the Depositor written notice
of such amendment setting forth the substance and effective date of the
amendment. The
<PAGE>
Custodian and the Depositor shall be deemed to have consented to any such
amendment not objected to in writing by the Custodian or Depositor as
applicable within thirty (30) days of receipt of the notice, provided that
no amendment shall cause or permit any part of the assets of the custodial
account to be diverted to purposes other than for the exclusive benefit of
the Depositor or his or her beneficiaries.

(b) The Depositor may terminate the custodial account at any time by
delivering to the Custodian a written notice of such termination.

(c) The custodial account shall automatically terminate upon distribution
to the Depositor or his or her beneficiaries of its entire balance.

3. Taxes and Custodial Fees
Any income taxes or other taxes levied or assessed upon or in respect of the
assets or income of the custodial account and any transfer taxes incurred shall
be paid from the custodial account. All administrative expenses incurred by the
Custodian in the performance of its duties, including fees for legal services
rendered to the Custodian, in connection with the custodial account, and the
Custodian's compensation shall be paid from the custodial account, unless
otherwise paid by the Depositor or his or her beneficiaries. Sufficient shares
will be liquidated from the custodial account to pay such fees and expenses.

The Custodian's fees are set forth in a schedule provided to the Depositor.
Extraordinary charges resulting from unusual administrative responsibilities not
contemplated by the schedule will be subject to such additional charges as will
reasonably compensate the Custodian. Fees for refund of excess contributions,
transferring to a successor trustee or custodian, or redemption/reinvestment of
Investment Company Shares will be deducted from the refund or redemption
proceeds and the remaining balance will be remitted to the Depositor, or
reinvested or transferred in accordance with the Depositor's instructions.

4. Reports and Notices
(a) The Custodian shall keep adequate records of transactions it is required
to perform hereunder. After the close of each calendar year, the Custodian
shall provide to the Depositor or his or her legal representative a written
report or reports reflecting the transactions effected by it during such
year and the assets and liabilities of the Custodial Account at the close of
the year.

(b) All communications or notices shall be deemed to be given upon receipt
by the Custodian at: Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 or the Depositor at his or her most recent address
shown in the Custodian's records. The Depositor agrees to advise the
Custodian promptly, in writing, of any change of address.

5. Designation of Beneficiary
The Depositor may designate a beneficiary or beneficiaries to receive benefits
from the custodial account in the event of the Depositor's death. In the event
the Depositor has not designated a beneficiary, or if all beneficiaries shall
predecease the Depositor, the following persons shall take in the order named:

(a) The spouse of the Depositor;

(b) If the spouse shall predecease the Depositor or if the Depositor does
not have a spouse, then to the Depositor's estate.

The Depositor may also change or revoke any previously made designation of
beneficiary. A designation or change or revocation of a designation shall be
made by written notice in a form acceptable to and filed with the Custodian,
prior to the complete distribution of the balance in the custodial account. The
last such designation on file at the time of the Depositor's death shall govern.
If a beneficiary dies after the Depositor, but prior to receiving his or her
entire interest in the custodial account, the remaining interest in the
custodial account shall be paid to the beneficiary's estate.

6. Multiple Individual Retirement Accounts
In the event the Depositor maintains more than one individual retirement
account (as defined in Section 408(a)) and elects to satisfy his or her minimum
distribution requirements described in Article IV above by making a distribution
for another individual retirement account in accordance with Item 6 thereof, the
Depositor shall be deemed to have elected to calculate the amount of his or her
minimum distribution under this custodial account in the same manner as under
the individual retirement account from which the distribution is made.

7. Inalienability of Benefits
The benefits provided under this custodial account nor the assets held
therein shall be subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind and any attempt to cause such benefits or assets
to be so subjected shall not be recognized except to the extent as may be
required by law.

8. Rollover Contributions and Transfers
The Custodian shall have the right to receive rollover contributions and to
receive direct transfers from other custodians or trustees. All contributions
must be made in cash or check.

9. Conflict in Provisions
To the extent that any provisions of this Article VIII shall conflict with
the provisions of Articles IV, V and/or VII, the provisions of this Article VIII
shall govern.

10. Applicable State Law
This custodial account shall be construed, administered and enforced
according to the laws of the State of Wisconsin.

11. Resignation or Removal of Custodian
The Custodian may resign at any time upon thirty (30) days notice in
writing to the Investment Company. Upon such resignation, the Investment Company
shall notify the Depositor, and shall appoint a successor custodian under this
Agreement. The Depositor or the Investment Company at any time may remove the
Custodian upon 30 days written notice to that effect in a form acceptable to and
filed with the Custodian. Such notice must include designation of a successor
custodian. The successor custodian shall satisfy the requirements of Section
408(h) of the Code. Upon receipt by the Custodian of written acceptance of such
appointment by the successor custodian, the Custodian shall transfer and pay
over to such successor the assets of and records relating to the Custodial
Account. The Custodian is authorized, however, to reserve such sum of money as
it may deem advisable for payment of all its fees, compensation, costs and
expenses, or for payment of any other liability constituting a charge on or
against the assets of the Custodial Account or on or against the Custodian, and
where necessary may liquidate shares in the Custodial Account for such payments.
Any balance of such reserve remaining after the payment of
<PAGE>
all such items shall be paid over to the successor Custodian. The Custodian
shall not be liable for the acts or omissions of any predecessor or successor
custodian or trustee.

12. Limitation on Custodian Responsibility
The Custodian will not under any circumstances be responsible for the
timing, purpose or propriety of any contribution or of any distribution made
hereunder, nor shall the Custodian incur any liability or responsibility for any
tax imposed on account of any such contribution or distribution. Further, the
custodian shall not incur any liability or responsibility in taking or omitting
to take any action based on any notice, election, or instruction or any written
instrument believed by the Custodian to be genuine and to have been properly
executed. The Custodian shall be under no duty of inquiry with respect to any
such notice, election, instruction, or written instrument, but in its discretion
may request any tax waivers, proof of signatures or other evidence which it
reasonably deems necessary for its protection. The Depositor and the successors
of the Depositor including any executor or administrator of the Depositor shall,
to the extent permitted by law, indemnify the Custodian and its successors and
assigns against any and all claims, actions or liabilities of the Custodian to
the Depositor or the successors or beneficiaries of the Depositor whatsoever
(including without limitation all reasonable expenses incurred in defending
against or settlement of such claims, actions or liabilities) which may arise in
connection with this Agreement or the Custodial Account, except those due to the
Custodian's own bad faith, gross negligence or willful misconduct. The Custodian
shall not be under any duty to take any action not specified in this Agreement,
unless the Depositor shall furnish it with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian, or to
defend or engage in any suit with respect hereto unless it shall have first
agreed in writing to do so and shall have been fully indemnified to its
satisfaction.

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INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE
STATEMENT FOR ROTH (AMERICAN DREAM) IRAS

1. AM I ELIGIBLE TO CONTRIBUTE TO A ROTH IRA?
Anyone with compensation income whose adjusted gross income does not exceed the
limits described below is eligible to contribute to a Roth IRA. You may also
establish a Roth IRA to receive rollover contributions or transfers from another
Roth IRA or, in some cases, from a Traditional IRA. You may not roll amounts
into a Roth IRA from other retirement plans such as an employer-sponsored
qualified plan. However, current law does not appear to prohibit a rollover from
a qualified plan into a Traditional IRA and then from the Traditional IRA into a
Roth IRA.

2. WHEN CAN I MAKE CONTRIBUTIONS?
You may make annual contributions to your Roth IRA any time up to and
including the due date for filing your tax return for the year, not including
extensions. Unlike a Traditional IRA, you may continue to make regular
contributions to your Roth IRA even after you attain age 70 1/2. In addition,
rollover contributions and transfers (to the extent permitted as discussed
below) may be made at any time, regardless of your age.

3. HOW MUCH MAY I CONTRIBUTE TO A ROTH IRA?
You may make annual contributions to a Roth IRA in any amount up to 100% of
your compensation for the year or $2,000, whichever is less. The $2,000
limitation is reduced by any contributions made by you or on your behalf to any
other individual retirement plan (such as a Traditional IRA). (Legislation
pending as of this printing clarifies that, for this purpose, the term
individual retirement plan does not include SEP IRAs or SIMPLE IRAs.) However,
your annual contribution limitation is not reduced by contributions you make to
an Education IRA that covers someone other than yourself. Qualifying rollover
contributions and transfers are not subject to these limitations.

In addition, if you are married and file a joint return, you may make
contributions to your spouse's Roth IRA. However, the maximum amount contributed
to both your own and to your spouse's Roth IRA may not exceed 100% of your
combined compensation or $4,000, whichever is less. The maximum amount that may
be contributed to either your Roth IRA or your spouse's Roth IRA is $2,000.
Again, these dollar limits are reduced by any contributions made by or on behalf
of you or your spouse to any other individual retirement plan (such as a
Traditional IRA), except that the limit is not reduced for contributions either
of you make to an Education IRA for someone other than yourselves.

As noted in Item 1, your eligibility to contribute to a Roth IRA depends on
your adjusted gross income (as defined below). The amount that you may
contribute to a Roth IRA is reduced proportionately for adjusted gross income as
calculated above which exceeds the applicable dollar amount. The applicable
dollar amount is $95,000 for a taxpayer filing as an individual or head of
household and $150,000 for a taxpayer filing as a married individual filing a
joint tax return. The applicable dollar limit for a taxpayer filing as a married
individual filing a separate return is $0. If your adjusted gross income as
calculated above exceeds the applicable dollar amount by $15,000 or less
($10,000 or less in the case of a married individual filing jointly), you may
make a contribution to a Roth IRA. The amount you may contribute, however, will
be less than $2,000. (Legislation pending as of this printing would change the
phaseout range for a married individual filing separately from $0 to $10,000.)
Note that the amount you may contribute to a Roth IRA is not affected by your
participation in an employer-sponsored retirement plan.

For this purpose, your adjusted gross income (1) is determined without
regard to the exclusions from income arising under Section 135 (exclusion of
certain savings bond interest), Section 137 (exclusion of certain employer
provided adoption expenses) and Section 911 (certain exclusions applicable to
U.S. citizens or residents living abroad) of the Code, (2) is reduced by the
amount paid under an endowment contract described in Section 408(b) of the Code
which is properly allocated to the cost of life insurance, (3) takes into
account the passive loss limitations under Section 469 of the Code and any
taxable benefits under the Social Security Act and Railroad Retirement Act as
determined in accordance with Section 86 of the Code, (4) does not take into
account income from rollovers of Traditional IRAs, and (5) does take into
account the deduction for a Traditional IRA. (Legislation pending as of this
printing indicates that the deduction for a contribution to a Traditional IRA
would not be taken into account for determining your adjusted gross income.)

To determine the amount you may contribute to a Roth IRA (assuming you have
at least $2,000 of income), use the following calculations:
<PAGE>

(a) Subtract the amount contributed on your behalf to all Traditional IRAs
and employer-sponsored individual retirement plans from $2,000. This amount
is known as the "maximum potential contribution."

(b) Subtract the applicable dollar amount from your adjusted gross income
as determined above. If the result is $15,000 or more ($10,000 or more in
the case of a married individual filing jointly), you cannot make a
contribution to a Roth IRA.

(c) Divide the above figure by $15,000 ($10,000 in the case of a married
individual filing jointly), and multiply that percentage by the maximum
possible contribution.

(d) Subtract the dollar amount (result from (c) above) from the maximum
possible contribution to determine the amount you may contribute to a
Roth IRA.

(Legislation pending as of this printing indicates that you are eligible to make
a contribution to a Roth IRA of the lesser of: (i) $2,000 (assuming you have at
least $2,000 of income) less contributions to all other individual retirement
accounts or (ii) $2,000 minus the quantity $2,000 times the fraction determined
in part (c))

If the contribution limit is not a multiple of $10 then it should be
rounded up to the next $10. If you are eligible to make any contribution, you
may make a minimum $200 contribution.

Your contribution to a Roth IRA is not reduced by any amount you contribute
to an Education IRA for the benefit of someone other than yourself. If you are
the beneficiary of an Education IRA, additional limits may apply to you. Please
contact your tax advisor for more information.

4. CAN I ROLL OVER OR TRANSFER AMOUNTS FROM OTHER IRAS?
You are allowed to "roll over" a distribution or transfer your assets from
one Roth IRA to another without any tax liability. Rollovers between Roth IRAs
are permitted once per year and must be accomplished within 60 days after the
distribution. In addition, if you are a single, head of household or married
filing jointly taxpayer and your adjusted gross income is not more than
$100,000, you may roll over amounts from another individual retirement plan
(such as a Traditional IRA) to a Roth IRA. Such amounts are subject to tax as if
they were additional income to you for the year, but are not subject to the 10%
penalty tax. (However, under legislation pending as of this printing, if the
amount rolled over is distributed before the end of the five-tax-year period
beginning with the beginning of the tax year of the rollover, a 10% penalty tax
will apply to the taxed portion of the rollover.)

If you roll over amounts from a Traditional IRA to a Roth IRA during 1998,
you may take advantage of special tax treatment. Under the special rules, you
may take your rollover into income as if one quarter of the amount rolled over
was distributed to you in 1998 and one quarter of the amount was distributed to
you in each of the following three years.

(Legislation pending as of this printing indicates that if you die prior to
taking all four amounts into income, the remaining amounts are included in
income for the year of your death unless you have a spouse and your spouse
elects to take those amounts into the spouse's income over the remaining
period.)

Subject to the foregoing limits, you may also directly convert a Traditional
IRA to a Roth IRA with similar tax results.

Furthermore, if you have made contributions to a Traditional IRA during the
year in excess of the deductible limit, you may convert those nondeductible IRA
contributions to contributions to a Roth IRA (subject to the contribution limit
for a Roth IRA).

You may not roll over amounts to a Roth IRA from a qualified retirement plan or
any other retirement plan that is not an individual retirement plan.

5. WHAT IF I MAKE AN EXCESS CONTRIBUTION?
Contributions that exceed the allowable maximum for federal income tax
purposes are treated as excess contributions. A nondeductible penalty tax of 6%
of the excess amount contributed will be added to your income tax for each year
in which the excess contribution remains in your account.

6. HOW DO I CORRECT AN EXCESS CONTRIBUTION?
If you make a contribution in excess of your allowable maximum, you may
correct the excess contribution and avoid the 6% penalty tax for that year by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for the tax year for which the
contribution was made. Any earnings on the withdrawn excess contribution may
also be subject to the 10% early distribution penalty tax if you are under age
59 1/2 or have not satisfied the five-year requirement described below. In
addition, although you will still owe penalty taxes for one or more years,
excess contributions may be withdrawn after the time for filing your tax return.
Finally, excess contributions for one year may be carried forward and applied
against the contribution limitation in succeeding years.

(Legislation pending as of this printing would permit an individual who is
partially or entirely ineligible for a Roth IRA to transfer amounts of up to
$2,000 to a nondeductible Traditional IRA (subject to reduction for amounts
remaining in the Roth IRA and for other Traditional IRA contributions).)

7. WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM A ROTH IRA?
You may at any time request distribution of all or any portion of your
account. However, distributions made prior to your attainment of age 59 1/2
(or in some cases within five years of establishing your account) may produce
adverse tax consequences.

8. WHEN MUST DISTRIBUTIONS FROM A ROTH IRA BEGIN?
Unlike Traditional IRAs, there is no requirement that you begin distribution of
your account at any particular age.

9. ARE THERE DISTRIBUTION RULES THAT APPLY AFTER MY DEATH?
Your account must be distributed after your death in accordance with rules
similar to those that apply to distributions from a Traditional IRA. Thus,
although the IRS has not issued guidance it is expected that the rules will
require that your remaining interest in your Roth IRA will, at the election of
your beneficiary or beneficiaries, (i) be distributed by December 31 of the year
in which occurs the fifth anniversary of your death, or (ii) commence to be
distributed by December 31 of the year following your death over a period not
exceeding the life or life expectancy of your designated beneficiary or
beneficiaries.
<PAGE>
It is expected that two additional distribution options will be available
if your spouse is the beneficiary: (i) payments to your spouse may commence as
late as December 31 of the year you would have attained age 70 1/2 and be
distributed over a period not exceeding the life or life expectancy of your
spouse, or (ii) your spouse can simply elect to treat your Roth IRA as his or
her own, in which case distributions will be required to commence by April 1
following the calendar year in which your spouse attains age 70 1/2.

10. HOW ARE DISTRIBUTIONS FROM A ROTH IRA TAXED FOR FEDERAL INCOME
TAX PURPOSES?
Amounts distributed to you are generally excludable from your gross income
if they (i) are paid after you attain age 59 1/2, (ii) are made to your
beneficiary after your death, (iii) are attributable to your becoming disabled,
(iv) subject to various limits, are made for the purchase of a first home (or
for a second or subsequent home in certain limited cases) for you, your spouse,
or your or your spouse's children, grandchildren, or parents, or (v) are rolled
over to another Roth IRA.

Regardless of the foregoing, if you or your beneficiary receive a
distribution within the five-taxable-year period starting with the beginning of
the year to which your initial contribution to your Roth IRA applies, the
earnings on your account are includable in taxable income. In addition, if you
roll over funds to your Roth IRA from another individual retirement plan (such
as a Traditional IRA or another Roth IRA into which amounts were rolled from a
Traditional IRA), the portion of a distribution attributable to rolled-over
amounts which exceeds the amounts taxed in connection with the conversion to a
Roth IRA is includable in income (and subject to penalty tax) if it is
distributed prior to the end of the five-tax-year period beginning with the
start of the tax year during which the rollover occurred. (Under legislation
pending at the date of this printing, an amount taxed in connection with a
rollover would be subject to a 10% penalty tax if it is distributed before the
end of the five-tax-year period. The pending legislation also suggests that if
an individual makes multiple taxable rollovers to the same Roth IRA, the
five-year period runs from the date of the most recent rollover.)

In any event, any part of a distribution to you that constitutes a return
of your contributions will not be included in your taxable income. Amounts
distributed to you are treated as coming first from your nondeductible
contributions. (Legislation pending as of this printing clarifies that the next
portion of a distribution is treated as coming from amounts which have been
rolled over from a Traditional IRA and are subject to the four-year recognition
treatment described above. Next, amounts are treated as coming from other
rollovers from a Traditional IRA. Any remaining amounts are treated as
distributed last.) Any portion of your distribution which does not meet the
criteria for exclusion from gross income is also subject to a 10% penalty tax.

Note that to the extent a distribution would be taxable to you, neither you
nor anyone else can qualify for capital gains treatment for amounts distributed
from your account. Similarly, you are not entitled to the special five- or
ten-year averaging rule for lump-sum distributions that may be available to
persons receiving distributions from certain other types of retirement plans.
Rather, the taxable portion of any distribution is taxed to you as ordinary
income. Your Roth IRA is not subject to taxes on excess distributions or on
excess amounts remaining in your account as of your date of death.

You may be required to indicate on distribution requests whether or not
federal income taxes should be withheld on the taxable portion (if any) of a
distribution from a Roth IRA. Redemption requests not indicating an election not
to have federal income tax withheld will be subject to withholding with respect
to the taxable portion (if any) of a distribution to the extent required under
federal law. (Note that legislation pending as of this printing clarifies that,
for federal tax purposes, Roth IRAs are taxed separately from Traditional IRAs,
Roth IRAs with rollovers are taxed separately from Roth IRAs without rollovers,
and Roth IRAs with rollovers with different five-year periods are taxed
separately.)

11. ARE THERE PENALTIES FOR EARLY DISTRIBUTION FROM A ROTH IRA?
As indicated above, earnings on your contributions that are distributed before
certain events are subject to various taxes.

12. WHAT IF I ENGAGE IN A PROHIBITED TRANSACTION?
If you engage in a "prohibited transaction," as defined in Section 4975 of the
Internal Revenue Code, your account could lose its tax-favored status. Examples
of prohibited transactions are:

(a) the sale, exchange, or leasing of any property between you and your
account,

(b) the lending of money or other extensions of credit between you and
your account,

13. WHAT IF I PLEDGE MY ACCOUNT?
If you use (pledge) all or part of your Roth IRA as security for a loan, your
account may lose its tax-favored status.

14. HOW ARE CONTRIBUTIONS TO A ROTH IRA REPORTED FOR FEDERAL TAX PURPOSES?
As of the date of this printing, the Internal Revenue Service had not issued
forms for reporting information related to contributions to and distributions
from a Roth IRA.

15. HOW ARE EARNINGS ON MY ACCOUNT CALCULATED AND ALLOCATED?
The method of computing and allocating annual earnings is set forth in the Roth
Individual Retirement Account Custodial Agreement. The growth in value of your
IRA is neither guaranteed nor projected.

16. IS THERE ANYTHING ELSE I SHOULD KNOW?
Your Roth Individual Retirement Account Plan has been approved as to form by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form of the Plan and does not represent a
determination of the merits of the Plan as adopted by you. You may obtain
further information with respect to your Roth Individual Retirement Account from
any district office of the Internal Revenue Service. The statute provides that
Roth IRAs are to be treated the same as Traditional IRAs for most purposes. As
the IRS clarifies its interpretation of the statute, revised or updated
information will be provided.
<PAGE>
ROTH INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing a Roth IRA (under
Section 408A of the Internal Revenue Code) between the depositor and the
custodian.

ARTICLE I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except in
the case of a rollover contribution described in Section 408A(e), the custodian
will accept only cash contributions and only up to a maximum amount of $2,000
for any tax year of the depositor.

2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will
be accepted.

ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married depositor who files separately, between $0 and $10,000. In the
case of a conversion, the custodian will not accept IRA Conversion Contributions
in a tax year if the depositor's AGI for that tax year exceeds $100,000 or if
the depositor is married and files a separate return. Adjusted gross income is
defined in Section 408A(c)(3) and does not include IRA Conversion Contributions.

ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.

ARTICLE IV
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of Section 408(a)(5)).

2. No part of the custodial funds may be invested in collectibles (within
the meaning of Section 408(m) except as otherwise permitted by Section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.

ARTICLE V
1. If the depositor dies before his or her entire interest is distributed to him
or her and the grantor's surviving spouse is not the sole beneficiary, the
entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:

(a) Be distributed by December 31 of the year containing the fifth
anniversary of the depositors death, or

(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of the
depositor's death.

If distributions do not begin by the date described in (b), distribution method
(a) will apply.

2. In the case of distribution method 1.(b) above, to determine the minimum
annual payment for each year, divide the grantor's entire interest in the trust
as of the close of business on December 31 of the preceding year by the life
expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.

3. If the depositor's spouse is the sole beneficiary on the depositor's date of
death, such spouse will then be treated as the depositor.

ARTICLE VI
1. The depositor agrees to provide the custodian with information necessary
for the custodian to prepare any reports required under Section 408(i) and
408A(d)(3)(E), regulations Sections 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.

2. The custodian agrees to submit reports to the Internal Revenue Service and
the depositor prescribed by the Internal Revenue Service.

ARTICLE VII
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with Section 408A, the related
regulations, and other published guidance will be invalid.

ARTICLE VIII
This Agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.

ARTICLE IX
1. Investment of Account Assets.
(a) All contributions to the custodial account shall be invested in the
shares of any regulated investment company ("Investment Company") for which
Light Index Investment Co. serves as Investment Advisor, or any other
regulated investment company designated by the Investment Advisor. Shares of
stock of an Investment Company shall be referred to as "Investment Company
Shares."

(b) Each contribution to the custodial account shall identify the
depositor's account number and be accompanied by a signed statement
directing the investment of that contribution. The custodian may return to
the depositor, without liability for interest thereon, any contribution
which is not accompanied by adequate account identification or an
appropriate signed statement directing investment of that contribution.

(c) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to the
public. All distributions received on Investment Company Shares held in the
custodial account shall be reinvested in like shares. If any distribution of
Investment Company Shares may be received in additional like shares or in
cash or other property, the custodian shall elect to receive such
distribution in additional like Investment Company Shares.

(d) All Investment Company Shares acquired by the custodian shall be
registered in the name of the custodian or its nominee. The depositor shall
be the beneficial owner of all Investment Company Shares held in the
custodial account and the custodian shall not vote any such shares, except
upon written direction of the depositor. The custodian agrees to forward to
the depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held in the
custodial account received by the custodian.

(e) The depositor may, at any time, by written notice to the custodian,
redeem any number of shares held in the custodial account and reinvest
the proceeds in the shares of any other Investment Company. Such
redemptions and reinvestments shall be done at the price and in the manner
such shares are then being redeemed or offered by the respective
Investment Companies.

2. Amendment and Termination.
(a) The custodian may amend the Custodial Account (including retroactive
amendments) by delivering to the depositor written notice of such amendment
setting forth the substance and effective date of the amendment. The
depositor shall be deemed to have consented to any such amendment not
objected to in writing by the depositor within thirty (30) days of receipt
of the notice, provided that no amendment shall cause or permit any part of
the assets of the custodial account to be diverted to purposes other than
for the exclusive benefit of the depositor or his or her beneficiaries.

(b) The depositor may terminate the custodial account at any time by
delivering to the custodian a written notice of such termination.

(c) The custodial account shall automatically terminate upon distribution
to the depositor or his or her beneficiaries of its entire balance.

3. Taxes and Custodial Fees.
Any income taxes or other taxes levied or assessed upon or in respect of the
assets or income of the custodial account and any transfer taxes incurred shall
be paid from the custodial account. All administrative expenses incurred by the
custodian in the performance of its duties, including fees for legal services
rendered to the custodian, and the custodian's compensation shall be paid from
the custodial account, unless otherwise paid by the depositor or his or her
beneficiaries.

The custodian's fees are set forth in a schedule provided to the depositor.
Extraordinary charges resulting from unusual administrative responsibilities not
contemplated by the schedule will be subject to such additional charges as will
reasonably compensate the custodian. Fees for refund of excess contributions,
transferring to a successor trustee or custodian, or redemption/reinvestment of
Investment Company Shares will be deducted from the refund or redemption
proceeds and the remaining balance will be remitted to the depositor, or
reinvested or transferred in accordance with the depositor's instructions.

4. Reports and Notices.
(a) The custodian shall keep adequate records of transactions it is required
to perform hereunder. After the close of each calendar year, the custodian
shall provide to the depositor or his or her legal representative a written
report or reports reflecting the transactions effected by it during such
year and the assets and liabilities of the Custodial Account at the close of
the year.

(b) All communications or notices shall be deemed to be given upon
receipt by the custodian at 615 E. Michigan St., Milwaukee, WI 53202 or the
depositor at his most recent address shown in the custodian's records. The
depositor agrees to advise the custodian promptly, in writing, of any change
of address.

5. Designation of Beneficiary.
The depositor may designate a beneficiary or beneficiaries to receive benefits
from the custodial account in the event of the depositor's death. In the event
the depositor has not designated a beneficiary, or if all beneficiaries shall
predecease the depositor, the following persons shall take in the order named:
(a) The spouse of the depositor;

(b) If the spouse shall predecease the depositor or if the depositor does
not have a spouse, then to the personal representative of the depositor's
estate.

6. Inalienability of Benefits.
The benefits provided under this custodial account shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any kind
and any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent as may be required by law.

7. Rollover Contributions and Transfers.
Subject to the restrictions in Article I, the custodian shall have the right to
receive rollover contributions and to receive direct transfers from other
custodians or trustees. All contributions must be made in cash or check.

8. Conflict in Provisions.
To the extent that any provisions of this Article VIII shall conflict with the
provisions of Articles V, VI and/or VIII, the provisions of this Article IX
shall govern.

9. Applicable State Law.
This custodial account shall be construed, administered and enforced according
to the laws of the State of Wisconsin.

<PAGE>

Light Index(TM) Fund

704 Court A
Tacoma, WA 98402

Mutual Fund Services
615 East Michigan Street
P.O. Box 701
Milwaukee, WI 53201-0701
1-888-INDEX 57
(1-888-463-3957)

[2919] 12/31/97

<PAGE>

LOGO: Light Index Fund

Light Index(TM) Fund
IRA APPLICATION

Mail To: Light Index Fund
c/o Firstar Trust Company
Mutual Fund Services
P.O.Box 701
Milwaukee, WI 53201-0701

Overnight Express Mail To: Light Index Fund
c/o Firstar Trust Company
Mutual Fund Services
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202-5207

Please use this form only for registration of any IRA account. To obtain
additional forms or for help in completing this application please call
1-888 INDEX 57 (1-888-463-3957).

A. REGISTRATION

- ----------------------------------- ------ ---------------------------------
FIRST NAME M.I. LAST NAME
- -------------------------------------- ---------------------------------------
SOCIAL SECURITY # BIRTHDATE (Mo/Dy/Yr)
(MUST BE OF LEGAL AGE)

B. MAILING ADDRESS
--------------------------------------------- --------------
STREET APT/SUITE
----------------------------------- -------- --------------
CITY STATE ZIP
-------------------------------- ---------------------------
DAYTIME PHONE # EVENING PHONE #

q Duplicate Confirmation to:

-------------------------- ------- ------------------------
FIRST NAME M.I. LAST NAME
--------------------------------------------- --------------
STREET APT/SUITE
----------------------------------- -------- --------------
CITY STATE ZIP

C. TYPE OF IRA
(Please select only ONE of the following account types)

q Individual Retirement Account ($1,000 minimum, $2,000 maximum).
q Rollover IRA.
q SEP IRA.
q SIMPLE IRA (Must be accompanied by IRS forms 5305 SA and 5304 SIMPLE).
q Roth IRA.
q Conversion Roth IRA (only available to individuals with single or joint
Adjusted Gross Income of $100,000 or less). Year of Conversion _______
(Year in which traditional IRA was converted to a Roth IRA.)

D. TYPE OF CONTRIBUTION
(Please select ONE of the following types of contributions)

q Yearly Contribution for Tax Year __________ (If prior year, must be mailed on
or before April 15th).
q Transfer (assets are a direct transfer from previous custodian). Please
attach transfer form.
q Rollover assets (You had PHYSICAL RECEIPT of assets for less than 60 DAYS)
from previous IRA.
q Direct Rollover of Assets from your employer sponsored plan (you DID NOT have
receipt of assets). Please indicate previous account type.
___ Corporate ___ Pension Plan ___ Profit Sharing Plan ___ 401(k) ___ 403 (b)
___ Other (please specify)
q Rollover Roth(Rollover of Traditional IRA to Conversion Roth IRA.)

E. INVESTMENT

q By check made payable to Light Index Fund. Amount $ __________
q By wire: Call 1-888 INDEX 57 (1-888-463-3957). Indicate total amount and
date of wire $ _____________
Date ________________

[2920] S 12/31/97

See reverse side of form
<PAGE>
F. AUTOMATIC INVESTMENT PLAN

Your signed Application must be received at least 15 business days prior to
initial transaction.

An unsigned voided check (for checking accounts) or a savings account
deposit slip is required with your Application.

Please start my Automatic Investment Plan as described in the Prospectus
beginning:
Month ________________ Year _____ . I hereby instruct Firstar Trust Company,
Transfer Agent for the Light Index Fund to automatically transfer $ __________
(minimum $50) directly from my checking, NOW, or savings account named below on
the _______ of each month or the first business day thereafter. I understand
that I will be assessed a $20 fee if the automatic purchase cannot be made due
to insufficient funds, stop payment, or for any other reason. Automatic
investment plan contributions to your IRA will be reported as current year
contributions.

NAME(S) ON BANK ACCOUNT
- --------------------------------------- --------------------------------------
BANK NAME ACCOUNT NUMBER

BANK ADDRESS
- --------------------------------------- --------------------------------------
SIGNATURE OF BANK ACCOUNT OWNER SIGNATURE OF JOINT OWNER

G. BENEFICIARY

PRIMARY
--------------------------------------------- --------------
NAME RELATIONSHIP
-----------------------------------
ADDRESS
----------------------------------- -------- --------------
CITY STATE ZIP
--------------------------------------------- --------------
SOCIAL SECURITY # BIRTHDATE
SECONDARY
--------------------------------------------- --------------
NAME RELATIONSHIP
-----------------------------------
ADDRESS
----------------------------------- -------- --------------
CITY STATE ZIP
--------------------------------------------- --------------
SOCIAL SECURITY # BIRTHDATE

H. SIGNATURES

I adopt the Light Index Fund Individual Retirement Account and appoint Firstar
Trust Company to perform custodial and other administrative services specified
in the IRA Custodial Account Agreement. I have received and read the Prospectus
for the Fund and have read and understood the IRA Disclosure Statement and
Custodial Account Agreement. I certify under penalties of perjury that my social
security number above is correct, and that I am of legal age. If I am opening
this IRA with a distribution from an employer-sponsored retirement plan or
another individual retirement account, I certify that the distribution qualifies
as a rollover contribution. I understand that the fees relating to my IRA may be
collected by redeeming sufficient shares from my Fund account balance. I agree
to provide the Internal Revenue Service with information as required. I further
agree to follow all of the terms and conditions of the IRA Custodial Account
Agreement.

By selecting the option in Section [section letter], I hereby authorize the Fund
to initiate credits and debits to my account at the bank indicated and for the
bank to credit or debit the same to such account through the Automated Clearing
House ("ACH") system.

- ---------------------------------------------------- -------------------------
SIGNATURE DATE

Appointment as custodian accepted:

- ---------------------------------------------------- -------------------------
FIRSTAR TRUST COMPANY DATE

I. DEALER INFORMATION
(Please be sure to complete representative's first name and middle
initial.)

- -------------------------------------- ---------------------------------------
DEALER NAME REPRESENTATIVE'S LAST NAME
FIRST NAME MI

DEALER HEAD OFFICE REPRESENTATIVE'S BRANCH OFFICE

- -------------------------------------- ---------------------------------------
ADDRESS ADDRESS

- -------------------------------------- ---------------------------------------
CITY/STATE/ZIP CITY/STATE/ZIP

- -------------------------------------- ---------------------------------------
TELEPHONE NUMBER TELEPHONE NUMBER REP'S A.E. NUMBER

LIGHT INDEX FUND, INC.
DISTRIBUTION PLAN

1. Light index Fund, Inc. (the "Company") is engaged in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and

2. The Company on behalf of its one or more designated series presently existing
or hereafter established (hereinafter referred to as "Portfolios"), desires to
adopt a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act and the
Board of Directors of the Company (the "Board") has determined that there is a
reasonable likelihood that adoption of this Distribution Plan will benefit the
Company and the shareholders; and

3. The Company intends to employ a registered broker-dealer as distributor of
the securities of which it is the issuer ("Distributor");

NOW, THEREFORE, the Company hereby adopts this Distribution Plan (the "Plan") in
accordance with Rule 12b-1 under the 1940 Act.

1. PAYMENT OF FEES. The Company is authorized to pay the Distributor
distribution and service fees for each Portfolio listed on Schedule A of this
Plan, as such schedule may be amended from time to time, on an annualized basis,
at such rates as shall be determined from time to time by the Board in the
manner provided for approval of this Plan in Paragraph 5, up to the maximum
rates set forth in Schedule A, as such schedule may be amended from time to
time. Such fees shall be calculated and accrued daily and paid monthly or at
such other intervals as shall be determined by the Board in the manner provided
for approval of this Plan in Paragraph 5. The distribution and service fees
shall be payable by the Company on behalf of a Portfolio regardless of whether
those fees exceed or are less than the actual expenses, described in Paragraph 2
below, incurred by the Distributor with respect to such Portfolio in a
particular year.

2. DISTRIBUTION AND SERVICE EXPENSES. The fee authorized by Paragraph 1 of this
Plan shall be paid pursuant to an appropriate Distribution Agreement in payment
for any activities or expenses intended to result in the sale of Company shares,
including compensation paid to registered representatives of the Distributor and
to participating dealers that have entered into sales agreements with the
Distributor, advertising, salaries and other expenses of the Distributor
relating to selling or

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serving efforts, expenses of organizing and conducting sales seminars, printing
of prospectuses, statements of additional information and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and other sales promotion expenses, or for providing ongoing
services to shareholders.

3. ADDITIONAL COMPENSATION. This Plan shall not be construed to prohibit or
limit additional compensation derived from sales charges or other resources that
may be paid to the Distributor pursuant to the aforementioned Distribution
Agreement.

4. THIRD PARTY EXPENSES. Nothing in this Plan shall operate or be construed to
limit the extent to which the Company's investment adviser or any other person,
other than the Company, may incur and bear costs and expenses associated with
distribution of Shares in a Portfolio. The Company's investment adviser may
from time to time make payments to third parties out of its advisory fee, not
to exceed the amount of that fee. If such payments are deemed to be indirect
financing of an activity primarily intended to result in the sale of shares
issued by a Portfolio within the context of Rule 12b-1 under the 1940 Act, such
payments shall be authorized by this Plan.

5. BOARD APPROVAL. This Plan shall not take effect with respect to any Portfolio
until it has been approved, together with any related agreements, by vote of a
majority of both (a) the Board and (b) those members of the Board who are not
"interested persons" of the Company, as defined in the 1940 Act, and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Disinterested Directors'), cast in person at a
meeting or meetings called for the purpose of voting on this Plan and such
related agreements.

6. RENEWAL OF PLAN. This Plan shall continue in full force and effect with
respect to a Portfolio for successive periods of one year from its approval as
set forth in Paragraph 5 for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Paragraph 5.

7. REPORTS. Any Distribution Agreement entered into pursuant to this Plan shall
provide that the Distributor shall provide to the Board and the Board shall
review, at least quarterly, or at more frequent intervals as reasonably
requested by the Board, a written report of the amounts so expended and the
purposes for which such expenditures were made.

8. TERMINATION. This Plan may be terminated with respect to a Portfolio at
anytime by vote of a

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majority of the Disinterested Directors or by a vote of a majority of the
outstanding voting securities of such Portfolio, voting separately from any
other Portfolio of the Company.

9. AMENDMENTS. Any change to the Plan that would materially increase the
distribution costs to a Portfolio may not be instituted unless such amendment is
approved in the manner provided for Board approval in Paragraph 5 hereof and
approved by a vote of at least a majority of such Portfolio's outstanding voting
securities, as defined in the 1940 Act, voting separately from any other
Portfolio of the Company. Any other material change to the Plan may not be
instituted unless such change is approved in the manner provided for initial
approval in Paragraph 5 hereof.

10. NOMINATION OF DIRECTORS. While this Plan is in effect, the selection and
nomination of Disinterested Directors of the Company shall be committed to the
discretion of the Disinterested Directors then in office.

11. RECORDS. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 7 hereof for a period of
not less than six years from the date of execution of this Plan, or of the
agreements or of such reports, as the case may be, the first two years in an
easily accessible place.

DATE OF ADOPTION:_______________________, 1998

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LIGHT INDEX FUND, INC.
DISTRIBUTION PLAN
SCHEDULE A

The maximum annualized fee rate pursuant to Paragraph 1 of the Light Index
Fund, Inc. Distribution Plan shall be as follows:

Series:

Light Index Fund
Class A Common Stock

.0001 par value per share

Fee Rate:

0.25% of the average daily net assets.

DATED: ____________________________________, 1998

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