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. 3 [X]
Post-Effective Amendment No. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [X]
Amendment No. 3
(Check appropriate box or boxes)
_______________________
LIGHT REVOLUTION 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 Scott A. Moehrke
Light Index Investment Company Godfrey & Kahn, S.C.
704 Court A 780 North Water Street
Tacoma, WA 98402 Milwaukee, WI 53202
(Name and Address of Agent for
Service)
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.
In accordance with Rule 24f-2(a) 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.
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.
<PAGE>
LIGHT REVOLUTION 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
Item No. on Form N-1A Prospectus or Statement of
Additional Information
PART A - PROSPECTUS OF LIGHT REVOLUTION FUND
1. Cover Page Cover Page
2. Synopsis Fees and Expenses
3. Condensed Financial Total Return
Information
4. General Description of Investment Objective and
Registrant Policies; Investment Risks;
Who Should Invest;
Implementation of Policies;
Investment Restrictions;
General Information
5. Management of the Fund Management; Administration
of the Fund
5A. Management's Discussion of *
Fund Performance
6. Capital Stock and Other Opening an Account and
Securities Purchasing Shares; Selling
Your Shares; Dividends,
Other Distributions and
Taxes; General Information
7. Purchase of Securities Being Share Price; Opening an
Offered Account and Purchasing
Shares
8. Redemption or Repurchase Selling Your Shares; Opening
an Account and Purchasing
Shares; Other Account
Information
9. Legal Proceedings *
<PAGE>
PART B - STATEMENT OF ADDITIONAL INFORMATION
FOR LIGHT REVOLUTION FUND
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Fund;
History Directors and Officers
13. Investment Objectives and Investment Restrictions;
Policies Investment Policies and
Techniques
14. Management of the Registrant Management of the Fund;
Directors and Officers
15. Control Persons and Principal Ownership of Management and
Holders of Securities Principal Shareholders
16. Investment Advisory and Other Investment Adviser,
Services Administrator, Custodian,
Transfer Agent and Account
Services Agent
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other Purchase of Shares;
Securities Redemption of Shares;
Shareholder Meetings
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Redemption of Shares; Share
Offered Price; Systematic Withdrawal
Plan
20. Tax Status Dividends, Other Gain
Distributions and Taxes;
Investment Policies and
Techniques - Federal Tax
Treatment of Future
Contracts, - Federal Tax
Treatment of Options
21. Underwriters Distribution
22. Calculation of Performance Performance Measures
Data
23. Financial Statements Financial Statement
_______________
*Answer negative or inapplicable
<PAGE>
PROSPECTUS
____________, 1998
LIGHT REVOLUTION FUND, INC.
LIGHT REVOLUTION FUND
704 Court A
Tacoma, WA 98402
Telephone: (253) 274-0766
Toll-Free Telephone: (888) 463-3957
INVESTOR 1-888-463-3957
INFORMATION
DEPARTMENT
INVESTMENT Light Revolution Fund, Inc. (the "Company")
OBJECTIVE AND is an open-end, diversified management
POLICIES investment company, commonly referred to as
a mutual fund. The Company currently
comprises one portfolio: the Light
Revolution Fund (the "Fund"). The Fund's
investment objective is capital
appreciation. The Fund seeks to achieve
its investment objective by investing
primarily in the common stock of large
capitalization companies in the technology
sector engaged in the processing or
delivery of information. The investment
methodology used by the Fund to achieve its
investment objective is based on the
investment methodology of the Light Index,
an index that was developed and is
published by the Light Index Investment
Company, investment adviser to the Fund
(the "Adviser"). The Light Index consists
of a diversified number of large
capitalization companies engaged in the
processing or delivery of information.
There is no assurance that the Fund will
achieve its stated investment objective.
OPENING AN ACCOUNT To open a regular (non-retirement) account,
please complete and return the Purchase
Application. If you need assistance in
completing the Purchase Application, 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) (except for
Education IRAs, which have no minimum
initial investment requirement). To open
an IRA, please use a Light Revolution
<PAGE>
IRA
Application. To obtain a copy of this
form, call our Investor Information
Department at 1-888-463-3957, Monday
through Friday from 8:00 a.m. to 7:00 p.m.
(Central time). Fund shares may be
purchased at a price equal to their net
asset value plus a sales charge imposed at
the time of purchase. Certain investors
may not have to pay this sales charge and
reduced sales charges are available under
certain circumstances. Fund shares are
also subject to a Rule 12b-1 plan pursuant
to which an aggregate annual fee of 0.25%
is charged on the average daily net assets
of the Fund.
ABOUT THIS This Prospectus is designed to set forth
PROSPECTUS 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, which may be revised
from time to time, 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 at the
above-noted telephone number.
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS 1
FEES AND EXPENSES 2
INVESTMENT OBJECTIVE AND POLICIES 3
INVESTMENT RISKS 4
IMPLEMENTATION OF POLICIES 4
Short-Term Fixed Income Securities 4
Derivative Securities 4
Foreign Securities 5
Security Lending 5
Portfolio Turnover 5
INVESTMENT RESTRICTIONS 6
MANAGEMENT 6
Fund Expenses 7
The Light Index 8
Performance of the Light Index 8
ADMINISTRATION OF THE FUND 10
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES 10
Dividends and Other Distributions 10
Taxes 11
SHARE PRICE 12
Front-End Sales Charge Waivers and Reductions 13
Temporary Waiver 13
Waivers for Certain Investors 13
Reducing Sales Charges 14
DISTRIBUTION PLAN 15
GENERAL INFORMATION 16
<PAGE>
WHO SHOULD INVEST 16
OPENING AN ACCOUNT AND PURCHASING SHARES 17
Purchasing by Mail 17
New Account 17
Additional Investments 18
Purchasing by Wire 18
Before Wiring 18
Purchasing by Telephone 19
Automatic Investment Plan 19
Choosing a Distribution Option 19
Tax Caution 20
Important Information 20
When Your Account Will Be Credited 20
SELLING YOUR SHARES 21
Selling by Mail 21
Definition of Good Order 21
Selling by Telephone 21
Systematic Withdrawal Plan 22
Important Redemption Information 22
Delivery of Redemption Proceeds 22
Minimum Account Balance Requirement 23
IMPORTANT INFORMATION ABOUT TELEPHONE TRANSACTIONS 23
OTHER ACCOUNT INFORMATION 24
TOTAL RETURN 24
<PAGE>
HIGHLIGHTS
This Prospectus describes the Light Revolution Fund
(the "Fund"). The Fund's investment objective is
capital appreciation. As with any mutual fund, there
is no assurance that the Fund will achieve its
investment objective.
INVESTMENT STRATEGY The Industrial Age was an era characterized
by a rapid increase in productivity brought
about by the ability to perform physical
work with machines. Through the use of the
steam engine and other machines, natural
resources and industrial commodities such
as coal, iron ore, lumber and oil were
brought to market at speeds never before
possible. The early years of that era came
to be known as the "Industrial Revolution."
The Information Age is an era characterized
by a rapid increase in productivity brought
about by the ability to quickly process and
deliver information. Through the
development and use of the integrated
circuit and related technologies,
information is processed and delivered to
end-users at the speed of light when
translated into "information commodities"
like electrons, radio waves, microwaves,
infrared and visible light. The Adviser
has characterized this era as the "Light
Revolution."
The Fund was formed to provide a means to
invest in a group of large capitalization
companies which, in the Adviser's opinion,
are or are expected to become leaders in
the Light Revolution. For further
information, see "Investment Objective and
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. In addition, the Fund is
subject to risks associated with the Fund's
focus on companies which the Adviser
believes will participate in the Light
Revolution. This sector of the economy may
be subject to greater volatility than the
stock market in general or may not
correspond to stock market movements in
general. Investors should not consider an
investment in the Fund a complete
investment program, but as
<PAGE>
one component of
a diversified portfolio of investments.
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 (the "Adviser") and is sponsored
and distributed by First Data Distributors,
Inc. (the "Distributor"), which is not
affiliated with the Adviser. For further
information, see "Management" and
"Distribution Plan."
FEES AND EXPENSES
The following table illustrates all expenses and fees
that you would incur as a shareholder of the Fund. The
Annual Fund Operating Expenses are estimated amounts.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of net asset value per share)(1) 4.50%
Maximum Deferred Sales Load (as a percentage of
offering price) None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fees (2) None
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees (3) 0.25
Other Expenses (net of reimbursements) (4) 0.75
Total Fund Operating Expenses (net of
reimbursements) (4) 2.00%
(1) This sales charge is the maximum applicable to
purchase of shares. The Fund has decided to waive the
sales charge until the earlier of the date on which the
Fund has assets under management in an amount in excess of
$50 million, or June 30, 1999. Certain investors may not
have to pay this sales charge, and reduced sales charges
are available under certain circumstances. See "Share
Price - Front-End Sales Charge Waivers and Reductions."
(2) A fee of $12.00 is charged for each wire redemption.
(3) The distribution expenses are 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.
(4) "Other Expenses" is based on estimated amounts for the
current fiscal year. For the period ending June 30, 1999,
the Adviser has agreed to waive its management fee and/or
reimburse the Fund to the extent necessary to ensure that
the Fund's total annual operating expenses, including the
Adviser's advisory fee and the administration fee but
excluding interest, taxes, brokerage commissions and other
costs incurred in connection with the purchase and sale of
portfolio securities, and extraordinary items,
<PAGE>
do not
exceed 2.0% of the Fund's average daily net assets;
provided, however, that the Adviser is entitled to recoup
amounts waived or reimbursed for a period of up to three
years from the date such amounts were reimbursed or waived.
Absent these waivers and reimbursements, the Other Expenses
and Total Fund Operating Expenses are estimated to be ____%
and ____%, respectively.
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 based on
"Total Fund Operating Expenses" in the table above.
The 4.50% maximum sales charge imposed on Fund shares
is reflected in the example.
1 Year 3 Year
$64 $105
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.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective presented below may not be
changed without shareholder approval. Since all
investments are subject to inherent market risks, there
is no assurance that this investment objective will be
realized.
The investment objective of the Fund is capital
appreciation. The Fund seeks to achieve its investment
objective by investing primarily in the common stock of
large capitalization companies in the technology sector
engaged in the processing or delivery of information.
The investment methodology used by the Fund to achieve
its investment objective is based on the investment
methodology developed by the Adviser in creating and
maintaining the Light Index. The companies included in
the Light Index are publicly-traded companies engaged
in the processing or delivery of information which have
large capitalizations (i.e., a capitalization of at
least $1 billion) and which, in the Adviser's opinion,
are or are expected to become leaders in the "Light
Revolution" - a term created by the Adviser to describe
the transition of the world's economy from one based on
the ability to perform physical work with machines at
high speed to one based on the ability to process and
deliver information at the speed of light. See
"Management-The Light Index."
While the Adviser will base its investment methodology
on the investment methodology it uses in managing the
Light Index, the Fund is not an "index fund" and while
the Adviser anticipates that the Fund will be managed
in a substantially similar manner to the Adviser's
previous selection and weightings for the Light Index,
the Adviser will not attempt to identically replicate
the performance of the Light Index in managing the
Fund.
The Fund intends to remain fully invested and under
normal circumstances the Fund intends to invest at
least 95% of its assets in common stocks and in futures
contracts and options on such stocks. The Fund will
not invest in cash reserves as part of a temporary
defensive strategy, such as lowering its investment in
common stocks to protect against potential stock market
<PAGE>
declines. The Fund is managed without regard to tax
ramifications, and is responsible for voting the shares
of all securities it holds. See "Implementation of
Policies" for a description of these and other
investment practices of the Fund.
INVESTMENT RISKS
The Adviser has no prior experience advising a mutual
fund, but principals of the Adviser, through separate
advisory entities controlled by such principals, act as
investment advisers to individual and institutional
clients with investment portfolios of more than $90
million in the aggregate. See "Management." There can
be no assurance that, by using an investment
methodology based on the investment methodology used in
managing the Light Index, the Fund will achieve similar
returns. Investors should not consider the performance
of the Light Index as an indication of the future
performance of the Fund or the Adviser. See
"Management-Performance of the Light Index."
IMPLEMENTATION OF POLICIES
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 policies and
techniques is contained in the Company's SAI. The
Fund's policies may be changed without a vote of the
Fund's shareholders. 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 Fixed Income Securities. The Fund may
invest in certain short-term fixed income securities.
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 Securities. Derivative securities 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 use 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.
The risk of loss associated with futures contracts in
some strategies can be substantial due both to the low
margin deposits required and the extremely high degree
of leverage involved in futures pricing. As a result, a
relatively small price movement in a futures contract
may result in an immediate and substantial loss or
gain. However, the Fund will not use futures contracts,
options, warrants, convertible securities or swap
agreements for speculative purposes or to leverage its
net assets. Accordingly, the primary risks associated
with the Fund's use of these investments are: (i)
imperfect correlation between the change in market
value of the stocks held by the Fund and the prices of
futures contracts and options; and (ii) possible lack
of a liquid
<PAGE>
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.
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. 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 than is available in reports
about companies in the United States. Foreign
companies are not generally subject to uniform
accounting, auditing and financial reporting standards,
and auditing practices and requirements may not be
comparable to those applicable to United States
companies. The Fund may encounter difficulties or be
unable to vote proxies, exercise shareholder rights,
pursue legal remedies, and obtain judgments in foreign
courts.
Security Lending. The Fund may lend its investment
securities to qualified institutional investors for
either short-term or long-term purposes of realizing
additional income. Loans of securities by the Fund
will be collateralized by cash, letters of credit, or
securities issued or guaranteed by the U.S. Government
or its agencies. The collateral will equal at least
100% of the current market value of the loaned
securities. The Fund will limit such loans so that they
will not exceed 33 1/3% of the value of its securities.
Portfolio Turnover. A change in the investments held
by the Fund is known as "portfolio turnover."
Portfolio turnover generally involves expense to the
Fund, including brokerage commissions or dealer mark-
ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such
sales may result in the realization of taxable capital
<PAGE>
gains. See "Dividends, Other Distributions and Taxes."
Under normal market conditions, the portfolio turnover
rate for the Fund is anticipated to be under 50%
annually.
INVESTMENT RESTRICTIONS
The Company has adopted several restrictions on the
investments and other activities of the Fund that may
not be changed without shareholder approval. For
example, the Fund:
1. May not with respect to 75% of its total
assets, purchase the securities of any issuer
(except securities issued or guaranteed by
the U.S. government or its agencies or
instrumentalities) if, as a result, (i) more
than 5% of the Fund's total assets would be
invested in the securities of that issuer or
(ii) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
2. May (i) borrow money from banks and (ii) make
other investments or engage in other
transactions permissible under the Investment
Company Act of 1940 (the "1940 Act") which
may involve a borrowing, provided that the
combination of (i) and (ii) shall not exceed
33-1/3% of the value of the Fund's total
assets (including the amount borrowed), less
the Fund's liabilities (other than
borrowings). The Fund may also borrow money
from other persons to the extent permitted by
applicable law.
3. May not issue senior securities, except as
permitted under the 1940 Act.
4. May not make loans if, as a result, more than
33-1/3% of the Fund's total assets would be
lent to other persons, except through (i)
purchases of debt securities or other debt
instruments or (ii) engaging in repurchase
agreements.
5. May not purchase the securities of any issuer
if, as a result, more than 25% of the Fund's
total assets would be invested in the
securities of issuers, the principal business
activities of which are in the same industry.
The Fund does not consider all Light
Revolution companies to be in the same
industry.
MANAGEMENT
Under the laws of the state of Maryland, the Board of
Directors of the Company (the "Board of Directors") is
responsible for managing the Company's business and
affairs. The Board of Directors also oversees duties
required by applicable state and federal law. The
Company has entered into an investment advisory
agreement with the Light Index Investment Company (the
"Adviser") dated ___________________________, 1998 (the
"Advisory Agreement"), pursuant to which the Adviser
furnishes continuous investment advisory services to
the Fund. The Adviser discharges its responsibilities
subject to the supervision of the Board of Directors.
The Adviser was organized in 1997 and is located at 704
Court A, Tacoma, Washington 98402. The Adviser
supervises and manages the investment portfolio of the
Fund and, subject
<PAGE>
to such policies as the Board of
Directors 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%.
Mr. Henry Hewitt, the President of the Adviser, has
been a registered investment adviser since 1993. 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.
Fund Expenses. 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 1933, as amended (the "Securities Act"), and the
Investment Company Act of 1940, as amended (the "1940
Act"), and any amendments thereto, the expenses of
registering its shares with the Securities and Exchange
Commission (the "SEC") 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. For the period
ending June 30, 1999, the Adviser has agreed to waive
its management fee and/or reimburse the Fund to the
extent necessary to ensure that the Fund's total annual
operating expenses, including the Adviser's 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, do not exceed 2.0%
of the Fund's average daily net assets. Any such
waiver or reimbursement will have the effect of
lowering the overall expense ratio for the Fund and
increasing the Fund's overall return to investors at
the time any such amounts are waived and/or reimbursed.
For the period ending June 30, 1999, after waivers and
reimbursements, these expenses are expected to total
2.0% of the Fund's average daily net assets. The
Adviser is entitled to recoup amounts waived or
reimbursed for a period of up to three years from the
date such amounts were reimbursed or waived.
<PAGE>
The Light Index. In addition to managing the Fund, the
Adviser manages and publishes the Light Index. The
Adviser created the Light Index and determines its
composition. The Adviser reviews on a quarterly or
more frequent basis the performance of each company
comprising the Light Index and, in its discretion,
makes additions to and deletions from the Light Index
at that time. In deciding whether to add or delete a
company from the Light Index, the Adviser 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. To date, the
Adviser has not invested client funds on a
discretionary basis in the Light Index, but has
published the Light Index since 1994. 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 following table
shows the historical composite performance data for the
Light Index for the periods shown. The Light Index
represents a hypothetical investment of $10,000 in each
of the companies which are selected by the Adviser for
inclusion in the Light Index. The Light Index follows
an investment methodology (i.e., investment objective,
policies and strategies) substantially similar to the
investment methodology used in managing the Fund. The
Adviser has not managed funds on a discretionary basis
using the Light Index, but has published the Light
Index since 1994. The Light Index is not subject to
the diversification requirements, specific tax
restrictions and investment limitations imposed on the
Fund by the Internal Revenue Code of 1986, as amended
(the "Code"), and the 1940 Act, respectively.
Consequently, the performance results for the Light
Index could have been adversely affected if the Light
Index had been an actual investment regulated under
federal securities and tax laws. This data is provided
to illustrate the past performance of the Adviser in
managing the Light Index with an investment methodology
substantially similar to the investment methodology to
be used by the Adviser in managing the Fund, as
measured against the Standard & Poor's 500 Stock Index
("S&P 500") and the Lipper Science & Technology Fund
Index (the "Lipper Index"), and does not represent the
actual or anticipated performance of the Fund.
Investors should not consider this performance data as
an indication of the future performance of the Fund or
the Adviser.
The performance information for the Light Index has
been calculated in accordance with recommended
standards of the Association for Investment Management
and Research ("AIMR"), retroactively applied to all
time periods. All returns presented are time-weighted
total rates of return and include the reinvestment of
dividends and interest except that data for the Light
Index excludes dividend and earnings income.
Performance data for the Light Index
<PAGE>
was calculated as
if an investor had invested $10,000 in each of the
companies comprising the Light Index. To the Adviser's
knowledge, no investor has so invested, and
consequently, the performance data does not represent
actual results achieved by any investor. An actual
investor's results would have differed, based in part
upon the charging of transaction fees and expenses, the
timing of portfolio purchases, and other factors to
which the Light Index is not subject.
Total return is calculated monthly in accordance with
the time weighted rate of return method provided for by
AIMR standards accounted for on a trade date and
accural basis. AIMR standards for calculation of total
return differ from the standards required by the SEC
for calculation of average annual total return.
The performance information for the Light Index
presented below is unaudited and is not intended to
predict or suggest the future returns of the Fund.
Investors should be aware that the use of a methodology
different than that used below to calculate performance
could result in different performance data and that
comparisons of investment results should consider
qualitative circumstances and should be made only for
portfolios with generally similar investment
objectives. All rates of return for the Light Index
appearing in the table reflect a deduction to account
for the maximum applicable sales charge and fees and
expenses consistent with the Annual Fund Operating
Expenses table, but do not reflect the reinvestment of
dividends or distributions. See "Fees and Expenses."
Annual Rates of Return for the
Light Index(1)
(in percent)
Years Ended December 31,
1997 1996 1995 1994
The Light Index (2) _______ _______ ________ ________
S&P 500 (3) 31.01 20.26 34.11 -1.54
Lipper Index(4) 7.75 16.82 34.74 10.27
Compounded Annual Rates of Return
for the Light Index(1)
(For the Period Ended December 31,
1997)
4 Years 1 Year
The Light Index(2) ________% ________%
S&P 500 (3) 20.96% 31.01%
Lipper Index (4) 17.39% 7.75%
__________________________
(1) Total annual rate of return is the change in
redemption value of units purchased with a
hypothetical initial $10,000 investment, assuming
no dividends or earnings on the Light Index.
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.
<PAGE>
(2) The strategy employed by the Adviser in
maintaining the Light Index has been consistent
since its inception, except that beginning on
January 2, 1996, the Adviser amended the criteria
for including a company in the Light Index to
require a minimum market capitalization of $1
billion. That amendment resulted in the removal
from the Light Index of ______ companies and the
addition of _____ companies. See "Management-The
Light Index."
(3) The S&P 500 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, but does not
reflect investment management fees, brokerage
commissions and other expenses associated with
investing in equity securities.
(4) The Lipper Index consists of the top ten
technology mutual funds as measured by dollars
invested in those funds. The performance data
includes reinvested dividends [, but does not
reflect investment management fees, brokerage
commissions and other expenses associated with
investing in equity securities].
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 ("Firstar"). Under the
Administration Agreement, Firstar 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
SEC 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. Firstar, 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, Firstar
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 also provides custodial, transfer agency and
accounting services for the Fund. Information
regarding the fees payable by the Fund to Firstar for
these services is provided in the SAI.
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
<PAGE>
shares of the Fund unless the shareholder
elects otherwise. Such election must be made in writing
to the Fund. If you elect to have distributions paid
in cash and choose to have a check mailed to you and
either the U.S. Postal Service is unable to deliver the
check to you or if the check remains outstanding for at
least six months, the Fund reserves the right to
reinvest the check in shares of the Fund at the then
current net asset value per share until you notify the
Fund of different instructions.
Taxes. The Fund intends to qualify for taxation as a
"regulated investment company" ("RIC") under the Code,
so that the Fund will not be subject to federal income
tax to the extent it distributes its income and gains
to shareholders. Dividends, whether paid in cash or
reinvested in additional shares, from net investment
income and net short-term capital gains, if any, will
be taxable to shareholders as ordinary income (unless a
shareholder is exempt from income tax or entitled to a
tax deferral), and will qualify, in part, for the 70%
dividends-received deduction for corporations, but the
portion of the Fund's dividends so qualified will
depend on the aggregate qualifying dividend income
received by the Fund from domestic (U.S.) sources.
Distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital
loss) are taxable to shareholders as long-term capital
gain, whether paid in cash or additional shares, and
regardless of the length of time the shares have been
owned by the shareholder. Under the Taxpayer Relief
Act of 1997 ("Tax Act"), different maximum tax rates
apply to net capital gain depending on the taxpayer's
holding period and marginal rate of federal income tax
- - generally, 28% for gain on capital assets held for
more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) on
capital assets held for more than 18 months. The Tax
Act, however, does not address the application of these
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.
<PAGE>
The Fund is required by federal law to withhold 31% of
reportable payments (which includes dividends, capital
gain distributions, and redemptions) payable to
individual and certain other non-corporate shareholders
who have not complied with certain Internal Revenue
Service ("IRS") regulations. In order to avoid this
withholding requirement, you must certify on the
Account Registration Form that your Social Security or
other taxpayer identification number provided is
correct and that you are not currently subject to back-
up withholding, or that you are exempt from back-up
withholding.
Dividends and other distributions declared by the Fund,
as well as redemptions of shares, may also be subject
to state and local taxes.
The foregoing summarizes some of the important income
tax considerations generally affecting the Fund and its
shareholders. Potential investors in the Fund should
consult their tax advisers with specific reference to
their own tax situation.
SHARE PRICE
The Fund's "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 1940 Act 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.
The Fund's shares are offered and sold on a continual
basis at the next offering price ("Offering Price"),
which is the sum of the net asset value per share and
the sales charge indicated below:
<PAGE>
Portion of
As a Percentage As a Percentage Offering
Your Investment of Offering of Your Price Retained
Price Investment by Broker-
Dealers*
Up to $50,000 4.50% 4.71% 4.00%
$ 50,001 - $100,000 4.00% 4.17% 3.50%
$100,001 - $250,000 3.00% 3.09% 2.50%
$250,001 - $500,000 2.00% 2.04% 1.50%
$500,001 - $1,000,000 1.00% 1.01% 0.50%
Over $1,000,000 None None None
* At the discretion of FDDI, all sales charges may at
times be paid to the broker-dealer, if any, involved in
the trade. A broker-dealer paid all or substantially
all of the sales charges may be deemed an "underwriter"
under the Securities Act.
No sales charge is imposed on the reinvestment of
dividends or capital gains or on certain exchange
transactions. For information on how to reduce the
sales charge payable upon the purchase of Fund shares
or whether you qualify to purchase shares at net asset
value, see "- Front-End Sales Charge Waivers and
Reductions," below. Fund shares are also currently
subject to Rule 12b-1 fees in an aggregate amount of
0.25% of the average daily net asset value of the Fund.
The Distribution Plan is described in more detail under
"Distribution Plan." Investments in Fund shares above
$1 million are not assessed an initial sales load.
Front-End Sales Charge Waivers and Reductions
Temporary Waiver. The Fund has decided to waive the
sales charge until the earlier of the date on which the
Fund has assets under management in an amount in excess
of $50 million, or June 30, 1999.
Waivers for Certain Investors. Fund shares are offered
at net asset value to the following individuals and
institutions due to anticipated economies of scale in
sales efforts and expense:
certain retirement plans, such as profit-
sharing, pension, 401(k), and simplified employee
pension plans (SEP's and SIMPLE's), subject to
minimum requirements with respect to the number of
employees or amount of purchase, which may be
established by FDDI (currently, those criteria
require that the employer establishing the plan
have 200 or more eligible employees or that the
amount of invested total at least $1 million
within 13 months of the initial investment);
directors, officers and full-time employees
of the Fund, the Adviser, FDDI and affiliates of
such companies, and spouses and minor children of
such persons;
persons who have taken a distribution from a
retirement plan invested in shares of the Fund, to
the extent the distribution, provided that, the
distribution is reinvested within 90 days of the
payment date;
government entities that are prohibited from
paying mutual fund sales charges;
<PAGE>
registered broker-dealers who have entered
into a selling or service agreement with FDDI and
who have achieved certain sales objectives of the
Fund, for their investment accounts only, and
certain employees of such broker-dealers, and
their spouses, children, grandchildren, and
parents, in accordance with the internal policies
and procedures of the employing broker-dealer;
owners of private accounts managed by Adviser
who either purchase Fund shares within one year of
the Fund's inception or who at any time, within
the Adviser's sole discretion, are no longer
eligible for separate account management by
Adviser and who in either case completely
liquidate their private account and purchase Fund
shares with the proceeds within 90 days of the
liquidation;
trust companies investing $1 million or more
for common trust or collective investment funds;
registered investment companies;
any person who purchases shares of the Fund
with redemption proceeds from a money market fund;
provided, however, that the sales charge waiver
provided by this exception shall only be available
(i) for one such purchase within 12 months of the
redemption, (ii) to persons who immediately prior
to their investment in the money market fund were
shareholders of the Fund, and (iii) to the extent
of the investment in the money market fund being
redeemed;
"wrap accounts" for the benefit of clients of
registered broker-dealers having a selling or
service agreement with the FDDI; and
any person who purchases shares of the Fund
with redemption proceeds from a registered
investment company other than the Fund and on
which the investor paid either a front-end sales
charge or a contingent deferred sales charge;
provided that the proceeds are invested in the
Fund within 10 days of the redemption.
Please contact your investment professional, FDDI, or
Firstar for more information on purchases at net asset
value.
Reducing Sales Charges. If you are not eligible for a
waiver, there are two ways that you can combine
multiple purchases of Fund shares to take advantage of
the breakpoints in the sales charge schedule.
Rights of Accumulation. The Fund offers a
Right of Accumulation ("ROA") allowing you to
purchase Fund shares at the sales charge
applicable to the sum of (a) the dollar amount
then being purchased, plus (b) the higher of
either (i) the current market value (calculated at
the applicable Offering Price) or (ii) the actual
purchase price of all Fund shares already held by
you and your spouse and minor children or you and
members of a qualified group. A "qualified group"
is one that was formed at least one year prior to
the ROA purchase, has a purpose other than buying
Fund shares at a discount, has more than 10
members, can arrange meetings between FDDI and
group members, agrees to include Fund literature
in mailings to its members, agrees to arrange for
<PAGE>
payroll deductions or other bulk transmissions of
investments to the Fund, and meets other uniform
criteria that allow FDDI to achieve cost savings
in distributing shares of the Fund. To receive an
ROA, at the time of purchase, you must give your
investment professional, FDDI, or Firstar
sufficient information to determine whether the
purchase will qualify for the reduced sales
charge.
Letter of Intent. You may also immediately
qualify for a reduced sales charge on the purchase
of Fund shares by completing the Letter of Intent
section of the account application ("LOI"). By
completing the LOI, you express an intention to
invest during the next 13-month period a specified
amount (minimum of at least $50,001) which, if
made at one time, would qualify for a reduced
sales charge. Any shares you own on the date you
execute the LOI may be used as a credit toward the
completion of the LOI. However, the reduced sales
charge will only be applied to new purchases. Any
redemptions made during the 13-month period will
be subtracted from the amount of the purchases for
purposes of determining whether the terms of the
LOI have been satisfied. If, at the end of the 13-
month period covered by the LOI, the total amount
of purchases (less redemptions) does not equal the
amount indicated, you will be required to pay the
difference between the sales charge paid at the
reduced rate and the sales charge applicable to
the purchases actually made. Shares equal to 5%
of the amount specified in the LOI will be held in
escrow during the 13-month period and are subject
to involuntary redemption to assure any payment of
a higher applicable sales charge. By signing the
purchase application and checking the box labeled
"Letter of Intent," you grant to FDDI a security
interest in the reserved shares and appoint FDDI
as attorney-in-fact to sell any or all of the
reserved shares to cover any additional sales
charges if you do not fulfill your undertaking.
Signing a LOI does not bind you to purchase the
full amount indicated, but you must complete the
intended purchase in accordance with the terms of
the LOI to obtain the reduced sales charge. For
more information on the LOI, please contact your
investment professional, FDDI, or Firstar.
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 0.25% of the Fund's average daily net assets.
Amounts paid under the Plan by the Fund may be spent 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. Under the terms
of the Plan, the Distributor is authorized to, in turn,
pay all or a portion of this fee to any securities
dealer, financial institution or any other person (the
"Recipient") who renders assistance in distributing or
promoting the sale of Fund shares, or who provides
certain shareholder services to Fund shareholders,
pursuant to a written agreement (the "Related
Agreement"). 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. Payments
under
<PAGE>
the Plan are based upon a percentage of average daily
net assets attributable to each Fund regardless of the
amounts actually paid or expenses actually incurred by
the Distributor, however, in no event, may such
payments exceed the maximum allowable fee. It is,
therefore, possible that the Distributor may realize a
profit in a particular year as a result of these
payments. The Plan has the effect of increasing the
Fund's expenses from what they would otherwise be. The
Board of Directors reviews the Fund's distribution and
shareholder servicing fee payments in connection with
their determination as to the continuance of the Plan.
Investors should understand that the purpose and
function of the initial sales charge and distribution
fees discussed above is to provide the financing of the
distribution of the shares of the Fund.
GENERAL INFORMATION
The Company is a Maryland corporation. The Articles of
Incorporation permit the Board of 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 of 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 1940 Act 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, which serves as the Fund's Transfer and
Dividend Disbursing Agent. PricewaterhouseCoopers, LLP
serves as the independent accountant of the Fund and
will audit its financial statements annually. The Fund
is not involved in any litigation.
WHO SHOULD INVEST
The Fund is designed for investors seeking capital
appreciation. See "Investment Objective and Policies."
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 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
<PAGE>
lump sum. See "Share
Price - Front-End Sales Charge Waivers and Reductions -
Reducing Sales Charges."
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. The Fund also reserves the right
to suspend the offering of its shares.
Investors should not consider an investment in the Fund
a complete investment program, but only as one
component of a diversified portfolio of investments.
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) (except for
Education IRAs, which have no minimum investment
requirements). You must open a new IRA by mail (IRAs
may not be opened by wire) using a Light Revolution 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 (no more than $500 for an Education 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 1-888-463-3957. 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 certain circumstances, for
example, if an individual previously tried to purchase
shares with a bad check, or in amounts considered
disadvantageous to shareholders.
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.
<PAGE>
The Fund's shares are purchased at the next-determined
Offering Price after your investment has been received.
See "Share Price."
Purchasing by Mail. Complete and sign the Purchase
Application.
New Account. Please include the amount of your initial
investment on the Purchase Application, make your check
payable to Light Revolution Fund and mail to:
Light Revolution Fund
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
_____________________
For express or registered mail, sent to:
Light Revolution Fund
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's post office box of purchase
applications or redemption requests does not constitute
receipt by Firstar or the Fund.
Alternatively, you may place an order to purchase
shares of the Fund through a broker-dealer. Broker-
dealers may charge a transaction fee for placing orders
to purchase Fund shares. It is the responsibility of
the broker-dealer to place the order with the Fund on a
timely basis.
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 Revolution 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
<PAGE>
For credit to: Firstar Trust Company
Account Number 112-952-137
For further credit to:
Light Revolution Fund, [shareholder
account number], [shareholder name].
Before Wiring. To assure proper receipt, please be
sure to contact our Investor Information Department at
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
Firstar are open for business.
Purchasing by Telephone. The Fund lets you move money
from your bank account to your Light Revolution 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
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. You may
cancel your participation in the Automatic Investment
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-
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 Automatic Investment Plan,
your bank or other financial institution must be an ACH
member. It will take about 15 days for Firstar to
process
<PAGE>
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 1-888-463-
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 "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 (1-888-463-3957) for
assistance.
For our mutual protection, we may require a signature
guarantee on certain written transaction requests and
will require a signature guarantee for all written
redemptions over $25,000 and when redemption proceeds
are made payable to other than the account owner(s) or
are being sent to other than the address of record. A
signature guarantee verifies the authenticity of your
signature and may be obtained from banks, brokers and
any other guarantor that the Fund deems acceptable. A
signature guarantee cannot be provided by a notary
public.
<PAGE>
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 "Light Revolution
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"). 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 (as
defined below), 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 Light
Revolution Fund, 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 Light Revolution Fund, 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 has received
all required documents in Good Order.
Definition of Good Order. Good Order means that the
request includes the following:
1. The account number and Fund name.
2. The amount of the transaction (specified
in dollars or shares).
3. Signatures of all owners exactly as they
are registered on the account.
<PAGE>
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 1-888-463-3957.
Selling by Telephone. To sell shares by telephone you
or your pre-authorized representative may call our
Investor Information Department at 1-888-463-3957. 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 will wire redemption proceeds only to the bank
and account designated on your Purchase Application or
in written instructions subsequently received by
Firstar and only if the bank is a commercial bank
located within the United States which is an ACH
member. Firstar 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 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 Firstar. 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 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
Firstar. An application may be obtained from Firstar
by telephone at 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 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)
<PAGE>
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 New York Stock 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 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 SEC.
If the Board of Directors of the Company determines
that it would be detrimental to the best interests of
the Fund's remaining shareholders to make payment in
cash, the Fund may pay redemption proceeds in whole or
in part by a distribution in kind of readily marketable
securities.
Minimum Account Balance Requirement. Due to the
relatively high cost of maintaining smaller accounts,
the Fund reserves the right to redeem shares in any
account that is below $1,000. You will be notified if
the value of your account is below this minimum account
balance requirement. You will then be allowed 30 days
to make an additional investment before the account is
liquidated. If an account is liquidated, the proceeds
will be promptly paid to the shareholder.
IMPORTANT INFORMATION ABOUT TELEPHONE TRANSACTIONS
The ability to initiate redemptions (except wire
redemptions) by telephone is automatically established
on your account unless you request in writing that
telephone transactions on your account not be
permitted.
To protect your account from losses resulting from
unauthorized or fraudulent telephone instructions, the
Fund adheres to the following security procedures:
1. Security Check. To request a transaction by
telephone, the caller must know (i) the name
of the Fund; (ii) the 10-digit account
number; (iii) the exact name and address used
in the registration; and (iv) the Social
Security or Employer Identification number
listed on the account.
2. Payment Policy. The proceeds of any
telephone redemption by mail will be made
payable to the registered share owner and
mailed to the address of record only. The
proceeds of any telephone redemption by wire
will be wired only to
<PAGE>
the bank and account
designated on the Purchase Application or in
written instructions subsequently received by
Firstar from the registered share owner and
only if the bank is a commercial bank located
within the United States.
Neither the Fund nor Firstar 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 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:
Light Revolution Fund, 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 (1-888-463-3957).
For more information about any of these services,
please call our Investor Information Department at 1-
888-463-3957.
Firstar 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 Statements for the Fund will be mailed to you
semi-annually, according to the Fund's fiscal year-end.
TOTAL RETURN
From time to time the Fund may advertise its total
return. 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 the deduction
of the 4.50% maximum sales charge and all recurring
fees and expenses.
Performance information for the Fund advertised in
reports and promotional literature may be compared to:
(i) the Light Index, (ii) the S&P 500, the Dow Jones
Industrial Average, or various other unmanaged indexes,
and (iii) the performance of other mutual funds.
Unmanaged indexes may assume the reinvestment of income
distributions, but generally do not reflect deductions
for sales charges or administrative and management
costs and expenses.
<PAGE>
SUBJECT TO COMPLETION
STATEMENT OF ADDITIONAL INFORMATION
DATED JULY ____, 1998
LIGHT REVOLUTION FUND, INC.
LIGHT REVOLUTION FUND
This Statement is not a prospectus but should be read
in conjunction with the Light Revolution Fund's current
Prospectus, dated ____________, 1998, as amended from
time to time. To obtain a Prospectus please call 1-888-
463-3957.
<PAGE>
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS 1
INVESTMENT POLICIES AND TECHNIQUES 3
Lending of Portfolio Securities 3
Repurchase Agreements 3
Illiquid Securities 3
Short-Term Fixed Income Securities 4
Short Sales Against the Box 6
Warrants 6
Hedging Strategies 6
General Description of Hedging Strategies 6
General Limitations on Futures and Options Transactions 7
Asset Coverage for Futures and Options Positions 7
Stock Index Options 7
Certain Considerations Regarding Options 8
Federal Tax Treatment of Options 9
Futures Contracts 9
Options on Futures 11
Federal Tax Treatment of Futures Contracts 12
Foreign Investment Companies 13
Depositary Receipts 13
Convertible Securities 14
PURCHASE OF SHARES 14
In General 14
Specimen Price Make-Up 14
Exchange of Securities for Shares of the Fund 15
<PAGE>
REDEMPTION OF SHARES 15
MANAGEMENT OF THE FUND; DIRECTORS AND OFFICERS 16
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS 17
INVESTMENT ADVISER, ADMINISTRATOR, CUSTODIAN, 18
DISTRIBUTION 20
SHARE PRICE 20
SYSTEMATIC WITHDRAWAL PLAN 21
BROKERAGE ALLOCATION 21
DIVIDENDS, OTHER GAIN DISTRIBUTIONS AND TAXES 23
SHAREHOLDER MEETINGS 24
PERFORMANCE MEASURES 24
Total Return 24
Volatility 25
Comparisons 26
INDEPENDENT ACCOUNTANT 26
FINANCIAL STATEMENT 26
No person has been authorized to give any information
or to make any representations other than those
contained in this Statement of Additional Information
("SAI") and the Prospectus dated _________________,
1998, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund. This SAI does not constitute
an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be
made.
<PAGE>
INVESTMENT RESTRICTIONS
The investment objective of the Light Revolution Fund
(the "Fund") is capital appreciation. The investment
objective and policies of the Fund are described in
detail in the Prospectus under the caption "INVESTMENT
OBJECTIVE AND POLICIES."
The following is a complete list of the Fund's
fundamental investment limitations which cannot be
changed without shareholder approval.
The Fund:
1. May not with respect to 75% of its total
assets, purchase the securities of any issuer
(except securities issued or guaranteed by
the U.S. government or its agencies or
instrumentalities) if, as a result, (i) more
than 5% of the Fund's total assets would be
invested in the securities of that issuer or
(ii) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
2. May (i) borrow money from banks and (ii) make
other investments or engage in other
transactions permissible under the Investment
Company Act of 1940 (the "1940 Act") which
may involve a borrowing, provided that the
combination of (i) and (ii) shall not exceed
33-1/3% of the value of the Fund's total
assets (including the amount borrowed), less
the Fund's liabilities (other than
borrowings). The Fund may also borrow money
from other persons to the extent permitted by
applicable law.
3. May not issue senior securities, except as
permitted under the 1940 Act.
4. May not act as an underwriter of another
issuer's securities, except to the extent the
Fund may be deemed to be an underwriter
within the meaning of the Securities Act of
1933 in connection with the purchase and sale
of portfolio securities.
5. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this
limitation shall not prevent the Fund from
purchasing or selling options, futures
contracts, or other derivative instruments,
or from investing in securities or other
instruments backed by physical commodities).
6. May not make loans if, as a result, more than
33-1/3% of the Fund's total assets would be
lent to other persons, except through (i)
purchases of debt securities or other debt
instruments or (ii) engaging in repurchase
agreements.
7. May not purchase the securities of any issuer
if, as a result, more than 25% of the Fund's
total assets would be invested in the
securities of issuers, the principal business
activities of which are in the same industry.
The Fund does not consider all Light
Revolution companies to be in the same
industry.
8. May not purchase or sell real estate unless
acquired as a result of ownership of
securities or other instruments (but this
limitation shall not prohibit the Fund from
<PAGE>
purchasing or selling securities or other
instruments backed by real estate or of
issuers engaged in real estate activities).
With the exception of the investment restriction set
out in item 2 above, if a percentage restriction is
adhered to at the time of investment, a later increase
in percentage resulting from a change in market value
of the investment or the total assets will not
constitute a violation of that restriction.
The following are the Fund's non-fundamental operating
policies which may be changed by the Board of Directors
of the Light Revolution Fund, Inc. (the "Company")
without shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns
or has the right to obtain securities
equivalent in kind and amount to the
securities sold short or unless it covers
such short sale as required by the current
rules and positions of the Securities and
Exchange Commission or its staff, and
provided that transactions in options,
futures contracts, options on futures
contracts, or other derivative instruments
are not deemed to constitute selling
securities short.
2. Purchase securities on margin, except that
the Fund may obtain such short-term credits
as are necessary for the clearance of
transactions, and provided that margin
deposits in connection with futures
contracts, options on futures contracts, or
other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result
of such investment, more than 15% of its net
assets would be invested in illiquid
securities.
4. Purchase securities of other investment
companies except in compliance with the 1940
Act.
5. Engage in futures or options on futures
transactions which are impermissible pursuant
to Rule 4.5 under the Commodity Exchange Act
and, in accordance with Rule 4.5, will use
futures or options on futures transactions
solely for bona fide hedging transactions
(within the meaning of the Commodity Exchange
Act), provided, however, that the Fund may,
in addition to bona fide hedging
transactions, use futures and options on
futures transactions if the aggregate initial
margin and premiums required to establish
such positions, less the amount by which any
such options positions are in the money
(within the meaning of the Commodity Exchange
Act), do not exceed 5% of the Fund's net
assets.
6. Borrow money, except (i) from banks or (ii)
through reverse repurchase agreements or
mortgage dollar rolls, and will not purchase
securities when bank borrowings exceed 5% of
its total assets.
7. Make any loans other than loans of portfolio
securities, except through (i) purchases of
debt securities or other debt instruments, or
(ii) engaging in repurchase agreements.
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of
the Fund's investment objective, policies and
techniques that are described in the Prospectus under
the captions "Investment Objective and Policies" and
"Implementation of Policies."
Lending of Portfolio Securities. The Fund is authorized
to lend up to 33 1/3% of its total assets to broker-
dealers or institutional investors, but only when the
borrower maintains with the Fund's custodian bank
collateral either in cash or money market instruments
in an amount at least equal to the market value of the
securities loaned, plus accrued interest and dividends,
determined on a daily basis and adjusted accordingly.
In determining whether to lend securities to a
particular broker-dealer or institutional investor, the
portfolio manager will consider, and during the period
of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the
borrower. The Fund will retain authority to terminate
any loans at any time. The Fund may pay reasonable
administrative and custodial fees in connection with a
loan and may pay a negotiated portion of the interest
earned on the cash or money market instruments held as
collateral to the borrower or placing broker. The Fund
will receive reasonable interest on the loan or a flat
fee from the borrower and amounts equivalent to any
dividends, interest or other distributions on the
securities loaned. The Fund will retain record
ownership of loaned securities to exercise beneficial
rights, such as voting and subscription rights and
rights to dividends, interest or other distributions,
when retaining such rights is considered to be in a
Fund's interest.
Repurchase Agreements. The Fund may enter into
repurchase agreements with certain banks or non-bank
dealers. In a repurchase agreement, the Fund buys a
security at one price and, at the time of sale, the
seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually within
seven days). The repurchase agreement, thereby,
determines the yield during the purchaser's holding
period, while the seller's obligation to repurchase is
secured by the value of the underlying security. The
Light Index Investment Company (the "Adviser") will
monitor, on an ongoing basis, the value of the
underlying securities to ensure that the value always
equals or exceeds the repurchase price plus accrued
interest. Repurchase agreements could involve certain
risks in the event of a default or insolvency of the
other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of
the underlying securities. Although no definitive
creditworthiness criteria are used, the Adviser reviews
the creditworthiness of the banks and non-bank dealers
with which the Fund enters into repurchase agreements
to evaluate those risks. The Fund may, under certain
circumstances, deem repurchase agreements
collateralized by U.S. government securities to be
investments in U.S. government securities.
Illiquid Securities. The Fund may invest in illiquid
securities (i.e., securities that are not readily
marketable). For purposes of this restriction,
illiquid securities include, but are not limited to,
restricted securities (securities the disposition of
which is restricted under the federal securities laws),
securities which may only be resold pursuant to Rule
144A under the Securities Act of 1933, as amended (the
"Securities Act"), and repurchase agreements with
maturities in excess of seven days. However, the Fund
will not acquire illiquid securities if, as a result,
such securities would comprise more than 15% of the
value of the Fund's net assets. Rule 144A securities
will be treated as illiquid securities, subject to the
liquidity guidelines. The Board of Directors or its
delegate has
<PAGE>
the ultimate authority to determine, to
the extent permissible under the federal securities
laws, which securities are liquid or illiquid for
purposes of this 15% limitation. The Board of
Directors has delegated to the Adviser the day-to-day
determination of the liquidity of any security,
although it has retained oversight and ultimate
responsibility for such determinations. Although no
definitive liquidity criteria are used, the Board of
Directors has directed the Adviser to look to such
factors as (i) the nature of the market for a security
(including the institutional private resale market),
(ii) the terms of certain securities or other
instruments allowing for the disposition to a third
party or the issuer thereof (e.g., certain repurchase
obligations and demand instruments), (iii) the
availability of market quotations (e.g., for securities
quoted in the PORTAL system) and (iv) other permissible
relevant factors.
Restricted securities may be sold only in privately
negotiated transactions or in a public offering with
respect to which a registration statement is in effect
under the Securities Act. Where registration is
required, the Fund may be obligated to pay all or part
of the registration expenses and a considerable period
may elapse between the time of the decision to sell a
security and the time the Fund may be permitted to sell
a security under an effective registration statement.
If, during such a period, adverse market conditions
were to develop, the Fund might obtain a less favorable
price than that which prevailed when it decided to
sell. Restricted securities will be priced at fair
value as determined in good faith by the Board of
Directors. If, through the appreciation of restricted
securities or the depreciation of unrestricted
securities, the Fund should be in a position where more
than 15% of the value of its net assets are invested in
illiquid securities, including restricted securities
which are not readily marketable, the Fund will take
such steps as is deemed advisable, if any, to protect
liquidity.
Short-Term Fixed Income Securities. The Fund intends
to be fully invested at all times and accordingly will
only hold cash or short-term fixed income securities to
meet anticipated redemption requests, pending
investment and to pay expenses. Short-term fixed
income securities are defined to include without
limitation, the following:
1. U.S. government securities, including bills,
notes and bonds differing as to maturity and
rates of interest, which are either issued or
guaranteed by the U.S. Treasury or by U.S.
government agencies or instrumentalities.
U.S. government agency securities include
securities issued by: (a) the Federal
Housing Administration, Farmers Home
Administration, Export-Import Bank of the
United States, Small Business Administration
and the Government National Mortgage
Association, whose securities are supported
by the full faith and credit of the United
States; (b) the Federal Home Loan Banks,
Federal Intermediate Credit Banks and the
Tennessee Valley Authority, whose securities
are supported by the right of the agency to
borrow from the U.S. Treasury; (c) the
Federal National Mortgage Association, whose
securities are supported by the discretionary
authority of the U.S. government to purchase
certain obligations of the agency or
instrumentality; and (d) the Student Loan
Marketing Association, whose securities are
supported only by its credit. While the U.S.
government provides financial support to such
U.S. government-sponsored agencies or
instrumentalities, no assurance can be given
that it always will do so since it is not so
obligated by law. The U.S. government,
<PAGE>
its
agencies and instrumentalities do not
guarantee the market value of their
securities and consequently the value of such
securities may fluctuate.
2. Certificates of Deposit issued against funds
deposited in a bank or savings and loan
association. Such certificates are for a
definite period of time, earn a specified
rate of return and are normally negotiable.
If such certificates of deposit are non-
negotiable, they will be considered illiquid
securities and be subject to the Fund's
restriction on investments in illiquid
securities. Pursuant to the certificate of
deposit, the issuer agrees to pay the amount
deposited plus interest to the bearer of the
certificate on the date specified thereon.
Under current Federal Deposit Insurance
Corporation regulations, the maximum
insurance payable as to any one certificate
of deposit is $100,000; therefore,
certificates of deposit purchased by the Fund
may not be fully insured.
3. Bankers' acceptances which are short-term
credit instruments used to finance commercial
transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or
an importer to obtain a stated amount of
funds to pay for specific merchandise. The
draft is then "accepted" by a bank that, in
effect, unconditionally guarantees to pay the
face value of the instrument on its maturity
date. The acceptance may then be held by the
accepting bank as an asset or it may be sold
in the secondary market at the going rate of
interest for a specific maturity.
4. Repurchase agreements which involve purchases
of debt securities. In such an action, at
the time the Fund purchases the security, it
simultaneously agrees to resell and redeliver
the security to the seller, who also
simultaneously agrees to buy back the
security at a fixed price and time. This
assures a predetermined yield for the Fund
during its holding period since the resale
price is always greater than the purchase
price and reflects an agreed-upon market
rate. Such actions afford an opportunity for
the Fund to invest temporarily available
cash. The Fund may enter into repurchase
agreements only with respect to obligations
of the U.S. government, its agencies or
instrumentalities, certificates of deposit,
or bankers acceptances in which the Fund may
invest. Repurchase agreements may be
considered loans to the seller,
collateralized by the underlying securities.
The risk to the Fund is limited to the
ability of the seller to pay the agreed-upon
sum on the repurchase date. In the event of
default, the repurchase agreement provides
that the affected Fund is entitled to sell
the underlying collateral. However, if the
value of the collateral declines after the
agreement is entered into, and if the seller
defaults under a repurchase agreement when
the value of the underlying collateral is
less than the repurchase price, the Fund
could incur a loss of both principal and
interest. The Adviser monitors the value of
the collateral at the time the transaction is
entered into and at all times during the term
of the repurchase agreement. The Adviser does
so in an effort to determine that the value
of the collateral always equals or exceeds
the agreed-upon repurchase price to be paid
to the Fund. If the seller were to be
subject to a federal bankruptcy proceeding,
the ability of a Fund to liquidate the
collateral could be delayed or impaired
because of certain provisions of the
bankruptcy laws.
<PAGE>
5. Bank time deposits, which are monies kept on
deposit with banks or savings and loan
associations for a stated period of time at a
fixed rate of interest. There may be
penalties for the early withdrawal of such
time deposits, in which case the yields of
these investments will be reduced.
6. Commercial paper consists of short-term
unsecured promissory notes, including
variable rate master demand notes issued by
corporations to finance their current
operations. Master demand notes are direct
lending arrangements between the Fund and a
corporation. There is no secondary market
for the notes. However, they are redeemable
by the Fund at any time. The Adviser will
consider the financial condition of the
corporation (e.g., earning power, cash flow
and liquidity ratios) and will continuously
monitor the corporation's ability to meet all
of its financial obligations, because the
Fund's liquidity might be impaired if the
corporation were unable to pay principal and
interest on demand. Investments in
commercial paper will be limited to
commercial paper rated in the two highest
categories by a major rating agency or
unrated commercial paper which is, in the
opinion of the Adviser, of comparable
quality.
Short Sales Against the Box. When the Adviser believes
that the price of a particular security held by the
Fund may decline, it may make "short sales against the
box" to hedge the unrealized gain on such security.
Selling short against the box involves selling a
security which the Fund owns for delivery at a
specified date in the future. The Fund will limit its
transactions in short sales against the box to 5% of
its net assets.
Warrants. The Fund may invest in warrants if, after
giving effect thereto, not more than 5% of its net
assets will be invested in warrants other than warrants
acquired in units or attached to other securities.
Investing in warrants is purely speculative in that
they have no voting rights, pay no dividends and have
no rights with respect to the assets of the corporation
issuing them. Warrants basically are options to
purchase equity securities at a specific price for a
specific period of time. They do not represent
ownership of the securities but only the right to buy
them. Warrants are issued by the issuer of the
security, which may be purchased on their exercise.
The prices of warrants do not necessarily parallel the
prices of the underlying securities.
Hedging Strategies
General Description of Hedging Strategies. The Fund
may engage in hedging activities, including options,
futures contracts (sometimes referred to as "futures")
and options on futures contracts to attempt to hedge
the Fund's holdings.
Hedging instruments on securities generally are used to
hedge against price movements in one or more particular
securities positions that the Fund owns or intends to
acquire. Hedging instruments on stock indexes, in
contrast, generally are used to hedge against price
movements in broad equity market sectors in which the
Fund has invested or expects to invest. The use of
hedging instruments is subject to applicable
regulations of the Securities and Exchange Commission
(the "SEC"), the several options and futures exchanges
upon which they are traded, the Commodity Futures
Trading
<PAGE>
Commission (the "CFTC") and various state
regulatory authorities. In addition, a Fund's ability
to use hedging instruments will be limited by tax
considerations.
General Limitations on Futures and Options
Transactions. The Company has filed a notice of
eligibility for exclusion from the definition of the
term "commodity pool operator" with the CFTC and the
National Futures Association, which regulate trading in
the futures markets. Pursuant to Section 4.5 of the
regulations under the Commodity Exchange Act (the
"CEA"), the notice of eligibility for the Fund includes
the representation that the Fund will use futures
contracts and related options solely for bona fide
hedging purposes within the meaning of CFTC
regulations, provided that the Fund may hold other
positions in futures contracts and related options that
do not fall within the definition of bona fide hedging
transactions (i.e., for speculative purposes) if
aggregate initial margins and premiums paid, less the
amount by which any such option positions are in the
money (within the meaning of the CEA), do not exceed 5%
of the net asset value of the Fund. In addition, the
Fund will not enter into futures contracts and options
transactions if more than 20% of its net assets would
be committed to such instruments.
The foregoing limitations are not fundamental policies
of the Fund and may be changed without shareholder
approval as regulatory agencies permit. Various
exchanges and regulatory authorities have undertaken
reviews of options and futures trading in light of
market volatility. Among the possible actions that
have been presented are proposals to adopt new or more
stringent daily price fluctuation limits for futures
and options transactions and proposals to increase the
margin requirements for various types of futures
transactions.
Asset Coverage for Futures and Options Positions. The
Fund will comply with the regulatory requirements of
the SEC and the CFTC with respect to coverage of
options and futures positions by registered investment
companies and, if the guidelines so require, will set
aside cash, U.S. government securities, high grade
liquid debt securities and/or other liquid assets
permitted by the SEC and CFTC in a segregated custodial
account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or
options position is outstanding, unless replaced with
other permissible assets, and will be marked-to-market
daily.
Stock Index Options. The Fund may (i) purchase stock
index options for any purpose, (ii) sell stock index
options in order to close out existing positions,
and/or (iii) write covered options on stock indexes for
hedging purposes. Stock index options are put options
and call options on various stock indexes. In most
respects, they are identical to listed options on
common stocks. The primary difference between stock
options and index options occurs when index options are
exercised. In the case of stock options, the
underlying security, common stock, is delivered.
However, upon the exercise of an index option,
settlement does not occur by delivery of the securities
comprising the index. The option holder who exercises
the index option receives an amount of cash if the
closing level of the stock index upon which the option
is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of
the option. This amount of cash is equal to the
difference between the closing price of the stock index
and the exercise price of the option expressed in
dollars times a specified multiple.
A stock index fluctuates with changes in the market
values of the stocks included in the index. For
example, some stock indexes are based on a broad market
index, such as the Standard & Poor's 500
<PAGE>
Stock Index or
the Value Line Composite Index or a narrower market
index, such as the Standard & Poor's 100 Stock Index.
An index may also be based on an industry or market
segment, such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on
stock indexes are currently traded on the following
exchanges: the Chicago Board of Options Exchange, the
New York Stock Exchange, the American Stock Exchange,
the Pacific Stock Exchange, and the Philadelphia Stock
Exchange.
The Fund's use of stock index options is subject to
certain risks. Successful use by the Fund of options
on stock indexes will be subject to the ability of the
Adviser to correctly predict movements in the stock
market. This requires different skills and techniques
than predicting changes in the prices of individual
securities. In addition, the Fund's ability to
effectively hedge all or a portion of the securities in
its portfolio, in anticipation of or during a market
decline through transactions in put options on stock
indexes, depends on the degree to which price movements
in the underlying index correlate with the price
movements of the securities held by the Fund. Inasmuch
as the Fund's securities will not duplicate the
components of an index, the correlation will not be
perfect. Consequently, the Fund will bear the risk
that the prices of its securities being hedged will not
move in the same amount as the prices of its put
options on the stock indexes. It is also possible that
there may be a negative correlation between the index
and the Fund's securities which would result in a loss
on both such securities and the options on stock
indexes acquired by the Fund.
The hours of trading for options may not conform to the
hours during which the underlying securities are
traded. To the extent that the options markets close
before the markets for the underlying securities,
significant price and rate movements can take place in
the underlying markets that cannot be reflected in the
options markets. The purchase of options is a highly
specialized activity which involves investment
techniques and risks different from those associated
with ordinary portfolio securities transactions. The
purchase of stock index options involves the risk that
the premium and transaction costs paid by the Fund in
purchasing an option will be lost as a result of
unanticipated movements in prices of the securities
comprising the stock index on which the option is
based.
Certain Considerations Regarding Options. There is no
assurance that a liquid secondary market on an options
exchange will exist for any particular option, or at
any particular time, and for some options no secondary
market on an exchange or elsewhere may exist. If the
Fund is unable to close out a call option on securities
that it has written before the option is exercised, the
Fund may be required to purchase the optioned
securities in order to satisfy its obligation under the
option to deliver such securities. If a Fund is unable
to effect a closing sale transaction with respect to
options on securities that it has purchased, it would
have to exercise the option in order to realize any
profit and would incur transaction costs upon the
purchase and sale of the underlying securities.
The writing and purchasing of options is a highly
specialized activity which involves investment
techniques and risks different from those associated
with ordinary portfolio securities transactions.
Imperfect correlation between the options and
securities markets may detract from the effectiveness
of attempted hedging. Options transactions may result
in significantly higher transaction costs and portfolio
turnover for the Fund.
<PAGE>
Federal Tax Treatment of Options. Certain option
transactions have special tax results for the Fund.
Expiration of a call option written by the Fund will
result in short-term capital gain. If the call option
is exercised, the Fund will realize a gain or loss from
the sale of the security covering the call option and,
in determining such gain or loss, the option premium
will be included in the proceeds of the sale.
If the Fund writes options other than "qualified
covered call options," as defined in Section 1092 of
the Internal Revenue Code of 1986, as amended (the
"Code"), or purchases puts, any losses on such options
transactions, to the extent they do not exceed the
unrealized gains on the securities covering the
options, may be subject to deferral until the
securities covering the options have been sold.
In the case of transactions involving "nonequity
options," as defined in Section 1256 of the Code, the
Fund will treat any gain or loss arising from the
lapse, closing out or exercise of such positions as 60%
long-term and 40% short-term capital gain or loss as
required by Section 1256 of the Code. In addition,
such positions must be marked-to-market as of the last
business day of the year, and gain or loss must be
recognized for federal income tax purposes in
accordance with the 60%/40% rule discussed above even
though the position has not been terminated. A
"nonequity option" includes an option with respect to
any group of stocks or a stock index if there is in
effect a designation by the CFTC of a contract market
for a contract based on such group of stocks or
indexes. For example, options involving stock indexes
such as the Standard & Poor's 500 and 100 Stock Indexes
would be "nonequity options" within the meaning of
Section 1256 of the Code.
Futures Contracts. The Fund may enter into futures
contracts (hereinafter referred to as "Futures" or
"Futures Contracts"), including index and interest rate
Futures, as a hedge against movements in the equity and
bond markets, in order to establish more definitely the
effective return on securities held or intended to be
acquired by the Fund or for other purposes permissible
under the CEA. Each Fund's hedging may include sales
of Futures as an offset against the effect of expected
declines in stock prices and purchases of Futures as an
offset against the effect of expected increases in
stock or bond prices. The Fund will not enter into
Futures Contracts which are prohibited under the CEA
and will, to the extent required by regulatory
authorities, enter only into Futures Contracts that are
traded on national futures exchanges and are
standardized as to maturity date and underlying
financial instrument. The principal interest rate
Futures exchanges in the United States are the Board of
Trade of the City of Chicago and the Chicago Mercantile
Exchange. Futures exchanges and trading are regulated
under the CEA by the CFTC.
An index Futures Contract is an agreement pursuant to
which the parties agree to take or make delivery of an
amount of cash equal to the difference between the
value of the index at the close of the last trading day
of the contract and the price at which the index
Futures Contract was originally written. An interest
rate futures contract provides for the future sale by
one party and purchase by another party of a specified
amount of a specific financial instrument (e.g., debt
security) for a specified price at a designated date,
time, and place. Transaction costs are incurred when a
Futures Contract is bought or sold and margin deposits
must be maintained. A Futures Contract may be
satisfied by delivery or purchase, as the case may be,
of the instrument or by payment of the change in the
cash value of the index. More commonly, Futures
Contracts are closed out prior to delivery by entering
into an offsetting transaction in a matching Futures
Contract. Although the value of an index might be a
function of the value of certain specified securities,
no physical delivery of those
<PAGE>
securities is made. If
the offsetting purchase price is less than the original
sale price, a gain will be realized; if it is more, a
loss will be realized. Conversely, if the offsetting
sale price is more than the original purchase price, a
gain will be realized; if it is less, a loss will be
realized. The transaction costs must also be included
in these calculations. There can be no assurance,
however, that the Fund will be able to enter into an
offsetting transaction with respect to a particular
Futures Contract at a particular time. If the Fund is
not able to enter into an offsetting transaction, the
Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
Margin is the amount of funds that must be deposited by
the Fund with its custodian in a segregated account in
the name of the futures commission merchant in order to
initiate Futures trading and to maintain the Fund's
open positions in Futures Contracts. A margin deposit
is intended to ensure the Fund's performance of the
Futures Contract. The margin required for a particular
Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly
modified from time to time by the exchange during the
term of the Futures Contract. Futures Contracts are
customarily purchased and sold on margins that may
range upward from less than 5% of the value of the
Futures Contract being traded.
If the price of an open Futures Contract changes (by
increase in the case of a sale or by decrease in the
case of a purchase) so that the loss on the Futures
Contract reaches a point at which the margin on deposit
does not satisfy margin requirements, the broker will
require an increase in the margin. However, if the
value of a position increases because of favorable
price changes in the Futures Contract so that the
margin deposit exceeds the required margin, the broker
will pay the excess to the Fund. In computing daily
net asset value, each Fund will mark to market the
current value of its open Futures Contracts. The Fund
expects to earn interest income on its margin deposits.
Because of the low margin deposits required, Futures
trading involves an extremely high degree of leverage.
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 Futures Contract were
closed out. Thus, a purchase or sale of a Futures
Contract may result in losses in excess of the amount
initially invested in the Futures Contract. However,
the Fund would presumably have sustained comparable
losses if, instead of the Futures Contract, it had
invested in the underlying financial instrument and
sold it after the decline.
Most United States 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 Futures 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
<PAGE>
trading, thereby preventing prompt liquidation of
Futures positions and subjecting some Futures traders
to substantial losses.
There can be no assurance that a liquid market will
exist at a time when the Fund seeks to close out a
Futures position. The Fund would continue to be
required to meet margin requirements until the position
is closed, possibly resulting in a decline in the
Fund's net asset value. In addition, many of the
contracts discussed above are relatively new
instruments without a significant trading history. As
a result, there can be no assurance that an active
secondary market will develop or continue to exist.
A public market exists in Futures Contracts covering a
number of indexes, including, but not limited to, the
Standard & Poor's 500 Stock Index, the Standard &
Poor's 100 Stock Index, the NASDAQ 100 Index, the Value
Line Composite Index and the New York Stock Exchange
Composite Index.
Options on Futures. The Fund may also purchase or
write put and call options on Futures Contracts and
enter into closing transactions with respect to such
options to terminate an existing position. A futures
option gives the holder the right, in return for the
premium paid, to assume a long position (call) or short
position (put) in a Futures Contract at a specified
exercise price prior to the expiration of the option.
Upon exercise of a call option, the holder acquires a
long position in the Futures Contract and the writer is
assigned the opposite short position. In the case of a
put option, the opposite is true. Prior to exercise or
expiration, a futures option may be closed out by an
offsetting purchase or sale of a futures option of the
same series.
The Fund may use options on Futures Contracts in
connection with hedging strategies. Generally, these
strategies would be employed under the same market and
market sector conditions in which the Fund uses put and
call options on securities or indexes. The purchase of
put options on Futures Contracts is analogous to the
purchase of puts on securities or indexes so as to
hedge the Fund's securities holdings against the risk
of declining market prices. The writing of a call
option or the purchasing of a put option on a Futures
Contract constitutes a partial hedge against declining
prices of the securities which are deliverable upon
exercise of the Futures Contract. If the futures price
at expiration of a written call option is below the
exercise price, the Fund will retain the full amount of
the option premium which provides a partial hedge
against any decline that may have occurred in the
Fund's holdings of securities. If the futures price
when the option is exercised is above the exercise
price, however, the Fund will incur a loss, which may
be offset, in whole or in part, by the increase in the
value of the securities held by the Fund that were
being hedged. Writing a put option or purchasing a
call option on a Futures Contract serves as a partial
hedge against an increase in the value of the
securities the Fund intends to acquire.
As with investments in Futures Contracts, the Fund is
required to deposit and maintain margin with respect to
put and call options on Futures Contracts written by
it. Such margin deposits will vary depending on the
nature of the underlying Futures Contract (and the
related initial margin requirements), the current
market value of the option, and other futures positions
held by the Fund. The Fund will set aside in a
segregated account at the Fund's custodian liquid
assets, such as cash, U.S. government securities or
other high grade liquid debt obligations equal in value
to the amount due on the underlying obligation. Such
segregated assets will be marked to market daily, and
<PAGE>
additional assets will be placed in the segregated
account whenever the total value of the segregated
account falls below the amount due on the underlying
obligation.
The risks associated with the use of options on Futures
Contracts include the risk that a Fund may close out
its position as a writer of an option only if a liquid
secondary market exists for such options, which cannot
be assured. The Fund's successful use of options on
Futures Contracts depends on the subadviser's ability
to correctly predict the movement in prices of Futures
Contracts and the underlying instruments, which may
prove to be incorrect. In addition, there may be
imperfect correlation between the instruments being
hedged and the Futures Contract subject to the option.
For additional information, see "Futures Contracts."
Federal Tax Treatment of Futures Contracts. For
federal income tax purposes, each Fund is required to
recognize as income for each taxable year its net
unrealized gains and losses on Futures Contracts as of
the end of the year, as well as gains and losses
actually realized during the year. Except for
transactions in Futures Contracts that are classified
as part of a "mixed straddle" under Section 1256 of the
Code, 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
Futures Contract. In the case of a Futures transaction
not classified as a "mixed straddle," the recognition
of losses may be deferred to a later taxable year.
Sales of Futures Contracts that 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.
The Fund intends to operate as a "Regulated Investment
Company" ("RIC") under Subchapter M of the Code, and
therefore will not be liable for federal income taxes
to the extent earnings are timely distributed. As a
result of being a RIC, net capital gain that the Fund
distributes to shareholders will retain their original
capital gain character in the shareholders' individual
tax returns.
In order for the Fund to qualify for federal income tax
treatment as a RIC, at least 90% of the gross income of
the Fund for a taxable year must be derived from
qualifying income; i.e., dividends, interest, income
derived from loans of securities and gains from the
sale of securities, and other income (including gains
on options and futures contracts) derived with respect
to the Fund's business of investing in stock or
securities. It is anticipated that any 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. Any increase in value on a position that
is part of a designated hedge will be offset by any
decrease in value (whether or not realized) on any
other position that is part of such hedge.
The Fund will distribute to shareholders at least
annually, any net capital gains which have been
recognized for federal income tax purposes (including
unrealized gains at the end of the Fund's fiscal year)
on Futures transactions. Such distributions will be
combined with distributions of capital gains realized
on the Fund's other investments and shareholders will
be advised of the nature of the payments.
<PAGE>
Foreign Investment Companies. Some of the countries in
which the Fund may invest may not permit direct
investment by outside investors. Investments in such
countries may only be permitted through foreign
government-approved or -authorized investment vehicles,
which may include other investment companies.
Investing through such vehicles may involve frequent or
layered fees or expenses and may also be subject to
limitation under the 1940 Act. Under the 1940 Act, the
Fund may invest up to 10% of its assets in shares of
investment companies and up to 5% of its assets in any
one investment company as long as the investment does
not represent more than 3% of the voting stock of the
acquired investment company.
Depositary Receipts. The Fund may invest in foreign
securities by purchasing depositary receipts, including
American Depositary Receipts ("ADRs") and European
Depositary Receipts ("EDRs") or other securities
convertible into securities or issuers based in foreign
countries. These securities may not necessarily be
denominated in the same currency as the securities into
which they may be converted. Generally, ADRs, in
registered form, are denominated in U.S. dollars and
are designed for use in the U.S. securities markets,
while EDRs, in bearer form, may be denominated in other
currencies and are designed for use in European
securities markets. ADRs are receipts typically issued
by a U.S. bank or trust company evidencing ownership of
the underlying securities. EDRs are European receipts
evidencing a similar arrangement. For purposes of the
Fund's investment policies, ADRs and EDRs are deemed to
have the same classification as the underlying
securities they represent. Thus, an ADR or EDR
representing ownership of common stock will be treated
as common stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and obligations of ADR holders and the
practices of market participants. A depositary may
establish an unsponsored facility without participation
by (or even necessarily the acquiescence of) the issuer
of the deposited securities, although typically the
depositary requests a letter of non-objection from such
issuer prior to the establishment of the facility.
Holders of unsponsored ADRs generally bear all the
costs of such facilities. The depositary usually
charges fees upon the deposit and withdrawal of the
deposited securities, the conversion of dividends into
U.S. dollars, the disposition of non-cash
distributions, and the performance of other services.
The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder
communications received from the issuer of the
deposited securities or to pass through voting rights
to ADR holders in respect of the deposited securities.
Sponsored ADR facilities are created in generally the
same manner as unsponsored facilities, except that the
issuer of the deposited securities enters into a
deposit agreement with the depositary. The deposit
agreement sets out the rights and responsibilities of
the issuer, the depositary and the ADR holders. With
sponsored facilities, the issuer of the deposited
securities generally will bear some of the costs
relating to the facility (such as dividend payment fees
of the depositary), although ADR holders continue to
bear certain other costs (such as deposit and
withdrawal fees). Under the terms of most sponsored
arrangements, depositaries agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
<PAGE>
Convertible Securities. The Fund may invest in
convertible securities, which are bonds, debentures,
notes, preferred stocks, or other securities that may
be converted into or exchanged for a specified amount
of common stock or warrants of the same or a different
company within a particular period of time at a
specified price or formula. A convertible security
entitles the holder to receive interest normally paid
or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is
redeemed, converted or exchanged. Convertible
securities have unique investment characteristics in
that they generally (i) have higher yields than common
stocks, but lower yields than comparable non-
convertible securities, (ii) are less subject to
fluctuation in value than the underlying stock (or
warrant) since they have fixed income characteristics,
and (iii) provide the potential for capital
appreciation if the market price of the underlying
common stock (or warrant) increases. A convertible
security may be subject to redemption at the option of
the issuer at a price established in the convertible
security's governing instrument. If a convertible
security held by the Fund is called for redemption, the
Fund will be required to permit the issuer to redeem
the security, convert it into the underlying common
stock (or warrant), or sell it to a third party.
PURCHASE OF SHARES
In General. Shares of the Fund are offered and sold on
a continual basis at the next offering price (the
"Offering Price"), which is the sum of the net asset
value per share and the sales charge imposed by the
Fund as set forth under "Share Price" in the Fund's
prospectus. See "Share Price." 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. Certain investors may not have to pay
the sales charge imposed by the Fund and reduced sales
charges are available under certain circumstances.
Waivers or reductions of the initial sales charge for
purchases of Fund shares by certain classes of persons
or through certain types of transactions as described
in the prospectus are provided because of anticipated
economies in sales and sales related efforts and lower
sales related expenses as compared with sales to the
general public.
Specimen Price Make-Up. Under the current distribution
arrangements between the Fund and First Data
Distributors, Inc. ("FDDI"), Fund shares are sold at a
maximum sales charge of 4.50%. Using the Fund's
initial net asset value per share, the maximum offering
price of the Fund's shares is as follows:
Net asset value per share $100.00
Maximum sales load (4.50% of offering price) $ 4.50
Offering price to public $104.50
<PAGE>
Exchange of Securities for Shares of the Fund. In
certain circumstances, shares of the Fund may be
purchased in exchange for a minimum value of $1 million
in common stocks. Such common stocks must be included
in the Fund's portfolio 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. 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's portfolio; (2), the investor
represents and warrants that all securities offered to
the Fund are not subject to any restrictions upon their
sale by the Fund under the Securities Act, or
otherwise; (3) such securities are traded in an
unrelated transaction with a quoted sales price on the
same day the exchange valuation is made; (4) 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 (5) 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 New
York Stock Exchange is restricted as determined by the
SEC, (ii) during any period when an emergency exists as
defined by the rules of the SEC as a result of which it
is not reasonably practicable for the Fund to dispose
of securities owned by it, or fairly to determine the
value of its assets, and (iii) for such other periods
as the SEC may permit.
No charge is made by the Fund for redemptions of
shares. 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 SEC 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 election is
irrevocable without the prior approval of the SEC.
Redemptions in excess of the above limits may be paid
in whole or in part, in investment securities or in
cash, as the Board of Directors may deem advisable;
however, payment will be made wholly in cash unless the
Board of Directors believes 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
<PAGE>
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 following is a list of the directors and officers
of the Company and a statement of their present
positions with the Company and principal occupations
during the past five years. The mailing address of the
directors and officers of the Company is Light Index
Investment Company, 704 Court A, Tacoma, Washington
98402.
Henry Hewitt, 45, created the Light Index. He will be
responsible for the day-to-day management of the 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(TM) Herald since September 1993. The Light
Revolution(TM) Herald 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 a founder and
a director of Working Assets Money Fund, an open end
investment company (money market fund) registered under
the 1940 Act. Mr. Hatch will serve as a Director of
the Company.
*John Hewitt Jr., 69, has been an investment adviser in
Tacoma since 1964. He is a Yale graduate and a retired
Marine Captain. Mr. Hewitt will serve as a Director of
the Company.
*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, an Internet
Business Consulting firm designed to help businesses
benefit from use of the Internet and electronic
commerce. Mr. O'Herin serves as 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 1940 Act.
Messrs. Henry Hewitt, Brian Hatch and Charles O'Herin
are "interested persons" of the Company as defined in
the 1940 Act.
<PAGE>
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 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 Estimate Total
Benefits d Annual Compensation
Aggregate Accrued As Benefits from Company
Name of Compensati Part of Upon and Fund
Person on from Fund Retirement Paid to Directors
Company Expenses
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
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 1,000 100%
Investment Company
(Adviser)
704 Court A
Tacoma, WA 98402
Directors and 0 0%
Officers as a
Group (5 persons)
As of the date hereof, the Adviser 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.
<PAGE>
INVESTMENT ADVISER, ADMINISTRATOR, CUSTODIAN,
TRANSFER AGENT AND ACCOUNT SERVICES AGENT
The investment adviser to the Fund is Light Index
Investment Company, 704 Court A, Tacoma, Washington
98402 (the "Adviser"). Pursuant to the investment
advisory agreement entered into between the Company and
the Adviser with respect to the Fund dated
_____________________, 1998 (the "Advisory Agreement"),
the Adviser furnishes continuous investment advisory
services to the Fund. A brief description of the
Advisory Agreement is set forth in the Prospectus under
"Management." The Adviser is controlled by Henry
Hewitt, President, Chief Executive Officer and a
Director of the Adviser.
The Adviser may agree to waive or reimburse all or a
portion of its management fee for the Fund. For the
period ending June 30, 1999, the Adviser has agreed to
waive its management fees and/or reimburse the Fund to
the extent necessary to ensure that the Fund's total
annual operating expenses including the Adviser's
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, do not
exceed 2.0% of the Fund's average daily net assets.
The Adviser is entitled to recoup amounts waived or
reimbursed for a period of up to three years from the
date such amounts were reimbursed or waived. 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 waived 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 reimburse the Fund in the amount of
such difference, subject to adjustment month by month
during the balance of the Fund's fiscal year if accrued
expenses thereafter fall below this limit. The
organizational expenses of the Fund will be advanced by
the Adviser and are estimated to be
$______________________.
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 1940
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.
<PAGE>
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 ("Firstar"). The
Fund Administration Servicing Agreement entered into
between the Company and Firstar 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 Firstar, or by Firstar upon the
giving of ninety (90) days' written notice to the
Company.
Under the Administration Agreement, Firstar 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 Firstar in the performance of
its duties under the Administration Agreement.
Firstar also provides services to the Company and the
Adviser pursuant to a Fulfillment Servicing Agreement
("Fulfillment Agreement"). Under the Fulfillment
Agreement, Firstar 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 is entitled to receive service fees
of $.99 per minute, with a $100 per month minimum and a
one-time $780 set-up fee. Firstar is also entitled to
receive service fees in connection with its reporting
of leads to the Company of $.45 per lead, which
includes the insertion of up to 4 items, and $.15 per
item for additional inserts.
Firstar also serves as custodian of the Company's
assets pursuant to a Custodian Servicing Agreement
("Custodian Agreement"). Under the Custodian
Agreement, Firstar 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 does not
exercise any supervisory function over the purchase and
sale of securities. For its services as custodian,
Firstar 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, as custodian, is entitled to certain
charges for securities transactions and reimbursements
for expenses.
Firstar 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 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 is entitled to receive
fees at the rate of $14.00 per shareholder account
(subject to a minimum annual fee of $22,000). Firstar
is also entitled to certain other transaction charges
and reimbursement for expense.
<PAGE>
From time to time, the Fund, directly or indirectly
through arrangements with the Adviser, the Transfer
Agent or other Fund service providers (each a "Fund
Service Provider"), and/or a Fund Service Provider may
pay amounts to third parties that provide transfer
agent and other administrative services relating to the
Fund to persons who beneficially own interests in the
Fund, such as participants in 401(K) plans. These
services may include, among other things, sub-
accounting services, transfer agent type activities,
answering inquiries relating to the Fund, transmitting,
on behalf of the Fund, proxy statements, annual
reports, Prospectuses, other communications regarding
the Fund, and related services as the Fund or
beneficial owners may reasonably request. In such
cases, the Fund will not pay fees based on the number
of beneficial owners at a rate that is greater than the
rate at which the Fund is currently paying a Fund
Service Provider for providing these services to Fund
shareholders.
In addition the Company has entered into a Fund
Accounting Servicing Agreement with Firstar pursuant to
which Firstar 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 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 is also entitled to certain out of
pocket expenses, including pricing expenses.
DISTRIBUTION
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, Westborough, Massachusetts, 01581-5108.
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.
<PAGE>
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, create a Systematic Withdrawal Plan from which
a fixed sum will be paid to the investor at the regular
intervals. To establish the Systematic Withdrawal
Plan, the investor deposits Fund shares with the
Company and appoints it as an agent to effect
redemptions of Fund shares held in the account for the
purpose of making monthly or quarterly withdrawal
payments of a fixed amount to the investor out of the
account. Fund shares deposited by the investor in the
account need not be endorsed or accompanied by a stock
power if registered in the same name as the account;
otherwise, a properly executed endorsement or stock
power, obtained from any bank, broker-dealer or the
Company is required. The investor's signature should
be guaranteed by a bank, a member firm of a national
stock exchange or other eligible guarantor.
The minimum amount of a withdrawal payment is $50.
These payments will be made from the proceeds of
periodic redemptions of shares in the account at net
asset value. Redemptions will be made in accordance
with the schedule (e.g., monthly, bimonthly (every
other month), quarterly or yearly, but in no event more
than monthly) selected by the investor. If a scheduled
redemption day is a weekend day or a holiday, such
redemption will be made on the next preceding business
day. Establishment of a Systematic Withdrawal Plan
constitutes an election by the investor to reinvest in
additional Fund shares, at net asset value, all income
dividends and capital gains distributions payable by
the Fund on shares held in such account, and shares so
acquired will be added to such account. The investor
may deposit additional Fund shares in his account at
any time.
Withdrawal payments cannot be considered as yield or
income on the investor's investment, since portions of
each payment will normally consist of a return of
capital. Depending on the size or the frequency of the
disbursements requested, and the fluctuation in the
value of the Fund's portfolio, redemptions for the
purpose of making such disbursements may reduce or even
exhaust the investor's account.
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 in writing thirty (30) days prior to
the next payment.
BROKERAGE ALLOCATION
The Adviser is responsible for decisions to buy and
sell securities for the Fund and for the placement of
the Fund's securities business, the negotiation of the
commissions to be paid on such transactions and the
allocation of portfolio brokerage and principal
business. The Adviser seeks the best execution at the
best security price available with respect to each
transaction, in light of the overall quality of
brokerage and research services provided to the Adviser
or the Fund. The best price to the Fund means the best
net price without regard to the mix between purchase or
sale price and commission, if any. Purchases may be
made from underwriters, dealers and, on occasion, the
issuers. Commissions will be paid on the Fund's
futures and options transactions. The purchase
<PAGE>
price
of portfolio securities purchased from an underwriter
or dealer may include underwriting commissions and
dealer spreads. The Fund may pay mark-ups on principal
transactions. In selecting broker-dealers and in
negotiating commissions, the Adviser considers the
firm's reliability, the quality of its execution
services on a continuing basis and its financial
condition. Brokerage will not be allocated based on
the sale of the Fund's shares.
Section 28(e) of the Securities Exchange Act of 1934
("Section 28(e)") permits an investment adviser, under
certain circumstances, to cause an account to pay a
broker or dealer who supplies brokerage and research
services a commission for effecting a transaction in
excess of the amount of commission another broker or
dealer would have charged for effecting the
transaction. Brokerage and research services include:
(a) furnishing advice as to the value of securities,
the advisability of investing, purchasing or selling
securities and the availability of securities or
purchasers or sellers of securities; (b) furnishing
analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio
strategy and the performance of accounts; and (c)
effecting securities transactions and performing
functions incidental thereto (such as clearance,
settlement, and custody).
In selecting brokers, the Adviser considers investment
and market information and other research, such as
economic, securities and performance measurement
research provided by such brokers and the quality and
reliability of brokerage services, including execution
capability, performance and financial responsibility.
Accordingly, the commissions charged by any such broker
may be greater than the amount another firm might
charge if the Adviser determines in good faith that the
amount of such commissions is reasonable in relation to
the value of the research information and brokerage
services provided by such broker to the Fund. The
Adviser believes that the research information received
in this manner provides the Fund with benefits by
supplementing the research otherwise available to the
Fund. The Advisory Agreement provides that such higher
commissions will not be paid by the Fund unless: (a)
the Adviser determines in good faith that the amount is
reasonable in relation to the services in terms of the
particular transaction or in terms of the Adviser's
overall responsibilities with respect to the accounts
as to which they exercise investment discretion; (b)
such payment is made in compliance with the provisions
of Section 28(e), other applicable state and federal
laws, and the Advisory Agreement; and (c) in the
opinion of the Adviser, the total commissions paid by
the Fund will be reasonable in relation to the benefits
to the Fund over the long term. The investment
advisory fees paid by the Fund under the Advisory
Agreement are not reduced as a result of the Adviser's
receipt of research services.
The Adviser places portfolio transactions for other
advisory accounts managed by the Adviser. Research
services furnished by firms through which the Fund
effects its securities transactions may be used by the
Adviser in servicing all of its accounts; not all of
such services may be used by the Adviser in connection
with the Fund. The Adviser believes it is not possible
to measure separately the benefits from research
services to each of the accounts (including the Fund)
managed by it. Because the volume and nature of the
trading activities of the accounts are not uniform, the
amount of commissions in excess of those charged by
another broker paid by each account for brokerage and
research services will vary. However, the Adviser
believes such costs to the Fund will not be
disproportionate to the benefits received by the Fund
on a continuing basis. The Adviser seeks to allocate
portfolio transactions equitably whenever concurrent
decisions are made to purchase or sell
<PAGE>
securities by
the Fund and another advisory account. In some cases,
this procedure could have an adverse effect on the
price or the amount of securities available to the
Fund. In making such allocations between the Fund and
other advisory accounts, the main factors considered by
the Adviser are the respective investment objectives,
the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for
investment and the size of investment commitments
generally held.
The Fund anticipates that its portfolio turnover rate
will not exceed 50%, and is expected to be between 25%
and 50%. The annual portfolio turnover rate indicates
changes in the Fund's securities holdings; for
instance, a rate of 100% would result if all the
securities in a portfolio (excluding securities whose
maturities at acquisition were one year or less) at the
beginning of an annual period had been replaced by the
end of the period. The turnover rate may vary from
year to year, as well as within a year, and may be
affected by portfolio sales necessary to meet cash
requirements for redemptions of the Fund's shares.
DIVIDENDS, OTHER GAIN DISTRIBUTIONS AND TAXES
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 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, 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 require
ments 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 purposes the amount,
character, and timing of recognition of the gains and
losses it realizes in connection therewith. For
additional information, see "Investment Policies and
Techniques-Hedging Strategies-Federal Tax Treatment of
Futures Contracts."
Undistributed net investment income is included in the
Fund's net assets for the purpose of calculating net
asset value per
<PAGE>
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 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 Cash Dividend Option (dividends paid in
cash and capital gains distributions reinvested in
additional Fund shares) or the Cash Option (both
dividends and capital gains distributions will be paid
in cash) has been elected. An account statement is sent
to shareholders whenever an income dividend or other
distribution is paid.
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 1940 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 1940 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.
PERFORMANCE MEASURES
As described in the "Total Return" section of the
Fund's prospectus, the Fund's historical performance or
return may be shown in the form of various performance
figures. The Fund's performance figures are based upon
historical results and are not necessarily
representative of future performance. Factors
affecting the Fund's performance include general market
conditions, operating expenses and investment
management.
Total Return. 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 SEC 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:
<PAGE>
P(1 - T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the end of the period
of a hypothetical $1,000 payment made at the
beginning of such period
This calculation (i) assumes that the maximum sales
charge of 4.50% is deducted from the initial $1,000
payment, (ii) assumes all dividends and distributions
are reinvested at net asset value or the appropriate
reinvestment dates as described in the Prospectus, and
(iii) deducts all recurring fees and expenses, such as
advisory fees, charged 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.Cumulative total return represents the simple
change in value of an investment over a stated period and
may be quoted as a percentage or as a dollar amount.
Total returns may be broken down into their components
of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship
between these factors and their contributions to total
return.
Volatility. Occasionally statistics may be used to
specify the Fund's volatility or risk. Measures of
volatility or risk are generally used to compare the
Fund's net asset value or performance relative to a
market index. One measure of volatility is beta. Beta
is the volatility of the Fund relative to the total
market as represented by the Standard & Poor's 500
Stock Index. A beta of more than 1.00 indicates
volatility greater than the market, and a beta of less
than 1.00 indicates volatility less than the market.
Another measure of volatility or risk is standard
deviation. Standard deviation is used to measure
variability of net asset value or total return around
an average, over a specified period of time. The
premise is that greater volatility connotes greater
risk undertaken in achieving performance.
<PAGE>
Comparisons. From time to time, in marketing and other
Fund literature, the Fund's performance may be compared
to the performance of other mutual funds in general or
to the performance of particular types of mutual funds
with similar investment goals, as tracked by
independent organizations. Among these organizations,
Lipper Analytical Services, Inc. ("Lipper"), a widely
used independent research firm which ranks mutual funds
by overall performance, investment objectives, and
assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income
and capital gains dividends reinvested. Such
calculations do not include the effect of any sales
charges imposed by other funds. The Fund will be
compared to Lipper's appropriate fund category, that
is, by the Fund's investment objective and portfolio
holdings.
The Fund's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which ranks funds on the basis of
historical risk and total return. Morningstar's
rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a
weighted average for 3, 5 and 10 year periods.
Rankings are not absolute or necessarily predictive of
future performance.
Evaluations of Fund performance made by independent
sources may also be used in advertisements concerning
the Fund, including reprints of or selections from,
editorials or articles about the Fund. Sources for
Fund performance and articles about the Funds may
include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, the Wall Street Journal, Barron's and
a variety of investment newsletters.
The Fund may compare its performance to a wide variety
of indexes and measures of inflation including the
Standard & Poor's 500 Stock Index, the NASDAQ Over-the-
Counter Composite Index, the Russell 2500 Index, the
Russell 1000 Growth Index and the Lehman Aggregate Bond
Index. There are differences and similarities between
the investments that the Fund may purchase for its
portfolio and the investments measured by these
indexes.
Investors may want to compare the Fund's performance to
that of certificates of deposit offered by banks and
other depositary institutions. Certificates of deposit
may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal
of the deposits prior to maturity normally will be
subject to a penalty. Rates offered by banks and other
depositary institutions are subject to change at any
time specified by the issuing institution. Investors
may also want to compare performance of the Fund to
that of money market funds. Money market fund yields
will fluctuate and shares are not insured, but share
values usually remain stable.
INDEPENDENT ACCOUNTANT
PricewaterhouseCoopers, LLP has been selected as the
independent accountant for the Fund.
FINANCIAL STATEMENT
The following financial statement is attached hereto:
Report of Independent Public Accountants
<PAGE>
Statement of Assets and Liabilities
Notes to the Financial Statement
<PAGE>
PART C
LIGHT REVOLUTION FUND, INC.
OTHER INFORMATION
Item 24. Financial Statements And Exhibits
(a) FINANCIAL STATEMENTS
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Financial Statement
(b) EXHIBITS
1.1 Articles of Incorporation of Registrant*
1.2 Amendment to 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 Revolution
Fund, Inc.*
6. Distribution Agreement between First Data
Distributors, Inc. and Light Revolution Fund,
Inc.*
7. Not Applicable
8. Custodian Servicing Agreement between Light
Index Revolution, Inc., and Firstar Trust
Company*
9.1 Fund Administration Servicing Agreement
between Light Revolution Fund, Inc. and
Firstar Trust Company*
9.2 Fund Accounting Servicing Agreement between
Light Revolution Fund, Inc. and Firstar Trust
Company*
9.3 Fulfillment Servicing Agreement between Light
Revolution 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 Account Disclosure
Statement and Custodial Account Agreement*
15. Distribution Plan*
16. Not Applicable
<PAGE>
17. Not Applicable
18. Powers-of-Attorney.*
* Previously Filed.
** Filed herewith.
***To be filed by amendment.
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, 1
$0.0001 par value
(Light Revolution Fund)
Item 27. Indemnification
Pursuant to the authority of the Maryland
General Corporation Law, particularly Section 2-
418 thereof, Registrant's Board of Directors has
adopted the following bylaw which is in full force
and effect and has not been modified or canceled:
ARTICLE VII
GENERAL PROVISIONS
* * *
Section 7. Indemnification
A. The corporation shall indemnify all of its
corporate representatives against expenses, including
attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in
connection with the defense of any action, suit or
proceeding, or
<PAGE>
threat or claim of such action, suit or
proceeding, whether civil, criminal, administrative, or
legislative, no matter by whom brought, or in any
appeal in which they or any of them are made parties or
a party by reason of being or having been a corporate
representative, if the corporate representative acted
in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the
corporation, if he received no improper benefit in
money, property or services. and with respect to any
criminal proceeding, if he had no reasonable cause to
believe his conduct was unlawful; provided that the
corporation shall not indemnify corporate
representatives in relation to matters as to which any
such corporate representative shall be adjudged in such
action, suit or proceeding to be liable for gross
negligence, willful misfeasance, bad faith, reckless
disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is
otherwise not permitted by the Maryland General
Corporation Law.
B. In the absence of an adjudication which expressly
absolves the corporate representative, or in the event
of a settlement, each corporate representative shall be
indemnified hereunder only if there has been a
reasonable determination based on a review of the facts
that indemnification of the corporate representative is
proper because he has met the applicable standard of
conduct set forth in paragraph A. Such determination
shall be made (i) by the board of directors, by a
majority vote of a quorum which consists of directors
who were not parties to the action, suit or proceeding,
or if such a quorum cannot be obtained, then by a
majority vote of a committee of the board consisting
solely of two or more directors, not, at the time,
parties to the 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.
<PAGE>
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 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
(a) First Data Distributors, Inc., a wholly-
owned subsidiary of First Data Investor
Services Group, Inc. and an indirect wholly-
owned subsidiary of First Data Corporation,
acts as distributor of the Registrant
pursuant to a distribution
<PAGE>
agreement dated
_______________. First Data Distributors,
Inc. also acts as the underwriter for ABN
Amro Funds, Alleghany Funds, BT Insurance
Funds Trust, First Choice Funds Trust,
Forward Funds, Inc., The Galaxy Fund, Galaxy
VIP Fund, Galaxy Fund II, IBJ Funds Trust,
ICM Series Trust, LKCM Funds, Panorama Trust,
Undiscovered Managers Funds, and Wilshire
Target Funds. First Data Distributors, Inc.
is registered with the Securities and
Exchange Commission as a broker-dealer and is
a member of the National Association of
Securities Dealers, Inc. First Data
Distributors, Inc. is located at 4400
Computer Drive, Westborough, Massachusetts
01581.
(b)
Position
Principal Position with
Name Business Address with FDDI Company
Frank Koudelka 4400 Computer Drive President None
Westborough, MA 01581 and CEO
Scott Hacker 4400 Computer Drive Vice President None
Westborough, MA 01581 Treasurer and
Chief Compliance
Officer
Bernard Rothman 4400 Computer Drive Vice President None
Westborough, MA 01581 - Tax
Christine P. Ritch 4400 Computer Drive Chief Legal None
Westborough, MA 01581 Officer and
Clerk
Bradley Stearns 4400 Computer Drive Assistant None
Westborough, MA 01581 Clerk
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required
to be maintained by Registrant pursuant to Section
31(a) of the Investment Company Act of 1940, as
amended, 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.
<PAGE>
Item 31. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 32. Undertakings
The Registrant undertakes:
(a) 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 if the
Registrant proposes to raise its initial capital
pursuant to Section 14(a)(3) of the Investment Company
Act of 1940, as amended.
<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 Pre-Effective Amendment
No. 3 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly
authorized on the 28th day of July, 1998.
LIGHT REVOLUTION FUND, INC.
By: /s/ Henry Hewitt
-------------------------
Henry Hewitt, President
Pursuant to the requirements of the Securities Act
of 1933, this Pre-Effective Amendment No. 3 to this
Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated:
Signature Title Date
/s/ Charles O'Herin Vice President/ July 28, 1998
- --------------------------- Secretary/Treasurer
Charles O'Herin
* Director July 28, 1998
- ---------------------------
Thomas Kinsman
* Director July 28, 1998
- ---------------------------
Brian Hatch
* Director July 28, 1998
- --------------------------
John Hewitt, Jr.
/s/ Henry Hewitt July 28, 1998
- ---------------------------
*By Henry Hewitt pursuant
to Power of Attorney.
<PAGE>
INDEX TO EXHIBITS
1.1 Articles of Incorporation of Registrant*
1.2 Amendment of 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 Revolution Fund,
Inc.*
6. Distribution Agreement between First Data
Distributors, Inc. and Light Revolution Fund,
Inc.*
7. Not Applicable
8. Custodian Servicing Agreement between Light
Revolution Fund, Inc. and Firstar Trust Company*
9.1 Fund Administration Servicing Agreement between
Light Revolution Fund, Inc. and Firstar Trust
Company*
9.2 Fund Accounting Servicing Agreement between Light
Revolution Fund, Inc. and Firstar Trust Company*
9.3 Fulfillment Servicing Agreement between Light
Revolution 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. Not Applicable
18. Powers-of-Attorney*
* Previously filed.
** Filed herewith.
***To be filed by amendment.
