X COM FUNDS, 485APOS, 2000-01-11

X COM FUNDS
485APOS, 2000-01-11

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As Filed with the Securities and Exchange Commission on January 11, 2000

File Nos. 333-80205
811-09381

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1

and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2

X.COM FUNDS

(Exact name of Registrant as specified in charter)

394 University Avenue
Palo Alto, CA 94301
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (650) 752-6900

JOHN T. STORY
X.com Corporation
394 University Avenue
Palo Alto, CA 94301
(Name and address of agent for service)

Please send copy of all communications to:

David A. Hearth, Esq.
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
(415) 835-1600

It is proposed that this filing will become effective:
____ immediately upon filing pursuant to Rule 485(b)
____ on __________ pursuant to Rule 485(b)
____ 60 days after filing pursuant to Rule 485(a)(1)
__X_ 75 days after filing pursuant to Rule 485(a)(2)
____ on __________ pursuant to Rule 485(a)

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X.COM FUNDS

CONTENTS OF REGISTRATION STATEMENT

This registration statement contains the following documents:*

Facing Sheet

Contents of Registration Statement

Cross-Reference Sheet for

X.COM CLASSIC S&P 500 FUND
X.COM PROTECTED S&P 500 FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM e-COMMERCE FUND

Part A - Combined Prospectus for

X.COM CLASSIC S&P 500 FUND
X.COM PROTECTED S&P 500 FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM e-COMMERCE FUND

Part B - Combined Statement of Additional Information for

X.COM CLASSIC S&P 500 FUND
X.COM PROTECTED S&P 500 FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM e-COMMERCE FUND

Part C - Other Information

Signature Page

Exhibits

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*This post-effective amendment does not contain the combined
prospects and combined statement of additional information with
respect to the following series of the Registrant: X.COM PREMIER S&P
500 FUND, X.COM U.S.A. BOND FUND and X.COM U.S.A. MONEY MARKET FUND.

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PART A

COMBINED PROSPECTUS FOR

X.COM CLASSIC S&P FUND
X.COM PROTECTED S&P FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM e-COMMERCE FUND

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X.COM FUNDS
-----------

X.COM CLASSIC S&P 500 FUND

X.COM PROTECTED S&P 500 FUND

X.COM SUPER U.S. INDEX FUND

X.COM SMALL CAP INDEX FUND

X.COM INTERNATIONAL INDEX FUND

X.COM E-COMMERCE FUND
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PROSPECTUS
----------

MARCH __, 2000

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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

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TABLE OF CONTENTS
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<TABLE>
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PAGE
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<S> <C>
INTRODUCTION.....................................................1
ABOUT EACH FUND..................................................3
The X.com Classic S&P 500 Fund...............................3
The X.com Protected S&P 500 Fund.............................5
The X.com Super U.S. Index Fund..............................6
The X.com Small Cap Index Fund...............................8
The X.com International Index Fund..........................10
The X.com e-Commerce Fund...................................11
PERFORMANCE INFORMATION.........................................14
FEES AND EXPENSES...............................................17
MORE ABOUT THE FUNDS'INVESTMENT STRATEGIES AND RISKS............19
FUND MANAGEMENT.................................................20
THE FUNDS'STRUCTURE.............................................22
PRICING OF FUND SHARES..........................................23
HOW TO BUY AND SELL SHARES OF THE X.COM FUNDS...................25
DIVIDENDS AND OTHER DISTRIBUTIONS...............................26
TAX CONSEQUENCES................................................27
</TABLE>

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INTRODUCTION
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WHO CAN INVEST IN A FUND?

The Funds are for on-line investors who are customers of X.com Corporation
("X.com") and First Western National Bank (the "Bank"), which is under contract
to provide X.com customers with various banking and financial services. The Bank
is a member of the Federal Deposit Insurance Corporation ("FDIC"). You will need
to do the following to purchase shares of the Fund:

- Open an account with the Bank.

- Complete an X.com Account Application and follow the instructions
provided under "How to Buy and Sell Shares" later in this
Prospectus.

- Simply follow the instructions on the X.com website, WWW.X.COM.

- You are also required to consent to receive all information about
the Fund electronically, both to open an account and during the time
you own shares of the Fund. If you revoke your consent to receive
this information electronically, fail to maintain an e-mail account,
or close your account, the Funds may, to the extent permitted by the
federal securities laws, redeem your shares, and will, in any event,
prohibit additional investments in the Funds, including the
reinvestment of dividends.*

WHAT ARE INDEX FUNDS?

Index funds are often described as "passively managed" in that they seek to
match the performance of a specific benchmark index by holding either all the
securities that make up the targeted index or a highly representative sample.
For example, in the case of the X.com Classic S&P 500 Fund, that benchmark is
the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index").

WHAT IS THE MASTER/FEEDER FUND STRUCTURE USED BY THE FUNDS?

Several of the X.com Funds described in this Prospectus are feeder funds that
invest all of their assets in a corresponding master fund. A master/feeder fund
structure is a two-tier fund structure made up of a master portfolio that
invests in securities, and a feeder fund that invests in the master portfolio
instead of directly buying portfolio securities. Barclays Global Fund Advisors
("BGFA") serves as the investment adviser to each of the master funds other than
the master fund for the Small Cap Index Fund. BGFA is a subsidiary of Barclays
Global Investors, N.A., the world's largest institutional investment adviser. As
of December 31, 1999, BGFA and its

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* The staff of the Securities and Exchange Commission (the "Staff") has
informally said that the Funds may not involuntarily redeem your shares if
you revoke your consent to receive shareholder documents electronically or
fail to maintain an e-mail account. However, should the Staff's position on
this issue change, the Funds intend to involuntarily redeem your shares
under these circumstances.

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affiliates provided investment advisory services for over $__________ billion of
assets. ___________________ ("__________") serves as the investment adviser to
the master fund used by the Small Cap Index Fund. [__________] provided
investment advisory services for over $__________ billion of assets as of
December 31, 1999.

By employing the master/feeder structure for the Funds, X.com is able to offer
investors not only leading-edge online products and services, but also the
economies of scale and experience of an established mutual fund advisers like
BGFA and [_________].

2
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ABOUT EACH FUND
- --------------------------------------------------------------------------------

This portion of the Prospectus provides a description of each Fund's investment
objective, principal investment strategies and principal risks. Of course, there
can be no assurance that any Fund will achieve its investment objective.

The investment characteristics and investment risks of the Funds match those of
each Funds' corresponding Master Portfolio (except for the e-Commerce Fund,
which does not use a master fund). For that reason, the discussion of each
Fund's investment objectives, strategies and risks necessarily includes a
description of the investment characteristics and risks associated with the
investments of the corresponding Master Portfolios. Each Fund's performance will
correspond directly to the performance of the related Portfolio.

PLEASE NOTE THAT YOUR INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OF THE BANK OR
ANY OTHER BANK OR FINANCIAL INSTITUTION, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC") OR ANY OTHER GOVERNMENT AGENCY. BECAUSE
EACH FUND IS SUBJECT TO INVESTMENT RISKS, YOU MAY LOSE MONEY IF YOU INVEST IN
THE FUNDS.

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THE X.COM CLASSIC S&P 500 FUND
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INVESTMENT OBJECTIVE

The X.com Classic S&P 500 Fund (the "Classic S&P 500 Fund") seeks to approximate
as closely as practicable, before fees and expenses, the CAPITALIZATION-WEIGHTED
TOTAL RATE OF RETURN of the S&P 500 Index.* The S&P 500 Index, a widely
recognized benchmark for U.S. stocks, currently represents about 75% of the
market capitalization of all publicly traded common stocks in the United States.
The S&P 500 Index includes 500 established companies representing different
sectors of the U.S. economy (including industrial, utilities, financial, and
transportation) selected by Standard & Poor's.

"Capitalization-weighted total rate of return" means that each stock in the
index contributes to the index in the same proportion as the value of its
shares. Thus, if the shares of Company A are worth twice as much as the shares
of Company B, Company A's return will count twice as much as Company B's in
calculating the index's overall return.

PRINCIPAL STRATEGIES

The Classic S&P 500 Fund does not invest directly in a portfolio of securities.
Instead, it seeks to achieve its investment objective by investing all of its
assets in the S&P 500 Index Master Portfolio ("S&P 500 Portfolio"), a series of
Master Investment Portfolio ("MIP"), a registered open-end management investment
company issuing individual interests in multiple series (each,

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* "Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500-Registered Trademark-,"
and "500 -Registered Trademark-" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed by X.com Asset Management, Inc. for
use in connection with the Classic S&P 500 Fund. The Classic S&P 500 Fund is
not sponsored, endorsed, sold, or promoted by Standard & Poor's and Standard
& Poor's makes no representation regarding the advisability of investing in
the Classic S&P 500 Fund.

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a "Portfolio"). The S&P 500 Portfolio seeks to provide investment results that
correspond, before fees and expenses, to the total return of the publicly traded
common stocks, in the aggregate, as represented by the S&P 500 Index. To do so,
the S&P 500 Portfolio invests substantially all of its assets in the same stocks
and in substantially the same percentages as the S&P 500 Index.

Under normal market conditions, the S&P 500 Portfolio will invest at least 90%
of its assets in the stocks making up the S&P 500 Index. Over time, the S&P 500
Portfolio attempts to achieve, in both rising and falling markets, a correlation
of at least 95% between the capitalization-weighted total return of its assets
and that of the S&P 500 Index. A correlation of 100% would mean the total return
of the S&P 500 Portfolio's assets would increase and decrease exactly the same
as the S&P 500 Index.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the Classic S&P 500 Fund depends to a
great extent upon changes in market conditions. Equity securities change in
value more than fixed-income securities and the value of the equity securities
held by the Classic S&P 500 Fund (through its investments in the S&P 500
Portfolio) will fluctuate as the market prices of those securities rise and
fall. The value of your investment in the Classic S&P 500 Fund will change daily
based on many factors, including the volatility of the securities in the S&P 500
Index, national and international economic conditions, and general market
conditions.

INDEX-FUND RISK: The Classic S&P 500 Fund is not actively managed through
traditional methods of stock selection. Instead, it invests (through its
investments in the S&P 500 Portfolio) in the stocks included in the S&P 500
Index regardless of their investment merits. Except to a limited extent, the
Classic S&P 500 Fund cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general decline
in the U.S. stock market segment relating to the S&P 500 Index.

The Classic S&P 500 Fund's ability to track the performance of the S&P 500 Index
may also be affected by, among other things, transaction costs, the fees and
expenses of the Classic S&P 500 Fund and the S&P 500 Portfolio, changes in the
composition of the S&P 500 Index or the assets of the S&P 500 Portfolio, and the
timing, frequency and amount of investor purchases and redemptions of both the
Classic S&P 500 Fund and S&P 500 Portfolio. Because the S&P 500 Portfolio seeks
to track the performance of the S&P 500 Index, the S&P 500 Portfolio will not
attempt to judge the merits of any particular stock as an investment.

In addition, the S&P 500 Portfolio will need to maintain cash balances to pay
redemptions and expenses, which may affect the overall performance of the
Classic S&P 500 Fund.

4
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THE X.COM PROTECTED S&P 500 FUND
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INVESTMENT OBJECTIVE

The X.com Protected S&P 500 Fund (the "Protected S&P 500 Fund") seeks, for
long-term investors, to approximate at least [90%] of the
CAPITALIZATION-WEIGHTED TOTAL RATE OF RETURN of the S&P 500 Index without any
loss of principal.*

The Protected S&P 500 Fund is "protected" because the Fund has an agreement with
_______________ (the "Big Bank") that protects you against losses from an
investment in shares of the Fund if you hold those shares for at least 3 years.
The Big Bank, in exchange for protecting you against losses of principal on
shares held at least 3 years, receives a portion of the fees charged by the
Protected S&P 500 Fund and receives [ %] of all increases in the value of your
shares when redeemed. Your failure to hold shares for at least 3 years would
mean that you would give up [ %] of any increase in value on your investment but
not receive any protection against losses of the amount invested.

The S&P 500 Index, a widely recognized benchmark for U.S. stocks, currently
represents about 75% of the market capitalization of all publicly traded common
stocks in the United States. The S&P 500 Index includes 500 established
companies representing different sectors of the U.S. economy (including
industrial, utilities, financial, and transportation) selected by Standard &
Poor's.

PRINCIPAL STRATEGIES

Like the Classic S&P 500 Fund, the Protected S&P 500 Fund does not invest
directly in a portfolio of securities. Instead, it seeks to achieve its
investment objective by investing all of its assets in the S&P 500 Portfolio, a
series of MIP. The S&P 500 Portfolio seeks to provide investment results that
correspond, before fees and expenses, to the total return of the publicly traded
common stocks, in the aggregate, as represented by the S&P 500 Index. To do so,
the S&P 500 Portfolio invests substantially all of its assets in the same stocks
and in substantially the same percentages as the S&P 500 Index.

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* "Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500-Registered Trademark-,"
and "500 -Registered Trademark-" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed by X.com Asset Management, Inc. for
use in connection with the Protected S&P 500 Fund. The Protected S&P 500
Fund is not sponsored, endorsed, sold, or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Protected S&P 500 Fund.

5
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mean the total return of the S&P 500 Portfolio's assets would increase and
decrease exactly the same as the S&P 500 Index. The total return on an
investment in the Protected S&P 500 Fund would not increase as much as the S&P
500 Portfolio because of the fee of the Big Bank.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the Protected S&P 500 Fund depends to
a great extent upon changes in market conditions. Equity securities change in
value more than fixed-income securities and the value of the equity securities
held by the Protected S&P 500 Fund (through its investments in the S&P 500
Portfolio) will fluctuate as the market prices of those securities rise and
fall. The value of your investment in the Protected S&P 500 Fund will change
daily based on many factors, including the volatility of the securities in the
S&P 500 Index, national and international economic conditions, and general
market conditions.

If you hold your shares for fewer than 3 years, your investment would be fully
vulnerable to decreases in the value of your investment. Even shares held for at
least 3 years, which are protected against the loss of your purchase price, are
not protected against declines from high points above your original purchase
price.

INDEX-FUND RISK: The Protected S&P 500 Fund is not actively managed through
traditional methods of stock selection. Instead, it invests (through its
investments in the S&P 500 Portfolio) in the stocks included in the S&P 500
Index regardless of their investment merits. Except to a limited extent, the
Protected S&P 500 Fund cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general decline
in the U.S. stock market segment relating to the S&P 500 Index.

The Protected S&P 500 Fund's ability to track the performance of the S&P 500
Index may also be affected by, among other things, transaction costs, the fees
and expenses of the Protected S&P 500 Fund and the S&P 500 Portfolio, changes in
the composition of the S&P 500 Index or the assets of the S&P 500 Portfolio, and
the timing, frequency and amount of investor purchases and redemptions of both
the Protected S&P 500 Fund and S&P 500 Portfolio. Because the S&P 500 Portfolio
seeks to track the performance of the S&P 500 Index, the S&P 500 Portfolio will
not attempt to judge the merits of any particular stock as an investment.

In addition, the S&P 500 Portfolio will need to maintain cash balances to pay
redemptions and expenses, which may affect the overall performance of the
Protected S&P 500 Fund.

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THE X.COM SUPER U.S. INDEX FUND
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INVESTMENT OBJECTIVE

The X.com Super U.S. Index Fund (the "Super Index Fund") seeks to approximate as
closely as practicable, before fees and expenses, the CAPITALIZATION-WEIGHTED
TOTAL RATE OF RETURN of the Wilshire 4500 Index.* The Wilshire 4500 Index, a
widely recognized benchmark for small and

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* "Wilshire Associates," "Wilshire 4500 Completion Index" and "Wilshire 4500"
are trademarks of Wilshire Associates, Inc. The Super Index Fund is not
sponsored, endorsed, sold, or promoted by Wilshire

6
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mid cap U.S. stocks, includes approximately 6,500 companies representing
different sectors of the U.S. economy. The Wilshire 4500 Index is intended to
serve as a good measure of the broad U.S. stock market excluding the stocks that
appear in the S&P 500 Index.

As of September 30, 1999, the stocks included in the Wilshire 4500 Index had an
average market value of $455 million, but with a median of $92 million (that is,
an equal number of stocks had capitalization levels above and below $92
million). The capitalization of included stocks ranged from less than $1 million
to over $82 billion.

PRINCIPAL STRATEGIES

The Super Index Fund does not invest directly in a portfolio of securities.
Instead, it seeks to achieve its investment objective by investing all of its
assets in the Wilshire 4500 Index Master Portfolio ("Wilshire 4500 Portfolio"),
a series of MIP. The Wilshire 4500 Portfolio seeks to provide investment results
that correspond, before fees and expenses, to the total return of the publicly
traded common stocks, in the aggregate, as represented by the Wilshire 4500
Index. To do so, the Wilshire 4500 Portfolio invests substantially all of its
assets in the same stocks and in substantially the same percentages as the
Wilshire 4500 Index.

Under normal market conditions, the Wilshire 4500 Portfolio will invest at least
90% of its assets in the stocks making up the Wilshire 4500 Index. Over time,
the Wilshire 4500 Portfolio attempts to achieve, in both rising and falling
markets, a correlation of at least 95% between the capitalization-weighted total
return of its assets and that of the Wilshire 4500 Index. A correlation of 100%
would mean the total return of the Wilshire 4500 Portfolio's assets would
increase and decrease exactly the same as the Wilshire 4500 Index.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the Super Index Fund depends to a
great extent upon changes in market conditions. Equity securities change in
value more than fixed-income securities and the value of the equity securities
held by the Super Index Fund (through its investments in the Wilshire 4500
Portfolio) will fluctuate as the market prices of those securities rise and
fall. The value of your investment in the Super Index Fund will change daily
based on many factors, including the volatility of the securities in the
Wilshire 4500 Index, national and international economic conditions, and general
market conditions.

The Super Index Fund's focus on small-cap and mid-cap stocks may expose
investors to additional risks. Smaller companies typically offer fewer products
or services and have more-limited financial resources than larger companies, and
their securities may trade less frequently and in smaller amounts than those of
larger companies. As a result, small-cap stocks--and

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* Associates, Inc. and Wilshire Associates, Inc. makes no representation
regarding the advisability of investing in the Super Index Fund.

7
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therefore the Super Index Fund--may fluctuate significantly more in value than
larger-cap stocks and mutual funds that focus on them.

INDEX-FUND RISK: The Super Index Fund is not actively managed through
traditional methods of stock selection. Instead, it invests (through its
investments in the Wilshire 4500 Portfolio) in the stocks included in the
Wilshire 4500 Index regardless of their investment merits. Except to a limited
extent, the Super Index Fund cannot modify its investment strategies to respond
to changes in the economy and may be particularly susceptible to a general
decline in the U.S. stock market segment relating to the Wilshire 4500 Index.

The Super Index Fund's ability to track the performance of the Wilshire 4500
Index may also be affected by, among other things, transaction costs, the fees
and expenses of the Super Index Fund and the Wilshire 4500 Portfolio, changes in
the composition of the Wilshire 4500 Index or the assets of the Wilshire 4500
Portfolio, and the timing, frequency and amount of investor purchases and
redemptions of both the Super Index Fund and Wilshire 4500 Portfolio. Because
the Wilshire 4500 Portfolio seeks to track the performance of the Wilshire 4500
Index, the Wilshire 4500 Portfolio will not attempt to judge the merits of any
particular stock as an investment.

In addition, the Wilshire 4500 Portfolio will need to maintain cash balances to
pay redemptions and expenses, which may affect the overall performance of the
Super Index Fund.

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THE X.COM SMALL CAP INDEX FUND
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INVESTMENT OBJECTIVE

The X.com Small Cap Index Fund (the "Small Cap Index Fund") seeks to approximate
as closely as practicable, before fees and expenses, the CAPITALIZATION-WEIGHTED
TOTAL RATE OF RETURN of the Russell 2000-Registered Trademark- Index.* The
Russell 2000-Registered Trademark- Index, a widely recognized benchmark for
small cap U.S. stocks, includes approximately 2,000 companies representing
different sectors of the U.S. economy.

As of December 31, 1999, the stocks included in the Russell 2000 Index had an
average market value of $___ million, but with a median of $___ million (that
is, an equal number of stocks had capitalization levels above and below $___
million). The capitalization of included stocks ranged from less than $___
million to over $___ billion.

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* "Russell 2000-Registered Trademark- Index," "Russell" and "Russell
2000-Registered Trademark-" are trademarks of Frank Russell & Co.
("Russell"). The Small Cap Index Fund is not sponsored, endorsed, sold, or
promoted by Russell and Russell makes no representation regarding the
advisability of investing in the Small Cap Index Fund.

8
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PRINCIPAL STRATEGIES

The Small Cap Index Fund does not invest directly in a portfolio of securities.
Instead, it seeks to achieve its investment objective by investing all of its
assets in the Russell 2000 Index Master Portfolio ("Russell 2000 Portfolio"), a
series of _____________. The Russell 2000 Portfolio seeks to provide investment
results that correspond, before fees and expenses, to the total return of the
publicly traded common stocks, in the aggregate, as represented by the Russell
2000 Index. To do so, the Russell 2000 Portfolio invests substantially all of
its assets in the same stocks and in substantially the same percentages as the
Russell 2000 Index.

Under normal market conditions, the Russell 2000 Portfolio will invest at least
90% of its assets in the stocks making up the Russell 2000 Index. Over time, the
Russell 2000 Portfolio attempts to achieve, in both rising and falling markets,
a correlation of at least 95% between the capitalization-weighted total return
of its assets and that of the Russell 2000 Index. A correlation of 100% would
mean the total return of the Russell 2000 Portfolio's assets would increase and
decrease exactly the same as the Russell 2000 Index.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the Small Cap Index Fund depends to a
great extent upon changes in market conditions. Equity securities change in
value more than fixed-income securities and the value of the equity securities
held by the Small Cap Index Fund (through its investments in the Russell 2000
Portfolio) will fluctuate as the market prices of those securities rise and
fall. The value of your investment in the Small Cap Index Fund will change daily
based on many factors, including the volatility of the securities in the Russell
2000 Index, national and international economic conditions, and general market
conditions.

The Small Cap Index Fund's focus on small-cap stocks may expose investors to
additional risks. Smaller companies typically offer fewer products or services
and have more-limited financial resources than larger companies, and their
securities may trade less frequently and in smaller amounts than those of larger
companies. As a result, small-cap stocks--and therefore the Small Cap Index
Fund--may fluctuate significantly more in value than larger-cap stocks and
mutual funds that focus on them.

INDEX-FUND RISK: The Small Cap Index Fund is not actively managed through
traditional methods of stock selection. Instead, it invests (through its
investments in the Russell 2000 Portfolio) in the stocks included in the Russell
2000 Index regardless of their investment merits. Except to a limited extent,
the Small Cap Index Fund cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general decline
in the U.S. stock market segment relating to the Russell 2000 Index.

The Small Cap Index Fund's ability to track the performance of the Russell 2000
Index may also be affected by, among other things, transaction costs, the fees
and expenses of the Small Cap Index Fund and the Russell 2000 Portfolio, changes
in the composition of the Russell 2000 Index or the assets of the Russell 2000
Portfolio, and the timing, frequency and amount of investor purchases and
redemptions of both the Small Cap Index Fund and Russell 2000 Portfolio. Because
the Russell 2000 Portfolio seeks to track the performance of the Russell 2000
Index, the

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Russell 2000 Portfolio will not attempt to judge the merits of any particular
stock as an investment.

In addition, the Russell 2000 Portfolio will need to maintain cash balances to
pay redemptions and expenses, which may affect the overall performance of the
Small Cap Index Fund.

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THE X.COM INTERNATIONAL INDEX FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The X.com International Index Fund (the "International Index Fund") seeks to
approximate as closely as practicable, before fees and expenses, the
CAPITALIZATION-WEIGHTED TOTAL RATE OF RETURN of the MSCI
EAFE-Registered Trademark- (Europe, Australasia, Far East) Index.* The EAFE
Index, a widely recognized benchmark for foreign stocks, includes over 1,000
established companies representing different sectors of the world economy in 21
developed markets.

PRINCIPAL STRATEGIES

The International Index Fund does not invest directly in a portfolio of
securities. Instead, it seeks to achieve its investment objective by investing
all of its assets in the EAFE-Registered Trademark- Index Master Portfolio
("EAFE-Registered Trademark- Portfolio"), a series of MIP. The
EAFE-Registered Trademark- Portfolio seeks to provide investment results that
correspond, before fees and expenses, to the total return of the publicly traded
common stocks, in the aggregate, as represented by the
EAFE-Registered Trademark- Index. To do so, the EAFE-Registered Trademark-
Portfolio invests substantially all of its assets in the same stocks and in
substantially the same percentages as the EAFE-Registered Trademark- Index.

Under normal market conditions, the EAFE-Registered Trademark- Portfolio will
invest at least 90% of its assets in the stocks making up the
EAFE-Registered Trademark- Index. Over time, the EAFE-Registered Trademark-
Portfolio attempts to achieve, in both rising and falling markets, a correlation
of at least 95% between the capitalization-weighted total return of its assets
and that of the EAFE-Registered Trademark- Index. A correlation of 100% would
mean the total return of the EAFE-Registered Trademark- Portfolio's assets would
increase and decrease exactly the same as the EAFE-Registered Trademark- Index.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the International Index Fund depends
to a great extent upon changes in market conditions. Equity securities change in
value more than fixed-

- -------------------------
* "Morgan Stanley Capital International," "MSCI," "MSCI
EAFE-Registered Trademark- (Europe, Australasia, Far East)" and
"EAFE-Registered Trademark-" are trademarks of Morgan Stanley Capital
International. The International Index Fund is not sponsored, endorsed,
sold, or promoted by Morgan Stanley Capital International and Morgan Stanley
Capital International makes no representation regarding the advisability of
investing in the International Index Fund.

10
<PAGE>

income securities and the value of the equity securities held by the
International Index Fund (through its investments in the
EAFE-Registered Trademark- Portfolio) will fluctuate as the market prices of
those securities rise and fall. The value of your investment in the
International Index Fund will change daily based on many factors, including the
volatility of the securities in the EAFE-Registered Trademark- Index, national
and international economic conditions, and general market conditions.

FOREIGN RISK: By emphasizing investments in foreign stocks, the International
Index Fund may expose shareholders to additional risks. Foreign stock markets
tend to be more volatile than the U.S. market due to economic and political
instability and regulatory conditions in some countries.

In addition, most of the securities in which the EAFE-Registered Trademark-
Portfolio invests are denominated in foreign currencies, whose values may
decline against the U.S. dollar.

INDEX-FUND RISK: The International Index Fund is not actively managed through
traditional methods of stock selection. Instead, invests (through its
investments in the EAFE-Registered Trademark- Portfolio) in the stocks included
in the EAFE-Registered Trademark- Index regardless of their investment merits.
Except to a limited extent, the International Index Fund cannot modify its
investment strategies to respond to changes in the economy and may be
particularly susceptible to a general decline in the stock markets of one or
more countries represented in the EAFE-Registered Trademark- Index.

The International Index Fund's ability to track the performance of the
EAFE-Registered Trademark- Index may also be affected by, among other things,
transaction costs, the fees and expenses of the International Index Fund and the
EAFE-Registered Trademark- Portfolio, changes in the composition of the
EAFE-Registered Trademark- Index or the assets of the EAFE-Registered Trademark-
Portfolio, and the timing, frequency and amount of investor purchases and
redemptions of both the International Index Fund and EAFE-Registered Trademark-
Portfolio. Because the EAFE-Registered Trademark- Portfolio seeks to track the
performance of the EAFE-Registered Trademark- Index, the
EAFE-Registered Trademark- Portfolio will not attempt to judge the merits of any
particular stock as an investment.

In addition, the EAFE-Registered Trademark- Portfolio will need to maintain cash
balances to pay redemptions and expenses, which may affect the overall
performance of the International Index Fund.

- --------------------------------------------------------------------------------
THE X.COM E-COMMERCE FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The X.com e-Commerce Fund (the "e-Commerce Fund") seeks long-term growth of
capital by investing in companies involved with electronic commerce.

PRINCIPAL STRATEGIES

Under normal conditions, the e-Commerce Fund invests at least 65% of its assets
in securities of U.S. and foreign companies that the Subadviser considers to be
well-positioned to benefit significantly from their involvement in electronic
commerce ("e-commerce"). The Fund considers e-commerce companies to be those
that engage in designing, developing, operating, financing, manufacturing or
providing the following activities, products and services: internet access,
equipment and service; electronic components and equipment; commerce
infrastructure

11
<PAGE>

tools such as security and payment systems; computers; software tools and
utilities; electronic communications; web presence/solution providers; local and
wide area networking; publishing and information systems; and emerging
technologies combining communications, commerce, media and/or computer systems.

The Subadviser's analysis of a potential investment will focus on valuing an
e-commerce company when it believes the value exceeds the market price of the
stock. In assessing a company's potential, the Subadviser may consider a number
of factors, including technology, marketing, proprietary technological
advantages and the company's ability to rapidly respond to changing technology
and market conditions.

Current income from dividends or interest is not a consideration in selecting
the Fund's investments. Unlike the other Funds offered in this prospectus, the
e-Commerce Fund invests directly in stocks rather than investing in a Master
Portfolio.

PRINCIPAL RISKS

MARKET RISK: The value of an investment in the e-Commerce Fund depends to a
great extent upon changes in market conditions. Equity securities change in
value more than fixed-income securities and the value of the equity securities
held by the e-Commerce Fund will fluctuate as the market prices of those
securities rise and fall. The value of your investment in the e-Commerce Fund
will change daily based on many factors, including the volatility of the
securities held by the e-Commerce Fund, national and international economic
conditions, and general market conditions.

The value of these stocks may change value daily and dramatically and perform
differently than the broader stock market. Your investment may not increase in
value, and could decrease, while you are invested in the e-Commerce Fund, even
if you are a long-term investor.

In addition, the e-Commerce Fund will need to maintain cash balances to pay
redemptions and expenses, which may affect the overall performance of the
e-Commerce Fund.

POSSIBLE LACK OF DIVERSIFICATION. The e-Commerce Fund is non-diversified, which
means that the e-Commerce Fund may invest a greater percentage of its assets in
a single issuer. Because a relatively high percentage of the e-Commerce Fund's
total assets may be invested in the stocks of a single issuer or a limited
number of issuers, shares of the e-Commerce Fund may be more sensitive to
changes in market value of a single issuer or a limited number of issuers. Such
a focused investment strategy may increase the volatility of the e-Commerce
Fund's investment results because it may be more susceptible to risks associated
with a single economic, political or regulatory event than a diversified fund.

INDUSTRY CONCENTRATION. To the extent the stocks held by the e-Commerce Fund are
companies concentrated in the e-commerce sector and one or more industries or
groups of industries, the e-Commerce Fund's investment will also be
concentrated. Investments in a single sector of the stock market present greater
risk and increased volatility. The value of the e-Commerce Fund's shares in the
e-commerce sector may be especially sensitive to factors and risks that
specifically affect the e-commerce sector and, as a result, the Fund's share
price may fluctuate more widely than the value of the shares of a mutual fund
that invests in a broader range of industry sectors.

12
<PAGE>

The e-commerce sector has a large proportion of technology and
telecommunications stocks and may be more volatile than other industries or
groups of industries of the market. The e-commerce sector also could be subject
to greater government regulation than other industry sectors and, therefore,
changes in regulatory policies for the e-commerce sector may have a material
effect on the value of stocks issued by companies in the e-commerce sector.
Additionally, the e-commerce sector can be particularly affected by such
specific risks as: aggressive product prices due to competitive pressure from
numerous market entrants, short product cycles, rapid rate of change, and
product obsolescence at a more frequent rate than other types of companies
caused by rapid technological advances; and risks that new products will fail to
meet expectations or even reach the marketplace, among others. In addition, such
companies tend to be capital intensive and, as a result, may not be able to
recover all capital investment costs.

Whenever e-commerce stocks perform worse than other types of investments, such
as bonds, the e-Commerce Fund's performance also will fall behind those
investments. Many stocks of companies of the e-commerce sector have risen in
value based on anticipation of future earnings and company viability and
currently are not profitable. If these future projections prove to be overly
optimistic, shares of the corresponding companies may experience significant
declines in market value.

SMALLER COMPANIES. Many of the companies in which the e-Commerce Fund invests
can be characterized as small-cap or mid-cap companies. Investments in these
companies are more risky than investments in stocks of larger companies. Smaller
companies have less public information generally available; more-limited product
lines; less liquidity; less frequent trading; and limited financial resources.

As a result, small-cap and mid-cap stocks--and therefore the e-Commerce
Fund--may fluctuate significantly more in value than larger-cap stocks and
mutual funds that focus on them.

13
<PAGE>

- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

The bar charts on this page show the annual returns of each Fund and how its
performance has varied from year to year.* The average annual return tables
compare each Fund's average annual return with the return of a corresponding
index for one and five years and since inception. How the Funds have performed
in the past does not necessarily indicate how the Funds will perform in the
future.

CLASSIC S&P 500 FUND AND PROTECTED S&P 500 FUND

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
S&P 500 Fund Portfolio Average Annual Total Returns (as of December 31, 1999)
Classic Protected S&P Fund Average Annual Total Returns (as of December 31, 1999)
- -----------------------------------------------------------------------------------------------
One Year Five Years Since July 2, 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Classic S&P 500 Fund and
Protected S&P 500 Fund _____% _____% _____%
- -----------------------------------------------------------------------------------------------
S&P 500 Index _____% _____% _____%
- -----------------------------------------------------------------------------------------------
</TABLE>

- -------------------------
* The Funds did not offer shares to the public before March __, 2000. Each
Fund providing performance information is using the annual returns of each
corresponding Master Portfolio, which has not been adjusted to account for
expenses payable at the Fund level. The annual returns for the Funds would have
been lower than those shown above because they have higher expenses than their
corresponding Portfolios. The Protected S&P 500 Fund would have had lower
performance than the S&P 500 Index and the Classic S&P Fund because of its
substantially higher expenses and the share of any increase in value that must
be paid to [Big Bank].

14
<PAGE>

SUPER U.S. INDEX FUND

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Super U.S. Index Fund Portfolio Average Annual Total Returns (as of December 31, 1999)

- -----------------------------------------------------------------------------------------------
One Year Five Years Since ............
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Super U.S. Index Fund ____% ____% ____%
- -----------------------------------------------------------------------------------------------
Wilshire 4500 Index ____% ____% ____%
- -----------------------------------------------------------------------------------------------
</TABLE>

SMALL CAP INDEX FUND

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Small Cap Index Fund Portfolio Average Annual Total Returns (as of December 31, 1999)

- -----------------------------------------------------------------------------------------------
One Year Five Years Since ............
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small Cap Index Fund ____% ____% ____%
- -----------------------------------------------------------------------------------------------
Russell 2000 Index ____% ____% ____%
- -----------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

INTERNATIONAL INDEX FUND

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
International Index Fund Portfolio Average Annual Total Returns (as of December 31, 1999)

- -----------------------------------------------------------------------------------------------
One Year Five Years Since ............
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Index Fund ____% ____% ____%
- -----------------------------------------------------------------------------------------------
EAFE-Registered Trademark- Index ____% ____% ____%
- -----------------------------------------------------------------------------------------------
</TABLE>

E-COMMERCE FUND

- --------------------------------------------------------------------------------
This Fund commenced operations on March __, 2000. Performance results have not
been provided because this Fund has not been in existence for a full calendar
year and because the Fund does not invest in a Master Portfolio that could
provide performance information instead.
- --------------------------------------------------------------------------------

16
<PAGE>

- --------------------------------------------------------------------------------
FEES AND EXPENSES
- --------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.

<TABLE>
<CAPTION>
SHAREHOLDER FEES Classic S&P Protected Super U.S. Small Cap Int'l Index e-Commerce
(FEES PAID DIRECTLY FROM YOUR 500 Fund S&P 500 Fund Index Fund Index Fund Fund Fund
INVESTMENT)
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None None None
Imposed on Purchases

Maximum Deferred Sales Charge None None None None None None
(Load)

Maximum Sales Charge (Load) None None None None None None
Imposed in Reinvested
Dividends and other
Distributions

Redemption Fee None None None None None None

Maximum Account Fee None None None None None None

Special Protection Fee* None ___% of None None None None
gain

*Each shareholder must pay to Big Bank, out of redemption proceeds, a
Special Protection Fee equal to __% of the increase in net asset value of
shares redeemed. This fee must be paid regardless of how long you held your
shares.

ANNUAL FUND OPERATING Classic S&P Protected Super U.S. Small Cap Int'l Index e-Commerce
EXPENSES(1) 500 Fund S&P 500 Fund Index Fund Index Fund Fund Fund
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.16%(2) ___%(2) 0.40%(2) 0.40% 0.60%(2) 1.00%(2)

Distribution (12b-1) Fees None None None None None None

Other Expenses 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Annual Fund Operating 0.16% ____% 0.40% 0.40% 0.60% 1.00%
Expenses

Fee Waiver and Expense 0.00% ____% 0.00% 0.00% 0.00% 0.00%
Reimbursement(3)
NET OPERATING EXPENSES 0.16% ____% 0.40% 0.40% 0.60% 1.00%
</TABLE>

(1) The cost reflects the expenses at both the Fund and the Portfolio levels.

(2) Management fees include a fee equal to 0.05%, 0.10%, 0.14% and 0.25% of
the daily net assets payable at the Portfolio level to the investment
adviser for the S&P 500 Portfolio, Wilshire 4500 Portfolio, Russell 2000
Portfolio and EAFE-Registered Trademark- Portfolio, respectively.
Management fees also include a "unified" fee equal to 0.11%, ____, 0.30%,
0.26%,0.35% and 1.00% payable by the Classic S&P 500 Fund, Protected S&P
500 Fund, Super

17
<PAGE>

U.S. Index Fund, Small Cap Index Fund, International Index Fund and the
e-Commerce Fund, respectively, to X.com Asset Management, Inc., the Funds'
investment adviser (the "Adviser"). Under the investment advisory
contract, the Adviser provides or arranges to be provided to the Funds
administration, transfer agency, pricing, custodial, auditing, and legal
services, and is responsible for payment of all of the operating expenses
of each Fund except the Portfolio management fees, brokerage fees, taxes,
interest and extraordinary expenses. The Adviser is also responsible for
paying the fee of the Subadviser to the e-Commerce Fund.

(3) The fee waiver for each Fund is made pursuant to a written expense
limitation and reimbursement agreement, which is in effect for an initial
term of one year and will be renewed thereafter automatically for a
one-year term on an annual basis. The agreement can be changed, terminated
or not renewed by either party only by giving 90 days' prior notice.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds. The Example assumes that:

- you invest $10,000 in each Fund for the time periods indicated;
- your investment has a 5% return each year; and
- each Fund's operating expenses remain the same.
- you redeem your shares at the end of the relevant period

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR* 3 YEARS*+
------- --------
<S> <C> <C>
CLASSIC S&P 500 FUND $____ $____
PROTECTED S&P 500 FUND $____** $____
SUPER U.S INDEX FUND $____ $____
SMALL CAP INDEX FUND $____ $____
INTERNATIONAL INDEX FUND $____ $____
E-COMMERCE FUND $____ $____
</TABLE>

* Reflects costs at both the Fund and Portfolio levels.
** INCLUDES THE SPECIAL PROTECTION FEE EQUAL TO 10% OF GAINS.

- --------------------------------------------------------------------------------
+ X.com Asset Management, Inc. anticipates that the expense
limitation and reimbursement agreement will be renewed for each of
the second and third year of each Fund's operation. If the
agreement is renewed, your actual cost will be as follows:
Classic S&P 500 Fund $_____;
Protected S&P 500 Fund $_____;
Super U.S. Index Fund $_____;
Small Cap Index Fund $_____;
International Index Fund $_____;
e-Commerce Fund $_____;
- --------------------------------------------------------------------------------

18
<PAGE>

- --------------------------------------------------------------------------------
MORE ABOUT THE FUNDS' INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------

INVESTMENT STRATEGIES

As with all mutual funds, there can be no assurance that the Funds will achieve
their respective investment objectives. The investment strategies of the Funds
are not fundamental and may be changed without approval of Fund shareholders. A
Fund may withdraw its investment in a Portfolio only if the Trust's Board of
Trustees determines that such action is in the best interests of the Fund and
its shareholders. If there is a change in the investment objective and
strategies of a Fund, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs.

INDEX INVESTING: The assets of the Master Portfolios in which each Fund other
than the e-Commerce Fund invests (collectively, the "Index Portfolios") are not
actively managed. Instead, the manager of each Index Portfolio seeks to achieve
returns corresponding to the targeted index by utilizing an "indexing"
investment approach to determine which securities are to be purchased or sold to
replicate, to the extent feasible, the investment characteristics of that index
through computerized, quantitative techniques. The Index Portfolios cannot, as a
practical matter, own all the securities that make up their respective market
indexes in perfect correlation to the indexes. The Index Portfolios seek to
track their respective market indexes during down markets as well as during up
markets. Consequently, the returns of the Index Portfolios will be directly
affected by the volatility of the securities making up their respective market
indexes.

Each Index Portfolio may invest up to 10% of its total assets in high quality
money market instruments to provide liquidity to meet redemption requests or to
facilitate investment in the stocks in the targeted index.

Each Index Portfolio may use derivative instruments in order to: (i) simulate
full investment in its corresponding index while retaining a cash balance for
portfolio management purposes; (ii) facilitate trading; (iii) reduce transaction
costs; or (iv) seek higher investment returns when such instruments are priced
more attractively than the stocks in its corresponding index. Those derivatives
include the purchase and sale of futures contracts and options on the targeted
index.

INVESTMENT RISKS

An investment in the Funds is subject to investment risks, including the loss of
the principal amount invested. The performance per share of the Funds and
Portfolios will change daily based on many factors, including, but not limited
to, the quality of the instruments held by each Fund or Portfolio and national
and international economic conditions and general market conditions.

DERIVATIVES: Derivatives are financial instruments whose values are derived, at
least in part, from prices of other securities or specified assets, indices, or
rates. The use of derivative instruments is a highly specialized activity and
there can be no guarantee that their use will increase the return of the Funds,
or protect their assets from declining in value. The Funds' investments in
derivative instruments can significantly increase their exposure to market risk
or the credit risk of the counterparty. Derivative instruments can also involve
the risk of mispricing or improper valuation and the risk that changes in the
value of the derivative instruments may not

19
<PAGE>

correlate perfectly with the Funds' corresponding indexes. In fact, the use of
derivative instruments adversely impact the value of the Funds' assets, which
may reduce the return you receive on your investment.

The Index Portfolios' use of derivative instruments may affect the Funds'
ability to track their respective indexes less closely if the derivatives do not
perform as expected, or if the derivative instruments are timed incorrectly or
are executed under adverse market conditions.

SECURITIES LENDING: Each Portfolio in which the Funds invest may lend a portion
of its securities to certain financial institutions in order to earn income.
These loans are fully collateralized. However, if the institution defaults, the
Funds' performance could be reduced.

- --------------------------------------------------------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------

INVESTMENT ADVISER FOR THE FUNDS. Under an investment advisory agreement with
the Funds, X.com Asset Management, Inc. (the "Adviser"), a registered investment
adviser, provides investment advisory services to the Funds. The Adviser is a
wholly owned subsidiary of X.com and is located at 394 University Avenue, Palo
Alto, CA 94301. The Adviser was formed in 1999 and therefore has limited prior
experience as an investment adviser.

X.com is the direct parent company of the Adviser. X.com is dedicated to
providing easy, low-cost financial services to on-line investors through its
continuous emphasis on technology. Through the world wide web, X.com offers
access to your X.com Funds account virtually anywhere, at any time.

Subject to general supervision of the X.com Funds' Board of Trustees and in
accordance with the investment objective, policies and restrictions of each of
the Funds, the Adviser provides the Funds with ongoing investment guidance,
policy direction and monitoring of each of the Portfolios in which each Fund
invests. The Adviser may in the future manage cash and money market instruments
for cash flow purposes. The Adviser also provides or arranges for
administration, transfer agency, custody, any subadviser and all other services
necessary for the Funds to operate. For its advisory services, each Fund pays
the Adviser an investment advisory fee at an annual rate, after fee waivers and
expense reimbursements, equal to the following percentage of each Fund's average
daily net assets:

<TABLE>
<CAPTION>
After Fee Waiver and
Fund Contractual Rate Expense Reimbursement
---- ---------------- ---------------------
(expressed as a percentage of (expressed as a percentage of
average daily net assets) average daily net assets)
<S> <C> <C>
Classic S&P 500 Fund 0.11% 0.11%
Protected S&P 500 Fund ____% ____%*
Super U.S. Index Fund 0.30% 0.30%*
Small Cap Index Fund 0.24% 0.24%
International Index Fund 0.35% 0.35%*
e-Commerce Fund 1.00% 1.00%
</TABLE>

20
<PAGE>

*THE ADVISER HAS ENTERED INTO A WRITTEN EXPENSE LIMITATION AND REIMBURSEMENT
AGREEMENT WITH THE TRUST, UNDER WHICH IT HAS AGREED TO WAIVE A PERCENTAGE OF ITS
ADVISORY FEE RECEIVED FROM THE FUNDS. THE EXPENSE LIMITATION AND REIMBURSEMENT
AGREEMENT IS IN EFFECT FOR AN INITIAL TERM OF ONE YEAR AND WILL BE RENEWED
THEREAFTER AUTOMATICALLY FOR ONE-YEAR TERMS ON AN ANNUAL BASIS. THE AGREEMENT
CAN BE CHANGED, TERMINATED OR NOT RENEWED BY EITHER PARTY ONLY UPON PROVIDING 90
DAYS' PRIOR NOTICE.

Out of the fee received by the Adviser, the Adviser pays all expenses of
managing and operating the Funds except brokerage expenses, taxes, interest,
fees and expenses of the independent trustees (including legal counsel fees),
and extraordinary expenses. A portion of the advisory fee may be paid by the
Adviser to unaffiliated third parties who provide recordkeeping and
administrative services that would otherwise be performed by an affiliate of the
Adviser.

INVESTMENT ADVISER FOR THE PORTFOLIOS (OTHER THAN THE RUSSELL 2000 PORTFOLIO).
Barclays Global Fund Advisors ("BGFA") is the investment adviser for each
Portfolio. BGFA is a direct subsidiary of Barclays Global Investors, N.A.
(which, in turn, is an indirect subsidiary of Barclays Bank PLC) and is located
at 45 Fremont Street, San Francisco, California 94105. BGFA has provided asset
management, administration and advisory services for over 25 years. As of June
30, 1999, BGFA and its affiliates provided investment advisory services for over
$687 billion of assets. BGFA receives a fee from each Portfolio at an annual
rate equal to the following percentage of each Portfolio's average daily net
assets:

<TABLE>
<CAPTION>
Percentage of
Portfolio Average Daily Net Assets
--------- ------------------------
<S> <C>
S&P 500 Portfolio 0.05%
Wilshire 4500 Portfolio 0.10%
EAFE-Registered Trademark- Portfolio 0.25%
</TABLE>

Each Fund bears a pro rata portion of the investment advisory fees paid by its
corresponding Portfolio, as well as certain other fees paid by each Portfolio,
such as accounting, legal, and Securities and Exchange Commission ("SEC")
registration fees.

INVESTMENT ADVISER FOR THE RUSSELL 2000 PORTFOLIO.
[Adviser and fees.]

SUBADVISER FOR THE E-COMMERCE FUND. The Adviser has hired ________________ (the
"Subadviser") to manage the portfolio of the e-Commerce Fund. The Subadvisory
Agreement between the Adviser and Subadviser provides that the Subadviser is
paid [monthly] [quarterly] at an annual rate of _____% on the average daily net
assets of the e-Commerce Fund.

[More information about the Subadviser.] [Exemptive order for substitution?]

The Funds' Statement of Additional Information contains detailed information
about the Funds' investment adviser, administrator, and other service providers.

21
<PAGE>

- --------------------------------------------------------------------------------
THE FUNDS' STRUCTURE
- --------------------------------------------------------------------------------

Each Fund is a separate series of X.com Funds. The Funds other than the
e-Commerce Fund (the "Feeder Funds") seek to achieve their investment objectives
by investing all of each Feeder Fund's assets in the corresponding Portfolio.
The Portfolios are each a series of MIP or _______, separate open-end investment
companies with the same investment objective as the corresponding Feeder Fund.
This two-tier fund structure is commonly referred to as a "master/feeder"
structure because one fund (the "feeder" fund) invests all of its assets in a
second fund (the "master fund"). In addition to selling its shares to the Feeder
Fund, each corresponding Portfolio has sold and is expected to continue to sell
its shares to certain other mutual funds or other accredited investors. The
expenses paid by these mutual funds and accredited investors may differ from the
expenses paid by a Feeder Fund; consequently, the returns received by
shareholders of other mutual funds or other accredited investors may differ from
those received by shareholders of the Feeder Fund.

The X.com Funds' Board of Trustees (the "Board") believes that, as other
investors invest their assets in the Portfolios, certain economic efficiencies
may be realized with respect to each Portfolio. For example, fixed expenses that
otherwise would have been borne solely by a Feeder Fund (and the other existing
interest-holders in its corresponding Portfolio) would be spread across a larger
asset base as more funds or other accredited investors invest in the particular
Portfolio. However, if a mutual fund or other investor withdraws its investment
from a Portfolio, the economic efficiencies (E.G., spreading fixed expenses
across a larger asset base) that the Board believes should be available through
investment in a Portfolio may not be fully achieved or maintained.

Each Feeder Fund may be asked to vote on matters concerning the Portfolio.
Except as permitted by the SEC, whenever a Feeder Fund is requested to vote on a
matter pertaining to a Portfolio, that Feeder Fund will hold a meeting of its
shareholders, and, at the meeting of investors in the Portfolio, will cast all
of its votes in the same proportion as the votes of the Feeder Fund's
shareholders.

Each Feeder Fund may withdraw its investments in its corresponding Portfolio if
the Board determines that it is in the best interests of the Feeder Fund and its
shareholders to do so. Upon any such withdrawal, the Board would consider what
action might be taken, including the investment of all the assets of the Feeder
Fund in another pooled investment entity having the same investment objective as
the Feeder Fund, direct management of the Feeder Fund or other pooled investment
entity by the Adviser or the hiring of a sub-adviser to manage the Feeder Fund's
assets.

Investment of the Feeder Funds' assets in the Portfolios is not a fundamental
policy of the Funds and a shareholder vote is not required for a Feeder Fund to
withdraw its investment from a Portfolio.

SIMILARLY, THE E-COMMERCE FUND MAY, WITHOUT A SHAREHOLDER VOTE, TERMINATE THE
SUBADVISER AND [HIRE A NEW SUBADVISER OR] INVEST ITS ASSETS IN A MASTER FUND OR
PORTFOLIO WITH A SUBSTANTIALLY SIMILAR INVESTMENT OBJECTIVE. SHAREHOLDERS WOULD
BE NOTIFIED OF ANY SUCH CHANGE.

22
<PAGE>

- --------------------------------------------------------------------------------
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------

The Funds are true no-load funds, which means you may buy or sell shares
directly at the net asset value ("NAV") determined after a Fund receives your
request in proper form. A request is received in proper form if it is placed
electronically through the X.com website and specifies the number of shares or
dollar amount of shares to be purchased or redeemed. If a Fund receives such
request before the close of the New York Stock Exchange, Inc. ("NYSE") on a day
on which the NYSE is open, your share price will be the NAV determined that day.
Shares will not be priced on the days on which the NYSE is closed for trading.

Each Feeder Fund's investment in its corresponding Portfolio is valued based on
the Feeder Fund's ownership interest in the net assets of the Master Portfolio.
A Fund's NAV per share is calculated by taking the value of each Fund's net
assets and dividing by the number of shares outstanding. Unlike the Feeder
Funds, the e-Commerce Fund directly holds stocks that must be valued daily. We
base the value of the e-Commerce Fund's investments on their market value,
usually the last price reported for each security before the close of market
that day. A market price may not be available for securities that trade
infrequently. In the absence of a market pricing, the Adviser, subject to the
supervision of the Board of Trustees or Pricing Committee, will make a
good-faith estimate of the security's "fair value." That value may be higher or
lower than the security's closing price in its relevant market. Expenses are
accrued daily and applied when determining each Fund's NAV. The NAV for each
Fund is determined as of the close of trading on the floor of the NYSE
(generally 4:00 p.m., Eastern Time), each day the NYSE is open. Each Fund
reserves the right to change the time at which purchases and redemptions are
priced if the NYSE closes at a time other than 4:00 p.m. Eastern Time or if an
emergency exists. The NYSE is closed on national holidays and on Good Friday.

Each Portfolio calculates its NAV on the same day and at the same time as its
corresponding Fund. Each Portfolio's investments are valued each day the NYSE is
open for business. Each Portfolio's assets are valued generally by using
available market quotations or at fair value as determined in good faith by the
Board of Directors of MIP. Bonds and notes with remaining maturities of 60 days
or less are valued at amortized cost.

- --------------------------------------------------------------------------------
HOW TO BUY AND SELL SHARES OF THE X.COM FUNDS
- --------------------------------------------------------------------------------

The Funds are available only to on-line investors that have established a
customer relationship with X.com and opened an account with the Bank, which is
under contract to provide X.com customers with various banking and financial
services.

23
<PAGE>

ON-LINE INVESTOR REQUIREMENTS

The Funds are designed and built specifically for on-line investors. Each Fund
requires its shareholders to consent to receive all shareholder information
about the Fund electronically. Shareholder information includes, but is not
limited to, prospectuses, financial reports, confirmations, proxy solicitations,
and financial statements. Shareholders may also receive other correspondence
from X.com Funds or the Bank through their e-mail account. By purchasing shares
of the Fund, you certify that you have access to the Internet and a current
e-mail account, and you acknowledge that you have the sole responsibility for
providing a correct and operational e-mail address. You may incur costs for
on-line access to shareholder documents and maintaining an e-mail account.

If you rescind your consent to receive shareholder information electronically,
fail to maintain an e-mail account, or close your account, the Funds may, to the
extent permitted by the federal securities laws, redeem your position in the
Funds and, in any event, will prohibit additional investments in the Funds,
including the reinvestment of dividends.* Prior to revoking your consent, you
will be reminded of the Fund's involuntary redemption policy. If the Funds
involuntarily redeem your shares, you may experience adverse tax consequences.
If your shares are involuntarily redeemed, you will receive paper copies of all
shareholder information until all of your shares have been redeemed and the
proceeds have been credited to your account, or you have otherwise received the
redemption proceeds. The Fund reserves the right to deliver paper-based
documents in certain circumstances, at no cost to the investor.

ACCOUNT REQUIREMENTS

To register as a customer of X.com and open an account with the Bank, you must
complete and submit an X.com Account Application (the "Application"). The
Application is available on the X.com website at WWW.X.COM. While you may submit
the Application electronically, you must also complete, sign and deliver a
signature card. The signature card will be sent to your address of record and
must be returned promptly per the enclosed instructions.

FOR MORE DETAILED INFORMATION ON HOW TO OPEN AN ACCOUNT WITH THE BANK, VISIT THE
X.COM WEBSITE (WWW.X.COM).

Once you open your account, you will be subject to general account requirements
as described in the Application, and will have access to all the electronic
financial services made available over the Internet by X.com, including the
opportunity to invest in X.com Funds.

PLACING AN ORDER

You can begin purchasing shares of the Funds as soon as you open and fund your
account. Because a Fund's net asset value changes daily, your purchase price
will be the next NAV determined after a Fund receives and accepts your purchase
order.

- -------------------------
* The SEC has informally indicated its view that the Funds may not
involuntarily redeem your shares if you revoke your consent to receive
shareholder documents electronically or fail to maintain an e-mail account.
However, should the SEC's position on this issue change, the Funds intend to
involuntarily redeem your shares under such circumstances.

24
<PAGE>

You can place orders to purchase or redeem Fund shares by accessing the X.com
website at WWW.X.COM. At the time you log-on to the website, you will be
prompted to enter your personal identification password so that we can be sure
each transaction is secure. By clicking on the appropriate mutual fund order
buttons, you can quickly and easily place an order to purchase or redeem shares
in a Fund. When you purchase shares in a Fund, you will be asked: (1) to confirm
your consent to receive all Fund documentation electronically; and (2) to affirm
that you have read the prospectus. The prospectus is readily available for
viewing and printing on the X.com website. IF YOU DO NOT CONSENT TO RECEIVE ALL
FUND DOCUMENTATION ELECTRONICALLY YOU WILL NOT BE ABLE TO PURCHASE SHARES OF THE
FUND. To complete a purchase transaction, you must transfer sufficient funds
from your Bank account to your mutual fund account. Notice of trade
confirmations will be sent electronically to the e-mail address you provided
when you opened your account.

MINIMUM INVESTMENT REQUIREMENTS

For your initial investment in a Fund $1

To buy additional shares of a Fund $1

Continuing minimum investment $1

After your account is established you may use any of the methods described below
to buy or sell shares. You can only sell shares of the Funds that you own; that
means you cannot "short" shares of the Fund.

ACCESSING ACCOUNT INFORMATION

For information on how to access account information and/or applications
electronically, please refer to the online assistant at WWW.X.COM available 24
hours a day.

REDEMPTIONS

You can access the money you have invested in a Fund at any time by selling some
or all of your shares back to the Fund. As soon as a Fund receives your
redemption request, your shares will be redeemed and the proceeds will be
credited to your account with the Bank. This usually occurs the business day
following the transaction. All redemption proceeds will be credited to your Bank
account.

REDEMPTION DELAYS. You will have to wait to receive payment on redeemed shares
until the funds you used to buy the shares have cleared (E.G., if you opened
your Bank account with a check, until your check has cleared). The delay may
take up to fifteen (15) days from the date of purchase.

The right of redemption may be suspended during any period in which (i) trading
on the NYSE is restricted, as determined by the SEC, or the NYSE is closed for
other than weekends and holidays; (ii) the SEC has permitted such suspension by
order; or (iii) an emergency as

25
<PAGE>

determined by the SEC exists, making disposal of portfolio securities or
valuation of net assets of the Fund not reasonably practicable.

REDEMPTION FEE. The Funds do not impose a redemption fee. The Index Funds can
experience substantial price fluctuations and are intended for long-term
investors. Short-term "market timers" who engage in frequent purchases and
redemptions can disrupt a Fund's investment program and create additional
transaction costs that are borne by all shareholders. For these reasons, in the
future the Index Funds may assess a 2.0% fee on redemptions of shares held for
less than 90 days.

SPECIAL PROTECTION FEE FOR THE PROTECTED S&P 500 FUND

Each shareholder must pay to Big Bank, out of redemption proceeds, 10% of all
increase in net asset value of shares redeemed. This fee must be paid regardless
of how long you held your shares.

AMENDING YOUR APPLICATION

For your protection, you will be required to submit an amended Application if
you desire to change certain information provided on your initial Application.
The amended Application is designed to protect you and the Funds against
fraudulent transactions by unauthorized persons. Specifically, the Funds will
require you to amend your Application in the following instances:

1. If you transfer the ownership of your account to another
individual or organization.

2. If you add or change your name or add or remove an owner on your
account.

3. If you add or change the beneficiary on your transfer-on-death
account.

CLOSING YOUR ACCOUNT

If you close your account with the Bank, the Fund may, to the extent permitted
by the federal securities laws, redeem all of your shares in your Fund account.

- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS
- --------------------------------------------------------------------------------

The Funds intend to pay dividends from net investment income quarterly and
distribute capital gains, if any, annually. The Funds may make additional
distributions if necessary.

Unless you choose otherwise, all your dividends and capital gain distributions
will be automatically reinvested in additional Fund shares. Shares are purchased
at the net asset value determined on the reinvestment date. If you revoke your
consent to receive shareholder information electronically, fail to maintain an
e-mail account, or close your account, you will not be permitted to reinvest
your dividends in additional Fund shares.

26
<PAGE>

- --------------------------------------------------------------------------------
TAX CONSEQUENCES
- --------------------------------------------------------------------------------

The following information is meant as a general summary for U.S. taxpayers.
Please see the Funds' Statement of Additional Information for more information.
You should rely on your own tax advisor for advice about the particular federal,
state and local tax consequences to you of investing in the Funds.

Each Fund generally will not be required to pay income tax on amounts it
distributes to shareholders, although shareholders will be taxed on
distributions they receive.

Each Fund will distribute substantially all of its income and gains to its
shareholders every year. If a Fund declares a dividend in October, November or
December but pays it in January, you may be taxed on the dividend as if you
received it in the previous year.

You will generally be taxed on dividends you receive from a Fund, regardless of
whether they are paid to you in cash or are reinvested in additional Fund
shares. If a Fund designates a dividend as a capital gain distribution, you will
pay tax on that dividend at the long-term capital gains tax rate, no matter how
long you have held your Fund shares.

If you invest through a tax-deferred retirement account, such as an IRA, you
generally will not be required to pay tax on dividends until they are
distributed from the account. These accounts are subject to complex tax rules,
and you should consult your tax advisor about investment through a tax-deferred
account.

There may be tax consequences to you if you dispose of your Fund shares, for
example, through redemption, exchange or sale. You will generally have a capital
gain or loss from a disposition. The amount of the gain or loss and the rate of
tax will depend mainly upon how much you paid for the shares, how much you sold
them for, and how long you held them.

Each Fund will send you a tax report each year that will tell you which
dividends must be treated as ordinary income and which (if any) are long-term
capital gain.

As with all mutual funds, a Fund may be required to withhold U.S. federal income
tax at the rate of 31% of all taxable distributions payable to you if you fail
to provide the Fund with your correct taxpayer identification number or to make
required certifications, or if you have been notified by the IRS that you are
subject to backup withholding. Backup withholding is not an additional tax, but
is a method in which the IRS ensures that it will collect taxes otherwise due.
Any amounts withheld may be credited against your U.S. federal income tax
liability.

27
<PAGE>

[Outside back cover page.]

The Statement of Additional Information for the Funds ("SAI"), contains further
information about each Fund. The SAI is incorporated into this Prospectus by
reference (that means it is legally considered part of this Prospectus).
Additional information about the Funds' investments will be available in the
Funds' annual and semi-annual reports to shareholders. In a Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its fiscal
year.

Additional information including the SAI and the most recent annual and
semi-annual reports (when available), may be obtained without charge at our
website (WWW.X.COM). Shareholders will be alerted by e-mail when a prospectus
amendment, annual or semi-annual report is available. Shareholders may also call
the toll-free number listed below for additional information or with any
inquiries.

Further information about the Funds (including the SAI) can also be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. You may call
1-202-942-8090 for information about the operations of the public reference
room. Reports and other information about the Funds are also available on the
SEC's website (http://www.sec.gov) or copies can be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
D.C. 20549-6009 or by electronic request at the following e-mail address:
[email protected].

X.COM CORP.
394 UNIVERSITY AVENUE
PALO ALTO, CA 94301
TOLL-FREE: (888) 447-8999
HTTP://WWW.X.COM

INVESTMENT COMPANY ACT FILE NO.: 811-09381

28
<PAGE>

PART B

COMBINED STATEMENT OF ADDITIONAL INFORMATION FOR

X.COM CLASSIC S&P FUND
X.COM PROTECTED S&P FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM e-COMMERCE FUND

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

X.COM FUNDS

X.COM CLASSIC S&P 500 FUND
X.COM PROTECTED S&P 500 FUND
X.COM SUPER U.S. INDEX FUND
X.COM SMALL CAP INDEX FUND
X.COM INTERNATIONAL INDEX FUND
X.COM E-COMMERCE FUND

MARCH __, 2000

This Statement of Additional Information ("SAI") is not a prospectus. This SAI
should be read together with the Prospectus for the X.com Classic S&P 500 Fund
(the "Classic S&P 500 Fund"), the X.com Protected S&P 500 Fund (the
"Protected S&P 500 Fund"), X.com Super U.S. Index Fund (the "Super U.S. Index
Fund"), X.com Small Cap Index Fund (the "Small Cap Index Fund"), and X.com
International Index Fund (the "International Index Fund") (collectively, with
the "Index Funds"), and the X.com e-Commerce Fund (the "e-Commerce Fund"
(collectively, with the Index Funds, the "Funds") dated March, 2000 (as
amended from time to time).

To obtain a copy of the Funds' Prospectus and the Funds' most recent
shareholders' report (when issued) free of charge, please access our Website
online (WWW.X.COM) via e-mail. The Funds are for on-line investors that are
customers of First Western National Bank, which X.com Corporation ("X.com") has
agreed to acquire subject to regulatory and shareholder approval and with which
X.com has contracted to provide various financial services for its customers
(the "Bank"). Only investors who are customers of the Bank and who consent to
receive all information about the Funds electronically may invest in any of the
Funds.

<PAGE>

TABLE OF CONTENTS
PAGE

HISTORY OF THE FUNDS..........................................................1

THE FUNDS.....................................................................1

INVESTMENT STRATEGIES AND RISKS...............................................1

FUND POLICIES................................................................10

TRUSTEES AND OFFICERS........................................................15

INVESTMENT MANAGEMENT........................................................17

SERVICE PROVIDERS............................................................21

PORTFOLIO TRANSACTIONS AND BROKERAGE SELECTION...............................22

ORGANIZATION, DIVIDEND AND VOTING RIGHTS.....................................26

SHAREHOLDER INFORMATION......................................................27

TAXATION.....................................................................30

MASTER PORTFOLIO ORGANIZATION................................................33

PERFORMANCE INFORMATION......................................................35

FINANCIAL STATEMENTS.........................................................39

APPENDIX.....................................................................40

i
<PAGE>

HISTORY OF THE FUNDS

Each of the Funds is a diversified series of X.com Funds (the "Trust"). The
Trust is organized as a Delaware business trust and was formed on June 7, 1999.

THE FUNDS

Each of the Funds is classified as a diversified open-end, management investment
company.

MASTER PORTFOLIOS. MIP and __________ are each an open-end management investment
company organized as a Delaware business trust. The policy of each Index Fund to
invest all of its assets in a Master Portfolio is not a fundamental policy of
any Fund and a shareholder vote is not required for any Fund to withdraw its
investment from the Portfolio in which it invests.

The investment objective of each Fund is fundamental and, therefore, cannot be
changed without approval of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of that Fund's outstanding voting
interests.

INVESTMENT STRATEGIES AND RISKS

Since each Fund other than the e-Commerce Fund invests all its assets in its
corresponding Master Portfolio, the investment characteristics and investment
risks of a Fund correspond to those of the Master Portfolio in which the Fund
invests. The following supplements the discussion in the Prospectus of the
principal investment strategies, policies and risks that pertain to the
Portfolios and, accordingly, to the Funds that invest in the Portfolios. In
addition to discussing the principal risks of investing in the Portfolios and
the Funds, this section also describes the non-principal risks of such
investments. These investment strategies and policies may be changed without
shareholder approval unless otherwise noted and apply to all of the Portfolios
unless otherwise noted.

FUTURES CONTRACTS AND OPTIONS TRANSACTIONS. The Portfolios may use futures as a
substitute for a comparable market position in the underlying securities.

A futures contract is an agreement between two parties, a buyer and a seller, to
exchange a particular commodity or financial instrument at a specific price on a
specific date in the future. An option transaction generally involves a right,
which may or may not be exercised, to buy or sell a commodity or financial
instrument at a particular price on a specified future date. Futures contracts
and options are standardized and traded on exchanges, where the exchange serves
as the ultimate counterparty for all contracts. Consequently, the primary credit
risk on futures contracts is the creditworthiness of the exchange. Futures
contracts are subject to market risk (i.e., exposure to adverse price changes).

<PAGE>

Upon exercise of an option on a futures contract, the writer of the option
delivers to the holder of the option the futures position and the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of options on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the time of
sale, there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily and that
change would be reflected in the net asset value of the relevant Portfolio.

Although the Portfolios intend to purchase or sell futures contracts only if
there is an active market for such contracts, no assurance can be given that a
liquid market will exist for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting these
Portfolios to substantial losses. If it is not possible, or if a Portfolio
determines not to close a futures position in anticipation of adverse price
movements, the Portfolio will be required to make daily cash payments on
variation margin.

The Portfolios may invest in stock index futures and options on stock index
futures as a substitute for a comparable market position in the underlying
securities. A stock index future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the index is
made. With respect to stock indices that are permitted investments, the
Portfolios intend to purchase and sell futures contracts on the stock index for
which it can obtain the best price with consideration also given to liquidity.
There can be no assurance that a liquid market will exist at the time when a
Portfolio seeks to close out a futures contract or a futures option position.
Lack of a liquid market may prevent liquidation of an unfavorable position.

The Portfolios' futures transactions must constitute permissible transactions
pursuant to regulations promulgated by the Commodity Futures Trading Commission
("CFTC"). In addition, these Portfolio may not engage in futures transactions if
the sum of the amount of initial margin deposits and premiums paid for unexpired
options on futures contracts, other than those contracts entered into for bona
fide hedging purposes, would exceed 5% of the liquidation value of these
Portfolios' assets, after taking into account unrealized profits and unrealized
losses on such contracts; provided, however, that in the case of an option on a
futures contract that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in calculating the 5% liquidation limit. Pursuant to
regulations

2
<PAGE>

and/or published positions of the Securities and Exchange Commission ("SEC"),
the Portfolios may be required to designate cash or liquid securities in
connection with its futures transactions in an amount generally equal to the
entire value of the underlying security.

FUTURE DEVELOPMENTS. The Portfolios may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and any
other derivative investments which are not presently contemplated for use by
such Portfolio or which are not currently available but which may be developed,
to the extent such opportunities are both consistent with the respective
Portfolio's investment objective and legally permissible for that Portfolio.
Before entering into such transactions or making any such investment, the Index
Funds will provide appropriate disclosure in their prospectus.

FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS.
The Portfolios may purchase or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment basis
involve a risk of loss if the value of the security to be purchased declines, or
the value of the security to be sold increases, before the settlement date.
Although the Portfolios will generally purchase securities with the intention of
acquiring them, the Portfolios may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the Portfolio's investment advisor.

When-issued securities are subject to market fluctuation, and no income accrues
to the purchaser during the period before the securities are paid for and
delivered on the settlement date. The purchase price and the interest rate that
will be received on debt securities are fixed at the time the purchaser enters
into the commitment.

Securities purchased on a when-issued or forward commitment basis may expose the
Portfolios to risk because they may experience fluctuations in value prior to
their actual delivery. Purchasing a security on a when-issued basis can involve
a risk that the market price at the time of delivery may be lower than the
agreed-upon purchase price, in which case there could be an unrealized loss at
the time of delivery. None of the Portfolios currently intend on investing more
than 5% of its assets in when-issued securities during the coming year. Each of
the Portfolios will designate cash or liquid securities in an amount at least
equal in value to that Portfolio's commitments to purchase when-issued
securities. If the value of these assets declines, that Portfolio will designate
additional liquid assets on a daily basis so that the value of the assets in the
account is equal to the amount of such commitments.

BANK OBLIGATIONS. The Portfolios may invest in bank obligations, including
certificates of deposit, time deposits, banker's acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions.

3
<PAGE>

Certificates of deposit are negotiable certificates evidencing the obligation of
a bank to repay funds deposited with it for a specified period of time. Time
deposits are non-negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. Time deposits which may be
held by the Portfolios will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Banker's acceptances are credit instruments
evidencing the obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and of the drawer to
pay the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations, bearing fixed, floating-
or variable-interest rates.

Investments in foreign obligations involve certain considerations that are not
typically associated with investing in domestic obligations. There may be less
publicly available information about a foreign issuer than about a domestic
issuer. Foreign issuers also are not generally subject to uniform accounting,
auditing and financial reporting standards or governmental supervision
comparable to those applicable to domestic issuers. In addition, with respect to
certain foreign countries, taxes may be withheld at the source under foreign
income tax laws, and there is a possibility of expropriation or confiscatory
taxation, political or social instability or diplomatic developments that could
adversely affect investments in, the liquidity of, and the ability to enforce
contractual obligations with respect to, securities of issuers located in those
countries.

Obligations of foreign banks and foreign branches of U.S. banks involve somewhat
different investment risks from those affecting obligations of U.S. banks,
including the possibilities that liquidity could be impaired because of future
political and economic developments; the obligations may be less marketable than
comparable obligations of U.S. banks; a foreign jurisdiction might impose
withholding taxes on interest income payable on those obligations; foreign
deposits may be seized or nationalized; foreign governmental restrictions (such
as foreign exchange controls) may be adopted which might adversely affect the
payment of principal and interest on those obligations; and the selection of
those obligations may be more difficult because there may be less publicly
available information concerning foreign banks. In addition, the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to U.S. banks. In
that connection, foreign banks are not subject to examination by an U.S.
Government agency or instrumentality.

COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT INSTRUMENTS. The Portfolios may
invest in commercial paper (including variable amount master demand notes),
which consists of short-term, unsecured promissory notes issued by corporations
to finance short-term credit needs. Commercial paper is usually sold on a
discount basis and has a maturity at the time of issuance not exceeding nine
months. Variable amount master demand notes are demand obligations that permit
the investment of fluctuating amounts at varying market rates of interest
pursuant to arrangements between the issuer and a commercial bank acting as
agent for the payee of such notes whereby both parties have the right to vary
the amount of the outstanding indebtedness on the notes. The investment

4
<PAGE>

adviser to the Portfolios monitors on an ongoing basis the ability of an issuer
of a demand instrument to pay principal and interest on demand.

The Portfolios also may invest in non-convertible corporate debt securities
(e.g., bonds and debentures) with not more than one year remaining to maturity
at the date of settlement. The Portfolios will invest only in such corporate
bonds and debentures that are rated at the time of purchase at least "Aa" by
Moody's or "AA" by S&P. Subsequent to its purchase by a Portfolio, an issuer of
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by the Portfolio. The investment adviser to the
Portfolios will consider such an event in determining whether a Portfolio should
continue to hold the obligation. To the extent a Portfolio continues to hold
such obligations, it may be subject to additional risk of default.

To the extent the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, the Portfolios will
attempt to use comparable ratings as standards for investments in accordance
with the investment policies contained in its Prospectus and in this SAI. The
ratings of Moody's and S&P and other nationally recognized statistical rating
organizations are more fully described in the attached Appendix.

REPURCHASE AGREEMENTS. All of the Portfolios may enter into a repurchase
agreement wherein the seller of a security to a Portfolio agrees to repurchase
that security from the Portfolio at a mutually-agreed upon time and price. The
period of maturity is usually quite short, often overnight or a few days,
although it may extend over a number of months. Each of the Portfolios may enter
into repurchase agreements only with respect to securities that could otherwise
be purchased by the respective Portfolio, including government securities and
mortgage-related securities, regardless of their remaining maturities, and
requires that additional securities be deposited with the custodian if the value
of the securities purchased should decrease below the repurchase price.

The Portfolios may incur a loss on a repurchase transaction if the seller
defaults and the value of the underlying collateral declines or is otherwise
limited or if receipt of the security or collateral is delayed. The Portfolio's
custodian has custody of, and holds in segregated accounts, securities acquired
as collateral by each of the Portfolios under a repurchase agreement. Repurchase
agreements are considered loans by the Portfolios. All repurchase transactions
must be 100% collateralized.

In an attempt to reduce the risk of incurring a loss on a repurchase agreement,
the Portfolios limit investments in repurchase agreements to selected
creditworthy securities dealers or domestic banks or other recognized financial
institutions. The Portfolio's advisor monitors on an ongoing basis the value of
the collateral to assure that it always equals or exceeds the repurchase price.

FLOATING- AND VARIABLE- RATE OBLIGATIONS. All of the Portfolios may purchase
floating-rate and variable-rate obligations as described in the Prospectus. The
Portfolios may purchase debt instruments with interest rates that are
periodically adjusted at specified

5
<PAGE>

intervals or whenever a benchmark rate or index changes. These adjustments
generally limit the increase or decrease in the amount of interest received on
the debt instruments. The Portfolios may purchase floating- and variable-rate
demand notes and bonds, which are obligations ordinarily having stated
maturities in excess of thirteen months, but which permit the holder to demand
payment of principal at any time, or at specified intervals not exceeding
thirteen months. Variable-rate demand notes include master demand notes that are
obligations that permit a Portfolio to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the
Portfolio, as lender, and the borrower.

Floating- and variable-rate instruments are subject to interest-rate risk and
credit risk. The issuer of such obligations ordinarily has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of day's notice to the holders of such obligations. The interest rate on
a floating-rate demand obligation is based on a known leading rate, such as a
bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable-rate demand obligation is adjusted
automatically at specified intervals. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks.
Because these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be traded,
and there generally is no established secondary market for these obligations,
although they are redeemable at face value. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements, the
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated by
credit rating agencies and the Portfolios may invest in obligations which are
not so rated only if BGFA determines that at the time of investment the
obligations are of comparable quality to the other obligations in which that
Portfolio may invest. BGFA, on behalf of the Portfolios, considers on an ongoing
basis the creditworthiness of the issuers of the floating- and variable-rate
demand obligations in the Portfolios' portfolio. None of the Portfolios will
invest more than 10% of the value of its total net assets in floating- or
variable-rate demand obligations whose demand feature is not exercisable within
seven days. Such obligations may be treated as liquid, provided that an active
secondary market exists.

LOANS OF PORTFOLIO SECURITIES. The Portfolios may lend securities from their
portfolios to brokers, dealers and financial institutions (but not individuals)
in order to increase the return on their portfolios. The value of the loaned
securities may not exceed one-third of the respective Portfolio's total assets
and loans of portfolio securities are fully collateralized based on values that
are marked-to-market daily. Neither of these Portfolios will enter into any
portfolio security lending arrangement having a duration of longer than one
year. The principal risk of portfolio lending is potential default or insolvency
of the borrower. In either of these cases, a Portfolio could experience delays
in recovering securities or collateral or could lose all or part of the value of
the loaned securities. The Portfolios may pay reasonable administrative and
custodial fees in

6
<PAGE>

connection with loans of portfolio securities and may pay a portion of the
interest or fee earned thereon to the borrower or a placing broker.

In determining whether to lend a security to a particular broker, dealer or
financial institution, the Portfolio's investment adviser considers all relevant
facts and circumstances, including the size, creditworthiness and reputation of
the broker, dealer, or financial institution. Any loans of portfolio securities
are fully collateralized and marked to market daily. The Portfolios will not
enter into any portfolio security lending arrangement having a duration of
longer than one year. Any securities that a Portfolio may receive as collateral
will not become part of the Portfolio's investment portfolio at the time of the
loan and, in the event of a default by the borrower, the Portfolio will, if
permitted by law, dispose of such collateral except for such part thereof that
is a security in which the Portfolio is permitted to invest. During the time
securities are on loan, the borrower will pay the Portfolio any accrued income
on those securities, and the Portfolio may invest the cash collateral and earn
income or receive an agreed upon fee from a borrower that has delivered
cash-equivalent collateral.

INVESTMENT COMPANY SECURITIES. The Portfolios may invest in securities issued by
other open-end management investment companies which principally invest in
securities of the type in which such Portfolio invests. Under the 1940 Act, a
Portfolio's investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of that Portfolio's net assets with respect to any one
investment company and (iii) 10% of that Portfolio's net assets in the
aggregate. Investments in the securities of other investment companies generally
will involve duplication of advisory fees and certain other expenses. These
Portfolios may also purchase shares of exchange-listed closed-end funds.

ILLIQUID SECURITIES. To the extent that such investments are consistent with its
respective investment objective, the Portfolios may invest up to 15% of the
value of their respective net assets in securities as to which a liquid trading
market does not exist. Such securities may include securities that are not
readily marketable, such as privately issued securities and other securities
that are subject to legal or contractual restrictions on resale, floating- and
variable-rate demand obligations as to which that Portfolio cannot exercise a
demand feature on not more than seven day's notice and as to which there is no
secondary market and repurchase agreements providing for settlement more than
seven days after notice.

FOREIGN SECURITIES. The EAFE-Registered Trademark- Portfolio emphasizes the
stocks of foreign issuers. In addition, the stocks of some foreign issuers may
be included in the other Portfolios, as well as American Depositary Receipts and
similar instruments, which may subject the Portfolios to additional investment
risks with respect to those securities that are different in some respects from
those incurred by a fund which invests only in securities of domestic issuers.
These risks include possible adverse political and economic developments,
seizure or nationalization of foreign deposits or adoption of governmental
restrictions which might adversely affect the value of the securities of a
foreign issuer to investors located outside the country of the issuer, whether
from currency blockage or otherwise. These securities may not necessarily be
denominated in the same currency as

7
<PAGE>

the securities into which they may be converted. ADRs (sponsored or unsponsored)
are receipts typically issued by a U.S. bank or trust company and traded on a
U.S. Stock Exchange, that evidence ownership of underlying foreign securities.
Issuers of unsponsored ADRs are not contractually obligated to disclose material
information in the U.S. and, therefore, such information may not correlate to
the market value of the unsponsored ADR.

OBLIGATIONS OF FOREIGN GOVERNMENTS, BANKS AND CORPORATIONS. The Portfolios may
invest in U.S. dollar-denominated short-term obligations issued or guaranteed by
one or more foreign governments or any of their political subdivisions, agencies
or instrumentalities that are determined by their investment advisor to be of
comparable quality to the other obligations in which these Portfolios may
invest. To the extent that such investments are consistent with its investment
objective, each of the Portfolios may also invest in debt obligations of
supranational entities. Supranational entities include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and international banking institutions
and related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.
The percentage of these Portfolios' assets invested in obligations of foreign
governments and supranational entities will vary depending on the relative
yields of such securities, the economic and financial markets of the countries
in which the investments are made and the interest rate climate of such
countries.

Each Portfolio may also invest a portion of its total assets in high quality,
short-term (one year or less) debt obligations of foreign branches of U.S. banks
or U.S. branches of foreign banks that are denominated in and pay interest in
U.S. dollars.

U.S. GOVERNMENT OBLIGATIONS. The Portfolios may invest in various types of U.S.
Government obligations. U.S. Government obligations include securities issued or
guaranteed as to principal and interest by the U.S. Government and supported by
the full faith and credit of the U.S. Treasury. U.S. Treasury obligations differ
mainly in the length of their maturity. Treasury bills, the most frequently
issued marketable government securities, have a maturity of up to one year and
are issued on a discount basis. U.S. Government obligations also include
securities issued or guaranteed by federal agencies or instrumentalities,
including government-sponsored enterprises. Some obligations of such agencies or
instrumentalities of the U.S. Government are supported by the full faith and
credit of the United States or U.S. Treasury guarantees. Other obligation of
such agencies or instrumentalities of the U.S. Government are supported by the
right of the issuer or guarantor to borrow from the U.S. Treasury. Others are
supported by the discretionary authority of the U.S. Government to purchase
certain obligations of the agency or instrumentality or only by the credit of
the agency or instrumentality issuing the obligation.

In the case of obligations not backed by the full faith and credit of the United
States, the investor must look principally to the agency or instrumentality
issuing or guaranteeing the

8
<PAGE>

obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government would
provide financial support to its agencies or instrumentalities (including
government-sponsored enterprises) where it is not obligated to do so. In
addition, U.S. government obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.

UNRATED, DOWNGRADED AND BELOW INVESTMENT GRADE INVESTMENTS. The Portfolios may
purchase instruments that are not rated if, in the opinion of their investment
advisor, such obligations are of investment quality comparable to other rated
investments that are permitted to be purchased by the Portfolios. After purchase
by a Portfolio, a security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event will
require a sale of such security by the Portfolio provided that when a security
ceases to be rated, the Board of Trustees for that Portfolio determines that
such security presents minimal credit risks and provided further that, when a
security is downgraded below the eligible quality for investment or no longer
presents minimal credit risks, the Board of Trustees finds that the sale of such
security would not be in that Portfolio's best interests. In no event will such
securities exceed 5% of any Portfolio's net assets. To the extent the ratings
given by Moody's or S&P may change as a result of changes in such organizations
or their rating systems, the Portfolios will attempt to use comparable ratings
as standards for investments in accordance with the investment policies
contained in this SAI. The ratings of Moody's and S&P are more fully described
in the Appendix to this SAI.

Because the Portfolios are not required to sell downgraded securities, the
Portfolios could hold up to 5% of each of their net assets in debt securities
rated below "Baa" by Moody's or below "BBB" by S&P or in unrated, low quality
(below investment grade) securities. Although they may offer higher yields than
do higher rated securities, low rated, and unrated, low quality debt securities
generally involve greater volatility of price and risk of principal and income,
including the possibility of default by, or bankruptcy of, the issuers of the
securities. In addition, the markets in which low rated and unrated, low quality
debt are traded are more limited than those in which higher rated securities are
traded. The existence of limited markets for particular securities may diminish
the Portfolio's ability to sell the securities at fair value either to meet
redemption requests or to respond to changes in the economy or in the financial
markets and could adversely affect and cause fluctuations in the daily net asset
value of the Portfolio's shares.

Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of low rated or unrated, low
quality debt securities, especially in a thinly traded market. Analysis of the
creditworthiness of issuers of low rated or unrated, low quality debt securities
may be more complex than for issuers of higher rated securities, and the ability
of a Portfolio to achieve its investment objective may, to the extent such
Portfolio holds low rated or unrated low quality debt securities, be

9
<PAGE>

more dependent upon such creditworthiness analysis than would be the case if
that Portfolio held exclusively higher rated or higher quality securities.

Low rated or unrated low quality debt securities may be more susceptible to real
or perceived adverse economic and competitive industry conditions than
investment grade securities. The prices of such debt securities have been found
to be less sensitive to interest rate changes than higher rated or higher
quality investments, but more sensitive to adverse economic downturns or
individual corporate developments. A projection of an economic downturn or of a
period of rising interest rates, for example, could cause a decline in low rated
or unrated, low quality debt securities prices because the advent of a recession
could dramatically lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the issuer of the
debt securities defaults, a Portfolio may incur additional expenses to seek
recovery.

FUND POLICIES

FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS

The following are the Funds' fundamental investment restrictions which, along
with the Funds' investment objectives, cannot be changed without shareholder
approval which would require a vote of a majority of the outstanding shares of
the applicable Fund, as set forth in the 1940 Act.

Unless noted otherwise, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in a Fund's assets (I.E., due to cash inflows or redemptions) or in market value
of the investment or the Fund's assets will not constitute a violation of that
restriction.

Unless indicated otherwise below, each of the Funds may not:

1. invest more than 5% of its assets in the obligations of any single issuer,
except that up to 25% of the value of its total assets may be invested, and
securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such limitation (does
not apply to the e-Commerce Fund);

2. with respect to 75% of its total assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time of
such investment) of the outstanding voting securities of any one issuer (does
not apply to the e-Commerce Fund);

3. issue senior securities, except as permitted under the 1940 Act;

4. borrow money, except to the extent permitted under the 1940 Act, provided
that each Fund may borrow up to 20% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and these borrowings may
be secured by the pledge of up to 20% of the current value of its net assets
(but investments may not be purchased while any such outstanding borrowing in
excess of 5% of its net assets exists);

10
<PAGE>

5. act as an underwriter of another issuer's securities, except to the extent
that the Fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
the disposition of portfolio securities;

6. purchase the securities of any issuer if, as a result, more than 25% of the
Fund's total assets (taken at market value at the time of such investment) would
be invested in the securities of issuers in any particular industry, provided,
however, that (i) this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities (or
repurchase agreements thereto), and (ii) the Funds will concentrate in
obligations to the same degree that their respective Indexes concentrate in
those obligations during the same period (does not apply to the e-Commerce
Fund);

7. purchase or sell real estate, although it may purchase securities secured
by real estate or interests therein, or securities issued by companies which
invest in real estate, or interests therein;

8. invest in commodities. This restriction shall not prohibit the Funds,
subject to restrictions described in the Prospectus and elsewhere in this
Statement of Additional Information, from purchasing, selling or entering into
futures contracts, options on futures contracts and other derivative
instruments, subject to compliance with any applicable provisions of the federal
securities or commodities laws;

9. lend any funds or other assets, except that the Funds may, consistent with
its investment objective and policies: (a) invest in certain short-term or
temporary debt obligations, even though the purchase of such obligations may be
deemed to be the making of loans, (b) enter into repurchase agreements, and (c)
lend its portfolio securities in an amount not to exceed 33 1/3% of the Fund's
total assets, provided such loans are made in accordance with applicable
guidelines established by the SEC and the Trustees of the Funds.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS

The following are the Funds' non-fundamental operating restrictions, which may
be changed by the Funds' Board of Trustees without shareholder approval.

1. The Funds may invest in shares of other open-end management investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act. Under
the 1940 Act, a Fund's investment in such securities currently is limited,
subject to certain exceptions, to (i) 3% of the total voting stock of any one
investment company; (ii) 5% of such Fund's net assets with respect to any one
investment company; and (iii) 10% of such Fund's net assets in the aggregate.
Other investment companies in which the Funds invest can be expected to charge
fees for operating expenses, such as investment advisory and administration fees
that would be in additions to those charged by the Fund.

11
<PAGE>

2. Each Fund may not invest more than 15% of its net assets in illiquid
securities. For this purpose, illiquid securities include, among others, (a)
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (b) fixed time deposits
that are subject to withdrawal penalties an that have maturities of more than
seven days, and (c) repurchase agreements not terminable within seven days.

3. Each Fund may lend securities from its portfolio to brokers, dealers,
financial institutions, in amounts not to exceed (in the aggregate) one-third of
a Fund's total assets. Any such loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Funds will
not enter into any portfolio security lending arrangement having a duration of
longer than one year.

12
<PAGE>

PORTFOLIO POLICIES

THE PORTFOLIOS: FUNDAMENTAL INVESTMENT RESTRICTIONS

The Portfolios are subject to the following fundamental investment restrictions
which cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of these Portfolio's outstanding voting securities. If
a percentage restriction is adhered to at the time of investment, a later change
in percentage resulting from a change in values or assets will not constitute a
violation of such restriction.

Each Portfolio may not:

1. invest more than 5% of its assets in the obligations of any single issuer,
except that up to 25% of the value of its total assets may be invested, and
securities issued or guaranteed by the U.S. government, or its agencies or
instrumentalities may be purchased, without regard to any such limitation;

2. hold more than 10% of the outstanding voting securities of any single
issuer. This investment restriction applies only with respect to 75% of each
Portfolio's total assets;

3. invest in commodities, except that each Portfolio may purchase and sell
(I.E., write) options, forward contracts, futures contracts, including those
relating to indexes, and options on futures contracts or indexes;

4. purchase, hold or deal in real estate, or oil, gas or other mineral leases
or exploration or development programs, but each Portfolio may purchase and sell
securities that are secured by real estate or issued by companies that invest or
deal in real estate;

5. borrow money, except to the extent permitted under the 1940 Act, provided
that the Portfolio may borrow from banks up to 20% of the current value of its
net assets (but investments may not be purchased while any such outstanding
borrowing in excess of 5% of its net assets exists). For purposes of this
investment restriction, a Portfolio's entry into options, forward contracts,
futures contracts, including those relating to indexes, and options on futures
contracts or indexes shall not constitute borrowing to the extent certain
segregated accounts are established and maintained by such Portfolio;

6. make loans to others, except through the purchase of debt obligations and
the entry into repurchase agreements. However, each Portfolio may lend its
portfolio securities in an amount not to exceed one-third of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the SEC and the Portfolios' Board of Trustees;

7. act as an underwriter of securities of other issuers, except to the extent
that the Portfolio may be deemed an underwriter under the Securities Act by
virtue of disposing of portfolio securities;

13
<PAGE>

8. invest 25% or more of its total assets in the securities of issuers in any
particular industry or group of closely related industries, except that there
shall be no limitation with respect to investments in (i) obligations of the
U.S. Government, its agencies or instrumentalities; and (ii) any industry in
which the corresponding Portfolio Index becomes concentrated to the same degree
during the same period;

9. issue any senior security (as such term is defined in Section 18(f) of the
1940 Act), except to the extent the activities permitted in such Portfolio's
Fundamental Investment Restrictions Nos. 3 and 5 may be deemed to give rise to a
senior security; and

10. purchase securities on margin, but each Portfolio may make margin deposits
in connection with transactions in options, forward contracts, futures
contracts, including those related to indexes, and options on futures contracts
or indexes.

THE PORTFOLIOS: NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

The Portfolios are subject to the following non-fundamental operating policies
which may be changed by the Board of Trustees of these Portfolios without the
approval of the holders of such Portfolio's outstanding securities.

1. The Portfolios may invest in shares of other open-end management investment
companies, subject to the limitations of Section 12(d)(1) of the 1940 Act. Under
the 1940 Act, a Portfolio's investment in such securities currently is limited,
subject to certain exceptions, to (i) 3% of the total voting stock of any one
investment company; (ii) 5% of such Portfolio's net assets with respect to any
one investment company; and (iii) 10% of such Portfolio's net assets in the
aggregate. Other investment companies in which the Portfolios invest can be
expected to charge fees for operating expenses, such as investment advisory and
administration fees that would be in additions to those charged by the
Portfolio.

2. Each Portfolio may not invest more than 15% of its net assets in illiquid
securities. For this purpose, illiquid securities include, among others, (a)
securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (b) fixed time deposits
that are subject to withdrawal penalties an that have maturities of more than
seven days, and (c) repurchase agreements not terminable within seven days.

3. Each Portfolio may lend securities from its portfolio to brokers, dealers,
financial institutions, in amounts not to exceed (in the aggregate) one-third of
a Portfolio's total assets. Any such loans of portfolio securities will be fully
collateralized based on values that are marked to market daily. The Portfolios
will not enter into any portfolio security lending arrangement having a duration
of longer than one year.

14
<PAGE>

TRUSTEES AND OFFICERS

The Trust's Board of Trustees has the responsibility for the overall management
of the Funds, including general supervision and review of its investment
activities and the conformity with Delaware law and the stated policies of the
Funds. The Board of Trustees elects the officers of the Trust who are
responsible for administering the Funds' day-to-day operations. Trustees and
officers of the Funds, together with information as to their principal business
occupations during the last five years, and other information are shown below.
Each "interested or affiliated person," as defined in the 1940 Act, is indicated
by an asterisk (*):

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name, Address, and Age Position(s) Held with the Fund Principal Occupation(s) During the Past 5
Years

- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nicole E. Faucher Trustee President, Nicole E Faucher & Associates
(Internet company) (1998-present); formerly,
President, R.V. Kohn's & Associates
(investment consulting) (1996-98); Managing
Director, Western Region, SEI Capital
Resources (investment consulting) (1993-96)

Kevin T. Hamilton Trustee Principal and Portfolio Manager, Messner &
Smith Investment Management Limited
(1998-present); formerly, Executive Vice
President, Montgomery Asset Management, LLC
(1991-98).

Elon R. Musk* Trustee, Director, President, and Treasurer, X.com
Chairman of the Board of Trustees Asset Management, Inc. (1999-present);
Chairman and Chief Executive Officer, X.com
(1999-present); Executive Vice President and
Principal Founder, Zip2 Corp. (1995-99);
Teaching Assistant, Business Education,
Wharton School of Business, University of
Pennsylvania (1994-95)

15
<PAGE>

Gregory N. River Trustee Founder, Owner, and President, Paladin
Consulting Company (1996-present);
Consultant (investment services),
Self-Employed (1994-96).

John T. Story* Trustee; President Executive Vice President, X.com,
(1999-present); President, John T. Story &
Associates (mutual fund consulting)
(1998-99); Executive Vice President,
Montgomery Asset Management (1994-1998).
</TABLE>

*Each of Mr. Musk and Mr. Story is an "interested person" of the Trust (as that
term is defined in the 1940 Act) because of his affiliations with the Fund.

The Trust pays each non-affiliated Trustee a quarterly fee of $500 per Board
meeting for the Funds. In addition, the Trust reimburses each of the
non-affiliated Trustee for travel and other expenses incurred in connection with
attendance at such meetings. Other officers and Trustees of the Trust receive no
compensation or expense reimbursement. The following table provides an estimate
of each Trustee's compensation for the current fiscal year:

16
<PAGE>

ESTIMATED COMPENSATION TABLE

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Total Compensation From
Name of Person, Position Aggregate Compensation from Funds and Trust Expected to
the Funds be Paid to Trustees (1)

- --------------------------------------------------------------------------------------------
<S> <C> <C>
Nicole E. Faucher $2,000 $2,000

Kevin T. Hamilton $2,000 $2,000

Gregory N. River $2,000 $2,000
</TABLE>

No Trustee will receive any benefits upon retirement. Thus, no pension
or retirement benefits have accrued as part of the Funds' expenses.

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

(1) This amount represents the estimated aggregate amount of compensation paid
to each non-affiliated Trustee for service on the Board of Trustees for the
fiscal year ending December 31, 1999.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

A shareholder that owns 25% or more of any Funds' voting securities is in
control of that Fund on matters submitted to a vote of shareholders. Upon
commencement of operations and shortly after, X.com Asset Management, Inc., the
Funds' investment adviser, will own 100% of the Funds' outstanding shares. There
are no other shareholders holding 25% or more.

INVESTMENT MANAGEMENT

INVESTMENT ADVISERS. Under an Investment Advisory Agreement ("Investment
Advisory Agreement") with the Trust, X.com Asset Management, Inc. ("Investment
Adviser") provides investment advisory services to the Funds. The Investment
Adviser is a wholly owned subsidiary of X.com Corporation, a Delaware
corporation.

Subject to general supervision of the Trust's Board of Trustees and in
accordance with the investment objective, policies and restrictions of each of
the Funds, the Investment Adviser provides the Funds with ongoing investment
guidance, policy direction and monitoring of each of the Portfolios. The
Investment Adviser may in the future manage cash and money market instruments
for cash flow purposes. The Investment Adviser also provides or arranges for
administration, transfer agency, custody and all other services necessary for
the Funds to operate. The Investment Adviser has only limited experience
managing mutual funds beginning in November 1999.

17
<PAGE>

Each Fund pays the Investment Adviser an investment advisory fee at the rate
specified in the table below. In addition, the Investment Adviser has entered
into an expense limitation and reimbursement agreement with the Trust, under
which the Investment Adviser will waive all investment advisory fees payable to
it by each Fund over the limits shown in the table below:

<TABLE>
<CAPTION>
Investment Advisory Contractual Expense
Fund Fee Limitation
- ---- --- ----------
<S> <C> <C>
Classic S&P Fund 0.11% 0.16%

Protected S&P Fund % %

Super U.S. Index Fund 0.30% 0.40%

Small Cap Index Fund 0.26% 0.40%

International Index Fund 0.35% 0.60%

e-Commerce Fund 1.00% 1.00%
</TABLE>

THE PORTFOLIOS' INVESTMENT ADVISER. The Portfolios' (other than the Russell
2000 Portfolio) investment adviser is Barclays Global Fund Advisors ("BGFA").
BGFA is a direct subsidiary of Barclays Global Investors, N.A. (which, in
turn, is an indirect subsidiary of Barclays Bank PLC ("Barclays")) and is
located at 45 Fremont Street, San Francisco, California 94105. BFGA has
provided assets management, administration and advisory services for over 25
years. As of December 31, 1999, BGFA and its affiliates provided investment
advisory services for over $____ billion of assets. Barclays Bank PLC has
been involved in banking in the United Kingdom for over 300 years. Pursuant
to an Investment Advisory Contract dated January 1, 1996 (the "Advisory
Contract") with the Portfolios, BGFA provides investment guidance and policy
direction in connection with the management of the Portfolio's assets.
Pursuant to the Advisory Contract, BGFA furnishes to the Portfolio's Board of
Trustees periodic reports on the investment strategy and performance of the
Portfolios. BGFA receives fees from the S&P 500 Portfolio, the Wilshire 4500
Portfolio and the EAFE -Registered Trademark- Portfolio at an annual rate
equal to 0.05%, 0.10% and 0.25%, respectively, of the Portfolio's average
daily net assets. This advisory fee is an expense of each Portfolio borne
proportionately by its interestholders, including each of the respective
Funds.

BGFA has agreed to provide to each Portfolio, among other things, research,
analysis and statistical and economic data and information concerning interest
rate and security market trends, portfolio composition, credit conditions and
average maturities of each Portfolio's investment portfolio.

18
<PAGE>

The Advisory Contract will continue in effect for each Portfolio provided the
continuance is approved annually (i) by the holders of a majority of the
applicable Portfolio's outstanding voting securities or by the applicable
Portfolio's Board of Trustees and (ii) by a majority of the Trustees of the
applicable Portfolio who are not parties to the Advisory Contract or affiliated
with any such party. The Advisory Contract may be terminated on 60 days' written
notice by either party and will terminate automatically if assigned.

Asset allocation and modeling strategies are employed by BGFA for other
investment companies and accounts advised or sub-advised by BGFA. If these
strategies indicate particular securities should be purchased or sold at the
same time by a Portfolio and one or more of these investment companies or
accounts, available investments or opportunities for sales will be allocated
equitably to each by BGFA. In some cases, these procedures may adversely affect
the size of the position obtained for or disposed of by a Portfolio or the price
paid or received by a Portfolio.

THE SMALL CAP PORTFOLIOS' INVESTMENT ADVISER.

The Russell 2000 Portfolio's investment adviser is __________ ("__________").
[Background.] As of December 31, 1999, __________ provided investment advisory
services for over $___ billion of assets.

Pursuant to an Investment Advisory Contract dated __________, 19__ (the
"Advisory Contract") with the Russell 2000 Portfolio, _______ provides
investment guidance and policy direction in connection with the management of
the Portfolio's assets. Pursuant to the Advisory Contract, _______ furnishes to
the Portfolio's Board of Trustees periodic reports on the investment strategy
and performance of the Portfolio. _______ receives fees from the Russell 2000
Portfolio at an annual rate equal to ____% of the Portfolio's average daily net
assets. This advisory fee is an expense of the Portfolio borne proportionately
by its interestholders, including the Small Cap Index Fund.

_______ has agreed to provide to the Russell 20000 Portfolio, among other
things, research, analysis and statistical and economic data and information
concerning interest rate and security market trends, portfolio composition,
credit conditions and average maturities of the Portfolio's investment
portfolio.

The Advisory Contract will continue in effect for the Portfolio provided the
continuance is approved annually (i) by the holders of a majority of the
Portfolio's outstanding voting securities or by the Portfolio's Board of
Trustees and (ii) by a majority of the Trustees of the Portfolio who are not
parties to the Advisory Contract or affiliated of any such party. The Advisory
Contract may be terminated on 60 days' written notice by either party and will
terminate automatically if assigned.

Asset allocation and modeling strategies are employed by _______ for other
investment companies and accounts advised or sub-advised by _______. If these
strategies indicate particular securities should be purchased or sold at the
same time by the Portfolio and one or more of these investment companies or
accounts, available investments or

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<PAGE>

opportunities for sales will be allocated equitably to each by _______. In some
cases, these procedures may adversely affect the size of the position obtained
for or disposed of by the Portfolio or the price paid or received by the
Portfolio.

THE e-COMMERCE FUND'S SUBADVISER. The Investment Adviser's Investment Advisory
Agreement authorizes the Investment Adviser, at its option and at its sole
expense, to appoint a subadviser, which may assume all or a portion of the
responsibilities and obligations of the Investment Adviser pursuant to the
Investment Advisory Agreement as shall be delegated to the subadviser. Any
appointment of a subadviser and assumption of responsibilities and obligations
of the Investment Adviser by such subadviser is subject to approval by the Board
of Trustees and, as required by law, the shareholders of the affected Fund.

Pursuant to this authority, the Investment Adviser has retained a subadviser
only for the e-Commerce Fund, __________ (the "Subadviser").

The current Subadvisory Agreement between the Investment Adviser and the
Subadviser (the "Subadvisory Agreement") provides that the Subadviser agrees to
manage the investment of the Fund's assets, subject to the applicable provisions
of the Trust's Trust Instrument, Bylaws and current registration statement
(including, but not limited to, the investment objective, policies, and
restrictions delineated in the Fund's current Prospectus and Statement of
Additional Information), as interpreted from time to time by the Board of
Trustees.

For its services under the Subadvisory Agreement, the Investment Adviser (not
the Fund) has agreed to pay the Subadviser an annual fee equal to the
percentages set forth below of the value of the Fund's average net assets
allocated to the Subadviser, payable monthly:

e-Commerce Fund ___% on the first $___ million
___% on the next $___ million
___% on the next $___ million
___% on the remaining balance

The Subadvisory Agreement for the Fund continues in effect from year to year
only as long as such continuance is specifically approved at least annually by
(i) the Board of Trust of the Trust or by the vote of a majority of the
outstanding voting shares of the Fund, and (ii) by the vote of a majority of the
Trustees or the Trust who are not parties to the Subadvisory Agreement or
interested persons of the Investment Adviser or the Subadviser or the Trust. The
Subadvisory Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees of the Trust or by the vote of a majority of
the outstanding voting shares of the Fund, or by the Subadviser or the
Investment Adviser, upon 30 days' written notice to the other party.
Additionally, the Subadvisory Agreement automatically terminates if it is
assigned.

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SERVICE PROVIDERS

ADMINISTRATOR OF THE FUND. Investors Bank & Trust Company ("IBT"), 200 Clarendon
Street, Boston, MA 02111, serves as the Funds' administrator. As the Funds'
administrator, IBT provides administrative services directly or through
sub-contracting, including: (i) general supervision of the operation of the
Funds, including coordination of the services performed by the investment
adviser, transfer and dividend disbursing agent, custodian, shareholder
servicing agent, independent auditors and legal counsel; (ii) general
supervision of regulatory compliance matters, including the compilation of
information for documents such as reports to, and filings with, the SEC and
state securities commissions; and (iii) periodic reviews of management reports
and financial reporting. IBT also furnishes office space and certain facilities
required for conducting the business of the Fund. The Investment Adviser pays
IBT for all administrative services provided to the Funds.

ADMINISTRATOR OF THE PORTFOLIOS. Stephens, Inc. ("Stephens"), and Barclays
Global Investors, N.A. ("BGI") serve as co-administrators on behalf of the
Portfolios (other than the Russell 2000 Portfolio). Under the Co-Administration
Agreement between Stephens, BGI and the Portfolios, Stephens and BGI provide as
administrative services, among other things: (i) general supervision of the
operation of the Portfolios, including coordination of the services performed by
the investment adviser, transfer and dividend disbursing agent, custodian,
shareholder servicing agent(s), independent auditors and legal counsel; (ii)
general supervision of regulatory compliance matters, including the compilation
of information for documents such as reports to, and filings with, the SEC and
state securities commissions; and preparation of proxy statements and
shareholder reports for the Portfolios; and (iii) general supervision relative
to the compilation of data required for the preparation of periodic reports
distributed to the Portfolio's officers and Board of Trustees. Stephens also
furnishes office space and certain facilities required for conducting the
business of the Portfolios together with those ordinary clerical and bookkeeping
services that are not furnished by BGFA. Stephens also pays the compensation of
the Portfolio's Trustees, officers and employees who are affiliated with
Stephens. Furthermore, except as provided in the advisory contract, Stephens and
BGI bear substantially all costs of the Portfolios and the Portfolio's
operations. However, Stephens and BGI are not required to bear any cost or
expense which a majority of the non-affiliated Trustees of the Portfolios deem
to be an extraordinary expense.

CUSTODIAN AND FUND ACCOUNTING SERVICES AGENT. IBT also serves as custodian of
the assets of the Funds and the Portfolios. As a result, IBT has custody of all
securities and cash of the Funds and the Portfolios, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments, and performs other duties, all as directed by
the officers of the Funds and the Portfolios. The custodian has no
responsibility for any of the investment policies or decisions of the Funds and
the Portfolios. IBT also acts as the Funds' Accounting Services Agent. The
Investment Adviser pays IBT for all custodial services provided to the Funds.

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<PAGE>

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. X.com Asset Management, Inc., 394
University Avenue, Palo Alto, California 94301, acts as transfer agent and
dividend disbursing agent for the Funds.

FUND SHAREHOLDER SERVICING AGENT. Under a Shareholder Servicing Agreement, the
Bank acts as shareholder servicing agent for the Fund. As shareholder servicing
agent, the Bank provides personal services to the Funds' shareholders and
maintains the Funds' shareholder accounts. Such services include, (i) answering
shareholder inquiries regarding account status and history, the manner in which
purchases and redemptions of the Funds' shares may be effected, and certain
other matters pertaining to the Funds; (ii) assisting shareholders in
designating and changing dividend options, account designations and addresses;
(iii) providing necessary personnel and facilities to coordinate the
establishment and maintenance of shareholder accounts and records with the
Funds' transfer agent; (iv) transmitting shareholder's purchase and redemption
orders to the Funds' transfer agent; (v) arranging for the wiring or other
transfer of funds to and from shareholder accounts in connection with
shareholder orders to purchase or redeem shares of the Fund; (vi) verifying
purchase and redemption orders, transfers among and changes in
shareholder-designated accounts; (vii) informing the distributor of the Fund of
the gross amount of purchase and redemption orders for the Funds' shares; (viii)
provide certain printing and mailing services, such as printing and mailing of
shareholder account statements, checks, and tax forms; and (ix) providing such
other related services as the Fund or a shareholder may reasonably request, to
the extent permitted by applicable law.

INDEPENDENT AUDITORS. _______________, 99 High Street, Boston, Massachusetts,
02110, acts as independent auditors for the Fund.

LEGAL COUNSEL. Paul, Hastings, Janofsky & Walker LLP, 345 California Street, San
Francisco, California 94104, acts as legal counsel for the Trust and the Funds.

PORTFOLIO TRANSACTIONS AND BROKERAGE SELECTION

FOR THE MASTER PORTFOLIOS. The Portfolios have no obligation to deal with any
dealer or group of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Portfolios' Board of
Trustees, BGFA and _______ as investment advisers to the Portfolios (for the
relevant Portfolios, the "Master Advisers"), are responsible for the Portfolios'
investment portfolio decisions and the placing of portfolio transactions. In
placing orders, it is the policy of the Portfolios to obtain the best results
taking into account the broker/dealer's general execution and operational
facilities, the type of transaction involved and other factors such as the
broker/dealer's risk in positioning the securities involved. While the Master
Advisers generally seek reasonably competitive spreads or commissions, the
Portfolios will not necessarily be paying the lowest spread or commission
available.

Purchase and sale orders of the securities held by the Portfolios may be
combined with those of other accounts that the Master Advisers manage, and for
which they have brokerage placement authority, in the interest of seeking the
most favorable overall net

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<PAGE>

results. When a Master Adviser determines that a particular security should be
bought or sold for a Portfolio and other accounts managed by that Master Adviser
undertakes to allocate those transactions among the participants equitably.

Under the 1940 Act, persons affiliated with the Portfolios such as the Master
Advisers and their affiliates are prohibited from dealing with the Portfolios as
a principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is otherwise
available.

Except in the case of equity securities purchased by the Portfolios, purchases
and sales of securities usually will be principal transactions. Portfolio
securities normally will be purchased or sold from or to dealers serving as
market makers for the securities at a net price. The Portfolios also will
purchase portfolio securities in underwritten offerings and may purchase
securities directly from the issuer. Generally, money market securities,
adjustable rate mortgage securities ("ARMS"), municipal obligations, and
collateralized mortgage obligations ("CMOs") are traded on a net basis and do
not involve brokerage commissions. The cost of executing the Portfolio's
investment portfolio securities transactions will consist primarily of dealer
spreads and underwriting commissions.

Purchases and sales of equity securities on a securities exchange are effected
through brokers who charge a negotiated commission for their services. Orders
may be directed to any broker including, to the extent and in the manner
permitted by applicable law, affiliates of a Master Adviser. In the
over-the-counter market, securities are generally traded on a "net" basis with
dealers acting as principal for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount.

In placing orders for portfolio securities of the Portfolios, a Master
Adviser is required to give primary consideration to obtaining the most
favorable price and efficient execution. This means that a Master Adviser
seeks to execute each transaction at a price and commission, if any, that
provide the most favorable total cost or proceeds reasonably attainable in
the circumstances. While a Master Adviser generally seeks reasonably
competitive spreads or commissions, the Portfolios will not necessarily be
paying the lowest spread or commission available. In executing portfolio
transactions and selecting brokers or dealers, a Master Adviser seeks to
obtain the best overall terms available for the Portfolios. In assessing the
best overall terms available for any transaction, a Master Adviser considers
factors deemed relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability
of the broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. Rates are
established pursuant to negotiations with the broker based on the quality and
quantity of execution services provided by the broker in the light of
generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Portfolio's Board of
Trustees.

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<PAGE>

Certain of the brokers or dealers with whom the Portfolios may transact business
offer commission rebates to the Portfolios. A Master Adviser considers such
rebates in assessing the best overall terms available for any transaction. The
overall reasonableness of brokerage commissions paid is evaluated by a Master
Adviser based upon its knowledge of available information as to the general
level of commission paid by other institutional investors for comparable
services.

FOR THE e-COMMERCE FUND. In all purchases and sales of securities for the Fund,
the primary consideration is to obtain the most favorable price and execution
available. The Investment Adviser/Subadviser determines which securities are to
be purchased and sold by the Fund and which broker-dealers are eligible to
execute the Fund's portfolio transactions, subject to the instructions of, and
review by, the Funds and its Board. Purchases and sales of securities within the
U.S. other than on a securities exchange will generally be executed directly
with a "market-maker" unless, in the opinion of the Investment
Adviser/Subadviser or the Fund, a better price and execution can otherwise be
obtained by using a broker for the transaction.

Purchases of portfolio securities for the Fund also may be made directly from
issuers or from underwriters. Where possible, purchase and sale transactions
will be effected through dealers (including banks) which specialize in the types
of securities which the Funds will be holding, unless better executions are
available elsewhere. Dealers and underwriters usually act as principals for
their own account. Purchases from underwriters will include a concession paid by
the issuer to the underwriter and purchases from dealers will include the spread
between the bid and the asked price. If the execution and price offered by more
than one dealer or underwriter are comparable, the order may be allocated to a
dealer or underwriter that has provided research or other services as discussed
below.

In placing portfolio transactions, the Investment Adviser/Subadviser will use
its best efforts to choose a broker-dealer capable of providing the services
necessary generally to obtain the most favorable price and execution available.
The full range and quality of services available will be considered in making
these determinations, such as the firm's ability to execute trades in a specific
market required by the Fund, the size of the order, the difficulty of execution,
the operational facilities of the firm involved, the firm's risk in positioning
a block of securities, and other factors.

While the Fund's general policy is to seek first to obtain the most favorable
price and execution available, in selecting a broker-dealer to execute portfolio
transactions, weight may also be given to the ability of a broker-dealer to
furnish brokerage, research and statistical services to the Fund or to the
Investment Adviser/Subadviser, even if the specific services were not imputed
just to the Fund and may be lawfully and appropriately used by the Investment
Adviser/Subadviser in advising other clients. The Investment Adviser/Subadviser
considers such information, which is in addition to, and not in lieu of, the
services required to be performed by it under the Investment Advisory
Agreement/Subadvisory Agreement, to be useful in varying degrees, but of
indeterminable value. In negotiating any commissions with a broker or evaluating
the

24
<PAGE>

spread to be paid to a dealer, the Fund may therefore pay a higher commission or
spread than would be the case if no weight were given to the furnishing of these
supplemental services, provided that the amount of such commission or spread has
been determined in good faith by the Fund and the Investment Adviser/Subadviser
to be reasonable in relation to the value of the brokerage and/or research
services provided by such broker-dealer, which services either produce a direct
benefit to the Fund or assist the Investment Adviser/Subadviser in carrying out
its responsibilities to the Fund. The standard of reasonableness is to be
measured in light of the Investment Adviser/Subadviser's overall
responsibilities to the Fund. The Board reviews all brokerage allocations where
services other than best price and execution capabilities are a factor to ensure
that the other services provided meet the criteria outlined above and produce a
benefit to the Fund.

Investment decisions for the Fund are made independently from those of other
client accounts of the Investment Adviser/Subadviser or its affiliates, and
suitability is always a paramount consideration. Nevertheless, it is possible
that at times the same securities will be acceptable for the Fund and for one or
more of such client accounts. The Investment Adviser/Subadviser and its
personnel may have interests in one or more of those client accounts, either
through direct investment or because of management fees based on gains in the
account. The Investment Adviser/Subadviser has adopted allocation procedures to
ensure the fair allocation of securities and prices between the Fund and the
Investment Adviser/Subadviser's various other accounts. These procedures
emphasize the desirability of bunching trades and price averaging (see below) to
achieve objective fairness among clients advised by the same portfolio manager
or portfolio team. Where trades cannot be bunched, the procedures specify
alternatives designed to ensure that buy and sell opportunities are allocated
fairly and that, over time, all clients are treated equitably. The Investment
Adviser/Subadviser's trade allocation procedures also seek to ensure reasonable
efficiency in client transactions, and they provide portfolio managers with
reasonable flexibility to use allocation methodologies that are appropriate to
their investment discipline on client accounts.

To the extent any of the Investment Adviser/Subadviser's client accounts and the
Fund seek to acquire the same security at the same general time (especially if
that security is thinly traded or is a small-cap stock), that Fund may not be
able to acquire as large a portion of such security as it desires, or it may
have to pay a higher price or obtain a lower yield for such security. Similarly,
the Fund may not be able to obtain as high a price for, or as large an execution
of, an order to sell any particular security at the same time. If one or more of
such client accounts simultaneously purchases or sells the same security that
the Fund is purchasing or selling, each day's transactions in such security
generally will be allocated between the Fund and all such client accounts in a
manner deemed equitable by the Investment Adviser/Subadviser, taking into
account the respective sizes of the accounts, the amount being purchased or sold
and other factors deemed relevant by the Investment Adviser/Subadviser. In many
cases, the Fund's transactions are bunched with the transactions for other
client accounts. It is recognized that in some cases this system could have a
detrimental effect on the price or value of the security insofar as the Fund is
concerned. In other cases, however, it is believed that the ability of the Fund
to participate in volume transactions may produce better executions for the
Fund.

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<PAGE>

Investment Adviser/Subadviser's sell discipline for investments in issuers is
based on the premise of a long-term investment horizon; however, sudden changes
in valuation levels arising from, for example, new macroeconomic policies,
political developments, and industry conditions could change the assumed time
horizon. Liquidity, volatility, and overall risk of a position are other factors
considered by the Investment Adviser/Subadviser in determining the appropriate
investment horizon.

At the company level, sell decisions are influenced by a number of factors
including current stock valuation relative to the estimated fair value range, or
a high P/E relative to expected growth. Negative changes in the relevant
industry sector, or a reduction in international competitiveness and a declining
financial flexibility may also signal a sell.

The Fund does not direct brokerage or effect securities transactions through
brokers in accordance with any formula, nor does it effect securities
transactions through such brokers solely for selling shares of the Funds.

ORGANIZATION, DIVIDEND AND VOTING RIGHTS

The Funds are diversified series of X.com Funds (the "Trust"), an open-end
investment company, organized as a Delaware business trust on June 7, 1999. The
Trust may issue additional series and classes.

All shareholders may vote on each matter presented to shareholders. Fractional
shares have the same rights proportionately as do full shares. Shares of the
Trust have no preemptive, conversion, or subscription rights. If the Trust
issues additional series, each series of shares will be held separately by the
custodian, and in effect each series will be a separate fund.

All shares of the Trust have equal voting rights. Approval by the shareholders
of a Fund is effective as to that Fund whether or not sufficient votes are
received from the shareholders of the other investment portfolios to approve the
proposal as to those investment portfolios.

Generally, the Trust will not hold an annual meeting of shareholders unless
required by the 1940 Act. The Trust will hold a special meeting of its
shareholders for the purpose of voting on the question of removal of a Trustee
or Trustees if requested in writing by the holders of at least 10% of the
Trust's outstanding voting securities, and to assist in communicating with other
shareholders as required by Section 16(c) of the 1940 Act.

Each share of the Funds represents an equal proportional interest in that Fund
and is entitled to such dividends and distributions out of the income earned on
the assets belonging to that Fund as are declared in the discretion of the
Trustees. In the event of the liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets attributable to that
Fund that are available for distribution, and a distribution of any general
assets not attributable to a particular investment portfolio that are available

26
<PAGE>

for distribution in such manner and on such basis as the Trustees in their sole
discretion may determine.

Shareholders are not entitled to any preemptive rights. All shares, when issued,
will be fully paid and non-assessable by the Trust.

Under Delaware law, the shareholders of the Funds are not generally subject to
liability for the debts or obligations of the Trust. Similarly, Delaware law
provides that a series of the Trust will not be liable for the debts or
obligations of any other series of the Trust. However, no similar statutory or
other authority limiting business trust shareholder liability exists in other
states. As a result, to the extent that a Delaware business trust or a
shareholder is subject to the jurisdiction of courts of such other states, the
courts may not apply Delaware law and may thereby subject the Delaware business
trust shareholders to liability. To guard against this risk, the Declaration of
Trust contains an express disclaimer of shareholder liability for acts or
obligations of a Fund. Notice of such disclaimer will generally be given in each
agreement, obligation or instrument entered into or executed by a series or the
Trustees. The Declaration of Trust also provides for indemnification by the
relevant series for all losses suffered by a shareholder as a result of an
obligation of the series. In view of the above, the risk of personal liability
of shareholders of a Delaware business trust is remote.

SHAREHOLDER INFORMATION

Shares are sold through the Bank and are distributed by the Funds.

PRICING OF FUND SHARES. The net asset value per share of a Fund is calculated as
follows: all liabilities incurred or accrued are deducted from the valuation of
total assets, which includes accrued but undistributed income; the resulting net
assets are divided by the number of shares of that Fund outstanding at the time
of the valuation and the result (adjusted to the nearest cent) is the net asset
value per share.

As noted in the Prospectus, the net asset value of shares of the Funds generally
will be determined at least once daily as of 4:00 P.M., Eastern time (or earlier
when trading closes earlier), on each day the NYSE is open for trading. It is
expected that the NYSE will be closed on Saturdays and Sundays and for New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas. The national
bank holidays also include: Columbus Day and Veterans' Day. The Funds may, but
do not expect to, determine the net asset values of their shares on any day when
the NYSE is not open for trading if there is sufficient trading in their
portfolio securities on such days to affect materially per-share net asset
value.

The Funds that invest in a Portfolio will use the net asset values reported by
the Portfolio for its shares in calculating the Funds' net asset values.

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<PAGE>

Generally, the Funds' investments are valued at market value or, in the absence
of a market value, at fair value as determined in good faith by the Investment
Adviser and the Trust's Board of Trustees or Pricing Committee pursuant to
procedures approved by or under the direction of the Board.

The Funds' equity securities, including ADRs, EDRs and GDRs, which are traded on
securities exchanges are valued at the last sale price on the exchange on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Equity securities that are traded on
more than one exchange are valued on the exchange determined by the Investment
Adviser to be the primary market. Securities traded in the over-the-counter
market are valued at the mean between the last available bid and asked price
prior to the time of valuation. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the direction of the Board.

Generally, trading in and valuation of foreign securities is substantially
completed each day at various times prior to the close of the NYSE. In addition,
trading in and valuation of foreign securities may not take place on every day
in which the NYSE is open for trading. Furthermore, trading takes place in
various foreign markets on days in which the NYSE is not open for trading and on
which the Funds' net asset values are not calculated. Occasionally, events
affecting the values of such securities in U.S. dollars on a day on which a Fund
calculates its net asset value may occur between the times when such securities
are valued and the close of the NYSE that will not be reflected in the
computation of that Fund's net asset value unless the Board or its delegates
deem that such events would materially affect the net asset value, in which case
an adjustment would be made.

Short-term debt obligations with remaining maturities in excess of 60 days are
valued at current market prices, as discussed above. Short-term securities with
60 days or less remaining to maturity are, unless conditions indicate otherwise,
amortized to maturity based on their cost to a Fund if acquired within 60 days
of maturity or, if already held by a Fund on the 60th day, based on the value
determined on the 61st day.

Corporate debt securities, U.S. government securities, mortgage-related
securities and asset-backed fixed-income securities held by the Funds are valued
on the basis of valuations provided by dealers in those instruments, by an
independent pricing service, or at fair value as determined in good faith by
procedures approved by the Board. Any such pricing service, in determining
value, will use information with respect to transactions in the securities being
valued, quotations from dealers, market transactions in comparable securities,
analyses and evaluations of various relationships between securities and
yield-to-maturity information.

An option that is written by a Fund is generally valued at the last sale price
or, in the absence of the last sale price, the last offer price. An option that
is purchased by a Fund is

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<PAGE>

generally valued at the last sale price or, in the absence of the last sale
price, the last bid price. The value of a futures contract equals the unrealized
gain or loss on the contract that is determined by marking the contract to the
current settlement price for a like contract on the valuation date of the
futures contract if the securities underlying the futures contract experience
significant price fluctuations after the determination of the settlement price.
When a settlement price cannot be used, futures contracts will be valued at
their fair market value as determined by or under the direction of the Boards.

If any securities held by a Fund are restricted as to resale or do not have
readily available market quotations, the Investment Adviser and the Trust's
Board or Pricing Committee determine their fair value, following procedures
approved by the Board. The Trustees periodically review such valuations and
valuation procedures. The fair value of such securities is generally determined
as the amount which a Fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to the financial position of the
issuer and other fundamental analytical data relating to the investment and to
the nature of the restrictions on disposition of the securities (including any
registration expenses that might be borne by a Fund in connection with such
disposition). In addition, specific factors are also generally considered, such
as the cost of the investment, the market value of any unrestricted securities
of the same class (both at the time of purchase and at the time of valuation),
the size of the holding, the prices of any recent transactions or offers with
respect to such securities and any available analysts' reports regarding the
issuer.

Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If neither of these
alternatives is available or both are deemed not to provide a suitable
methodology for converting a foreign currency into U.S. dollars, the Board in
good faith will establish a conversion rate for such currency.

All other assets of the Funds are valued in such manner as the Board in good
faith deems appropriate to reflect their fair value.

TELEPHONE AND INTERNET REDEMPTION PRIVILEGES. The Trust employs reasonable
procedures to confirm that instructions communicated by telephone or the
Internet are genuine. The Trust and the Funds may not be liable for losses due
to unauthorized or fraudulent instructions. Such procedures include but are not
limited to requiring a form of personal identification prior to acting on
instructions received by telephone or the Internet, providing written
confirmations of such transactions to the address of record, tape recording
telephone instructions and backing up Internet transactions.

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<PAGE>

TAXATION

Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Funds and the purchase, ownership, and disposition of Fund
shares. This discussion does not purport to be complete or to deal with all
aspects of federal income taxation that may be relevant to shareholders in light
of their particular circumstances. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and judicial and administrative ruling
authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisors with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.

TAXATION OF THE FUNDS. Each Fund intends to be taxed as a regulated investment
company under Subchapter M of the Code. Accordingly, each Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to certain securities loans, and
gains from the sale or other disposition of stock, securities or foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities or currencies; and (b) diversify its holdings so that, at
the end of each fiscal quarter, (i) at least 50% of the value of the Fund's
total assets is represented by cash and cash items, U.S. Government securities,
the securities of other regulated investment companies and other securities,
with such other securities limited, in respect of any one issuer, to an amount
not greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities and the securities of other regulated investment
companies).

As a regulated investment company, a Fund generally is not subject to U.S.
federal income tax on income and gains that it distributes to shareholders, if
at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed. Each Fund intends to distribute substantially all of such income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, the Fund intends to make distributions in accordance with the
calendar year distribution requirement.

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DISTRIBUTIONS. Distributions of investment company taxable income (including net
short-term capital gains) are taxable to a U.S. shareholder as ordinary income,
whether paid in cash or shares. Dividends paid by a Fund to a corporate
shareholder, to the extent such dividends are attributable to dividends received
by the Fund from U.S. corporations, may, subject to limitation, be eligible for
the dividends received deduction. However, the alternative minimum tax
applicable to corporations may reduce the value of the dividends received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses) designated by the Fund as
capital gain dividends, whether paid in cash or reinvested in Fund shares, will
generally be taxable to shareholders as long-term capital gain, regardless of
how long a shareholder has held Fund shares.

Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received. A distribution will be treated as paid on December 31 of a calendar
year if it is declared by the Fund in October, November or December of that year
with a record date in such a month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.

If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by a Fund, such distribution generally will be taxable
even though it represents a return of invested capital. Investors should be
careful to consider the tax implications of buying shares of a Fund just prior
to a distribution. The price of shares purchased at this time will include the
amount of the forthcoming distribution, but the distribution will generally be
taxable to the shareholder.

DISPOSITIONS. Upon a redemption, sale or exchange of shares of a Fund, a
shareholder will realize a taxable gain or loss depending upon his or her basis
in the shares. A gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands, and will be long-term
capital gain or loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for not more than one
year. Any loss realized on a redemption, sale or exchange will be disallowed to
the extent the shares disposed of are replaced (including through reinvestment
of dividends) within a period of 61 days, beginning 30 days before and ending 30
days after the shares are disposed of. In such a case the basis of the shares
acquired will be adjusted to reflect the disallowed loss. If a shareholder holds
Fund shares for six months or less and during that period receives a
distribution taxable to the shareholder as long-term capital gain, any loss
realized on the sale of such shares during such six-month period would be a
long-term loss to the extent of such distribution.

BACKUP WITHHOLDING. A Fund generally will be required to withhold federal income
tax at a rate of 31% ("backup withholding") from dividends paid, capital gain
distributions, and redemption proceeds to shareholders if (1) the shareholder
fails to furnish the Fund with the shareholder's correct taxpayer identification
number or social security number,

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<PAGE>

(2) the IRS notifies the shareholder or the Fund that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Any amounts withheld may be credited against the shareholder's
federal income tax liability.

OTHER TAXATION. Distributions may be subject to additional state, local and
foreign taxes, depending on each shareholder's particular situation.

MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than the
stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for each
period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued market discount for prior periods not
previously taken into account) or (ii) the amount of the principal payment with
respect to such period. Generally, market discount accrues on a daily basis for
each day the debt security is held by a Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of the Fund, at a
constant yield to maturity which takes into account the semi-annual compounding
of interest. Gain realized on the disposition of a market discount obligation
must be recognized as ordinary interest income (not capital gain) to the extent
of the "accrued market discount."

ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by a Fund may be
treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by the Fund, original issue discount that accrues on a debt security in
a given year generally is treated for federal income tax purposes as interest
and, therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies. Some debt securities may be
purchased by the Fund at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).

OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures contracts and
certain options (namely, nonequity options and dealer equity options) in which
the Fund may invest may be "section 1256 contracts." Gains (or losses) on these
contracts generally are considered to be 60% long-term and 40% short-term
capital gains or losses. Also, section 1256 contracts held by the Fund at the
end of each taxable year (and on certain other dates

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<PAGE>

prescribed in the Code) are "marked to market" with the result that unrealized
gains or losses are treated as though they were realized.

Transactions in options, futures and forward contracts undertaken by a Fund may
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund, and losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized. In
addition, certain carrying charges (including interest expense) associated with
positions in a straddle may be required to be capitalized rather than deducted
currently. Certain elections that the Fund may make with respect to its straddle
positions may also affect the amount, character and timing of the recognition of
gains or losses from the affected positions.

Because only a few regulations implementing the straddle rules have been
promulgated, the consequences of such transactions to a Fund are not entirely
clear. The straddle rules may increase the amount of short-term capital gain
realized by the Fund, which is taxed as ordinary income when distributed to
shareholders. Because application of the straddle rules may affect the character
of gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders as ordinary income or long-term capital gain may be
increased or decreased substantially as compared to a fund that did not engage
in such transactions.

CONSTRUCTIVE SALES. Under certain circumstances, a Fund may recognize gain from
a constructive sale of an "appreciated financial position" it holds if it enters
into a short sale, forward contract or other transaction that substantially
reduces the risk of loss with respect to the appreciated position. In that
event, the Fund would be treated as if it had sold and immediately repurchased
the property and would be taxed on any gain (but not loss) from the constructive
sale. The character of gain from a constructive sale would depend upon the
Fund's holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Fund's holding period and the application of various loss
deferral provisions of the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.

MASTER PORTFOLIO ORGANIZATION

The Portfolios are series of Master Investment Portfolio ("MIP"), an open-end,
series management investment company organized as Delaware business trust. MIP
was organized on October 21, 1993. In accordance with Delaware law and in
connection with the tax treatment sought by MIP, the Declaration of Trust
provides that its investors are personally responsible for Trust liabilities and
obligations, but only to the extent the Trust property is insufficient to
satisfy such liabilities and obligations. The Declaration of Trust also provides
that MIP must maintain appropriate insurance (for example, fidelity

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<PAGE>

bonding and errors and omissions insurance) for the protection of the Trust, its
investors, Trustees, officers, employees and agents covering possible tort and
other liabilities, and that investors will be indemnified to the extent they are
held liable for a disproportionate share of MIP's obligations. Thus, the risk of
an investor incurring financial loss on account of investor liability is limited
to circumstances in which both inadequate insurance existed and MIP itself was
unable to meet its obligations.

The Declaration of Trust further provides that obligations of MIP are not
binding upon its Trustees individually but only upon the property of MIP and
that the Trustees will not be liable for any action or failure to act, but
nothing in the Declarations of Trust protects a Trustee against any liability to
which the Trustee would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the Trustee's office.

The interests in the Portfolios have substantially identical voting and other
rights as those rights enumerated above for shares of the Fund. MIP is generally
not required to hold annual meetings, but is required by Section 16(c) of the
1940 Act to hold a special meeting and assist investor communications under
certain circumstances. Whenever the one of the Funds is requested to vote on a
matter with respect to the Portfolio in which it invests, that Fund will hold a
meeting of Fund shareholders and will cast its votes as instructed by such
shareholders.

In a situation where a Fund does not receive instruction from certain of its
shareholders on how to vote the corresponding shares of the applicable
Portfolio, such Fund will vote such shares in the same proportion as the shares
for which the Fund does receive voting instructions.

MASTER/FEEDER STRUCTURE. Each Fund seeks to achieve its investment objective by
investing all of its assets into the corresponding Master Portfolio of MIP. The
Funds and other entities investing in a Master Portfolio are each liable for all
obligations of such Master Portfolio. However, the risk of a Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and MIP itself is unable to meet its
obligations. Accordingly, the Trust's Board of Trustees believes that neither a
Fund nor its shareholders will be adversely affected by investing Fund assets in
a Master Portfolio. However, if a mutual fund or other investor withdraws its
investment from such Master Portfolio, the economic efficiencies (e.g.,
spreading fixed expenses among a larger asset base) that the Trust's Board of
Trustees believes may be available through investment in the Master Portfolio
may not be fully achieved. In addition, given the relative novelty of the
master/feeder structure, accounting or operational difficulties, although
unlikely, could arise.

A Fund may withdraw its investment in a Master Portfolio only if the Trust's
Board of Trustees determines that such action is in the best interests of such
Fund and its shareholders. Upon any such withdrawal, the Trust's Board of
Trustees would consider alternative investments, including investing all of the
Fund's assets in another investment company with the same investment objective
as the Fund or hiring an investment adviser

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<PAGE>

to manage the Fund's assets in accordance with the investment policies described
below with respect to the Master Portfolio.

Certain policies of the Master Portfolio which are non-fundamental may be
changed by vote of a majority of MIP's Trustees without interestholder approval.
If the Master Portfolio's investment objective or fundamental or non-fundamental
policies are changed, the Fund may elect to change its objective or policies to
correspond to those of the Master Portfolio. A Fund also may elect to redeem its
interests in the corresponding Master Portfolio and either seek a new investment
company with a matching objective in which to invest or retain its own
investment adviser to manage the Fund's portfolio in accordance with its
objective. In the latter case, a Fund's inability to find a substitute
investment company in which to invest or equivalent management services could
adversely affect shareholders' investments in the Fund. The Funds will provide
shareholders with 30 days' written notice prior to the implementation of any
change in the investment objective of the Fund or the Master Portfolio, to the
extent possible.

PERFORMANCE INFORMATION

The Funds may advertise a variety of types of performance information as more
fully described below. All of the Funds' performance is historical and past
performance does not guarantee the future performance of the Funds. From time to
time, the Investment Adviser may agree to waive or reduce its management fee
and/or to reimburse certain operating expenses of the Funds. Waivers of
management fees and reimbursement of other expenses will have the effect of
increasing the Funds' performance.

AVERAGE ANNUAL TOTAL RETURN. The Funds' average annual total return quotation
will be computed in accordance with a standardized method prescribed by rules of
the SEC. The average annual total return for these Funds for a specific period
is calculated as follows:

P(1+T)(To the power of n) = ERV

Where:

P = a hypothetical initial payment of $10,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical $10,000 payment made at the
beginning of the applicable period at the end of the period.

The calculation assumes that all income and capital gains dividends paid by
these Funds have been reinvested at net asset value on the reinvestment dates
during the period and all recurring fees charges to all shareholder accounts are
included.

TOTAL RETURN. Calculation of each Fund's total return is not subject to a
standardized formula. Total return performance for a specific period will be
calculated by first taking

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<PAGE>

an investment (assumed below to be $10,000) ("initial investment") in these
Funds' shares on the first day of the period and computing the "ending value" of
that investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the ending value and
dividing the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains dividends
paid by these Funds have been reinvested at net asset value of the Funds on the
reinvestment dates during the period. Total return may also be shown as the
increased dollar value of the hypothetical investment over the period.

CUMULATIVE TOTAL RETURN. 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 and cumulative 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.

DISTRIBUTION RATE. The distribution rate for each Fund will be computed,
according to a non-standardized formula by dividing the total amount of actual
distributions per share paid by the applicable Fund over a twelve month period
by that Fund's net asset value on the last day of the period. The distribution
rate differs from these Funds' yield because the distribution rate includes
distributions to shareholders from sources other than dividends and interest,
such as short-term capital gains. Therefore, these Funds' distribution rate may
be substantially different than its yield. Both the Funds' yield and
distribution rates will fluctuate.

PERFORMANCE COMPARISONS:

CERTIFICATES OF DEPOSIT. Investors may want to compare a 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.

MONEY MARKET FUNDS. Investors may also want to compare performance of a Fund to
that of money market funds. Money market fund yields will fluctuate and shares
are not insured, but share values usually remain stable.

LIPPER ANALYTICAL SERVICES, INC. ("LIPPER") AND OTHER INDEPENDENT RANKING
ORGANIZATIONS. From time to time, in marketing and other fund literature, a
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, 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

36
<PAGE>

do not include the effect of any sales charges imposed by other funds. A Fund
may be compared to Lipper's appropriate fund category, that is, by fund
objective and portfolio holdings. A Fund's performance may also be compared to
the average performance of its Lipper category.

MORNINGSTAR, INC. A Fund's performance may also be compared to the performance
of other mutual funds by Morningstar, Inc., which rates funds on the basis of
historical risk and total return. Morningstar's ratings 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. Ratings are not absolute and do not represent future
results.

INDEPENDENT SOURCES. Evaluations of fund performance made by independent sources
may also be used in advertisements concerning the Funds, including reprints of,
or selections from, editorials or articles about the Funds, especially those
with similar objectives. Sources for fund performance and articles about the
Funds may include publications such as Money, Forbes, Kiplinger's, Smart Money,
Financial World, Business Week, U.S. News and World Report, The Wall Street
Journal, Barron's, and a variety of investment newsletters.

INDICES. The Funds may compare their performance to a wide variety of indices.
There are differences and similarities between the investments that a Fund may
purchase and the investments measured by the indices.

HISTORICAL ASSET CLASS RETURNS. From time to time, marketing materials may
portray the historical returns of various asset classes. Such presentations will
typically compare the average annual rates of return of inflation, U.S. Treasury
bills, bonds, common stocks, and small stocks. There are important differences
between each of these investments that should be considered in viewing any such
comparison. The market value of stocks will fluctuate with market conditions,
and small-stock prices generally will fluctuate more than large-stock prices.
Stocks are generally more volatile than bonds. In return for this volatility,
stocks have generally performed better than bonds or cash over time. Bond prices
generally will fluctuate inversely with interest rates and other market
conditions, and the prices of bonds with longer maturities generally will
fluctuate more than those of shorter-maturity bonds. Interest rates for bonds
may be fixed at the time of issuance, and payment of principal and interest may
be guaranteed by the issuer and, in the case of U.S. Treasury obligations,
backed by the full faith and credit of the U.S. Treasury.

The historical S&P 500 data presented from time to time is not intended to
suggest that an investor would have achieved comparable results by investing in
any one equity security or in managed portfolios of equity securities, such as
the Fund, during the periods shown.

PORTFOLIO CHARACTERISTICS. In order to present a more complete picture of a
Fund's portfolio, marketing materials may include various actual or estimated
portfolio characteristics, including but not limited to median market
capitalizations, earnings per

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<PAGE>

share, alphas, betas, price/earnings ratios, returns on equity, dividend yields,
capitalization ranges, growth rates, price/book ratios, top holdings, sector
breakdowns, asset allocations, quality breakdowns, and breakdowns by geographic
region.

MEASURES OF VOLATILITY AND RELATIVE PERFORMANCE. Occasionally statistics may be
used to specify fund volatility or risk. The general premise is that greater
volatility connotes greater risk undertaken in achieving performance. Measures
of volatility or risk are generally used to compare a fund's net asset value or
performance relative to a market index. One measure of volatility is beta. Beta
is the volatility of a 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 a statistical tool that measures the degree to which a
fund's performance has varied from its average performance during a particular
time period.

Standard deviation is calculated using the following formula:

Standard deviation = the square root of S(xi - xm)2
----------
n-1

Where: S = "the sum of",

xi = each individual return during the time period,
xm = the average return over the time period, and
n = the number of individual returns during the time period.

Statistics may also be used to discuss a Fund's relative performance. One such
measure is alpha. Alpha measures the actual return of a fund compared to the
expected return of a fund given its risk (as measured by beta). The expected
return is based on how the market as a whole performed, and how the particular
fund has historically performed against the market. Specifically, alpha is the
actual return less the expected return. The expected return is computed by
multiplying the advance or decline in a market representation by the fund's
beta. A positive alpha quantifies the value that the fund manager has added, and
a negative alpha quantifies the value that the fund manager has lost. Other
measures of volatility and relative performance may be used as appropriate.
However, all such measures will fluctuate and do not represent future results.

Discussions of economic, social, and political conditions and their impact on
the Funds may be used in advertisements and sales materials. Such factors that
may impact the Funds include, but are not limited to, changes in interest rates,
political developments, the competitive environment, consumer behavior, industry
trends, technological advances, macroeconomic trends, and the supply and demand
of various financial instruments. In addition, marketing materials may cite the
portfolio management's views or interpretations of such factors.

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<PAGE>

MASTER FUND PERFORMANCE. The Funds intend to disclose historical performance of
the Portfolios, including the average annual and cumulative returns restated to
reflect the expense ratio of the Funds. This information will be included by
amendment. Although the investments of the Portfolios will be reflected in the
Funds, the Funds are distinct mutual funds and have different fees, expenses and
returns than the Portfolios. Historical performance of substantially similar
mutual funds is not indicative of future performance of the Funds.
Portfolio performance will be supplied by the Portfolio.

FINANCIAL STATEMENTS

No financial statements have yet been prepared because these Funds have not
commenced operations.

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APPENDIX

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A-1 AND PRIME-1 COMMERCIAL PAPER RATINGS

The rating A-1 (including A-1+) is the highest commercial paper rating assigned
by S&P. Commercial paper rated A-1 by S&P has the following characteristics:

- liquidity ratios are adequate to meet cash requirements;
- long-term senior debt is rated "A" or better;
- the issuer has access to at least two additional channels of
borrowing;
- basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances;
- typically, the issuer's industry is well established and the issuer
has a strong position within the industry; and
- the reliability and quality of management are unquestioned.

Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:

- evaluation of the management of the issuer;
- economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain
areas;
- evaluation of the issuer's products in relation to competition and
customer acceptance;
- liquidity;
- amount and quality of long-term debt;
- trend of earnings over a period of ten years;
- financial strength of parent company and the relationships which exist
with the issuer; and
- recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to
meet such obligations.

DESCRIPTION OF BOND RATINGS

Bonds are considered to be "investment grade" if they are in one of the top four
ratings.

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<PAGE>

S&P's ratings are as follows:

- Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
- Bonds rated AA have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
- Debt rated BB, B, CCC, CC or C is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the
obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse debt conditions.
- The rating C1 is reserved for income bonds on which no interest is
being paid.
- Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.

The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.

Moody's ratings are as follows:

- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt-edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long
term risks appear somewhat larger than in Aaa securities.
- Bonds which are rated A possess many favorably investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security

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<PAGE>

to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some time in the
future.
- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
- Bonds which are rated Ca represent obligations which are speculative
to a high degree. Such issues are often in default or have other
marked shortcomings.
- Bonds which are rated C are the lowest class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies modifiers to each rating classification from Aa through B to
indicate relative ranking within its rating categories. The modifier "1"
indicates that a security ranks in the higher end of its rating category; the
modifier "2" indicates a mid-range ranking and the modifier "3" indicates that
the issue ranks in the lower end of its rating category.

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<PAGE>

PART C

OTHER INFORMATION

Item 23. Exhibits

(a) Articles of Incorporation

(i) Certificate of Trust -- 1
(ii) Trust Instrument -- 1
(iii) Amended and Restated Trust Instrument -- 2

(b) By-laws -- 1

(d) Form of Investment Advisory Contract between X.com Asset
Management, Inc. and the Registrant -- 2

(e) Underwriting Contracts: Not applicable

(f) Bonus or Profit Sharing Contracts: Not applicable

(g) Form of Custodian Agreement between X.com Asset Management,
Inc., Investors Bank & Trust Company, and the Registrant -- 2

(h) Other Material Contracts:

(i) Form of Administration Agreement between X.com Asset
Management, Inc., Investors Bank & Trust, and the
Registrant -- 2
(ii) Form of Transfer Agency Agreement between X.com Asset
Management, Inc. and the Registrant -- 2
(iii) Form of X.com Funds Electronic Delivery Consent
Agreement -- 2
(iv) Form of Third Party Feeder Fund Agreement between
X.com Asset Management, Inc., Master Investment
Portfolio, and the Registrant - 2
(v) Form of Subadvisory Agreement between X.com Asset
Management, Inc. and ____________________, with
respect to the e-Commerce Fund -- to be filed by
further post-effective amendment

(i) Opinion and Consent of Counsel
(i) With respect to: X.Com Premier S&P 500 Fund, X.Com
U.S.A. Bond Fund and X.Com U.S.A. Money Market
Fund -- 2
(ii) With respect to: X.Com Classic S&P 500 Fund, X.Com
Protected S&P 500 Fund, X.Com Super U.S. Index Fund,
X.Com Small Cap Index Fund, X.com International Index
Fund and X.Com e-Commerce Fund - to be filed by
further post-effective amendment

(j) Consent of Independent Auditors: Not applicable

(k) Omitted Financial Statements: Not applicable

(l) Form of Subscription Agreement between Elon R. Musk and the
Registrant -- 2

<PAGE>

(m) Rule 12b-1 Plan: Not applicable

(n) Financial Data Schedules: Not applicable

(o) Rule 18f-3 Plan: Not applicable

(p) Powers of Attorney -- 2

(i) Form of Power of Attorney for Nicole E. Faucher
(ii) Form of Power of Attorney for Kevin T. Hamilton
(iii) Form of Power of Attorney for Elon R. Musk
(iv) Form of Power of Attorney for Gregory N. River
(v) Form of Power of Attorney for John T. Story

1. Filed with initial Registration Statement on Form N-1A on June 8, 1999.
2. Filed with Pre-Effective Amendment No. 1 filed with the SEC on
November 18, 1999.

Item 24. Persons Controlled by or Under Common Control With Registrant

No person is controlled by or under common control with the Registrant.

Item 25. Indemnification

Reference is made to Article X of the Registrant's Trust Instrument.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant by the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, officers or controlling persons of the Registrant in
connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, officers or controlling persons in connection with
the shares being registered, the 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 whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issues.

Item 26. Business and Other Connections of Investment Adviser

X.com Asset Management, Inc. (the "Investment Adviser") is a Delaware
corporation that offers investment advisory services. The Investment Adviser's
offices are located at 394 University Avenue, Palo Alto, CA 94301. The directors
and officers of the Investment Adviser and their business and other connections
are as follows:

<TABLE>
<CAPTION>
Name Title/Status with Investment Adviser Other Business Connections
- ---- ------------------------------------ --------------------------

<S> <C> <C>
Elon R. Musk Director; President; Treasurer Trustee and Chairman of the Board,
X.com Funds; Chairman and Chief

<PAGE>

Executive Officer, X.com Corporation

John T. Story Chief Operating Officer and Trustee and President, X.com Funds;
Chief Financial Officer Executive Vice President, X.com
Corporation

Mark Sullivan Secretary; Assistant Treasurer Vice President, Operations, X.com
Corporation
</TABLE>

Item 27. Principal Underwriters

Shares of the Registrant (of each Fund) are self-distributed.

Item 28. Location of Accounts and Records

The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of X.com Asset
Management, Inc., 394 University Drive, Palo Alto, California 94301, and
Investors Bank & Trust Company, 200 Clarendon Street, Boston, Massachusetts,
02111.

Item 29. Management Services

Not applicable

Item 30. Undertakings:

Not applicable

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Palo Alto in the State of California on the 11th day
of January 2000.

X.COM FUNDS
(Registrant)

By: /s/ John T. Story*
------------------
Name: John T. Story
Title: President

Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:

Signature Title Date
- --------- ----- ----

/s/ John T. Story* Trustee and President January 11, 2000
- ------------------
John T. Story

/s/ Jeff J. Gaboury Treasurer and January 11, 2000
- -------------------
Jeff J. Gaboury Chief Financial Officer

/s/ Nicole E. Faucher* Trustee January 11, 2000
- ---------------------
Nicole E. Faucher

/s/ Kevin T. Hamilton* Trustee January 11, 2000
- ----------------------
Kevin T. Hamilton

/s/ Elon R. Musk* Trustee January 11, 2000
- -----------------
Elon R. Musk

/s/ Gregory N. River* Trustee January 11, 2000
- ---------------------
Gregory N. River

By: /s/ Susan C. Mosher
--------------------
Susan C. Mosher,
Attorney-in-Fact, pursuant to
Power of Attorney previously
filed.