<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, For use of the
Commission Only
(as permitted by Rule 14a-6(e)(2)
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
- -------------------------------------------------------------------------------
X.COM FUNDS
(Name of Registrant as Specified in Charter)
- -------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- -------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
333-80205; 811-09381
- -------------------------------------------------------------------------------
(3) Filing Party:
X.COM FUNDS
- -------------------------------------------------------------------------------
(4) Date Filed:
MAY , 2000
- -------------------------------------------------------------------------------
<PAGE>
X.COM FUNDS
X.COM PREMIER S&P 500 FUND
X.COM U.S.A. BOND FUND
X.COM U.S.A. MONEY MARKET FUND
X.COM INTERNATIONAL INDEX FUND
394 UNIVERSITY AVENUE
PALO ALTO, CALIFORNIA 94301
NOTICE OF SPECIAL MEETING
TO BE HELD ON JUNE 6, 2000
To the shareholders of each of the X.com Premier S&P 500 Fund, the X.com
U.S.A. Bond Fund, the X.com U.S.A. Money Market Fund and the X.com International
Index Fund (each, a "Fund"), each a series of X.com Funds (the "Trust"), for a
Special Meeting of the Funds to be held on June 6, 2000:
Notice is hereby given that a Special Meeting (the "Meeting") of
shareholders of the Funds will be held on June 6, 2000, at 8:00 a.m., Pacific
Time, at the offices of the Trust, 394 University Avenue, Palo Alto, California
94301. At the Meeting, you and the other shareholders of each Fund will be asked
to consider and vote:
1. To approve a new Investment Advisory Agreement between the Trust and X.com
Asset Management, Inc. (the "Adviser") pursuant to which the Adviser will
continue to act as advisor with respect to the assets of each Fund, to
become effective upon shareholder approval.
2. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
Shareholders of record of each Fund at the close of business on April 24,
2000, are entitled to notice of, and to vote at, the Meeting. Please read the
accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE THE ATTACHED PROXY at HTTPS://SECURE.X.COM/PROXY.ASP
AND RETURN IT PROMPTLY so that a quorum will be present and a maximum number
of shares may be voted. If you attend the Meeting in person, you may change
your vote at that time.
BY ORDER OF THE BOARD OF TRUSTEES
SUSAN MOSHER, SECRETARY
Palo Alto, California
May __, 2000
<PAGE>
X.COM FUNDS
X.COM PREMIER S&P 500 FUND
X.COM U.S.A. BOND FUND
X.COM U.S.A. MONEY MARKET FUND
X.COM INTERNATIONAL INDEX FUND
394 UNIVERSITY AVENUE
PALO ALTO, CALIFORNIA 94301
PROXY STATEMENT
To the shareholders of each of the X.com Premier S&P 500 Fund, the X.com
U.S.A. Bond Fund, the X.com U.S.A. Money Market Fund and the X.com International
Index Fund (each, a "Fund"), each a series of X.com Funds (the "Trust"), for a
Special Meeting of the Funds to be held on June 6, 2000:
This Proxy Statement is furnished by the Trust to the shareholders of each
Fund on behalf of the Trust's Board of Trustees in connection with the Funds'
solicitation of voting instructions for use at a Special Meeting of Shareholders
of the Funds (the "Meeting") to be held on June 6, 2000 at 8:00 a.m., Pacific
Time, at the offices of the Trust, 394 University Avenue, Palo Alto, California
94301 for the purposes set forth below and in the accompanying Notice of Special
Meeting. The approximate mailing date of this Proxy Statement is May 12, 2000.
At the Meeting, the shareholders of each Fund will be asked:
1. To approve a new Investment Advisory Agreement between the Trust and X.com
Asset Management, Inc. (the "Adviser") pursuant to which the Adviser will
continue to act as advisor with respect to the assets of each Fund, to
become effective upon shareholder approval.
2. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
Any voting instructions given to a Fund may be revoked at any time before
the Meeting by notifying the Secretary of the Trust.
The Trust will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of the shares of
each Fund held of record by those persons. The Adviser may reimburse those
broker-dealer firms, custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection with that proxy solicitation. In addition to the
solicitation of proxies by electronic means, officers and employees of the
Trust, without additional compensation, may solicit proxies in person or by
telephone. The costs associated with that solicitation and the Meeting will be
paid by the Adviser and not by the Trust or any Fund.
<PAGE>
If sufficient votes are not received by the date of the Meeting, a person
named as proxy may propose one or more adjournments of the Meeting for a period
or periods not more than 120 days in the aggregate to permit further
solicitation of proxies. The persons named as proxies will vote all proxies in
favor of adjournment that voted in favor of Proposal No. 1 (or abstained) and
vote against adjournment all proxies that voted against Proposal No. 1.
Shareholders of each Fund at the close of business on April 24, 2000, will
be entitled to be present and vote at the Meeting. Shareholders of each Fund
will vote separately only with other shareholders of that Fund. As of that date,
each of the Funds had outstanding and entitled to vote the number of shares
reflected in the following table, which represents total net assets of each Fund
as set forth below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NAME OF FUND SHARES OUTSTANDING TOTAL NET ASSETS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
X.com Premier S&P 500 Fund 363,361.49 $4,069,648.64
X.com U.S.A. Bond Fund 37,690.49 $372,382.04
X.com U.S.A. Money Market Fund 18,114,626.01 $18,114,626.01
X.com International Index Fund 5.00 $47.80
- -------------------------------------------------------------------------------------------------------------
</TABLE>
To the knowledge of the Trust's management, at the close of business on
April 24, 2000, the officers and Trustees of the Trust or the Adviser owned, as
a group, the percentage of the aggregate shares of the Funds shown in the table
below. Also, to the knowledge of the Trust's management, at the close of
business on April 24, 2000, other persons owning beneficially more than 5% of
the outstanding shares of the Funds were as follows:
X.COM PREMIER S&P 500 FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF THE FUND
NAME AND ADDRESS SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Elon R. Musk (Chairman of the Board of Trustees 91,820.38 25.27%
of the Trust, and director, President and Treasurer of the
Adviser)
394 University Avenue, Palo Alto, California 94301
- ------------------------------------------------------------------------------------------------------------------
All officers and Trustees of the Trust and the Adviser 92,531.09 25.46%
(including Mr. Musk), in the aggregate
- ------------------------------------------------------------------------------------------------------------------
William Harris 88,977.02 24.49%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
X.COM U.S.A. BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF THE FUND
NAME AND ADDRESS SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Elon R. Musk (Chairman of the Board of Trustees of the 23,076.37 61.23%
Trust, and director, President and Treasurer of the
Adviser)
394 University Avenue, Palo Alto, California 94301
- ------------------------------------------------------------------------------------------------------------------
All officers and Trustees of the Trust and the Adviser (including 23,077.40 61.23%
Mr. Musk), in the aggregate
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
X.COM U.S.A. MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF THE FUND
NAME AND ADDRESS SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Elon R. Musk (Chairman of the Board of Trustees of the 1,946,587.39 10.75%
Trust, and director, President and Treasurer of the
Adviser)
394 University Avenue, Palo Alto, California 94301
- ------------------------------------------------------------------------------------------------------------------
All officers and Trustees of the Trust and the Adviser 2,190,984.69 12.10%
(including Mr. Musk), in the aggregate
- ------------------------------------------------------------------------------------------------------------------
X.com/PayPal Corp. 15,000,000 82.81%
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
X.COM INTERNATIONAL INDEX FUND
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF THE FUND
NAME AND ADDRESS SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Elon R. Musk (Chairman of the Board of Trustees of the 0 0%
Trust, and director, President and Treasurer of the
Adviser)
394 University Avenue, Palo Alto, California 94301
- ------------------------------------------------------------------------------------------------------------------
All officers and Trustees of the Trust and the Adviser 0 0
(including Mr. Musk), in the aggregate
- ------------------------------------------------------------------------------------------------------------------
Pamela Story 5.00 100%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Because each Fund has only relatively recently commenced operations and has
not attracted substantial assets from shareholders not affiliated with the
Adviser, shareholders affiliated with the Adviser are expected to cast votes
sufficient to approve Proposal No. 1 with respect to each Fund.
The Funds' current investment advisor and transfer agent is X.com Asset
Management, Inc. The Funds' current custodian and administrator is Investors
Bank & Trust Company, located at 200 Clarendon Street, Boston, Massachusetts
02117. Shares of each Fund are self-distributed by the Trust, without the use of
a broker-dealer that serves as the principal underwriter.
The persons named in the accompanying proxy will vote in each case as
directed in the proxy, but in the absence of any direction, they intend to vote
FOR Proposal No. 1 and may vote in their discretion with respect to other
matters not now known to the Board of Trustees that may be presented to the
Meeting.
4
<PAGE>
PROPOSAL NO. 1:
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
BETWEEN THE TRUST AND THE ADVISER
BACKGROUND
GENERAL. The Adviser has acted as the investment adviser with respect to
the assets of each Fund (other than the X.com International Index Fund) since
November 17, 1999, and with respect to the X.com International Index Fund, since
March 31, 2000. The parent company of the Adviser, X.com Corporation (the
"Parent"), has acquired Confinity, Inc., the company that owns the PayPal.com
website (the "Merger"). The Merger was completed on March 30, 2000.
The Meeting has been called for the purpose of considering a new
investment advisory agreement for each Fund as a result of the Merger. The
Merger represented a change in control of the Adviser and, as such, had the
effect of terminating the old Investment Advisory Agreement with respect to
the Fund. Accordingly, shareholders of each Fund are being asked to approve a
new Investment Advisory Agreement (the "New Investment Advisory Agreement")
with respect to each Fund. Since the termination of the old Investment
Advisory Agreement, the Adviser has continued to serve as the investment
advisor for the Funds on an interim basis, for compensation equal to the
lesser of the Adviser's cost or the former fee, which lesser amount has been
determined to be the former fee. With respect to each Fund other than the
X.com U.S.A. Money Market Fund (the "Money Market Fund"), the New Investment
Advisory Agreement contains the same terms and fees with the Adviser,
differing only in the effective and termination dates. With respect to the
Money Market Fund, the New Investment Advisory Agreement also provides for an
increase in fees of 1.80% which, after taking into account the proposed fee
waiver and reimbursement agreement that the Adviser has entered into with the
Trust, results in total fees of 1.50% annually. By unanimous written consent
dated May 2, 2000, the Trust's Board of Trustees approved the submission of
the New Investment Advisory Agreement to shareholders for their approval.
OLD INVESTMENT ADVISORY AGREEMENT
The Adviser currently serves as the investment adviser for each Fund under
an Investment Advisory Agreement, dated November 17, 1999 (the "Old Investment
Advisory Agreement"). The Old Investment Advisory Agreement provides for its
automatic termination in the event of a legal assignment. A direct or indirect
change in ownership of 25% or more of the voting stock of the Adviser would,
therefore, terminate the Old Investment Advisory Agreement. Under the Old
Investment Advisory Agreement, the Adviser is entitled to receive from the Trust
an annual fee (payable monthly) of each Fund's average daily net assets, as
follows:
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NAME OF FUND ANNUAL ADVISORY FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C>
X.com Premier S&P 500 Fund 0.23%
X.com U.S.A. Bond Fund 0.32%
X.com U.S.A. Money Market Fund 0.50%
X.com International Index Fund* 0.35%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* The Old Investment Advisory Agreement was approved with respect to the X.com
International Index Fund as of March 27, 2000.
NEW INVESTMENT ADVISORY AGREEMENT
Except for different effective and termination dates, the terms of the New
Investment Advisory Agreement for each Fund other than the Money Market Fund are
identical in all respects to the terms of the Old Investment Advisory Agreement.
With respect to the Money Market Fund, the New Investment Advisory Agreement
also provides for an increase in fees of 1.80% which, after taking into account
the proposed fee waiver and reimbursement agreement that the Adviser has entered
into with the Trust, results in total fees of 1.50% annually. A form of the New
Investment Advisory Agreement is attached to this Proxy Statement as EXHIBIT A
and the description set forth in this Proxy Statement of the New Investment
Advisory Agreement is qualified in its entirety by reference to EXHIBIT A.
Under the New Investment Advisory Agreement, the Adviser will continue
to provide investment advisory services to each Fund, including deciding what
securities will be purchased and sold by the Funds, when such purchases and
sales are to be made, and arranging for such purchases and sales, all in
accordance with the provisions of the Investment Company Act of 1940, as
amended (the "Investment Company Act") and any rules or regulations
thereunder; any other applicable provisions of law; the provisions of the
Declaration of Trust and By-Laws of the Trust as amended from time to time;
any policies and determinations of the Board of Trustees; and the fundamental
policies of the Trust relating to the Funds, as reflected in the Trust's
Registration Statement under the Investment Company Act (including by
reference, the Funds' Statement of Additional Information) as such
Registration Statement is amended from time to time. In addition, with
respect to the Money Market Fund, the Adviser will provide for a broad array
of financial services, including checkwriting privileges and the ability to
electronically transfer funds to other Money Market Fund investors.
As compensation for its services to the Funds under the New Investment
Advisory Agreement, the Adviser will be entitled to receive from the Trust fees
calculated, with respect to each Fund other than the Money Market Fund, at the
same rates as those
6
<PAGE>
charged under the Old Investment Advisory Agreement described above and, with
respect to the Money Market Fund, equal to 1.90% (including the fee equal to
0.10% of the daily net assets payable at the Master Portfolio level), which,
after taking into account the expense limitation and reimbursement agreement
will equal 1.50%.
The New Investment Advisory Agreement will continue in effect for a period
not to exceed two years from its effective date, and will continue in effect
thereafter for successive annual periods, so long as its continuance is
specifically approved at least annually by (1) a majority vote, cast in person
at a meeting called for that purpose, of the Trust's Board of Trustees or (2) a
vote of the holders of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of the Fund, and (3) in either event by a
majority of the Trustees who are not parties to the New Investment Advisory
Agreement or interested persons of the Trust or of any such party (the
"Disinterested Trustees").
The New Investment Advisory Agreement generally provides that it may be
terminated by the Trust or the Adviser at any time, without penalty, by giving
the other parties 60 days' written notice.
The Adviser will continue to carry out its duties under the New Investment
Advisory Agreement at its own expense and will pay the operating expenses of
each Fund, such as legal and auditing fees, fees and expenses of the Adviser,
its custodian, accounting services and third-party shareholder servicing agents,
Trustees' fees, the cost of communicating with shareholders and registration
fees, as well as its other operating expenses; but not the advisory fees or
expenses of the master portfolios in which each Fund invests substantially all
of its assets. In addition, with respect to the Money Market Fund, the Advisor
will provide for a broad array of financial services, including checkwriting
privileges and the ability to electronically transfer funds to another Money
Market Fund investor.
The New Investment Advisory Agreement provides that the Adviser will not be
liable for any loss sustained by reason of any error of judgment or mistake of
law, or for any loss suffered by a Fund or a Fund's shareholders in connection
with the investment advisory services provided by the Adviser. The New
Investment Advisory Agreement, however, provides that nothing contained in the
New Investment Advisory Agreement shall be construed to protect the Adviser
against any liability to the Trust, any Fund or the shareholders of the Funds by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of obligations and duties
under the New Investment Advisory Agreement.
LEGAL REQUIREMENTS UNDER THE INVESTMENT COMPANY ACT
Section 15(f) of the Investment Company Act provides that, when a change in
control of an investment adviser occurs, the investment adviser or any of its
affiliated persons may receive any amount or benefit in connection with the
change in control as
7
<PAGE>
long as two conditions are satisfied. The first condition specifies that no
"unfair burden" may be imposed on the investment company as a result of the
transaction relating to the change of control, or any express or implied terms,
conditions or understandings. The term "unfair burden," as defined in the
Investment Company Act, includes any arrangement during the two-year period
after the change in control whereby the investment adviser (or predecessor or
successor adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). No such compensation arrangements are contemplated in the Merger. The
Adviser has agreed to use its best efforts to ensure that the Merger will not
cause the imposition of an unfair burden, as that term is defined in Section
15(f) of the Investment Company Act, on any of the Funds.
The second condition specifies that, during the three-year period
immediately following consummation of the transaction, at least 75% of the
investment company's board of directors must not be "interested persons" of the
investment adviser or predecessor investment adviser within the meaning of the
Investment Company Act ("Disinterested Trustees"). The Board of Trustees of the
Trust will meet this 75% requirement before the Meeting through the resignation
of one of the interested Trustees.
The Board of Trustees of the Trust approved the New Investment Advisory
Agreement by unanimous written consent dated May 2, 2000. The approval is
expected to be ratified in person at the next regular meeting of the Board of
Trustees of the Trust scheduled for May 23, 2000.
If the Board of Trustees of the Trust approves the New Investment Advisory
Agreement, but the New Investment Advisory Agreement is not approved by the
Funds' shareholders, the Trustees will promptly seek to enter into a new
investment advisory arrangement for the Funds, subject to approval by the Funds'
shareholders.
For the fiscal year ended December 31, 1999 and the quarter ended March 31,
2000, the Adviser was paid the advisory fees shown in the table below by the
Trust under the Old Investment Advisory Agreement.
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PERIOD ENDING THREE-MONTH PERIOD
NAME OF FUND DECEMBER 31, 1999 ENDING MARCH 31, 2000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
X.com Premier S&P 500 Fund ($8) ($118)
X.com U.S.A. Bond Fund $17 $41
X.com U.S.A. Money Market Fund $162 $309
X.com International Index Fund not applicable not applicable
- -------------------------------------------------------------------------------------------------------------
</TABLE>
INFORMATION REGARDING THE ADVISER
The Adviser, X.com Asset Management, Inc., is a wholly-owned subsidiary of
X.com Corporation and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. The Adviser's address is 394
University Avenue, Palo Alto, California 94301.
The Adviser's principal executive officers and directors are shown below.
The address of each, as it relates to his duties at the Adviser, is the same as
that of the Adviser.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH THE ADVISER PRINCIPAL OCCUPATION
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Elon R. Musk, Director, President, Treasurer Trustee and Chairman of the Board, X.com
Funds; Chairman and Chief Executive Officer,
X.com Corporation
John T. Story, Chief Operating Officer, Chief Financial Trustee and President, X.com Funds, Executive
Officer Vice President, X.com Corporation
Mark Sullivan, Secretary, Assistant Treasurer Vice President, Operations, X.com Corporation
- -------------------------------------------------------------------------------------------------------------
</TABLE>
TRUSTEES' CONSIDERATION
The New Investment Advisory Agreement was approved by the Board of
Trustees of the Trust, including a majority of the Disinterested Trustees, by
unanimous written consent dated May 2, 2000 and is expected to be ratified in
person by the Board of Trustees of the Trust, including the Disinterested
Trustees, at the next regularly scheduled
9
<PAGE>
Board meeting on May 23, 2000. The Board of Trustees of the Trust, by
unanimous written consent dated May 2, 2000, adopted a resolution
recommending that the New Investment Advisory Agreement be submitted to the
shareholders of the Funds for approval. This resolution was made in advance
of the Board of Trustee's formal in-person review of the New Investment
Advisory Agreement. If the Board of Trustees does not approve the New
Investment Advisory Agreement, the shareholders of the Fund will be notified
and the Meeting will be adjourned.
The Board of Trustees of the Trust will be presented with information
demonstrating that the terms of the New Investment Advisory Agreement are fair
to, and in the best interest of, the Trust, the Funds and the shareholders of
each Fund. In considering the New Investment Advisory Agreement, the Trustees
will have before them information that will allow them to evaluate the
experience of the Adviser's key personnel in portfolio management, the quality
of services the Adviser is expected to provide to the Funds, and the
compensation proposed to be paid to the Adviser. The Trustees will be asked to
give equal consideration to all factors deemed to be relevant to the Funds,
including, but not limited to the following: (1) the favorable quality of
services provided to each Fund since its respective commencement of operations;
(2) the positive relationship of the Adviser with the Trust; (3) the performance
of the Funds since commencement of operations; (4) the competitive compensation
payable by the Trust to the Adviser under the proposed New Investment Advisory
Agreement, which will be at the same rate as the compensation now payable by the
Trust to the Adviser under the Old Investment Advisory Agreement; (5) the terms
of the Old Investment Advisory Agreement, which will be unchanged under the New
Investment Advisory Agreement except for different effective and termination
dates and minor updating changes; (6) the favorable history, reputation,
qualification and background of the Adviser, as well as the qualifications of
their personnel and financial condition; and (7) any other factors deemed by the
Board of Trustees to be relevant. In addition, with particular reference to the
Money Market Fund, the Board of Trustees will give consideration to the
additional services that will be provided to Money Market Fund investors,
including the costs to the Adviser of providing such services and the costs that
an investor would be expected to pay for such services if obtained separately.
The Adviser has advised the Board of Trustees that there has been no
diminution in the scope and quality of advisory services provided to the Funds
as a result of the Merger.
Along with the approval of the Board of Trustees of the Trust, the
affirmative vote of the holders of a majority of the outstanding shares of each
Fund is required for the New Investment Advisory Agreement with respect to that
Fund to become effective. "Majority" for this purpose under the Investment
Company Act means the lesser of (i) 67% of the shares represented at the meeting
if more than 50% of the outstanding shares is represented, or (ii) shares
representing more than 50% of the outstanding shares. Abstentions will count as
votes present at the Meeting for quorum purposes. All properly
10
<PAGE>
executed proxies received prior to the Meeting will be voted at the Meeting in
accordance with the instructions marked thereon. Proxies received prior to the
Meeting on which no vote is indicated will be voted in favor of each proposal as
to which it is entitled to vote. Abstentions do not constitute votes in favor of
a proposal and are treated as votes against a proposal. Broker non-votes (i.e.,
proxies from brokers or nominees indicating that those persons have not received
instructions from the beneficial owner or other person entitled to vote shares
on a particular matter with respect to which the broker or nominees do not have
discretionary power) do not constitute votes in favor of or against a proposal
and are disregarded in determining the votes cast when the voting requirement
for a proposal is based on achieving a percentage of the outstanding shares
entitled to vote present in person or by proxy at the Meeting. Broker non-votes
do not constitute votes in favor of a proposal and are treated as votes against
a proposal when the voting requirement for a proposal is based on achieving a
percentage of the outstanding shares entitled to vote. Forty percent of the
outstanding shares entitled to vote on a proposal must be present in person or
by proxy to have a quorum to conduct business at the Meeting. Broker non-votes
will count as votes present at the Meeting for quorum purposes.
ADDITIONAL INFORMATION ON THE TRUST AND THE ADVISER
The following is a list of the executive officers and Trustees of the
Trust, their positions with the Trust, and their positions with the Adviser, if
any:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NAME POSITION WITH TRUST POSITION WITH ADVISER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nicole E. Faucher Trustee None
Kevin T. Hamilton Trustee None
Elon R. Musk Trustee, Chairman of the Board of Director, President and Treasurer
Trustees
Gregory N. River Trustee None
John T. Story Trustee, President Chief Operating Officer, Chief
Financial Officer
Jeff J. Gaboury Treasurer None
Jack W. Clark Assistant Treasurer None
Susan C. Mosher Secretary None
- -------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
The Trust's management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxyholders will vote thereon in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Meeting is a special meeting of shareholders. The Trust is not required
to, nor does it intend to, hold regular annual meetings of its shareholders. If
such a meeting is called, any shareholder who wishes to submit a proposal for
consideration at the meeting should submit the proposal promptly to the Trust.
Any proposal to be considered for submission to shareholders must comply with
Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended.
REPORTS TO SHAREHOLDERS
Each Fund will furnish, without charge, a copy of the most recent Statement
of Additional Information, including the most recent audited financial
statements of the Funds, on request. Requests for such reports should be
directed to X.com Funds, 394 University Avenue, Palo Alto, California 94301
(888) 447-8999. Such information is also available on the website at
http://www.X.com.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY at
HTTPS://SECURE.X.COM/PROXY.ASP IS REQUESTED.
SUSAN MOSHER, SECRETARY
Palo Alto, California
May __, 2000
12
<PAGE>
EXHIBIT LIST
Exhibit A FORM OF NEW INVESTMENT ADVISORY AGREEMENT.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
X.COM FUNDS
This is an INVESTMENT ADVISORY AGREEMENT, dated as of June 6, 2000,
between X.com Asset Management, Inc. (the "Adviser") and X.com Funds (the
"Trust") with respect to the series listed on EXHIBIT A (the "Funds"), which
EXHIBIT A may be amended from time to time to add or delete Funds with mutual
consent of the parties.
WHEREAS, the Trust is a Delaware business trust organized pursuant to a
Declaration of Trust dated July 7, 1999 (the "Declaration of Trust"), and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, diversified management investment company;
WHEREAS, the Trust wishes to retain the Adviser to render investment
advisory services and other management services required for the ordinary
operations of the Funds, and the Adviser is willing to furnish those services to
the Funds;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, the Advisor has provided investment advisory and other
management services to the Funds pursuant to that certain Investment Advisory
Agreement, dated as of November 17, 1999 (the "Old Investment Advisory
Agreement");
WHEREAS, the Old Investment Advisory Agreement has terminated in
accordance with its terms pursuant to a change of control of the parent company
of the Advisor;
WHEREAS, the parties hereto wish to reinstate the agreement evidenced
by the Old Investment Advisory Agreement on substantially the same terms, with
certain modifications as contemplated in the next paragraph; and
WHEREAS, the Trust has determined to increase the services to be
provided by the Advisor hereunder for the X.com U.S.A. Money Market Fund and,
subject to requisite shareholder approval, to compensate the Advisor for such
increased services.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Adviser as follows:
1. APPOINTMENT.
The Trust hereby appoints the Adviser to act as investment adviser and
manager to the Funds for the periods and on the terms set forth in this
Agreement. The Adviser accepts such
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appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. INVESTMENT ADVISORY AND MANAGEMENT DUTIES.
(a) Subject to the supervision of the Trustees of the Trust, the
Adviser will provide a program of continuous investment management for the
Fund in accordance with each Fund's investment objective, policies and
limitations as stated in the Fund's Prospectus and Statement of Additional
Information included as part of the Trust's Registration Statement filed with
the Securities and Exchange Commission ("SEC") and as the Prospectus and
Statement of Additional Information may be amended from time to time, copies
of which shall be provided to the Adviser by the Trust. Subject to approval by
the Trustees of the Trust, the Adviser for each Fund may select a master fund
having substantially the same investment objective and policies as the Fund
into which all or substantially all of the Fund's assets may be invested, or
select and manage investment subadvisers who may be granted discretionary
investment authority with respect to the assets of the Fund.
(b) In performing its investment management services to the Funds
hereunder, the Adviser will provide the Funds with ongoing investment
guidance, policy direction, including oral and written research, monitoring of
any master funds, analysis, advice, statistical and economic data and
judgments regarding individual investments, general economic conditions and
trends and long-range investment policy.
(c) To the extent permitted by the Adviser's Form ADV as filed with
the SEC and subject to the approval of the Trustees of the Trust, the Adviser
shall have the authority to manage cash and money market instruments for cash
flow purposes.
(d) To the extent permitted by the Adviser's current Form ADV as
filed with the SEC, the Adviser will advise as to the securities, instruments,
repurchase agreements, options and other investments and techniques that each
Fund will purchase, sell, enter into or use, and will provide an ongoing
evaluation of the Fund's portfolio. The Adviser will advise as to what portion
of the Fund's portfolio shall be invested in securities and other assets, and
what portion if any, should be held uninvested.
(e) The Adviser shall provide or arrange for administration,
transfer agency, custody and all other services necessary for the Funds to
operate, and shall be responsible for the payment of all expenses associated
with such services, subject to Section 5 of this Investment Advisory Agreement.
(f) The Adviser may engage and remove one or more subadvisers,
subject to the legally required approvals of the Trust and its shareholders,
and the Adviser shall monitor the performance of any subadviser and report to
the Trust thereon.
(g) The Adviser further agrees that, in performing its duties
hereunder, it will:
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(i) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code (the "Code") and all
other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trustees;
(ii) use reasonable efforts to manage each Fund so that it will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
(iii) place orders pursuant to each Fund's investment
determinations as approved by the Trustees for the Fund directly with the
issuer, or with any broker or dealer, in accordance with applicable policies
expressed in the Fund's Prospectus and/or Statement of Additional Information
and in accordance with applicable legal requirements;
(iv) furnish to the Trust whatever statistical information the
Trust may reasonably request with respect to each Fund's assets or
contemplated investments. In addition, the Adviser will keep the Trust and the
Trustees informed of developments materially affecting each Fund's portfolio
and shall, on the Adviser's own initiative, furnish to the Trust from time to
time whatever information the Adviser believes appropriate for this purpose;
(v) make available to the Trust's administrator (the
"Administrator") and the Trust, promptly upon their request, such copies of
its investment records and ledgers with respect to each Fund as may be
required to assist the Administrator and the Trust in their compliance with
applicable laws and regulations. The Adviser will furnish the Trustees with
such periodic and special reports regarding the Fund and any subadviser as
they may reasonably request;
(vi) immediately notify the Trust in the event that the Adviser
or any of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as investment adviser
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the SEC or other regulatory
authority. The Adviser further agrees to notify the Trust immediately of any
material fact known to the Adviser respecting or relating to the Adviser that
is not contained in the Trust's Registration Statement regarding the Funds, or
any amendment or supplement thereto, but that is required to be disclosed
thereon, and of any statement contained therein that becomes untrue in any
material respect; and
(vii) in providing investment advice to the Funds, use no
inside information that may be in its possession or in the possession of any
of its affiliates, nor will the Adviser seek to obtain any such information.
3. FUTURES AND OPTIONS.
The Adviser's investment authority shall include advice with regard to
purchasing, selling, covering open positions, and generally dealing in financial
futures contracts and options
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<PAGE>
thereon, or master funds which do so in accordance with Rule 4.5 of the
Commodity Futures Trading Commission.
The Adviser's authority shall include authority to: (i) open and
maintain brokerage accounts for financial futures and options (such accounts
hereinafter referred to as "Brokerage Accounts") on behalf of and in the name of
the Fund; and (ii) execute for and on behalf of the Brokerage Accounts, standard
customer agreements with a broker or brokers. The Adviser may, using such of the
securities and other property in the Brokerage Accounts as the Adviser deems
necessary or desirable, direct the custodian to deposit on behalf of a Fund,
original and maintenance brokerage deposits and otherwise direct payments of
cash, cash equivalents and securities and other property into such brokerage
accounts and to such brokers as the Adviser deems desirable or appropriate.
4. USE OF SECURITIES BROKERS AND DEALERS.
The Adviser will monitor the use by master funds of broker-dealers. To
the extent permitted by the Adviser's Form ADV as filed with the SEC, purchase
and sale orders will usually be placed with brokers who are selected by the
Adviser as able to achieve "best execution" of such orders. "Best execution"
shall mean prompt and reliable execution at the most favorable securities price,
taking into account the other provisions hereinafter set forth. Whenever the
Adviser places orders, or directs the placement of orders, for the purchase or
sale of portfolio securities on behalf of a Fund, in selecting brokers or
dealers to execute such orders, the Adviser is expressly authorized to consider
the fact that a broker or dealer has furnished statistical, research or other
information or services which enhance the Adviser's research and portfolio
management capability generally. It is further understood in accordance with
Section 28(e) of the Securities Exchange Act of 1934, as amended, that the
Adviser may negotiate with and assign to a broker a commission which may exceed
the commission which another broker would have charged for effecting the
transaction if the Adviser determines in good faith that the amount of
commission charged was reasonable in relation to the value of brokerage and/or
research services (as defined in Section 28(e)) provided by such broker, viewed
in terms either of the Fund or the Adviser's overall responsibilities to the
Adviser's discretionary accounts.
Neither the Adviser nor any parent, subsidiary or related firm shall
act as a securities broker with respect to any purchases or sales of securities
which may be made on behalf of a Fund, provided that this limitation shall not
prevent the Adviser from utilizing the services of a securities broker which is
a parent, subsidiary or related firm, provided such broker effects transactions
on a "cost only" or "nonprofit" basis to itself and provides competitive
execution. Unless otherwise directed by the Trust in writing, the Adviser may
utilize the service of whatever independent securities brokerage firm or firms
it deems appropriate to the extent that such firms are competitive with respect
to price of services and execution.
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<PAGE>
5. ALLOCATION OF CHARGES AND EXPENSES.
The Adviser will pay all of the expenses of each class of each series
of the Trust's shares that it shall manage, other than the following expenses:
- - interest;
- - taxes;
- - brokerage commissions;
- - insurance and bonding premiums;
- - fees and expenses of those trustees who are not "interested persons"
as defined in the 1940 Act, including counsel fees;
- - extraordinary expenses approved by those disinterested trustees; and
- - fees and expenses of any master portfolio into which that series
invests all or substantially all of its assets.
The Adviser also will pay expenses incurred in connection with the
provision of shareholder services and distribution services.
To the extent the Adviser incurs any costs by assuming expenses that
are an obligation of a Fund as set forth herein, such Fund shall promptly
reimburse the Adviser for those costs and expenses, except to the extent the
Adviser has otherwise agreed to bear those expenses. To the extent the services
for which a Fund is obligated to pay are performed by the Adviser, the Adviser
shall be entitled to recover from that Fund to the extent of the Adviser's
actual costs for providing those services.
6. COMPENSATION.
(a) As compensation for the services provided and expenses assumed
by the Adviser under this Agreement, the Trust will arrange for each Fund to
pay the Adviser at the end of each calendar month an advisory fee computed
daily at an annual rate equal to the amount of average daily net assets listed
opposite each Fund's name in EXHIBIT A, attached hereto. The "average daily
net assets" of a Fund shall mean the average of the values placed on the
Fund's net assets as of 4:00 p.m. (New York time) on each day on which the net
asset value of the Fund is determined consistent with the provisions of Rule
22c-1 under the 1940 Act or, if the Fund lawfully determines the value of its
net assets as of some other time on each business day, as of such other time.
The value of net assets of each Fund shall always be determined pursuant to
the applicable provisions of the Declaration of Trust and the Registration
Statement. If, pursuant to such provisions, the determination of net asset
value is suspended for any particular business day, then for the purposes of
this Section 6, the value of the net assets of a Fund as last determined shall
be deemed to be the value of its net assets as of the close of the New York
Stock Exchange,
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<PAGE>
or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of the
net asset value of the shares of a Fund has been so suspended for a period
including any month end when the Adviser's compensation is payable pursuant to
this Section 6, then the Adviser's compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the
Fund as last determined (whether during or prior to such month). If a Fund
determines the value of the net assets of its portfolio more than once on any
day, then the last such determination thereof on that day shall be deemed to
be the sole determination thereof on that day for the purposes of this Section
6.
(b) The Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses that are the
responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Adviser hereunder or to continue future payments.
7. BOOKS AND RECORDS.
The Adviser agrees to maintain such books and records with respect to
its services to the Funds as are required by Section 31 under the 1940 Act, and
rules adopted thereunder, and by other applicable legal provisions, and to
preserve such records for the periods and in the manner required by that
Section, and those rules and legal provisions. The Adviser also agrees that
records it maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under
the 1940 Act and otherwise in connection with its services hereunder are the
property of the Trust and will be surrendered promptly to the Trust upon its
request. The Adviser further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Funds are being conducted in accordance
with applicable laws and regulations.
8. AGGREGATION OF ORDERS.
Provided that the investment objective, policies and restrictions of
the Funds are adhered to, the Trust agrees that the Adviser may aggregate sales
and purchase orders of securities held in the Funds with similar orders being
made simultaneously for other accounts managed by the Adviser or with accounts
of the affiliates of the Adviser, if in the Adviser's reasonable judgment such
aggregation shall result in an overall economic benefit to the respective Fund
taking into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. The Trust acknowledges that the determination of
such economic benefit to a Fund by the Adviser represents the Adviser's
evaluation that the Fund is benefited by relatively better purchase or sales
prices, lower commission expenses and beneficial timing of transactions or a
combination of these and other factors.
6
<PAGE>
9. STANDARD OF CARE AND LIMITATION OF LIABILITY.
The Adviser shall exercise its best judgment in rendering the services
provided by it under this Agreement. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund or the
holders of the Fund's shares in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Adviser against any liability to the Trust,
the Fund or to holders of the Fund's shares to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Adviser's reckless
disregard of its obligations and duties under this Agreement. As used in this
Section 9, the term "Adviser" shall include any officers, directors, employees
or other affiliates of the Adviser performing services with respect to the Fund.
10. SERVICES NOT EXCLUSIVE.
It is understood that the services of the Adviser are not exclusive,
and that nothing in this Agreement shall prevent the Adviser from providing
similar services to other investment companies or to other series of investment
companies, including the Trust (whether or not their investment objectives and
policies are similar to those of the Fund) or from engaging in other activities,
provided such other services and activities do not, during the term of this
Agreement, interfere in a material manner with the Adviser's ability to meet its
obligations to the Funds hereunder. When the Adviser recommends the purchase or
sale of a security for other investment companies and other clients, and at the
same time the Adviser recommends the purchase or sale of the same security for a
Fund, it is understood that in light of its fiduciary duty to the Fund, such
transactions will be executed on a basis that is fair and equitable to the Fund.
In connection with purchases or sales of portfolio securities for the account of
a Fund, neither the Adviser nor any of its directors, officers or employees
shall act as a principal or agent or receive any commission. If the Adviser
provides any advice to its clients concerning the shares of a Fund, the Adviser
shall act solely as investment counsel for such clients and not in any way on
behalf of the Trust or the Fund.
11. DURATION AND TERMINATION.
(a) This Agreement shall continue for a period of two years from the date of
commencement, and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually by
(i) the Trustees or (ii) a vote of a "majority" (as defined in the 1940 Act) of
the Funds' outstanding voting securities (as defined in the 1940 Act), provided
that in either event the continuance is also approved by a majority of the
Trustees who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any party to this Agreement, by vote cast in person
(to the extent required by the 1940 Act) at a meeting called for the purpose of
voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated: (a) at any
time without penalty by the Funds upon the vote of a majority of the Trustees or
by vote of the majority of the Funds' outstanding voting securities, upon sixty
(60) days' written notice to the
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<PAGE>
Adviser or (b) by the Adviser at any time without penalty, upon sixty (60)
days' written notice to the Trust. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
12. AMENDMENTS.
This Agreement may be amended at any time but only by the mutual
agreement of the parties to this Agreement and in accordance with any applicable
legal or regulatory requirements.
13. PROXIES.
Unless the Trust gives written instructions to the contrary, the
Adviser shall vote all proxies solicited by or with respect to the issuers of
securities in which assets of a Fund may be invested in a manner which best
serves the interests of the Fund's shareholders. The Adviser shall use its best
good faith judgment to vote such proxies in a manner which best serves the
interests of the Fund's shareholders.
14. USE OF "S&P 500" NAME.
It is understood that the Adviser has entered into a licensing
agreement with The McGraw-Hill Companies, Inc., for use of the terms "S&P 500",
"S&P", "Standard & Poor's", and "Standard & Poor's 500" (the "license"). In
accordance with such license, the Adviser shall permit the Trust, on behalf of
the affected Funds, to use the terms "S&P 500", "S&P", "Standard & Poor's", and
"Standard & Poor's 500", so long as the license and this Agreement shall
continue in effect.
15. FAILURE TO PERFORM; FORCE MAJEURE.
No failure or omission by either party hereto in the performance of any
obligation of this Agreement (other than payment obligations) shall be deemed a
breach of this Agreement or create any liability if the same shall arise from
any cause or causes beyond the control of the party, including but not limited
to, the following: acts of God, acts or omissions of any governmental agency;
any rules, regulations, or orders issued by any governmental authority or by any
officer, department, agency or instrumentality thereof; fire; storm; flood;
earthquake, war; rebellion; insurrection; riot; and invasion and provided that
such failure or omission resulting from one of the above causes is cured as soon
as is practicable after the occurrence of one or more of the above-mentioned
causes.
16. [RESERVED.]
17. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the
SEC thereunder.
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<PAGE>
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected hereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as
an agent of the Trust or the Fund.
(e) All liabilities of the Trust hereunder are limited to the assets
of the Funds, but this shall not be interpreted to conflict with each Fund's
maintaining its separate assets and liabilities.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of June 6, 2000.
X.COM FUNDS
By: _________________________________
Name:
Title:
X.COM ASSET MANAGEMENT, INC.
By: _________________________________
Name:
Title:
10
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
NAME OF FUND ADVISORY FEE EFFECTIVE DATE
- ------------ ------------ --------------
<S> <C> <C>
X.com Premier S&P 500 Fund 0.23% June 6, 2000
X.com U.S.A. Bond Fund 0.32% June 6, 2000
X.com U.S.A. Money Market Fund 1.80% June 6, 2000
X.com International Index Fund 0.35% June 6, 2000
</TABLE>
X.COM FUNDS
By: _________________________________
Name:
Title:
X.COM ASSET MANAGEMENT, INC.
By: _________________________________
Name:
Title:
1
<PAGE>
PROXY
X.COM PREMIER S&P 500 FUND
X.COM U.S.A. BOND FUND
X.COM U.S.A. MONEY MARKET FUND
X.COM INTERNATIONAL INDEX
SPECIAL MEETING OF SHAREHOLDERS
JUNE 6, 2000
SOLICITED ON BEHALF OF
THE BOARD OF TRUSTEES OF
X.COM FUNDS
The undersigned hereby appoints Elon R. Musk, John T. Story and Susan B.
Mosher, and each of them, as proxies of the undersigned, each with the power to
appoint his or her substitute, for the Special Meeting of Shareholders of X.com
Premier S&P 500 Fund, X.com U.S.A. Bond Fund, X.com U.S.A. Money Market Fund,
and X.com International Index (each, a "Fund"), each a series of X.com Funds
(the "Trust"), to be held on June 6, 2000 at the offices of the Trust, 394
University Avenue, Palo Alto, California 94301, or at any and all adjournments
thereof (the "Meeting"), to vote, as designated below, all shares of the Funds
held by the undersigned at the close of business on April 24, 2000. Capitalized
terms used without definition have the meanings given to them in the
accompanying Proxy Statement.
PLEASE RETURN A SEPARATE PROXY FOR EACH FUND IN WHICH YOU OWN SHARES.
AN EXECUTED PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL LISTED BELOW
UNLESS YOU HAVE SPECIFIED OTHERWISE. PLEASE COMPLETE, DATE AND RETURN THIS PROXY
PROMPTLY. YOU MAY VOTE ONLY IF YOU HELD SHARES IN THE FUND AT THE CLOSE OF
BUSINESS ON APRIL 24, 2000. YOUR RETURN OF A COMPLETED PROXY AUTHORIZES THE
PROXIES TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING, INCLUDING WITHOUT LIMITATION ALL MATTERS INCIDENT TO
THE CONDUCT OF THE MEETING.
<PAGE>
Dated: _______________, 2000
- ------------------------------------------------
Type Name
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
E-Mail Address
Please complete exactly as name or names appear on your shareholder account
statement.
X.COM PREMIER S&P FUND
1. Approval of the New Investment Advisory Agreement between the Trust and
the Adviser.
FOR / / AGAINST / / ABSTAIN / /
X.COM U.S.A. BOND FUND
1. Approval of the New Investment Advisory Agreement between the Trust and
the Adviser.
FOR / / AGAINST / / ABSTAIN / /
X.COM U.S.A. MONEY MARKET FUND
1. Approval of the New Investment Advisory Agreement between the Trust and
the Adviser.
FOR / / AGAINST / / ABSTAIN / /
X.COM INTERNATIONAL INDEX FUND
1. Approval of the New Investment Advisory Agreement between the Trust and
the Adviser.
FOR / / AGAINST / / ABSTAIN / /
