TDX Independence Funds, Inc. is an investment company with five series of underlying lifecycle fund portfolios. Each portfolio is designed for investors with different expected investment horizons. Each Fund offers shares, known as TDX Independence Shares, which are listed on the NYSE Arca. Independence Shares are not individually redeemable by the Funds but trade on NYSE Arca in individual share lots. XShares Advisors LLC serves as the investment advisor to each Fund.

The Independence Funds include:

• TDX Independence 2010 Exchange-Traded Fund (TDD)
• TDX Independence 2020 Exchange-Traded Fund (TDH)
• TDX Independence 2030 Exchange-Traded Fund (TDN)
• TDX Independence 2040 Exchange-Traded Fund (TDV)
• TDX Independence In-Target Exchange-Traded Fund (TDX)

Each Fund seeks to invest in a portfolio of securities that substantially replicates a particular lifecycle benchmark index (the Underlying Index). Information about each Underlying Index, including the component securities in each Underlying Index and value of the securities in each Underlying Index are posted throughout the trading day every 15 seconds and are available through Reuters. The Underlying Indexes are:

• Zacks 2010 Lifecycle Index
• Zacks 2020 Lifecycle Index
• Zacks 2030 Lifecycle Index
• Zacks 2040 Lifecycle Index
• Zacks In-Target Lifecycle Index

The Underlying Indexes are designed to reflect a portfolio of investments that can be used for lifecycle investing with respect to five different target dates. Zacks Investment Research is the creator of each of the Underlying Indexes. Each Underlying Index is comprised of a mix of securities from three broad asset classes, international equities, domestic equities, and fixed income (including, cash, cash equivalents or short-term money market instruments). Each Index automatically rebalances, typically quarterly, along a glidepath designed to prudently maximize capital appreciation at the target dates. More aggressive allocations at inception are systematically shifted to more conservative positions as the target date approaches. Upon reaching the target date, each Index has a very conservative allocation, relative to its Lipper benchmark, as discussed below. Over the five years after the target date is reached, allocations shift from conservative to more moderately-conservative allocations and thereafter remain static to perpetuity. Each Index focuses on a different target termination date and seeks to select a diversified group of equity and fixed-income securities with potential to outperform the corresponding target date of a Lipper Mixed-Asset Target Index, or in the case of the Zacks In-Target Lifecycle Index, the Lipper Mixed-Target Allocation Conservative Funds Index. The Underlying Indexes have been developed with respect to the following target dates:

Using the Index Methodology, the securities that represent each of the three broad asset classes are determined generally in the following manner:

International equity securities: for this asset class, common stocks, real estate investment trusts, shares of international equity closed-end funds and American Depositary Receipts may be selected. For international equity exposure, approximately 100 securities of companies listed on a national or international securities exchange are selected that collectively correlate, from a market capitalization and country diversification perspective.

Domestic equity securities: for this asset class, common stocks, real estate investment trusts and shares of domestic equity closed-end funds may be selected. For large capitalization exposure, approximately 100 securities of companies listed on a national securities exchange are selected that collectively replicate, from a historical perspective, with the performance of the Russell 1000 Index. For small and mid capitalization exposure, approximately 200 securities of companies listed on a national securities exchange are selected that collectively replicate, from a historical perspective, with the performance of the Russell 2000 Index. In each case, historical performance is measured on a ten year rolling basis and does not include dividend reinvestment.

Fixed-income securities: for this asset class, bonds, treasury bills and notes, mortgage real estate investment trusts, shares of fixed income closed-end funds and other fixed income securities (including, cash, cash equivalents or short-term money market instruments) may be selected. For fixed income security exposure, approximately 100 securities are selected whose duration collectively matches the time to the target termination date of the Underlying Index. The fixed income securities will be investment-grade fixed income securities (i.e., fixed income securities classified within the four highest ratings of a nationally recognized statistical rating organization such as Moody's Investors Service or Standard & Poor's or, if unrated, determined by Zacks to be of comparable quality).

Once each Underlying Index is established, the Index Methodology adjusts the relative weightings of each asset class within each Index, and may adjust the relative weightings of sub-sectors of one or more asset classes along a glidepath, gradually moving from a more aggressive to a more conservative allocation as the target date approaches, and then gradually back to a more moderately conservative allocation following the target date.