N-CSR

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-09093

E*TRADE Funds

(Exact name of registrant as specified in charter)

4500 Bohannon Drive
Menlo Park, CA 94025

(Address of principal executive offices) (Zip code)

Elizabeth Gottfried
4500 Bohannon Drive
Menlo Park, CA 94025

(Name and address of agent for service)

Registrant’s telephone number, including area code: 650-331-6000

Date of fiscal year end: December 31, 2008

Date of reporting period: December 31, 2008

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

The E*TRADE S&P 500 Index Fund
Management’s Discussion of Fund Performance

The E*TRADE S&P 500 Index Fund (“Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of the S&P 500™ Index. As an index fund, the Fund uses a passive management approach. All investment decisions are based on the goal of producing returns equivalent to the S&P 500™ Index. The S&P 500™ Index is a widely followed unmanaged index of large-capitalization U.S. stocks.

The Fund earned a return of -37.14% for the year ended December 31, 2008, compared to the -36.99% return for the S&P 500™ Index. All ten S&P 500™ Index sectors posted double digit negative returns for the year, with the weakest returns coming from the financials and materials sectors, which posted returns of -55.32% and -45.66%, respectively.

The consumer staples sector was the best performing sector in the S&P 500™ Index with a return of - -15.43% for the year. While consumer staples did not avoid the outgoing tide of equity flows, the sector was helped by companies like Wal-Mart (+20%), Anheuser-Busch (+34.3%), and Wrigley (+38.6%).

Much like in 2007, the financials sector was the weakest performing sector in the S&P™ 500 Index for 2008. In 2007, the financials sector posted a return of -18.6%; in 2008, the financials sector posted a return of -55.3%. In 2007, investors were concerned with companies’ exposure to sub-prime, collateral backed assets. In 2008, investors continued to be concerned with the sub-prime assets as the market conditions that became apparent in 2007 turned into a crisis. The financial crisis peaked in the third quarter when Lehman Brothers declared bankruptcy and the U.S. federal government announced the Troubled Asset Relief Program (TARP).

Wal-Mart Stores was the greatest contributor to the return of the Fund for the year ended December 31, 2008. Wal-Mart Stores posted a total return of 20.0% and, on average, represented 1.2% of the Fund’s holdings. Wal-Mart Stores managed to post solid performance numbers throughout the year.

The largest detractor from performance was General Electric which posted a return of -54.0% and was held at an average weight of 2.6% of the Fund’s portfolio. General Electric’s troubles began when they issued a surprising first quarter earnings report that missed analyst expectations by as much as 7 cents per share. On the same day, General Electric lowered earnings for the year moving forward.

The Fund continued to meet its investment objective of tracking the total return of the S&P 500™ Index. The weight of each of the 500 holdings in the Fund is carefully monitored relative to its weight in the S&P 500™ Index’s universe of stocks. Cash flows are invested promptly to minimize their impact on returns. The difference between the returns of the Fund and its benchmark is due in part to the fact that expenses are deducted from the Fund before its return is calculated. Since the S&P 500™ Index is not a mutual fund, direct investment in it is not possible and there are no expenses charged against its return. NAV rounding may also contribute, either positively or negatively, to the difference between the Fund’s return and the return of the S&P 500™ Index. NAV rounding occurs because mutual fund prices are carried out only to two decimal places. You should remember that past performance is no guarantee of future results and that the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

The following graph shows the hypothetical return of $10,000 invested in both of the S&P 500™ Index and the E*TRADE S&P 500 Index Fund from March 1, 1999 to December 31, 2008, and assumes the reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. An index is unmanaged and does not reflect the costs of operating a mutual fund, such as the costs of buying, selling, and holding securities, which would lower an index’s performance. You cannot invest directly in an index. Past performance is not a guarantee of future results.

E*TRADE Funds — 2008 Annual Report 1

	E*TRADE S&P 500		S&P 500TM
	Index Fund		Index
02/28/1999	$	10,000.00	$	10,000.00
03/31/1999	$	10,394.81	$	10,400.10
04/30/1999	$	10,795.76	$	10,802.90
05/31/1999	$	10,535.14	$	10,547.84
06/30/1999	$	11,119.59	$	11,133.24
07/31/1999	$	10,768.03	$	10,785.66
08/31/1999	$	10,717.80	$	10,731.74
09/30/1999	$	10,416.77	$	10,437.58
10/31/1999	$	11,081.68	$	11,098.07
11/30/1999	$	11,293.23	$	11,323.69
12/31/1999	$	11,955.03	$	11,990.66
01/31/2000	$	11,358.80	$	11,388.25
02/29/2000	$	11,136.47	$	11,172.67
03/31/2000	$	12,216.66	$	12,265.69
04/30/2000	$	11,851.98	$	11,896.62
05/31/2000	$	11,608.87	$	11,652.50
06/30/2000	$	11,880.43	$	11,939.73
07/31/2000	$	11,697.65	$	11,753.11
08/31/2000	$	12,424.67	$	12,483.10
09/30/2000	$	11,766.30	$	11,824.12
10/31/2000	$	11,715.36	$	11,774.10
11/30/2000	$	10,788.32	$	10,845.83
12/31/2000	$	10,832.68	$	10,898.87
01/31/2001	$	11,215.14	$	11,285.56
02/28/2001	$	10,191.82	$	10,256.54

2 E*TRADE Funds — 2008 Annual Report

	E*TRADE S&P 500		S&P 500TM
	Index Fund		Index
03/31/2001	$	9,538.00	$	9,606.79
04/30/2001	$	10,283.64	$	10,353.33
05/31/2001	$	10,345.77	$	10,422.70
06/30/2001	$	10,094.04	$	10,169.01
07/31/2001	$	9,990.19	$	10,068.95
08/31/2001	$	9,356.71	$	9,438.63
09/30/2001	$	8,602.65	$	8,676.46
10/31/2001	$	8,758.87	$	8,841.92
11/30/2001	$	9,435.84	$	9,520.15
12/31/2001	$	9,511.49	$	9,603.56
01/31/2002	$	9,365.32	$	9,463.41
02/28/2002	$	9,187.82	$	9,280.91
03/31/2002	$	9,523.82	$	9,629.96
04/30/2002	$	8,948.21	$	9,046.11
05/31/2002	$	8,874.95	$	8,979.47
06/30/2002	$	8,240.73	$	8,339.78
07/31/2002	$	7,600.36	$	7,689.74
08/31/2002	$	7,652.85	$	7,740.23
09/30/2002	$	6,816.47	$	6,899.02
10/31/2002	$	7,416.99	$	7,506.24
11/30/2002	$	7,848.95	$	7,948.05
12/31/2002	$	7,391.11	$	7,481.13
01/31/2003	$	7,190.20	$	7,285.15
02/28/2003	$	7,084.47	$	7,175.84
03/31/2003	$	7,142.21	$	7,245.51
04/30/2003	$	7,736.51	$	7,842.32
05/31/2003	$	8,139.78	$	8,255.51
06/30/2003	$	8,239.69	$	8,360.83
07/31/2003	$	8,378.09	$	8,508.24
08/31/2003	$	8,537.77	$	8,674.17
09/30/2003	$	8,447.96	$	8,582.06
10/31/2003	$	8,928.56	$	9,067.55
11/30/2003	$	9,003.32	$	9,147.32
12/31/2003	$	9,468.50	$	9,627.05
01/31/2004	$	9,639.87	$	9,803.75
02/29/2004	$	9,768.40	$	9,940.02
03/31/2004	$	9,616.98	$	9,790.06
04/30/2004	$	9,455.80	$	9,636.37
05/31/2004	$	9,595.49	$	9,768.61
06/30/2004	$	9,779.19	$	9,958.57
07/31/2004	$	9,455.74	$	9,628.97
08/31/2004	$	9,488.08	$	9,667.92
09/30/2004	$	9,590.69	$	9,772.63
10/31/2004	$	9,731.41	$	9,921.93
11/30/2004	$	10,131.93	$	10,323.39
12/31/2004	$	10,473.41	$	10,674.68
01/31/2005	$	10,211.85	$	10,414.22
02/28/2005	$	10,429.82	$	10,632.92
03/31/2005	$	10,243.65	$	10,444.71
04/30/2005	$	10,046.66	$	10,246.26
05/31/2005	$	10,364.03	$	10,572.10
06/30/2005	$	10,385.11	$	10,586.90
07/31/2005	$	10,769.74	$	10,980.73

E*TRADE Funds — 2008 Annual Report 3

	E*TRADE S&P 500		S&P 500TM
	Index Fund		Index
08/31/2005	$	10,670.83	$	10,880.80
09/30/2005	$	10,748.43	$	10,968.94
10/31/2005	$	10,571.87	$	10,785.76
11/30/2005	$	10,969.14	$	11,193.46
12/31/2005	$	10,975.53	$	11,196.82
01/31/2006	$	11,263.77	$	11,493.53
02/28/2006	$	11,297.03	$	11,524.57
03/31/2006	$	11,435.40	$	11,668.62
04/30/2006	$	11,591.29	$	11,824.98
05/31/2006	$	11,257.24	$	11,484.42
06/30/2006	$	11,263.02	$	11,500.50
07/31/2006	$	11,341.32	$	11,571.80
08/31/2006	$	11,609.75	$	11,847.21
09/30/2006	$	11,907.28	$	12,152.87
10/31/2006	$	12,289.21	$	12,549.06
11/30/2006	$	12,525.11	$	12,787.49
12/31/2006	$	12,694.65	$	12,966.51
01/31/2007	$	12,886.34	$	13,162.31
02/28/2007	$	12,637.63	$	12,904.33
03/31/2007	$	12,777.91	$	13,048.85
04/30/2007	$	13,333.75	$	13,626.92
05/31/2007	$	13,799.10	$	14,102.50
06/30/2007	$	13,576.93	$	13,868.40
07/31/2007	$	13,156.05	$	13,438.48
08/31/2007	$	13,349.44	$	13,640.05
09/30/2007	$	13,846.04	$	14,150.19
10/31/2007	$	14,074.50	$	14,375.18
11/30/2007	$	13,479.15	$	13,774.30
12/31/2007	$	13,387.49	$	13,679.25
01/31/2008	$	12,582.90	$	12,858.50
02/29/2008	$	12,168.92	$	12,440.60
03/31/2008	$	12,122.68	$	12,387.10
04/30/2008	$	12,709.42	$	12,990.35
05/31/2008	$	12,870.83	$	13,159.23
06/30/2008	$	11,789.68	$	12,051.22
07/31/2008	$	11,685.93	$	11,949.99
08/31/2008	$	11,858.88	$	12,123.27
09/30/2008	$	10,801.07	$	11,044.30
10/31/2008	$	8,983.25	$	9,189.96
11/30/2008	$	8,339.15	$	8,530.12
12/31/2008	$	8,416.71	$	8,619.69

The graph and table do not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. Past performance is not a guarantee of future results.

				Average Annual Return						Cumulative Return
							Since						Since
	1 Year			5 Year			Inception			5 Year			Inception
E*TRADE S&P 500 Index Fund		(37.14	)%		(2.33	)%		(1.75	)%		(11.12	)%		(16.01	)%
S&P 500™ Index		(36.99	)%		(2.19	)%		(1.50	)%		(10.49	)%		(13.82	)%

4 E*TRADE Funds — 2008 Annual Report

The E*TRADE Russell 2000 Index Fund
Management’s Discussion of Fund Performance

The E*TRADE Russell 2000 Index Fund (“Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of the Russell 2000™ Index. As an index fund, the Fund uses a passive management approach. All investment decisions are based on the goal of producing returns equivalent to the Russell 2000™ Index. The unmanaged Russell 2000™ Index is a recognized benchmark for small-company stocks traded on the major U.S. exchanges and consists of approximately 2000 small-capitalization stocks.

The Fund generated a return of -33.56% for the year ended December 31, 2008, compared to the - -33.79% return for the Russell 2000™ Index. Eleven of the twelve sectors measured by the Russell 2000™ Index posted double digit negative returns with only the ‘Other’ sector posting a single digit return of -4.48%.

The ‘Other Energy’ sector was the weakest performing sector measured by the Russell 2000™ Index. The ‘Other Energy’ sector posted a return of -53.4% for the year as the sector was hampered by the price collapse in commodities. The ‘Other Energy’ sector was hurt by companies like Berry Petroleum (-82.8%) and EXCO Resources (-41.5%).

The best performing stock held by the Fund was Emergent Biosolutions which posted a stellar +416% rate of return for the year. Emergent Biosolutions benefited from increased revenues based on new sales and grants, coupled with lower research and development costs.

The Fund continued to meet its investment objective of tracking the total return of the Russell 2000™ Index. The weight of each of the holdings in the Fund is carefully monitored relative to its weight in the Russell 2000™ Index’s universe of stocks. Cash flows are invested promptly to minimize their impact on total return. The difference between the returns of the Fund and its benchmark is due in part to the fact that expenses are deducted from the Fund before its return is calculated. Since the Russell 2000™ Index is not a mutual fund, direct investment in it is not possible and there are no expenses charged against its return. NAV rounding may also contribute, either positively or negatively, to the difference between the Fund’s return and the return of the Russell 2000™ Index. NAV rounding occurs because mutual fund prices are carried out only to two decimal places. You should remember that past performance is no guarantee of future results and that the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

The following graph shows the hypothetical return of $10,000 invested in each of the Russell 2000™ Index and the E*TRADE Russell 2000 Index Fund from January 1, 2001 to December 31, 2008, and assumes the reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. An index is unmanaged and does not reflect the costs of operating a mutual fund, such as the costs of buying, selling, and holding securities, which would lower an index’s performance. You cannot invest directly in an index. Past performance is not a guarantee of future results.

E*TRADE Funds — 2008 Annual Report 5

	E*TRADE Russell 2000		Russell 2000™
	Index Fund		Index
12/31/2000	$	10,000.00	$	10,000.00
01/31/2001	$	10,480.00	$	10,520.61
02/28/2001	$	9,800.00	$	9,830.33
03/31/2001	$	9,303.26	$	9,349.47
04/30/2001	$	10,045.11	$	10,080.88
05/31/2001	$	10,275.69	$	10,328.68
06/30/2001	$	10,638.48	$	10,685.33
07/31/2001	$	10,065.87	$	10,106.91
08/31/2001	$	9,744.41	$	9,780.46
09/30/2001	$	8,429.98	$	8,463.93
10/31/2001	$	8,913.42	$	8,959.20
11/30/2001	$	9,598.29	$	9,652.81
12/31/2001	$	10,182.37	$	10,248.60
01/31/2002	$	10,069.12	$	10,142.01
02/28/2002	$	9,791.13	$	9,864.07
03/31/2002	$	10,579.82	$	10,656.87
04/30/2002	$	10,672.63	$	10,753.95
05/31/2002	$	10,198.29	$	10,276.68
06/30/2002	$	9,691.07	$	9,766.78
07/31/2002	$	8,234.31	$	8,291.72
08/31/2002	$	8,203.31	$	8,270.60
09/30/2002	$	7,609.59	$	7,676.67
10/31/2002	$	7,849.01	$	7,922.77
11/30/2002	$	8,546.47	$	8,629.84
12/31/2002	$	8,057.21	$	8,149.35
01/31/2003	$	7,828.19	$	7,923.78

6 E*TRADE Funds — 2008 Annual Report

	E*TRADE Russell 2000		Russell 2000™
	Index Fund		Index
02/28/2003	$	7,588.77	$	7,684.37
03/31/2003	$	7,671.20	$	7,783.30
04/30/2003	$	8,402.79	$	8,521.31
05/31/2003	$	9,280.69	$	9,435.74
06/30/2003	$	9,432.88	$	9,606.52
07/31/2003	$	10,019.16	$	10,207.59
08/31/2003	$	10,490.28	$	10,675.57
09/30/2003	$	10,272.59	$	10,478.56
10/31/2003	$	11,121.65	$	11,358.51
11/30/2003	$	11,499.01	$	11,761.57
12/31/2003	$	11,713.98	$	12,000.24
01/31/2004	$	12,196.38	$	12,521.59
02/29/2004	$	12,301.25	$	12,633.82
03/31/2004	$	12,413.40	$	12,751.54
04/30/2004	$	11,751.77	$	12,101.43
05/31/2004	$	11,940.81	$	12,294.01
06/30/2004	$	12,434.72	$	12,811.77
07/31/2004	$	11,582.60	$	11,949.13
08/31/2004	$	11,519.48	$	11,887.69
09/30/2004	$	12,061.29	$	12,445.78
10/31/2004	$	12,293.24	$	12,690.77
11/30/2004	$	13,358.10	$	13,791.55
12/31/2004	$	13,740.96	$	14,199.78
01/31/2005	$	13,171.61	$	13,607.64
02/28/2005	$	13,390.59	$	13,837.61
03/31/2005	$	13,001.76	$	13,441.86
04/30/2005	$	12,244.70	$	12,671.64
05/31/2005	$	13,045.65	$	13,501.63
06/30/2005	$	13,561.73	$	14,022.79
07/31/2005	$	14,408.65	$	14,911.84
08/31/2005	$	14,144.68	$	14,635.97
09/30/2005	$	14,184.14	$	14,681.34
10/31/2005	$	13,732.28	$	14,226.22
11/30/2005	$	14,404.56	$	14,916.19
12/31/2005	$	14,319.25	$	14,847.58
01/31/2006	$	15,600.02	$	16,179.41
02/28/2006	$	15,553.87	$	16,134.10
03/31/2006	$	16,308.69	$	16,916.61
04/30/2006	$	16,308.69	$	16,913.22
05/31/2006	$	15,383.38	$	15,962.70
06/30/2006	$	15,478.68	$	16,064.86
07/31/2006	$	14,980.12	$	15,542.75
08/31/2006	$	15,420.71	$	16,002.82
09/30/2006	$	15,538.21	$	16,135.64
10/31/2006	$	16,433.08	$	17,065.06
11/30/2006	$	16,851.47	$	17,507.04
12/31/2006	$	16,903.23	$	17,564.81
01/31/2007	$	17,188.89	$	17,858.15
02/28/2007	$	17,051.38	$	17,717.07
03/31/2007	$	17,227.01	$	17,906.64
04/30/2007	$	17,538.82	$	18,228.96
05/31/2007	$	18,249.14	$	18,976.35
06/30/2007	$	17,982.71	$	18,697.39

E*TRADE Funds — 2008 Annual Report 7

	E*TRADE Russell 2000		Russell 2000™
	Index Fund		Index
07/31/2007	$	16,758.08	$	17,418.49
08/31/2007	$	17,133.47	$	17,813.89
09/30/2007	$	17,411.03	$	18,120.29
10/31/2007	$	17,924.65	$	18,640.34
11/30/2007	$	16,646.62	$	17,301.97
12/31/2007	$	16,611.67	$	17,291.59
01/31/2008	$	15,467.12	$	16,112.30
02/29/2008	$	14,901.03	$	15,514.53
03/31/2008	$	14,968.08	$	15,579.69
04/30/2008	$	15,587.76	$	16,232.48
05/31/2008	$	16,301.68	$	16,977.55
06/30/2008	$	15,062.75	$	15,670.28
07/31/2008	$	15,615.55	$	16,250.08
08/31/2008	$	16,194.89	$	16,836.71
09/30/2008	$	14,915.49	$	15,494.83
10/31/2008	$	11,819.04	$	12,271.90
11/30/2008	$	10,432.67	$	10,820.14
12/31/2008	$	11,036.72	$	11,447.70

The graph and table do not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. Past performance is not a guarantee of future results.

				Average Annual Return						Cumulative Return
							Since						Since
	1 Year			5 Year			Inception			5 Year			Inception
E*TRADE Russell 2000 Index Fund		(33.56	)%		(1.18	)%		1.24	%		(5.78	)%		10.36	%
Russell 2000™ Index		(33.79	)%		(0.93	)%		1.71	%		(4.56	)%		14.54	%

8 E*TRADE Funds — 2008 Annual Report

The E*TRADE International Index Fund
Management’s Discussion of Fund Performance

The E*TRADE International Index Fund (“Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of the Morgan Stanley Capital International (MSCI) EAFE Index (“MSCI EAFE Index”). As an index fund, the Fund uses a passive management approach. All investment decisions are based on the goal of producing returns equivalent to the MSCI EAFE Index. The unmanaged MSCI EAFE Index is made up of a wide range of foreign securities trading in developed foreign markets, such as Europe, Australia, New Zealand, Singapore and countries in the Far East.

Foreign stock markets had historically weak returns for the year ended December 31, 2008, both in absolute terms and when compared to the -36.99% return for the S&P 500™ Index. The Fund posted a - -42.29% return for 2008, compared to the -43.06% return for the MSCI EAFE Index. There were 21 countries in the MSCI EAFE Index universe as of December 31, 2008. Japan and the U.K. were the most heavily weighted, with weights of 25.3% and 19.9%, respectively, accounting for 45.2% of the MSCI EAFE Index.

The strongest returns during 2008 came from Japan, Switzerland, Spain and France, all of which posted an annual return of -29.1% or lower. Ireland (-71.7%) and Austria (-68.2%) were the poorest performing countries in the MSCI EAFE Index’s universe.

Given that it had both the heaviest weight in the MSCI EAFE Index and strong performance, Japan made a significant contribution to the MSCI EAFE Index’s return for the year, amounting to 3.69%.

The Fund continued to meet its investment objective of closely tracking the total return of the MSCI EAFE Index. Cash flows are invested promptly to minimize their impact on total return. The difference between the returns of the Fund and its benchmark are due in part to the fact that expenses are deducted from the Fund before its return is calculated. Since the MSCI EAFE Index is not a mutual fund, direct investment in it is not possible and there are no expenses charged against its return. NAV rounding may also contribute, either positively or negatively, to the difference between the Fund’s return and the return of the MSCI EAFE Index. NAV rounding occurs because mutual fund prices are carried out only to two decimal places. You should remember that there are special risks inherent with an investment in this Fund and that past performance is no guarantee of future results and that the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

The following graph shows the hypothetical return of $10,000 invested in each of the MSCI EAFE Index and the E*TRADE International Index Fund from November 1, 1999 to December 31, 2008, and assumes the reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. An index is unmanaged and does not reflect the costs of operating a mutual fund, such as the costs of buying, selling, and holding securities, which would lower an index’s performance. You cannot invest directly in an index. Past performance is not a guarantee of future results.

E*TRADE Funds — 2008 Annual Report 9

	E*TRADE International		MSCI EAFE
	Index Fund		Index
10/31/1999	$	10,000.00	$	10,000.00
11/30/1999	$	10,348.16	$	10,349.50
12/31/1999	$	11,290.19	$	11,280.44
01/31/2000	$	10,487.20	$	10,565.71
02/29/2000	$	10,758.09	$	10,852.15
03/31/2000	$	11,173.08	$	11,274.94
04/30/2000	$	10,571.75	$	10,683.69
05/31/2000	$	10,406.87	$	10,424.82
06/30/2000	$	10,727.53	$	10,834.93
07/31/2000	$	10,288.68	$	10,382.79
08/31/2000	$	10,376.45	$	10,474.99
09/30/2000	$	9,882.12	$	9,967.06
10/31/2000	$	9,657.53	$	9,733.63
11/30/2000	$	9,276.69	$	9,370.66
12/31/2000	$	9,605.54	$	9,705.95
01/31/2001	$	9,605.54	$	9,701.38
02/28/2001	$	8,862.90	$	8,974.75
03/31/2001	$	8,276.10	$	8,380.53
04/30/2001	$	8,854.64	$	8,968.34
05/31/2001	$	8,540.85	$	8,658.93
06/30/2001	$	8,175.44	$	8,308.07
07/31/2001	$	8,027.87	$	8,157.53
08/31/2001	$	7,821.27	$	7,952.61
09/30/2001	$	7,052.15	$	7,148.92
10/31/2001	$	7,220.53	$	7,331.72
11/30/2001	$	7,478.06	$	7,602.48

10 E*TRADE Funds — 2008 Annual Report

	E*TRADE International		MSCI EAFE
	Index Fund		Index
12/31/2001	$	7,521.40	$	7,647.79
01/31/2002	$	7,115.11	$	7,242.00
02/28/2002	$	7,154.75	$	7,293.13
03/31/2002	$	7,576.67	$	7,691.26
04/30/2002	$	7,586.60	$	7,746.95
05/31/2002	$	7,685.90	$	7,852.07
06/30/2002	$	7,377.14	$	7,542.47
07/31/2002	$	6,638.43	$	6,798.48
08/31/2002	$	6,608.48	$	6,784.68
09/30/2002	$	5,893.04	$	6,057.70
10/31/2002	$	6,202.68	$	6,383.72
11/30/2002	$	6,482.35	$	6,674.25
12/31/2002	$	6,260.18	$	6,450.33
01/31/2003	$	5,998.08	$	6,181.54
02/28/2003	$	5,856.94	$	6,040.23
03/31/2003	$	5,741.16	$	5,926.07
04/30/2003	$	6,308.19	$	6,513.70
05/31/2003	$	6,682.84	$	6,914.42
06/30/2003	$	6,848.17	$	7,085.55
07/31/2003	$	7,011.71	$	7,258.16
08/31/2003	$	7,175.25	$	7,434.68
09/30/2003	$	7,392.70	$	7,665.37
10/31/2003	$	7,854.10	$	8,143.62
11/30/2003	$	8,018.16	$	8,325.87
12/31/2003	$	8,639.90	$	8,976.70
01/31/2004	$	8,742.63	$	9,104.26
02/29/2004	$	8,948.10	$	9,315.94
03/31/2004	$	8,990.04	$	9,372.02
04/30/2004	$	8,793.71	$	9,167.99
05/31/2004	$	8,824.71	$	9,207.69
06/30/2004	$	9,036.97	$	9,413.20
07/31/2004	$	8,745.79	$	9,108.97
08/31/2004	$	8,808.19	$	9,151.23
09/30/2004	$	9,005.83	$	9,391.73
10/31/2004	$	9,319.26	$	9,712.55
11/30/2004	$	9,893.88	$	10,378.73
12/31/2004	$	10,314.77	$	10,834.57
01/31/2005	$	10,115.60	$	10,636.30
02/28/2005	$	10,524.42	$	11,097.91
03/31/2005	$	10,261.91	$	10,823.79
04/30/2005	$	10,050.98	$	10,581.34
05/31/2005	$	10,029.88	$	10,597.21
06/30/2005	$	10,146.48	$	10,742.39
07/31/2005	$	10,466.22	$	11,072.18
08/31/2005	$	10,817.94	$	11,355.63
09/30/2005	$	11,238.42	$	11,863.23
10/31/2005	$	10,938.73	$	11,518.01
11/30/2005	$	11,152.80	$	11,802.50
12/31/2005	$	11,699.62	$	12,352.50
01/31/2006	$	12,408.68	$	13,112.18
02/28/2006	$	12,344.22	$	13,084.64
03/31/2006	$	12,788.16	$	13,522.98
04/30/2006	$	13,393.00	$	14,178.84

E*TRADE Funds — 2008 Annual Report 11

	E*TRADE International		MSCI EAFE
	Index Fund		Index
05/31/2006	$	12,917.77	$	13,645.72
06/30/2006	$	12,860.97	$	13,651.18
07/31/2006	$	13,002.90	$	13,787.69
08/31/2006	$	13,352.26	$	14,170.99
09/30/2006	$	13,378.70	$	14,195.08
10/31/2006	$	13,883.55	$	14,748.69
11/30/2006	$	14,300.61	$	15,194.10
12/31/2006	$	14,730.75	$	15,671.19
01/31/2007	$	14,919.30	$	15,777.75
02/28/2007	$	14,919.30	$	15,907.13
03/31/2007	$	15,311.68	$	16,325.49
04/30/2007	$	15,890.46	$	17,065.03
05/31/2007	$	16,268.66	$	17,387.56
06/30/2007	$	16,224.73	$	17,413.64
07/31/2007	$	15,913.22	$	17,159.41
08/31/2007	$	15,790.68	$	16,895.15
09/30/2007	$	16,626.01	$	17,802.42
10/31/2007	$	17,350.91	$	18,503.84
11/30/2007	$	16,726.27	$	17,900.61
12/31/2007	$	16,303.10	$	17,497.85
01/31/2008	$	14,958.09	$	15,882.80
02/29/2008	$	14,922.19	$	16,114.68
03/31/2008	$	14,886.38	$	15,953.54
04/30/2008	$	15,669.40	$	16,840.55
05/31/2008	$	15,879.37	$	17,035.90
06/30/2008	$	14,558.21	$	15,645.78
07/31/2008	$	14,019.56	$	15,145.11
08/31/2008	$	13,493.82	$	14,534.76
09/30/2008	$	11,751.77	$	12,438.85
10/31/2008	$	9,307.40	$	9,929.93
11/30/2008	$	8,769.43	$	9,397.69
12/31/2008	$	9,406.97	$	9,963.43

The graph and table do not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. Past performance is not a guarantee of future results.

				Average Annual Return						Cumulative Return
							Since						Since
	1 Year			5 Year			Inception			5 Year			Inception
E*TRADE International Index Fund		(42.29	)%		1.72	%		(0.30	)%		8.91	%		(2.71	)%
MSCI EAFE Index		(43.06	)%		2.11	%		0.29	%		10.97	%		2.69	%

12 E*TRADE Funds — 2008 Annual Report

The E*TRADE Technology Index Fund
Management’s Discussion of Fund Performance

The E*TRADE Technology Index Fund (“Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of the S&P North American Technology Sector Index™ (“Index”). As an index fund, the Fund uses a passive management approach. All investment decisions are based on the goal of producing returns equivalent to the Index. The unmanaged Index is one of the broadest measures of U.S. traded technology stocks available.

The Fund earned a return of -43.79% for the year, compared to the -43.33% return for the Index. The Index is composed of six sub-indices measuring hardware, semiconductors, software, services, multimedia and the internet. All six of the sub-indexes earned double digit negative returns for the year ended December 31, 2008.

The weakest performance was posted in the semiconductors sub-index with a -51.8% return. The semiconductors sub-index was hampered by companies such as Texas Instruments (-52.7%) and MEMC Electronic Materials (-83.86%).

Electronic Data Systems (EDS), a business and technology solutions company, was the greatest contributor to the return of the Fund. EDS posted a one-year return of +21.2%, and represented 0.3% of the Fund’s holdings on average.

Microsoft Corp was the greatest detractor from performance with a total return of -44.4% and an average weight of 9.0% of the Index; Microsoft contributed -4.4% of performance to the annual return of the Fund. Microsoft’s sales suffered from a drop in consumer spending which translated into fewer sales of its popular Windows^® software.

The Fund continued to meet its investment objective of closely tracking the total return of the Index by replicating the holdings represented in the Index, with the weight of each of the Fund’s holdings monitored closely relative to its weight in the Index. Cash flows are invested promptly to minimize their impact on returns. The difference between the returns of the Fund and its benchmark is due in part to the fact that expenses are deducted from the Fund before its return is calculated. Since the Index is not a mutual fund, direct investment in it is not possible and there are no expenses charged against its return. NAV rounding may also contribute, either positively or negatively, to the difference between the Fund’s return and the return of the Index. NAV rounding occurs because mutual fund prices are carried out only to two decimal places. You should remember that there are special risks inherent with an investment in this Fund, that past performance is no guarantee of future results and that the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

The following graph shows the hypothetical return of $10,000 invested in each of the Index and the E*TRADE Technology Index Fund from September 1, 1999 to December 31, 2008, and assumes the reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. An index is unmanaged and does not reflect the costs of operating a mutual fund, such as the costs of buying, selling, and holding securities, which would lower an index’s performance. You cannot invest directly in an index. Past performance is not a guarantee of future results.

E*TRADE Funds — 2008 Annual Report 13

	E*TRADE Technology		S&P North American
	Index Fund		Technology Sector Index™
08/31/1999	$	10,000.00	$	10,000.00
09/30/1999	$	10,107.01	$	10,100.00
10/31/1999	$	10,466.93	$	10,457.54
11/30/1999	$	11,974.71	$	11,919.50
12/31/1999	$	14,384.73	$	14,339.16
01/31/2000	$	13,514.15	$	13,453.00
02/29/2000	$	15,953.78	$	15,893.38
03/31/2000	$	16,662.39	$	16,606.99
04/30/2000	$	15,224.93	$	15,158.86
05/31/2000	$	13,544.52	$	13,488.35
06/30/2000	$	15,194.56	$	15,147.42
07/31/2000	$	14,475.83	$	14,441.55
08/31/2000	$	16,348.58	$	16,320.40
09/30/2000	$	13,696.36	$	13,676.49
10/31/2000	$	12,653.70	$	12,643.92
11/30/2000	$	9,748.41	$	9,748.46
12/31/2000	$	8,967.32	$	8,913.02
01/31/2001	$	10,420.01	$	10,375.64
02/28/2001	$	7,536.48	$	7,499.52
03/31/2001	$	6,487.93	$	6,457.83
04/30/2001	$	7,711.24	$	7,690.63
05/31/2001	$	7,405.41	$	7,384.55
06/30/2001	$	7,416.34	$	7,403.75
07/31/2001	$	6,881.14	$	6,876.60
08/31/2001	$	5,985.50	$	5,981.27
09/30/2001	$	4,775.73	$	4,771.26

14 E*TRADE Funds — 2008 Annual Report

	E*TRADE Technology		S&P North American
	Index Fund		Technology Sector Index™
10/31/2001	$	5,536.75	$	5,537.52
11/30/2001	$	6,474.25	$	6,481.67
12/31/2001	$	6,363.96	$	6,366.94
01/31/2002	$	6,341.90	$	6,359.94
02/28/2002	$	5,492.64	$	5,510.25
03/31/2002	$	5,889.69	$	5,902.58
04/30/2002	$	5,161.75	$	5,179.51
05/31/2002	$	4,941.17	$	4,968.19
06/30/2002	$	4,246.32	$	4,265.69
07/31/2002	$	3,805.14	$	3,834.00
08/31/2002	$	3,761.02	$	3,784.54
09/30/2002	$	3,077.20	$	3,109.00
10/31/2002	$	3,749.99	$	3,788.32
11/30/2002	$	4,411.76	$	4,451.65
12/31/2002	$	3,761.02	$	3,803.05
01/31/2003	$	3,727.93	$	3,769.58
02/28/2003	$	3,783.08	$	3,827.25
03/31/2003	$	3,738.96	$	3,784.01
04/30/2003	$	4,124.99	$	4,178.68
05/31/2003	$	4,577.20	$	4,645.02
06/30/2003	$	4,566.17	$	4,633.41
07/31/2003	$	4,830.87	$	4,899.36
08/31/2003	$	5,161.75	$	5,238.40
09/30/2003	$	5,073.52	$	5,161.92
10/31/2003	$	5,580.87	$	5,665.72
11/30/2003	$	5,669.11	$	5,775.07
12/31/2003	$	5,768.37	$	5,864.01
01/31/2004	$	6,022.05	$	6,139.61
02/29/2004	$	5,845.58	$	5,965.86
03/31/2004	$	5,680.14	$	5,801.21
04/30/2004	$	5,338.22	$	5,463.00
05/31/2004	$	5,636.02	$	5,766.19
06/30/2004	$	5,779.40	$	5,908.04
07/31/2004	$	5,227.93	$	5,347.96
08/31/2004	$	4,974.25	$	5,081.63
09/30/2004	$	5,139.70	$	5,257.45
10/31/2004	$	5,415.43	$	5,536.62
11/30/2004	$	5,713.22	$	5,848.89
12/31/2004	$	5,892.14	$	6,035.47
01/31/2005	$	5,503.77	$	5,636.53
02/28/2005	$	5,514.87	$	5,647.80
03/31/2005	$	5,370.61	$	5,510.56
04/30/2005	$	5,093.21	$	5,228.97
05/31/2005	$	5,559.25	$	5,704.28
06/30/2005	$	5,448.29	$	5,591.91
07/31/2005	$	5,814.47	$	5,968.24
08/31/2005	$	5,758.98	$	5,917.51
09/30/2005	$	5,825.56	$	5,976.69
10/31/2005	$	5,714.60	$	5,870.30
11/30/2005	$	6,091.87	$	6,257.15
12/31/2005	$	5,980.91	$	6,141.40
01/31/2006	$	6,202.84	$	6,369.24

E*TRADE Funds — 2008 Annual Report 15

	E*TRADE Technology		S&P North American
	Index Fund		Technology Sector Index™
02/28/2006	$	6,102.97	$	6,271.16
03/31/2006	$	6,236.13	$	6,412.26
04/30/2006	$	6,191.74	$	6,369.94
05/31/2006	$	5,725.70	$	5,902.38
06/30/2006	$	5,648.02	$	5,820.93
07/31/2006	$	5,403.90	$	5,571.79
08/31/2006	$	5,814.47	$	6,007.51
09/30/2006	$	6,047.49	$	6,248.41
10/31/2006	$	6,291.61	$	6,498.35
11/30/2006	$	6,513.53	$	6,732.94
12/31/2006	$	6,435.86	$	6,691.87
01/31/2007	$	6,535.62	$	6,800.94
02/28/2007	$	6,402.29	$	6,661.52
03/31/2007	$	6,424.70	$	6,690.17
04/30/2007	$	6,746.57	$	7,025.35
05/31/2007	$	7,035.33	$	7,323.92
06/30/2007	$	7,090.91	$	7,381.78
07/31/2007	$	7,046.23	$	7,330.11
08/31/2007	$	7,245.64	$	7,541.95
09/30/2007	$	7,538.37	$	7,854.94
10/31/2007	$	8,048.71	$	8,379.65
11/30/2007	$	7,416.09	$	7,722.69
12/31/2007	$	7,507.30	$	7,818.45
01/31/2008	$	6,541.11	$	6,828.63
02/29/2008	$	6,307.60	$	6,595.09
03/31/2008	$	6,374.46	$	6,655.11
04/30/2008	$	6,829.59	$	7,138.93
05/31/2008	$	7,262.59	$	7,590.83
06/30/2008	$	6,563.20	$	6,868.18
07/31/2008	$	6,507.41	$	6,822.16
08/31/2008	$	6,651.88	$	6,970.21
09/30/2008	$	5,719.29	$	6,008.32
10/31/2008	$	4,664.08	$	4,905.79
11/30/2008	$	4,142.17	$	4,353.40
12/31/2008	$	4,220.04	$	4,430.89

The graph and table do not reflect the deduction of taxes that you would pay on a Fund distribution or redemption of Fund shares. Past performance is not a guarantee of future results.

				Average Annual Return						Cumulative Return
							Since						Since
	1 Year			5 Year			Inception			5 Year			Inception
E*TRADE Technology Index Fund		(43.79	)%		(6.06	)%		(8.52	)%		(26.84	)%		(56.62	)%
S&P North American Technology Sector Index™		(43.33	)%		(5.40	)%		(7.77	)%		(24.21	)%		(53.24	)%

16 E*TRADE Funds — 2008 Annual Report

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMON STOCKS — 98.6%
AEROSPACE & DEFENSE — 2.8%
Boeing Co. (The)		22,738	$	970,230
General Dynamics Corp.		12,096		696,609
Goodrich Corp.		3,879		143,601
Honeywell International, Inc.		22,535		739,824
L-3 Communications Holdings, Inc.		3,704		273,281
Lockheed Martin Corp.		10,323		867,958
Northrop Grumman Corp.		10,144		456,886
Precision Castparts Corp.		4,325		257,251
Raytheon Co.		12,847		655,711
Rockwell Collins, Inc.		4,942		193,183
United Technologies Corp.		29,495		1,580,932
				6,835,466
AIR FREIGHT & LOGISTICS — 1.2%
CH Robinson Worldwide, Inc.		5,271		290,063
Expeditors International of Washington, Inc.		6,606		219,782
FedEx Corp.		9,648		618,919
Ryder System, Inc.		1,725		66,896
United Parcel Service, Inc., Class B		30,878		1,703,230
				2,898,890
AIRLINE — 0.1%
Southwest Airlines Co.		22,756		196,157
AUTO COMPONENTS — 0.2%
Goodyear Tire & Rubber Co. (The) (a)		7,486		44,691
Johnson Controls, Inc.		18,410		334,326
				379,017
AUTOMOBILES — 0.1%
Ford Motor Co. (a) (b)		74,121		169,737
General Motors Corp. (b)		18,366		58,771
Harley-Davidson, Inc. (b)		7,224		122,591
				351,099
BEVERAGES — 2.5%
Brown-Forman Corp., Class B		3,040		156,530
Coca-Cola Co. (The)		61,734		2,794,698
Coca-Cola Enterprises, Inc.		9,840		118,375
Constellation Brands, Inc., Class A (a)		6,039		95,235
Dr. Pepper Snapple Group, Inc. (a)		7,871		127,904
Molson Coors Brewing Co., Class B		4,670		228,456
Pepsi Bottling Group, Inc.		4,193		94,384
PepsiCo, Inc.		48,190		2,639,366
				6,254,948
BIOTECHNOLOGY — 2.1%
Amgen, Inc. (a)		32,874		1,898,474
Biogen Idec, Inc. (a)		9,052		431,147
Celgene Corp. (a)		14,216		785,860
Cephalon, Inc. (a) (b)		2,123		163,556
Genzyme Corp. (a)		8,393		557,043
Gilead Sciences, Inc. (a)		28,523		1,458,666
				5,294,746
BUILDING PRODUCTS — 0.1%
Masco Corp.		11,166		124,278
CAPITAL MARKETS — 2.3%
American Capital, Ltd. (b)		6,003		19,450
Ameriprise Financial, Inc.		6,720		156,979
Bank of New York Mellon Corp.		35,535		1,006,707
Charles Schwab Corp. (The)		28,925		467,717
E*TRADE FINANCIAL Corp. (a) (c)		17,460		20,079
Federated Investors, Inc., Class B		2,748		46,606
Franklin Resources, Inc.		4,721		301,105
Goldman Sachs Group, Inc. (The)		13,720		1,157,831
Invesco, Ltd.		11,944		172,471
Janus Capital Group, Inc.		4,635		37,219
Legg Mason, Inc.		4,403		96,470
Merrill Lynch & Co., Inc.		49,680		578,275
Morgan Stanley		32,951		528,534
Northern Trust Corp.		6,920		360,809
State Street Corp.		13,387		526,511
T. Rowe Price Group, Inc.		8,022		284,300
				5,761,063
CHEMICALS — 1.7%
Air Products and Chemicals, Inc.		6,502		326,856
CF Industries Holdings, Inc.		1,764		86,718
Dow Chemical Co.		28,680		432,781
DuPont (E.I.) de Nemours & Co.		27,973		707,717
Eastman Chemical Co.		2,170		68,811
Ecolab, Inc.		5,201		182,815
International Flavors & Fragrances, Inc.		2,440		72,517
Monsanto Co.		17,001		1,196,020
PPG Industries, Inc.		5,088		215,884
Praxair, Inc.		9,568		567,956
Rohm and Haas Co.		3,840		237,274
Sigma-Aldrich Corp.		3,905		164,947
				4,260,296
COMMERCIAL BANKS — 4.0%
Bank of America Corp.		155,684		2,192,031
BB&T Corp.		17,142		470,719
Comerica, Inc. (c)		4,669		92,680
Fifth Third Bancorp		17,907		147,912
First Horizon National Corp. (b)		6,370		67,326
Huntington Bancshares, Inc.		11,357		86,995
KeyCorp		15,337		130,671
M&T Bank Corp. (b)		2,395		137,497
Marshall & Ilsley Corp. (b)		8,076		110,157
National City Corp.		63,174		114,345
PNC Financial Services Group		10,802		529,298
Regions Financial Corp.		21,469		170,893
SunTrust Banks, Inc.		10,966		323,936
U.S. Bancorp		54,440		1,361,544
Wachovia Corp.		66,938		370,837
Wells Fargo & Co. (b)		117,586		3,466,435
Zions Bancorp.		3,578		87,697
				9,860,973
COMMERCIAL SERVICES & SUPPLIES — 1.0%
Apollo Group, Inc., Class A (a)		3,292		252,233
Avery Dennison Corp.		3,297		107,911
Cintas Corp.		4,076		94,685
Equifax, Inc.		3,919		103,932
H&R Block, Inc.		10,516		238,924
Monster Worldwide, Inc. (a)		3,823		46,220
Pitney Bowes, Inc.		6,395		162,945
R. R. Donnelley & Sons Co.		6,360		86,369
Republic Services, Inc.		9,910		245,669
Robert Half International, Inc.		4,813		100,207
Stericycle, Inc. (a)		2,655		138,272
Waste Management, Inc.		15,207		503,960
Western Union Co. (The)		22,090		316,771
				2,398,098
COMMUNICATIONS EQUIPMENT — 2.5%
Ciena Corp. (a)		2,532		16,964
Cisco Systems, Inc. (a)		181,670		2,961,221
Corning, Inc.		48,227		459,603
Harris Corp.		4,160		158,288
JDS Uniphase Corp. (a)		6,543		23,882
Juniper Networks, Inc. (a) (b)		16,381		286,831
Motorola, Inc.		70,241		311,168
QUALCOMM, Inc.		51,365		1,840,408
Tellabs, Inc. (a)		12,349		50,878
				6,109,243
COMPUTERS & PERIPHERALS — 4.2%
Apple, Inc. (a)		27,581		2,354,038
Cognizant Technology Solutions Corp., Class A (a)		9,042		163,299

The accompanying notes are an integral part of these Financial Statements.

E*TRADE S&P 500 Index Fund — 2008 Annual Report 17

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMPUTERS & PERIPHERALS (continued)
Dell, Inc. (a)		53,695	$	549,837
EMC Corp. (a)		63,320		662,960
Hewlett-Packard Co.		75,938		2,755,790
International Business Machines Corp.		41,684		3,508,125
Lexmark International, Inc. (a)		2,359		63,457
NetApp, Inc. (a)		10,151		141,809
QLogic Corp. (a)		3,774		50,723
SanDisk Corp. (a)		7,013		67,325
Sun Microsystems, Inc. (a)		22,916		87,539
Teradata Corp. (a)		5,460		80,972
				10,485,874
CONSTRUCTION & ENGINEERING — 0.2%
Fluor Corp.		5,631		252,663
Jacobs Engineering Group, Inc. (a)		3,812		183,357
				436,020
CONSTRUCTION MATERIALS — 0.1%
Vulcan Materials Co. (b)		3,405		236,920
CONSUMER FINANCE — 0.5%
American Express Co.		35,948		666,835
Capital One Financial Corp.		12,152		387,524
Discover Financial Services		14,890		141,902
SLM Corp. (a)		14,498		129,032
				1,325,293
CONTAINERS & PACKAGING — 0.2%
Ball Corp.		2,934		122,025
Bemis Co., Inc.		3,092		73,219
Owens-Illinois, Inc. (a)		5,179		141,542
Pactiv Corp. (a)		4,059		100,988
Sealed Air Corp.		4,898		73,176
				510,950
DISTRIBUTORS — 0.1%
Genuine Parts Co.		4,946		187,256
DIVERSIFED FINANCIAL SERVICES — 2.5%
CIT Group, Inc.		11,182		50,766
Citigroup, Inc.		168,843		1,132,937
CME Group, Inc.		2,080		432,869
IntercontinentalExchange, Inc. (a)		2,241		184,748
JPMorgan Chase & Co.		115,807		3,651,395
Leucadia National Corp.		5,491		108,722
Moody’s Corp.		6,026		121,062
NASDAQ OMX Group, Inc. (The) (a)		4,223		104,350
NYSE Euronext		8,247		225,803
Principal Financial Group, Inc.		8,046		181,598
				6,194,250
DIVERSIFIED TELECOMMUNICATIONS SERVICES — 3.8%
American Tower Corp., Class A (a)		12,308		360,871
AT+T, Inc.		182,847		5,211,140
CenturyTel, Inc.		3,026		82,701
Embarq Corp.		4,410		158,584
Frontier Communications Corp.		9,437		82,479
Qwest Communications International, Inc. (b)		45,454		165,453
Sprint Nextel Corp.		88,498		161,951
Verizon Communications, Inc.		88,134		2,987,743
Windstream Corp.		13,634		125,433
				9,336,355
ELECTRIC UTILITIES — 2.9%
Allegheny Energy, Inc.		5,235		177,257
Ameren Corp.		6,517		216,755
American Electric Power Co., Inc.		12,472		415,068
CenterPoint Energy, Inc.		10,598		133,747
Consolidated Edison, Inc.		8,470		329,737
DTE Energy Co.		5,057		180,383
Dynegy, Inc., Class A (a)		15,692		31,384
Edison International		10,102		324,476
Entergy Corp.		5,874		488,306
Exelon Corp.		20,381		1,133,387
FirstEnergy Corp.		9,451		459,130
FPL Group, Inc.		12,665		637,429
Pepco Holdings, Inc.		6,708		119,134
PG&E Corp.		11,200		433,552
Pinnacle West Capital Corp.		3,128		100,503
PPL Corp.		11,611		356,342
Progress Energy, Inc.		8,123		323,702
Southern Co. (The)		24,033		889,221
TECO Energy, Inc.		6,602		81,535
Xcel Energy, Inc.		13,829		256,528
				7,087,576
ELECTRICAL EQUIPMENT — 0.5%
Cooper Industries, Ltd., Class A		5,377		157,170
Emerson Electric Co.		23,800		871,318
Rockwell Automation, Inc.		4,390		141,534
				1,170,022
ELECTRONIC EQUIPMENT & INSTRUMENTS — 0.3%
Agilent Technologies, Inc. (a)		10,859		169,726
Amphenol Corp., Class A		5,454		130,787
FLIR Systems, Inc. (a)		4,308		132,169
Jabil Circuit, Inc.		6,535		44,111
Molex, Inc.		4,370		63,321
Tyco Electronics, Ltd.		14,199		230,166
				770,280
ENERGY EQUIPMENT & SERVICES — 1.4%
Baker Hughes, Inc.		9,557		306,493
BJ Services Co.		9,057		105,695
Cameron International Corp. (a) (b)		6,749		138,355
ENSCO International, Inc.		4,400		124,916
Halliburton Co.		27,731		504,150
Nabors Industries, Ltd. (a)		8,829		105,683
National-Oilwell Varco, Inc. (a)		12,941		316,278
Noble Corp.		8,189		180,895
Rowan Cos., Inc.		3,506		55,745
Schlumberger, Ltd.		37,114		1,571,036
				3,409,246
FOOD & STAPLES RETAILING — 3.2%
Costco Wholesale Corp.		13,393		703,133
CVS Corp.		44,500		1,278,930
Kroger Co. (The)		20,306		536,281
Safeway, Inc.		13,301		316,165
Supervalu, Inc.		6,570		95,922
Sysco Corp.		18,665		428,175
Wal-Mart Stores, Inc.		69,373		3,889,050
Walgreen Co.		30,692		757,172
Whole Foods Market, Inc. (b)		4,353		41,092
				8,045,920
FOOD PRODUCTS — 1.8%
Archer-Daniels-Midland Co.		19,976		575,908
Campbell Soup Co.		6,415		192,514
ConAgra Foods, Inc.		13,872		228,888
Dean Foods Co. (a)		4,776		85,825
General Mills, Inc.		10,367		629,795
H.J. Heinz Co.		9,756		366,826
Hershey Foods Corp.		5,138		178,494
J.M. Smucker Co. (The)		3,674		159,305
Kellogg Co.		7,764		340,451
Kraft Foods, Inc., Class A		45,583		1,223,904
McCormick & Co., Inc.		4,033		128,491
Sara Lee Corp.		21,902		214,421
Tyson Foods, Inc., Class A		9,373		82,107
				4,406,929
GAS UTILITIES — 0.1%
Equitable Resources, Inc.		4,037		135,441
Nicor, Inc.		1,402		48,705

The accompanying notes are an integral part of these Financial Statements.

18 E*TRADE S&P 500 Index Fund — 2008 Annual Report

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
GAS UTILITIES (continued)
iSource, Inc.		8,509	$	93,344
				277,490
HEALTH CARE EQUIPMENT & SUPPLIES — 2.4%
Baxter International, Inc.		19,242		1,031,179
Becton, Dickinson & Co.		7,552		516,481
Boston Scientific Corp. (a)		46,529		360,134
C.R. Bard, Inc.		3,080		259,521
Covidien, Ltd.		15,559		563,858
DENTSPLY International, Inc.		4,621		130,497
Hospira, Inc. (a)		4,944		132,598
Intuitive Surgical, Inc. (a)		1,213		154,039
Medtronic, Inc.		34,696		1,090,148
Millipore Corp. (a)		1,713		88,254
PerkinElmer, Inc.		3,664		50,966
St. Jude Medical, Inc. (a)		10,679		351,980
Stryker Corp.		7,495		299,425
Thermo Fisher Scientific, Inc. (a)		12,992		442,637
Varian Medical Systems, Inc. (a)		3,855		135,079
Waters Corp. (a)		3,069		112,479
Zimmer Holdings, Inc. (a)		6,983		282,253
				6,001,528
HEALTH CARE PROVIDERS & SERVICES — 2.1%
Aetna, Inc.		14,306		407,721
AmerisourceBergen Corp.		4,913		175,198
Cardinal Health, Inc.		11,136		383,858
CIGNA Corp.		8,528		143,697
Coventry Health Care, Inc. (a)		4,622		68,775
DaVita, Inc. (a)		3,237		160,458
Express Scripts, Inc. (a)		7,647		420,432
Humana, Inc. (a)		5,236		195,198
IMS Health, Inc.		5,643		85,548
Laboratory Corp. of America Holdings (a) (b)		3,351		215,838
McKesson Corp.		8,555		331,335
Medco Health Solutions, Inc. (a)		15,452		647,593
Patterson Cos., Inc. (a)		2,829		53,044
Quest Diagnostics, Inc.		4,900		254,359
Tenet Healthcare Corp. (a)		12,031		13,836
UnitedHealth Group, Inc.		37,475		996,835
WellPoint, Inc. (a)		15,854		667,929
				5,221,654
HOME BUILDERS — 0.0%
D.R. Horton, Inc.		8,547		60,427
HOTELS, RESTAURANTS & LEISURE — 1.5%
Carnival Corp.		13,548		329,487
Darden Restaurants, Inc.		4,304		121,287
International Game Technology		9,143		108,710
Marriott International, Inc., Class A		9,162		178,201
McDonald’s Corp.		34,581		2,150,592
Starbucks Corp. (a)		22,653		214,297
Starwood Hotels & Resorts Worldwide, Inc.		5,678		101,636
Wyndham Worldwide Corp.		5,501		36,032
Wynn Resorts, Ltd. (a)		1,905		80,505
Yum! Brands, Inc.		14,352		452,088
				3,772,835
HOUSEHOLD DURABLES — 0.4%
Black & Decker Corp. (The)		1,864		77,934
Centex Corp.		3,857		41,038
Fortune Brands, Inc.		4,648		191,869
Harman International Industries, Inc.		1,816		30,382
KB Home		2,335		31,803
Leggett & Platt, Inc.		4,755		72,228
Lennar Corp., Class A		4,384		38,009
Newell Rubbermaid		8,600		84,108
Pulte Homes, Inc.		6,630		72,466
Snap-On, Inc.		1,782		70,175
Stanley Works (The) (b)		2,444		83,340
Whirlpool Corp.		2,280		94,278
				887,630
HOUSEHOLD PRODUCTS — 3.1%
Clorox Co. (The)		4,281		237,852
Colgate-Palmolive Co.		15,681		1,074,776
Kimberly-Clark Corp.		12,874		678,975
Procter & Gamble Co. (The)		92,640		5,727,005
				7,718,608
INDUSTRIAL CONGLOMERATES — 2.8%
3M Co.		21,500		1,237,110
General Electric Co.		325,894		5,279,483
Textron, Inc.		7,480		103,748
Tyco International, Ltd.		14,674		316,958
				6,937,299
INSURANCE — 2.6%
AFLAC, Inc.		14,462		662,938
Allstate Corp. (The)		16,629		544,766
American International Group, Inc.		83,371		130,892
Aon Corp.		8,370		382,342
Assurant, Inc.		3,649		109,470
Chubb Corp. (The)		11,036		562,836
Cincinnati Financial Corp.		5,034		146,338
Genworth Financial, Inc., Class A		12,783		36,176
Hartford Financial Services Group, Inc. (The)		9,348		153,494
Lincoln National Corp.		7,939		149,571
Loews Corp.		11,227		317,163
Marsh & McLennan Cos., Inc.		15,903		385,966
MBIA, Inc. (b)		5,738		23,354
Metlife, Inc.		24,623		858,358
Progressive Corp. (The)		20,946		310,210
Prudential Financial, Inc.		13,155		398,070
Torchmark Corp. (b)		2,581		115,371
Travelers Cos., Inc. (The)		18,136		819,747
UnumProvident Corp.		10,273		191,078
XL Capital, Ltd., Class A		9,952		36,822
				6,334,962
INTERNET & CATALOG RETAIL — 0.4%
Amazon.com, Inc. (a)		9,979		511,723
eBay, Inc. (a)		33,281		464,603
Expedia, Inc. (a)		6,499		53,552
				1,029,878
INTERNET SOFTWARE & SERVICES — 1.2%
Akamai Technologies, Inc. (a)		5,247		79,177
Google, Inc., Class A (a)		7,422		2,283,378
VeriSign, Inc. (a)		5,990		114,289
Yahoo!, Inc. (a)		42,968		524,210
				3,001,054
IT SERVICES — 0.8%
Affiliated Computer Services, Inc., Class A (a)		3,015		138,539
Automatic Data Processing, Inc.		15,778		620,707
Computer Sciences Corp. (a)		4,692		164,877
Convergys Corp. (a)		3,596		23,050
Fidelity National Information Services, Inc.		5,895		95,912
Fiserv, Inc. (a)		4,969		180,723
MasterCard, Inc., Class A		2,245		320,878
Paychex, Inc.		9,948		261,433
Total System Services, Inc.		6,107		85,498
				1,891,617
LEISURE EQUIPMENT & PRODUCTS — 0.1%
Eastman Kodak Co.		8,077		53,147
Hasbro, Inc.		3,843		112,100
Mattel, Inc.		11,121		177,936
				343,183

The accompanying notes are an integral part of these Financial Statements.

E*TRADE S&P 500 Index Fund — 2008 Annual Report 19

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
LIFE SCIENCES TOOLS & SERVICES — 0.1%
Life Technologies Corp.		5,328	$	124,196
MACHINERY — 1.6%
Caterpillar, Inc.		18,717		836,088
Cummins, Inc.		6,248		167,009
Danaher Corp.		7,911		447,842
Deere & Co.		13,240		507,357
Dover Corp.		5,824		191,726
Eaton Corp.		5,153		256,156
Flowserve Corp.		1,754		90,331
Illinois Tool Works, Inc.		12,212		428,031
Ingersoll-Rand Co., Ltd., Class A		9,891		171,609
ITT Corp.		5,635		259,154
Manitowoc Co., Inc. (The)		4,044		35,021
PACCAR, Inc. (b)		11,266		322,208
Pall Corp.		3,663		104,139
Parker-Hannifin Corp.		5,000		212,700
				4,029,371
MEDIA — 2.5%
CBS Corp., Class B		21,096		172,776
Comcast Corp., Class A		89,353		1,508,279
DIRECTV Group Inc., (The) (a)		16,934		387,958
Gannett Co., Inc. (b)		7,077		56,616
Interpublic Group Cos., Inc. (The) (a)		14,786		58,553
McGraw-Hill Cos., Inc. (The)		9,847		228,352
Meredith Corp.		1,119		19,157
New York Times Co. (The), Class A		3,377		24,753
News Corp., Inc., Class A		71,189		647,108
Omnicon Group, Inc.		9,643		259,590
Scripps Network Interactive, Class A		2,794		61,468
Time Warner, Inc.		111,091		1,117,575
Viacom, Inc., Class B (a)		19,036		362,826
Walt Disney Co. (The)		57,433		1,303,155
Washington Post Co. (The), Class B		185		72,196
				6,280,362
METALS & MINING — 0.7%
AK Steel Holding Corp.		3,475		32,387
Alcoa, Inc.		24,832		279,608
Allegheny Technologies, Inc.		2,987		76,258
Freeport-McMoRan Copper & Gold, Inc., Class B		11,717		286,363
Newmont Mining Corp.		14,160		576,312
Nucor Corp.		9,741		450,034
Titanium Metals Corp. (b)		2,782		24,509
United States Steel Corp.		3,607		134,180
				1,859,651
MULTI-LINE RETAIL — 0.7%
Big Lots, Inc. (a) (b)		2,547		36,906
Family Dollar Stores, Inc.		4,331		112,909
J. C. Penney Co., Inc. (Holding Co.)		6,893		135,792
Kohl’s Corp. (a)		9,443		341,837
Macy’s, Inc.		13,049		135,057
Nordstrom, Inc.		4,945		65,818
Sears Holding Corp. (a) (b)		1,726		67,090
Target Corp.		23,399		807,967
				1,703,376
MULTI-UTILITIES & UNREGULATED POWER — 1.1%
AES Corp. (The) (a)		20,859		171,878
CMS Energy Corp.		7,018		70,952
Constellation Energy Group, Inc.		5,529		138,723
Dominion Resources, Inc.		17,981		644,439
Duke Energy Corp.		39,220		588,692
Integrys Energy Group, Inc.		2,369		101,820
Public Service Enterprise Group, Inc.		15,766		459,894
SCANA Corp.		3,644		129,726
Sempra Energy		7,559		322,240
Wisconsin Energy Corp.		3,627		152,261
				2,780,625
OFFICE ELECTRONICS — 0.1%
Xerox Corp.		27,045		215,549
OIL & GAS — 11.8%
Anadarko Petroleum Corp.		14,243		549,068
Apache Corp.		10,370		772,876
Cabot Oil & Gas Corp.		3,206		83,356
Chesapeake Energy Corp.		16,781		271,349
ChevronTexaco Corp.		63,042		4,663,217
ConocoPhillips		46,256		2,396,061
Consol Energy, Inc.		5,680		162,334
Devon Energy Corp.		13,698		900,096
El Paso Corp.		21,741		170,232
EOG Resources, Inc.		7,714		513,598
Exxon Mobil Corp.		157,827		12,599,329
Hess Corp.		8,776		470,745
Marathon Oil Corp.		21,876		598,527
Massey Energy Co.		2,641		36,419
Murphy Oil Corp.		5,904		261,842
Noble Energy, Inc.		5,354		263,524
Occidental Petroleum Corp.		25,128		1,507,429
Peabody Energy Corp.		8,273		188,211
Pioneer Natural Resources Co.		3,651		59,073
Questar Corp.		5,376		175,741
Range Resources Corp.		4,809		165,382
Smith International, Inc.		6,697		153,294
Southwestern Energy Co. (a)		10,640		308,241
Spectra Energy Corp.		19,064		300,067
Sunoco, Inc.		3,623		157,456
Tesoro Corp.		4,296		56,578
Valero Energy Corp.		16,010		346,456
Weatherford International, Ltd. (a)		21,104		228,345
Williams Cos., Inc. (The)		17,868		258,729
XTO Energy, Inc.		17,897		631,227
				29,248,802
PAPER & FOREST PRODUCTS — 0.2%
International Paper Co.		13,266		156,539
MeadWestvaco Corp.		5,299		59,296
Weyerhauser Co.		6,551		200,526
				416,361
PERSONAL PRODUCTS — 0.2%
Avon Products, Inc.		13,199		317,172
Estee Lauder Cos., Inc. (The), Class A		3,594		111,270
				428,442
PHARMACEUTICALS — 7.8%
Abbott Laboratories		48,142		2,569,339
Allergan, Inc.		9,534		384,411
Bristol-Myers Squibb Co.		61,381		1,427,108
Eli Lilly & Co.		31,022		1,249,256
Forest Laboratories, Inc. (a)		9,452		240,742
Johnson & Johnson		86,088		5,150,645
King Pharmaceuticals, Inc. (a)		7,647		81,211
Merck & Co., Inc.		65,598		1,994,179
Mylan Laboratories, Inc. (a) (b)		9,454		93,500
Pfizer, Inc.		209,218		3,705,251
Schering-Plough Corp.		50,404		858,380
Watson Pharmaceuticals, Inc. (a)		3,245		86,220
Wyeth		41,345		1,550,851
				19,391,093
PROFESSIONAL SERVICES — 0.1%
Dun & Bradstreet Corp. (The)		1,665		128,538
REAL ESTATE — 1.0%
Apartment Investment & Management Co., Class A		3,476		40,144
AvalonBay Communities, Inc.		2,388		144,665
Boston Properties, Inc.		3,714		204,270
CB Richard Ellis Group, Inc. (a)		6,453		27,877
Developers Diversified Realty Corp.		3,550		17,324
Equity Residential		8,400		250,488

The accompanying notes are an integral part of these Financial Statements.

20 E*TRADE S&P 500 Index Fund — 2008 Annual Report

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
REAL ESTATE (continued)
HCP, Inc.		7,802	$	216,662
Host Hotels & Resorts, Inc.		16,213		122,732
Kimco Realty Corp.		7,040		128,691
Plum Creek Timber Co., Inc.		5,175		179,780
Prologis		8,242		114,481
Public Storage, Inc.		3,882		308,619
Simon Property Group, Inc.		6,977		370,688
Vornado Realty Trust		4,246		256,246
				2,382,667
ROAD & RAIL — 0.9%
Burlington Northern Santa Fe Corp.		8,709		659,358
CSX Corp.		12,239		397,400
Norfolk Southern Corp.		11,488		540,510
Union Pacific Corp.		15,713		751,081
				2,348,349
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.1%
Advanced Micro Devices, Inc. (a) (b)		18,880		40,781
Altera Corp.		9,226		154,166
Analog Devices, Inc.		9,005		171,275
Applied Materials, Inc.		41,600		421,408
Broadcom Corp., Class A (a)		13,684		232,217
Intel Corp.		172,576		2,529,964
KLA-Tencor Corp.		5,239		114,158
Linear Technology Corp.		6,879		152,163
LSI Logic Corp. (a)		20,015		65,849
MEMC Electronic Materials, Inc. (a)		6,964		99,446
Microchip Technology, Inc.		5,643		110,208
Micron Technology, Inc. (a) (b)		23,697		62,560
National Semiconductor Corp.		6,052		60,944
Novellus Systems, Inc. (a)		2,893		35,700
NVIDIA Corp. (a)		16,429		132,582
Teradyne, Inc. (a)		4,973		20,986
Texas Instruments, Inc.		40,225		624,292
Xilinx, Inc.		8,571		152,735
				5,181,434
SOFTWARE — 3.6%
Adobe Systems, Inc. (a)		16,447		350,157
Autodesk, Inc. (a)		6,975		137,059
BMC Software, Inc. (a)		5,892		158,554
CA, Inc.		12,212		226,288
Citrix Systems, Inc. (a)		5,654		133,265
Compuware Corp. (a)		7,449		50,281
Electronic Arts, Inc. (a)		9,885		158,555
Intuit, Inc. (a)		9,953		236,782
McAfee, Inc. (a)		4,700		162,479
Microsoft Corp.		237,369		4,614,453
Novell, Inc. (a)		10,305		40,086
Oracle Corp. (a)		121,497		2,154,142
Salesforce.com, Inc. (a)		3,255		104,193
Symantec Corp. (a)		26,017		351,750
				8,878,044
SPECIALTY RETAIL — 1.8%
Abercrombie & Fitch Co., Class A		2,700		62,289
AutoNation, Inc. (a) (b)		3,125		30,875
AutoZone, Inc. (a)		1,187		165,551
Bed Bath & Beyond, Inc. (a)		8,074		205,241
Best Buy Co., Inc.		10,473		294,396
GameStop Corp., Class A (a)		5,081		110,054
Gap, Inc. (The)		14,558		194,932
Home Depot, Inc. (The)		52,663		1,212,302
Limited Brands, Inc.		8,277		83,101
Lowe’s Cos., Inc.		45,445		977,976
Office Depot, Inc. (a)		7,946		23,679
RadioShack Corp.		3,896		46,518
Sherwin-Williams Co. (The)		3,059		182,775
Staples, Inc.		22,046		395,064
Tiffany & Co.		3,819		90,243
TJX Cos., Inc. (The)		13,004		267,492
				4,342,488
TEXTILES, APPAREL & LUXURY GOODS — 0.4%
Coach, Inc. (a)		10,143		210,670
Jones Apparel Group, Inc.		2,511		14,714
NIKE, Inc., Class B		12,164		620,364
Polo Ralph Lauren Corp.		1,745		79,240
V.F. Corp.		2,732		149,632
				1,074,620
THRIFTS & MORTGAGE FINANCE — 0.2%
Hudson City Bancorp, Inc.		16,173		258,121
People’s United Financial, Inc.		10,790		192,386
Sovereign Bancorp, Inc.		16,892		50,338
				500,845
TOBACCO — 1.8%
Altria Group, Inc.		63,865		961,807
Lorillard, Inc.		5,214		293,809
Philip Morris International, Inc.		62,770		2,731,123
Reynolds American, Inc.		5,270		212,434
UST, Inc.		4,574		317,345
				4,516,518
TRADING COMPANIES & DISTRIBUTORS — 0.1%
Fastenal Co. (b)		4,006		139,610
W.W. Grainger, Inc.		2,006		158,154
				297,764
TOTAL COMMON STOCKS (Cost $320,226,713)				243,934,425

	SHARES/
	PRINCIPAL
	AMOUNT
SHORT-TERM INVESTMENTS — 1.6%
BlackRock Liquidity Funds TempCash Portfolio,		2,692,362		2,692,362
U.S. Treasury Bill 1.85%(d) , 01/22/2009 (e)	$	1,250,000		1,249,982
TOTAL SHORT-TERM INVESTMENTS (Cost $3,941,476)				3,942,344
SECURITIES LENDING COLLATERAL — 1.0%
COMMERCIAL PAPER — 0.9%
Clipper Receivables Co., LLC 0.50%, 01/02/2009 (f) (g)		526,769		526,769
Galleon Capital LLC 0.50%, 01/02/2009 (f) (g)		1,755,895		1,755,895
				2,282,664
TIME DEPOSITS — 0.1%
Bank of Montreal 0.01%, 01/02/2009 (f)		58,331		58,331
Barclays Bank 0.01%, 01/02/2009 (f)		58,331		58,331
Credit Suisse 0.01%, 01/02/2009 (f)		58,330		58,330
Dexia Bank 0.15%, 01/02/2009 (f)		58,330		58,330
Bank of Nova Scotia 0.01%, 01/02/2009 (f)		58,330		58,330
				291,652
TOTAL SECURITIES LENDING COLLATERAL (Cost $2,574,316)				2,574,316
TOTAL INVESTMENTS — 101.2% (Cost $326,742,505)				250,451,085
LIABILITIES IN EXCESS OF CASH & OTHER ASSETS — (1.2%)				(3,096,460	)
TOTAL NET ASSETS — 100.0%			$	247,354,625

The accompanying notes are an integral part of these Financial Statements.

E*TRADE S&P 500 Index Fund — 2008 Annual Report 21

E*TRADE S&P 500 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

(a)	Non-income producing.
(b)	Securities (or a portion of securities) on loan. (See Note 9).
(c)	See Note 6 regarding Affiliated Issuers.
(d)	Yield to Maturity.
(e)	See Note 5 regarding Futures Contracts.
(f)	This security was purchased with cash collateral received from securities lending.
(g)	Securities exempt from registration under section 4(2) of the Securities Act of 1933, as amended. These securities may only be resold in an exempt transaction to qualified institutional buyers. At December 31, 2008, these securities amounted to $2,282,664 or 0.9% of net assets.

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 – Quoted Prices	$	246,626,787
Level 2 – Other Significant Observable Inputs		3,824,298
Level 3 – Significant Unobservable Inputs		—
Total	$	250,451,085

			% OF TOTAL
INDUSTRY	VALUE		NET ASSETS
OIL & GAS	$	29,248,802		11.8	%
PHARMACEUTICALS		19,391,093		7.8	%
COMPUTERS & PERIPHERALS		10,485,874		4.2	%
COMMERCIAL BANKS		9,860,973		4.0	%
DIVERSIFIED TELECOMMUNICATIONS SERVICES		9,336,355		3.8	%
SOFTWARE		8,878,044		3.6	%
FOOD & STAPLES RETAILING		8,045,920		3.2	%
HOUSEHOLD PRODUCTS		7,718,608		3.1	%
ELECTRIC UTILITIES		7,087,576		2.9	%
INDUSTRIAL CONGLOMERATES		6,937,299		2.8	%
AEROSPACE & DEFENSE		6,835,466		2.8	%
INSURANCE		6,334,962		2.6	%
MEDIA		6,280,362		2.5	%
BEVERAGES		6,254,948		2.5	%
DIVERSIFED FINANCIAL SERVICES		6,194,250		2.5	%
COMMUNICATIONS EQUIPMENT		6,109,243		2.5	%
HEALTH CARE EQUIPMENT & SUPPLIES		6,001,528		2.4	%
CAPITAL MARKETS		5,761,063		2.3	%
BIOTECHNOLOGY		5,294,746		2.1	%
HEALTH CARE PROVIDERS & SERVICES		5,221,654		2.1	%
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT		5,181,434		2.1	%
TOBACCO		4,516,518		1.8	%
FOOD PRODUCTS		4,406,929		1.8	%
SPECIALTY RETAIL		4,342,488		1.8	%
CHEMICALS		4,260,296		1.7	%
MACHINERY		4,029,371		1.6	%
HOTELS, RESTAURANTS & LEISURE		3,772,835		1.5	%
ENERGY EQUIPMENT & SERVICES		3,409,246		1.4	%
INTERNET SOFTWARE & SERVICES		3,001,054		1.2	%
AIR FREIGHT & LOGISTICS		2,898,890		1.2	%
MULTI-UTILITIES & UNREGULATED POWER		2,780,625		1.1	%
COMMERICIAL SERVICES & SUPPLIES		2,398,098		1.0	%
REAL ESTATE		2,382,667		1.0	%
SECURITIES LENDING COLLATERAL		2,574,316		1.0	%
ROAD & RAIL		2,348,349		0.9	%
IT SERVICES		1,891,617		0.8	%
METALS & MINING		1,859,651		0.7	%
MULTI-LINE RETAIL		1,703,376		0.7	%
CONSUMER FINANCE		1,325,293		0.5	%
ELECTRICAL EQUIPMENT		1,170,022		0.5	%
TEXTILES, APPAREL & LUXURY GOODS		1,074,620		0.4	%
INTERNET & CATALOG RETAIL		1,029,878		0.4	%
HOUSEHOLD DURABLES		887,630		0.4	%
ELECTRONIC EQUIPMENT & INSTRUMENTS		770,280		0.3	%
CONTAINERS & PACKAGING		510,950		0.2	%
THRIFTS & MORTGAGE FINANCE		500,845		0.2	%
CONSTRUCTION & ENGINEERING		436,020		0.2	%
PERSONAL PRODUCTS		428,442		0.2	%
PAPER & FOREST PRODUCTS		416,361		0.2	%
AUTO COMPONENTS		379,017		0.2	%
AUTOMOBILES		351,099		0.1	%
LEISURE EQUIPMENT & PRODUCTS		343,183		0.1	%
TRADING COMPANIES & DISTRIBUTORS		297,764		0.1	%
GAS UTILITIES		277,490		0.1	%
CONSTRUCTION MATERIALS		236,920		0.1	%
OFFICE ELECTRONICS		215,549		0.1	%
AIRLINE		196,157		0.1	%
DISTRIBUTORS		187,256		0.1	%
PROFESSIONAL SERVICES		128,538		0.1	%
BUILDING PRODUCTS		124,278		0.1	%
LIFE SCIENCES TOOLS & SERVICES		124,196		0.1	%
HOME BUILDERS		60,427		0.0	%
SHORT-TERM INVESTMENTS AND LIABILITIES IN EXCESS OF CASH & OTHER ASSETS		845,884		0.4	%
	$	247,354,625		100.0	%

The accompanying notes are an integral part of these Financial Statements.

22 E*TRADE S&P 500 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMON STOCKS — 99.7%
ADVERTISING — 0.1%
Gaiam, Inc., Class A (a)		1,536	$	7,096
Harte-Hanks, Inc.		3,597		22,445
inVentiv Health, Inc. (a)		3,239		37,378
Marchex, Inc., Class B		2,580		15,041
				81,960
AEROSPACE/DEFENSE — 1.6%
AAR Corp. (a)		3,961		72,922
Aerovironment, Inc. (a) (b)		1,004		36,957
ARGON ST, Inc. (a)		1,348		25,423
Curtiss-Wright Corp.		4,673		156,031
Ducommun, Inc.		1,035		17,284
Esterline Technologies Corp. (a)		3,071		116,360
GenCorp., Inc. (a)		5,874		21,616
HEICO Corp. (b)		2,303		89,425
Herley Industries, Inc. (a)		1,323		16,246
Kaman Corp.		2,653		48,099
LMI Aerospace, Inc. (a)		850		9,664
Moog, Inc., Class A (a)		4,398		160,835
Orbital Sciences Corp. (a)		6,112		119,367
Teledyne Technologies, Inc. (a)		3,701		164,880
TransDigm Group, Inc. (a)		3,470		116,488
Triumph Group, Inc.		1,702		72,267
				1,243,864
AGRICULTURE — 0.2%
AgFeed Industries, Inc. (a)		1,945		3,130
Alico, Inc.		359		14,715
Alliance One International, Inc. (a)		9,493		27,909
Andersons, Inc. (The)		1,774		29,236
Cadiz Inc. (a) (b)		1,096		13,711
Griffin Land & Nurseries, Inc.		327		12,053
Maui Land & Pineapple Co., Inc. (a)		408		5,479
Tejon Ranch Co. (a)		1,146		28,352
				134,585
AIRLINE — 1.0%
Airtran Holdings, Inc. (a)		12,216		54,239
Alaska Air Group, Inc. (a)		3,765		110,126
Allegiant Travel Co. (a) (b)		1,429		69,407
Hawaiian Holdings, Inc. (a)		4,461		28,461
JetBlue Airways Corp. (a)		17,701		125,676
Republic Airways Holdings, Inc. (a)		3,499		37,334
SkyWest, Inc.		5,967		110,986
UAL Corp.		13,135		144,748
US Airways Group, Inc. (a)		11,748		90,812
				771,789
APPAREL — 1.0%
American Apparel, Inc. (a)		3,320		6,607
Carter’s, Inc. (a)		5,910		113,827
Cherokee, Inc. (b)		719		12,475
Columbia Sportswear Co.		1,228		43,434
CROCS, Inc. (a) (b)		8,158		10,116
Deckers Outdoor Corp. (a)		1,361		108,703
G-III Apparel Group, Ltd. (a)		1,199		7,662
Gymboree Corp. (a)		2,933		76,522
Iconix Brand Group, Inc. (a)		6,035		59,022
K-Swiss, Inc., Class A		2,670		30,438
Maidenform Brands, Inc. (a)		2,119		21,508
Oxford Industries, Inc.		1,424		12,488
Perry Ellis International, Inc. (a)		1,010		6,403
Quiksilver, Inc. (a)		12,353		22,730
Skechers U.S.A., Inc., Class A (a)		3,387		43,421
Timberland Co., Class A (a)		5,003		57,785
True Religion Apparel, Inc. (a)		1,672		20,800
Volcom, Inc. (a) (b)		1,780		19,402
Warnaco Group, Inc. (The) (a)		4,753		93,301
Weyco Group, Inc.		746		24,655
				791,299
AUTO MANUFACTURERS — 0.4%
CLARCOR, Inc.		5,210		172,868
Force Protection, Inc. (a) (b)		7,144		42,721
Smith (A.O.) Corp.		2,040		60,221
Wabash National Corp.		2,815		12,668
				288,478
AUTO PARTS & EQUIPMENT — 0.4%
American Axle & Manufacturing Holdings		3,973		11,482
Amerigon, Inc. (a)		1,993		6,497
ArvinMeritor, Inc.		7,223		20,586
ATC Technology Corp. (a)		2,126		31,103
Commercial Vehicle Group, Inc. (a)		2,059		1,915
Cooper Tire & Rubber Co.		6,069		37,385
Dana Holding Corp. (a) (b)		9,703		7,180
Dorman Products, Inc. (a)		1,075		14,190
Exide Technologies (a)		7,376		39,019
Fuel Systems Solutions, Inc. (a)		1,265		41,441
Hayes Lemmerz International, Inc. (a)		9,738		4,382
Lear Corp. (a)		6,282		8,858
Modine Manufacturing Co.		3,299		16,066
Spartan Motors, Inc.		2,968		14,039
Superior Industries International, Inc. (b)		2,375		24,985
Tenneco, Inc. (a)		4,568		13,476
Titan International, Inc.		3,361		27,728
Visteon Corp. (a)		11,513		4,030
Wonder Auto Technology, Inc. (a)		1,440		5,645
				330,007
BANKS — 10.3%
1st Source Corp.		1,537		36,319
Abington Bancorp, Inc.		2,396		22,163
AMCORE Financial, Inc.		2,005		7,258
Ameris Bancorp		1,399		16,578
Ames National Corp.		631		16,747
Anchor BanCorp Wisconsin, Inc. (b)		1,845		5,092
Apollo Investment Corp. (b)		14,854		138,291
Arrow Financial Corp.		895		22,500
BancFirst Corp.		735		38,896
Banco Latinoamericano de Exportaciones, SA, Class E		2,855		40,998
BancTrust Financial Group, Inc.		1,719		25,372
Bank Mutual Corp.		4,830		55,738
Bank of the Ozarks, Inc.		1,291		38,265
BankFinancial Corp.		2,137		21,776
Banner Corp.		1,395		13,127
Beneficial Mutual Bancorp, Inc. (a)		3,284		36,945
Berkshire Hills Bancorp, Inc.		1,235		38,112
Boston Private Financial Holdings, Inc.		5,582		38,181
Brookline Bancorp, Inc.		6,093		64,890
Brooklyn Federal Bancorp, Inc.		339		4,763
Bryn Mawr Bank Corp.		674		13,547
Camden National Corp.		754		20,343
Capital City Bank Group, Inc.		1,213		33,042
Capital Southwest Corp.		313		33,854
Capitol Bancorp, Ltd.		1,310		10,218
Cardinal Financial Corp.		2,368		13,474
Cascade Bancorp (b)		2,070		13,972
Cass Information Systems, Inc.		697		21,231
Cathay General Bancorp		5,054		120,032
Centerstate Banks of Florida, Inc.		905		15,376
Central Pacific Financial Corp.		2,874		28,855
Chemical Financial Corp.		2,488		69,365
Citizens & Northern Corp.		879		17,360
Citizens Republic Bancorp, Inc.		12,987		38,701
City Bank (b)		1,329		6,911
City Holding Co.		1,661		57,770
Clifton Savings Bancorp, Inc.		1,236		14,659
CoBiz Financial, Inc. (b)		1,973		19,217
Colonial BancGroup, Inc. (The)		21,081		43,638
Columbia Banking System, Inc.		1,864		22,238
Community Bank System, Inc. (California)		3,362		81,999

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 23

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

		VALUE
	SHARES	(Note 2)
BANKS (continued)
Community Trust Bancorp, Inc.	1,544	$	56,742
Corus Bankshares, Inc. (b)	3,589		3,984
CVB Financial Corp.	6,908		82,205
Danvers Bancorp, Inc.	1,749		23,384
Dime Community Bancshares	2,320		30,856
East West Bancorp, Inc. (b)	6,625		105,801
Encore Bancshares, Inc. (a)	630		6,930
Enterprise Financial Services Corp.	1,107		16,871
Essa Bancorp, Inc.	1,664		23,512
Farmers Capital Bank Corp.	608		14,847
FBR Capital Markets Corp. (a)	3,025		14,701
Financial Institutions, Inc.	1,075		15,426
First Bancorp North Carolina	1,437		26,369
First Bancorp Puerto Rico (b)	7,331		81,667
First Bancorp, Inc.	849		16,887
First Busey Corp., Class A	2,543		46,384
First Commonwealth Financial Corp. (b)	8,774		108,622
First Community Bancshares, Inc.	926		32,290
First Financial Bancorp	3,924		48,618
First Financial Bankshares, Inc.	2,170		119,806
First Financial Corp.	1,217		49,885
First Financial Holdings, Inc.	1,203		24,349
First Financial Northwest, Inc.	2,240		20,922
First Merchants Corp.	1,876		41,666
First Midwest Bancorp, Inc.	5,072		101,288
First Niagara Financial Group, Inc.	12,229		197,743
First Place Financial Corp.	1,617		6,193
First South Bancorp, Inc. (North Carolina)	769		9,659
FirstFed Financial Corp. (a) (b)	1,268		2,219
FirstMerit Corp.	8,343		171,782
Flagstar Bancorp, Inc.	5,208		3,698
Flushing Financial Corp.	2,206		26,384
FNB Corp.	8,982		118,562
Fox Chase Bancorp, Inc. (a)	605		6,655
Frontier Financial Corp. (b)	4,608		20,091
Glacier Bancorp, Inc.	6,262		119,103
Greene Bancshares, Inc.	1,313		17,778
Guaranty Bancorp (a)	5,272		10,544
Guaranty Financial Group, Inc. (a) (b)	9,358		24,424
Hancock Holding Co.	2,687		122,151
Hanmi Financial Corp.	3,746		7,717
Harleysville National Corp.	4,377		63,204
Heartland Financial USA, Inc.	1,349		27,776
Heritage Commerce Corp.	1,069		12,016
Home Bancshares, Inc., Cornway, AR	1,327		35,763
Home Federal Bancorp, Inc.	644		6,904
IBERIABANK Corp.	1,640		78,720
Independent Bank Corp. (Massachusetts)	1,629		42,615
Integra Bank Corp.	1,915		2,624
International Bancshares Corp.	5,327		116,288
Investors Bancorp, Inc. (a)	4,540		60,972
Kearny Financial Corp.	1,829		23,411
Lakeland Bancorp, Inc.	2,112		23,781
Lakeland Financial Corp.	1,280		30,490
MainSource Financial Group, Inc.	2,075		32,162
MB Financial, Inc.	3,628		101,403
Meridian Interstate Bancorp, Inc. (a)	1,030		9,527
Midwest Banc Holdings, Inc. (b)	1,989		2,785
Nara Bancorp, Inc.	2,281		22,422
NASB Financial, Inc.	367		9,909
National Penn Bancshares, Inc.	8,301		120,448
NBT Bancorp, Inc.	3,359		93,918
NewAlliance Bancshares, Inc.	11,342		149,374
Northfield Bancorp, Inc. (New Jersey)	2,059		23,164
Northwest Bancorp, Inc.	1,690		36,132
OceanFirst Financial Corp.	866		14,376
Old National Bancorp (Indiana)	6,914		125,558
Old Second Bancorp, Inc. (b)	1,438		16,681
Oriental Financial Group, Inc.	2,381		14,405
Oritani Financial Corp. (a)	1,219		20,540
Pacific Capital Bancorp	4,815		81,277
Pacific Continental Corp.	1,045		15,644
PacWest Bancorp	2,556		68,756
Park National Corp.	1,153		82,728
Peapack-Gladstone Financial Corp.	813		21,658
Pennsylvania Commerce Bancorp, Inc. (a)	507		13,517
Peoples Bancorp, Inc.	983		18,805
Pinnacle Financial Partners, Inc. (a)	2,328		69,398
PremierWest Bancorp (b)	1,897		12,691
PrivateBancorp, Inc. (b)	2,200		71,412
Prosperity Bancshares, Inc.	4,093		121,112
Provident Bankshares Corp.	3,462		33,443
Provident Financial Services, Inc.	6,233		95,365
Provident New York Bancorp	4,015		49,786
Renasant Corp.	2,097		35,712
Republic Bancorp, Inc., Class A	874		23,773
Rockville Financial, Inc.	811		11,330
Roma Financial Corp.	941		11,847
S&T Bancorp, Inc.	2,486		88,253
Sanders Morris Harris Group, Inc.	2,005		12,010
Sandy Spring Bancorp, Inc.	1,643		35,867
Santander BanCorp	406		5,071
SCBT Financial Corp.	1,160		40,020
Seacoast Banking Corp. of Florida	1,342		8,857
Shore Bancshares, Inc.	823		19,744
Sierra Bancorp	699		14,679
Signature Bank (a)	3,625		104,001
Simmons First National Corp., Class A	1,436		42,319
Smithtown Bancorp, Inc. (b)	964		15,453
South Financial Group, Inc. (The)	7,286		31,476
Southside Bancshares, Inc.	1,250		29,375
Southwest Bancorp, Inc.	1,520		19,699
State Bancorp, Inc. (New York)	1,403		13,665
StellarOne Corp.	2,213		37,400
Sterling Bancorp (New York)	1,742		24,440
Sterling Bancshares, Inc.	7,323		44,524
Sterling Financial Corp. (Washington)	5,195		45,716
Suffolk Bancorp	955		34,313
Sun Bancorp, Inc. (New Jersey) (a)	1,413		10,583
Susquehanna Bancshares, Inc.	8,980		142,872
SVB Financial Group (a)	3,133		82,179
SY Bancorp, Inc.	1,342		36,905
Texas Capital Bancshares, Inc. (a)	2,765		36,940
Tompkins Financial Corp.	615		35,639
TowneBank	2,173		53,869
TriCo Bancshares	1,429		35,682
TrustCo Bank Corp. (New York)	7,739		73,598
Trustmark Corp.	5,170		111,620
UCBH Holdings, Inc.	11,297		77,723
UMB Financial Corp.	3,205		157,494
Umpqua Holdings Corp.	6,275		90,799
Union Bankshares Corp.	1,389		34,447
United Bankshares, Inc.	3,954		131,352
United Community Banks, Inc. (b)	4,262		57,871
United Community Financial Corp.	2,586		2,328
United Financial Bancorp, Inc.	1,741		26,359
United Security Bancshares (California) (b)	761		8,812
Univest Corp. of Pennsylvania	1,323		42,521
ViewPoint Financial Group	1,096		17,591
W Holding Co., Inc. (b)	205		2,112
Washington Trust Bancorp, Inc.	1,400		27,650
Waterstone Financial, Inc. (a)	969		3,246
WesBanco, Inc.	2,736		74,447
West Bancorporation	1,706		20,899
West Coast Bancorp	1,511		9,957
Westamerica Bancorp	3,030		154,985
Western Alliance Bancorp (a)	2,228		22,481
Westfield Financial, Inc.	3,105		32,044
Wilshire Bancorp, Inc.	1,983		18,006
Wintrust Financial Corp.	2,363		48,607

The accompanying notes are an integral part of these Financial Statements.

24 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
BANKS (continued)
WSFS Financial Corp.		612	$	29,370
Yadkin Valley Financial Corp.		1,123		16,003
				7,906,023
BEVERAGES — 0.2%
Boston Beer Co., Inc., Class A (a)		813		23,089
Coca-Cola Bottling Co. Consolidated		399		18,338
Farmer Brothers Co.		620		15,463
Green Mountain Coffee Roasters, Inc. (a) (b)		1,801		69,699
National Beverage Corp. (a)		928		8,352
Peet’s Coffee & Tea, Inc. (a)		1,439		33,457
				168,398
BIOTECHNOLOGY — 3.2%
Acorda Therapeutics, Inc. (a)		3,877		79,517
Affymax, Inc. (a)		1,027		10,260
Affymetrix, Inc. (a)		6,805		20,347
Alexion Pharmaceuticals, Inc. (a)		7,929		286,951
AMAG Pharmaceuticals, Inc. (a)		1,779		63,777
American Oriental Bioengineering, Inc. (a) (b)		6,050		41,080
Arena Pharmaceuticals, Inc. (a)		7,610		31,734
Ariad Pharmaceuticals, Inc. (a)		6,050		5,142
ArQule, Inc. (a)		3,791		15,998
Bio-Rad Laboratories, Inc., Class A (a)		1,953		147,080
BioMimetic Therapeutics, Inc. (a)		1,388		12,797
Cambrex Corp. (a)		2,643		12,211
Celera Corp. (a)		8,353		92,969
Celldex Therapeutics, Inc. (a) (b)		1,463		11,587
Clinical Data, Inc. (a)		1,016		9,042
Cougar Biotechnology, Inc. (a)		1,538		39,988
CryoLife, Inc. (a)		2,728		26,489
Cytokinetics, Inc. (a)		3,111		8,866
Enzo Biochem, Inc. (a)		3,316		16,215
Enzon Pharmaceuticals, Inc. (a) (b)		4,683		27,302
Exelixis, Inc. (a)		10,750		53,965
Facet Biotech Corp. (a)		2,492		23,898
Genomic Health, Inc. (a)		1,434		27,934
GTX, Inc. (a) (b)		1,865		31,407
Halozyme Therapeutics, Inc. (a)		5,938		33,253
Human Genome Sciences, Inc. (a)		13,851		29,364
Idera Pharmaceuticals, Inc. (a) (b)		2,014		15,468
ImmunoGen, Inc. (a)		5,079		21,789
Immunomedics, Inc. (a) (b)		6,743		11,463
Incyte Corp. (a)		7,630		28,918
Integra LifeSciences Holdings Corp. (a)		1,834		65,235
InterMune, Inc. (a) (b)		3,307		34,988
Lexicon Pharmaceuticals, Inc. (a)		7,872		11,021
Marshall Edwards, Inc. (a)		2,111		1,478
Martek Biosciences Corp. (a) (b)		3,432		104,024
Maxygen, Inc. (a)		2,595		23,147
Medivation, Inc. (a) (b)		2,630		38,319
Molecular Insight Pharmaceuticals, Inc. (a)		1,733		7,452
Momenta Pharmaceuticals, Inc. (a)		2,734		31,714
Myriad Genetics, Inc. (a)		4,606		305,194
Nanosphere, Inc. (a)		1,291		6,145
Nektar Therapeutics (a)		9,522		52,942
Novavax, Inc. (a)		5,112		9,662
NPS Pharmaceuticals, Inc. (a)		4,627		28,734
Optimer Pharmaceuticals, Inc. (a)		2,654		32,140
Orexigen Therapeutics, Inc. (a)		1,964		10,959
PDL BioPharma, Inc.		12,461		77,009
Protalix BioTherapeutics, Inc. (a)		191		351
Regeneron Pharmaceuticals, Inc. (a)		6,477		118,918
Repligen Corp. (a)		3,044		11,506
Rexahn Pharmaceuticals, Inc. (a) (b)		2,862		2,547
RTI Biologics, Inc. (a)		5,267		14,537
Sangamo BioSciences, Inc. (a) (b)		3,589		12,490
Savient Pharmaceuticals, Inc. (a)		5,316		30,780
Seattle Genetics, Inc. (WA) (a)		6,340		56,680
Sequenom, Inc. (a)		6,261		124,218
XOMA, Ltd. (a)		12,145		7,530
				2,456,531
BUILDING MATERIALS — 0.7%
Aaon, Inc.		1,302		27,186
Apogee Enterprises, Inc.		2,957		30,635
Builders FirstSource, Inc. (a)		1,423		2,177
Ceradyne, Inc. (a)		2,756		55,974
China Architectural Engineering, Inc. (a) (b)		1,827		4,494
Drew Industries, Inc. (a)		1,931		23,172
Interline Brands, Inc. (a)		3,174		33,740
LSI Industries, Inc.		1,692		11,624
NCI Building Systems, Inc. (a)		1,934		31,524
Quanex Building Products Corp.		3,714		34,800
Simpson Manufacturing Co., Inc.		3,887		107,903
Texas Industries, Inc. (b)		2,407		83,042
Trex Co., Inc. (a) (b)		1,552		25,546
Universal Forest Products, Inc.		1,663		44,751
US Concrete, Inc. (a)		4,160		13,978
				530,546
CHEMICALS — 1.7%
Aceto Corp.		2,395		23,974
American Vanguard Corp. (a)		1,945		22,756
Arch Chemicals, Inc.		2,561		66,765
Balchem Corp.		1,814		45,187
Ferro Corp.		4,470		31,513
H.B. Fuller Co.		4,991		80,405
ICO, Inc. (a)		2,715		8,579
Innophos Holdings, Inc.		1,023		20,266
Innospec, Inc.		2,214		13,040
Landec Corp. (a)		2,390		15,726
Metabolix, Inc. (a)		1,860		23,659
Minerals Technologies, Inc.		1,972		80,655
Myers Industries, Inc.		2,917		23,336
Newmarket Corp.		1,388		48,455
NL Industries, Inc.		632		8,469
Olin Corp.		7,825		141,476
OM Group, Inc. (a)		3,147		66,433
Penford Corp.		1,101		11,142
PolyOne Corp. (a)		9,143		28,800
Quaker Chemical Corp.		1,006		16,549
Raven Industries, Inc.		1,601		38,584
Rockwood Holdings, Inc. (a)		4,086		44,129
Schulman (A.), Inc.		2,713		46,121
Sensient Technologies Corp.		5,019		119,854
ShengdaTech, Inc. (a) (b)		2,787		9,810
Solutia, Inc. (a)		9,881		44,464
Spartech Corp.		3,199		20,026
Stepan Co.		663		31,154
Symyx Technologies, Inc. (a)		3,188		18,937
W.R. Grace & Co. (a)		7,374		44,023
Westlake Chemical Corp.		1,878		30,593
Zep, Inc.		2,049		39,566
Zoltek Cos., Inc. (a)		2,697		24,246
				1,288,692
COAL — 0.1%
International Coal Group, Inc. (a)		13,106		30,144
James River Coal Co. (a)		2,824		43,292
National Coal Corp. (a)		2,516		3,195
Westmoreland Coal Co. (a)		931		10,334
				86,965
COMMERCIAL SERVICES — 6.5%
Aaron Rents, Inc.		4,739		126,152
ABM Industries, Inc.		4,505		85,820
ACCO Brands Corp. (a)		5,017		17,309
Actuant Corp., Class A		5,713		108,661
Administaff, Inc.		2,158		46,785
Advance America Cash Advance Centers, Inc.		4,897		9,255

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 25

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMERCIAL SERVICES (continued)
Advisory Board Co. (The) (a)		1,649	$	36,773
Albany Molecular Research, Inc. (a)		2,359		22,977
American Public Education, Inc. (a) (b)		1,153		42,880
Arbitron, Inc.		2,848		37,821
Bankrate, Inc. (a) (b)		1,332		50,616
Bowne & Co., Inc.		2,544		14,959
Capella Education Co. (a)		1,467		86,201
Cardtronics, Inc. (a)		1,080		1,393
CBIZ, Inc. (a)		4,617		39,937
CDI Corp.		1,187		15,360
Cenveo, Inc. (a)		4,991		22,210
Chemed Corp.		2,305		91,670
China Direct, Inc. (a) (b)		668		969
Coinstar, Inc. (a)		2,878		56,150
Consolidated Graphics, Inc. (a)		976		22,097
Corinthian Colleges, Inc. (a)		8,913		145,906
Cornell Cos., Inc. (a)		1,144		21,267
CorVel Corp. (a)		730		16,045
CoStar Group, Inc. (a)		2,012		66,275
CRA International, Inc. (a)		1,134		30,539
Cross Country Healthcare, Inc. (a)		3,034		26,669
Deluxe Corp.		5,391		80,649
Dice Holdings, Inc. (a)		1,655		6,752
Dollar Financial Corp. (a)		2,375		24,462
Dollar Thrifty Automotive Group (a)		1,996		2,176
DynCorp International, Inc., Class A (a)		2,549		38,668
Electro Rent Corp.		2,111		23,559
Emergency Medical Services Corp., Class A (a)		960		35,146
Euronet Worldwide, Inc. (a)		4,933		57,272
Exlservice Holdings, Inc. (a)		1,390		11,912
Exponent, Inc. (a)		1,410		42,413
First Advantage Corp., Class A (a)		1,007		14,249
Forrester Research, Inc. (a)		1,603		45,221
Gartner, Inc., Class A (a)		6,183		110,243
Geo Group, Inc. (The) (a)		5,325		96,010
Gevity HR, Inc.		2,254		3,404
Global Cash Access Holdings, Inc. (a)		4,073		9,042
Grand Canyon Education, Inc. (a)		1,083		20,339
Great Lakes Dredge & Dock Co.		3,902		16,193
GSI Commerce, Inc. (a)		2,301		24,207
H&E Equipment Services, Inc. (a)		1,640		12,644
Hackett Group, Inc. (The) (a)		4,036		11,785
Healthcare Services Group, Inc.		4,434		70,626
Healthspring, Inc. (a)		5,160		103,045
Heartland Payment Systems, Inc.		2,554		44,695
Heidrick & Struggles International, Inc.		1,771		38,147
Hill International, Inc. (a)		2,295		16,157
HMS Holdings Corp. (a)		2,616		82,456
Hudson Highland Group, Inc. (a)		2,399		8,037
Huron Consulting Group, Inc. (a)		2,138		122,443
ICF International, Inc. (a)		651		15,995
ICT Group, Inc. (a)		747		3,421
Interactive Data Corp.		3,821		94,226
j2 Global Communications, Inc. (a)		4,576		91,703
Jackson Hewitt Tax Service, Inc.		2,975		46,678
K12, Inc. (a)		557		10,444
Kelly Services, Inc., Class A		2,572		33,462
Kendle International, Inc. (a)		1,300		33,436
Kenexa Corp. (a)		2,244		17,907
Kforce, Inc. (a)		2,987		22,940
Korn/Ferry International (a)		4,744		54,176
Landauer, Inc.		949		69,562
Learning Tree International, Inc. (a)		876		7,464
LECG Corp. (a)		2,637		17,694
Lincoln Educational Services Corp. (a)		379		5,022
Live Nation, Inc. (a)		7,914		45,426
MAXIMUS, Inc.		1,822		63,970
Mcgrath Rentcorp		2,366		50,538
Midas, Inc. (a)		1,246		13,071
Mobile Mini, Inc. (a)		3,541		51,061
Monro Muffler, Inc.		1,700		43,350
MPS Group, Inc. (a)		9,718		73,177
Multi-Color Corp.		1,097		17,355
National Research Corp.		171		4,952
Navigant Consulting Co. (a)		5,044		80,048
Net 1 UEPS Technologies, Inc. (a)		5,146		70,500
Odyssey Marine Exploration, Inc. (a)		4,814		15,501
On Assignment, Inc. (a)		3,319		18,819
Parexel International Corp. (a)		5,790		56,221
Perficient, Inc. (a)		3,347		15,999
PharmaNet Development Group, Inc. (a)		1,976		1,798
PHH Corp. (a)		5,667		72,141
Pre-Paid Legal Services, Inc. (a)		836		31,174
PRG-Schultz International, Inc. (a)		1,469		5,994
Princeton Review, Inc. (a)		1,309		6,453
Protection One, Inc. (a)		602		2,878
Providence Service Corp. (The) (a)		1,113		1,614
Rent-A-Center, Inc. (a)		6,968		122,985
Resources Connection, Inc. (a)		4,689		76,806
Riskmetrics Group, Inc. (a)		2,151		32,028
Rollins, Inc.		4,252		76,876
RSC Holdings, Inc. (a) (b)		4,909		41,825
Sotheby’s (b)		6,887		61,225
Spherion Corp. (a)		5,200		11,492
Stamps.com, Inc. (a)		1,390		13,664
Standard Parking Corp. (a)		837		16,188
Starent Networks Corp. (a)		2,915		34,776
Steiner Leisure, Ltd. (a)		1,627		48,029
Stewart Enterprises, Inc., Class A		8,536		25,693
SuccessFactors, Inc. (a)		2,240		12,858
Team, Inc. (a)		1,932		53,516
TeleTech Holdings, Inc. (a)		3,754		31,346
TNS, Inc. (a)		2,398		22,517
TrueBlue, Inc. (a)		4,532		43,371
Universal Technical Institute, Inc. (a)		2,155		37,001
Valassis Communications, Inc. (a)		4,710		6,217
Viad Corp.		2,117		52,375
VistaPrint, Ltd. (a) (b)		4,610		85,792
Volt Information Sciences, Inc. (a)		1,216		8,792
Watson Wyatt Worldwide Inc., Class A		4,403		210,551
World Fuel Services Corp.		3,008		111,296
Wright Express Corp. (a)		4,061		51,169
				4,969,206
COMPUTERS — 2.4%
3D Systems Corp. (a)		1,714		13,609
3PAR, Inc. (a)		2,669		20,364
Black Box Corp.		1,791		46,781
CACI International, Inc., Class A (a)		3,145		141,808
CIBER, Inc. (a)		5,533		26,614
Cogo Group, Inc. (a)		2,524		12,267
COMSYS IT Partners, Inc. (a)		1,616		3,620
Cray, Inc. (a)		2,993		6,225
Digimarc Corp. (a)		685		6,864
Echelon Corp. (a)		2,859		23,301
Electronics For Imaging, Inc. (a)		5,566		53,211
Extreme Networks, Inc. (a)		8,840		20,686
Hutchinson Technology, Inc. (a)		2,131		7,416
Hypercom Corp. (a)		4,977		5,375
iGATE Corp. (a)		2,043		13,300
Imation Corp.		2,929		39,747
Immersion Corp. (a)		2,727		16,062
Integral Systems, Inc. (a)		1,666		20,075
Isilon Systems, Inc. (a)		2,413		7,939
Jack Henry & Associates, Inc.		7,719		149,826
Limelight Networks Inc. (a)		3,017		7,392
Magma Design Automation, Inc. (a)		3,609		3,681
Manhattan Associates, Inc. (a)		2,579		40,774
Maxwell Technologies, Inc. (a)		1,788		9,065
Mentor Graphics Corp. (a)		9,353		48,355
Mercury Computer Systems, Inc. (a)		2,172		13,705

The accompanying notes are an integral part of these Financial Statements.

26 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMPUTERS (continued)
MICROS Systems, Inc. (a)		8,506	$	138,818
MTS Systems Corp.		1,836		48,911
NCI, Inc., Class A (a)		637		19,193
NetScout Systems, Inc. (a)		2,887		24,886
Palm, Inc. (a) (b)		10,509		32,263
Perot Systems Corp., Class A (a)		9,032		123,467
QAD, Inc.		1,415		5,929
Quantum Corp. (a)		17,407		6,267
Quest Software, Inc. (a)		7,556		95,130
Rackable Systems, Inc. (a)		2,705		10,658
Radiant Systems, Inc. (a)		2,422		8,162
RadiSys Corp. (a)		2,314		12,796
Rimage Corp. (a)		931		12,485
Riverbed Technology, Inc. (a)		5,778		65,811
ScanSource, Inc. (a)		2,750		52,992
Sigma Designs, Inc. (a) (b)		2,734		25,973
Silicon Storage Technology, Inc. (a)		8,841		20,246
Smart Modular Technologies WWH, Inc. (a)		4,623		7,119
Sonic Solutions, Inc. (a) (b)		2,060		3,626
SonicWALL, Inc. (a)		5,450		21,691
SRA International, Inc., Class A (a)		4,441		76,607
STEC, Inc. (a) (b)		2,984		12,712
Stratasys, Inc. (a) (b)		2,066		22,210
Super Micro Computer, Inc. (a)		2,167		13,717
SYKES Enterprises, Inc. (a)		3,452		66,002
Synaptics, Inc. (a)		3,550		58,788
Syntel, Inc.		1,328		30,703
Tyler Technologies, Inc. (a)		3,970		47,561
Virtusa Corp. (a)		909		5,127
				1,827,912
COMPUTERS, PERIPHERAL & SOFTWARE — 0.6%
Actuate Corp. (a)		6,243		18,479
Art Technology Group, Inc. (a)		12,895		24,887
Bottomline Technologies, Inc. (a)		2,298		16,316
Compellent Technologies, Inc. (a)		1,384		13,466
Data Domain, Inc. (a) (b)		3,458		65,010
Digi International, Inc. (a)		2,698		21,881
DivX, Inc. (a)		2,776		14,518
ENGlobal Corp. (a)		2,653		8,622
i2 Technologies, Inc. (a) (b)		1,427		9,119
infoGROUP, Inc.		3,116		14,770
Knot, Inc. (The) (a)		2,955		24,586
Monotype Imaging Holdings Inc. (a)		1,508		8,746
Move, Inc. (a)		12,579		20,126
Ness Technologies, Inc. (a)		3,844		16,452
Netezza Corp. (a)		3,865		25,664
Netgear, Inc. (a)		3,700		42,217
Phase Forward, Inc. (a)		4,468		55,939
Rightnow Technologies, Inc. (a)		2,725		21,064
Smith Micro Software, Inc. (a)		3,138		17,447
Ultimate Software Group, Inc. (a)		2,411		35,201
Vignette Corp. (a)		2,364		22,245
				496,755
COSMETICS / PERSONAL CARE — 0.2%
Chattem, Inc. (a) (b)		1,794		128,325
Elizabeth Arden, Inc. (a)		2,515		31,714
Inter Parfums, Inc.		1,450		11,132
				171,171
DISTRIBUTION / WHOLESALE — 0.9%
Beacon Roofing Supply, Inc. (a)		4,434		61,544
BMP Sunstone Corp. (a) (b)		2,594		14,449
Brightpoint, Inc. (a)		5,137		22,346
Chindex International. Inc, (a)		1,082		8,602
Columbus McKinnon Corp. (NY) (a)		1,901		25,949
Comfort Systems USA, Inc.		4,134		44,068
Core-Mark Holding Co., Inc. (a)		984		21,176
Houston Wire & Cable Co.		1,744		16,237
MWI Veterinary Supply, Inc. (a)		1,005		27,095
Owens & Minor, Inc.		4,294		161,669
Pool Corp.		4,994		89,742
United Stationers, Inc. (a)		2,411		80,744
Watsco, Inc.		2,440		93,696
				667,317
DIVERSIFED FINANCIAL SERVICES — 1.9%
Advanta Corp., Class B		3,834		8,013
Asset Acceptance Capital Corp. (a) (b)		1,472		7,522
BGC Partners, Inc., Class A		3,435		9,481
Broadpoint Securities Group, Inc. (a)		2,368		7,033
Calamos Asset Management, Inc., Class A		1,811		13,401
Cohen & Steers, Inc. (b)		1,612		17,716
CompuCredit Corp. (a) (b)		1,876		10,374
Credit Acceptance Corp. (a) (b)		613		8,398
Diamond Hill Investment Group, Inc.		201		13,065
Doral Financial Corp. (a)		527		3,952
Duff & Phelps Corp., Class A (a)		1,061		20,286
Encore Capital Group, Inc. (a)		1,482		10,670
Epoch Holding Corp.		1,151		8,736
Evercore Partners, Inc., Class A		1,016		12,690
FCStone Group, Inc. (a)		2,225		9,857
Federal Agricultural Mortgage Corp., Class C		951		3,328
Financial Federal Corp.		2,660		61,898
First Marblehead Corp. (The) (a)		6,775		8,740
Friedman Billings Ramsey Group, Inc., Class A (a)		13,050		2,218
GAMCO Investors, Inc., Class A		742		20,271
GFI Group, Inc.		6,759		23,927
Gladstone Capital Corp.		2,173		17,580
Gladstone Investment Corp.		2,164		10,625
Greenhill & Co., Inc. (b)		1,813		126,493
Interactive Brokers Group, Inc., Class A (a)		4,240		75,854
International Assets Holding Corp. (a)		413		3,544
KBW, Inc. (a) (b)		2,630		60,490
Knight Capital Group, Inc., Class A (a)		9,814		158,496
LaBranche & Co, Inc. (a)		4,903		23,485
Ladenburg Thalmann Financial Services, Inc. (a) (b)		9,032		6,503
MarketAxess Holdings, Inc. (a)		3,197		26,088
MCG Capital Corp.		6,468		4,592
MVC Capital, Inc.		2,504		27,469
National Financial Partners Corp. (b)		3,872		11,771
Nelnet, Inc., Class A		1,830		26,224
NewStar Financial, Inc. (a)		2,344		9,353
NGP Capital Resources Co.		2,228		18,648
Ocwen Financial Corp. (a)		3,728		34,223
OptionsXpress Holdings, Inc.		4,239		56,633
Penson Worldwide, Inc. (a)		1,683		12,824
Phoenix Cos., Inc. (The)		11,789		38,550
Piper Jaffray Cos. (a)		1,930		76,737
Portfolio Recovery Associates, Inc. (a)		1,520		51,437
Pzena Investment Management, Inc., Class A (b)		546		2,304
Resource America, Inc., Class A		1,217		4,868
S1 Corp. (a)		4,819		38,022
Stifel Financial Corp. (a)		2,642		121,136
SWS Group, Inc.		2,511		47,583
Thomas Weisel Partners Group, Inc. (a)		1,988		9,383
TradeStation Group, Inc. (a)		3,150		20,318
US Global Investors, Inc., Class A		1,089		5,325
Westwood Holdings Group, Inc.		526		14,944
World Acceptance Corp. (a)		1,615		31,912
				1,454,990
ELECTRIC — 2.7%
Allete, Inc.		2,734		88,226
Avista Corp.		5,541		107,385
Black Hills Corp.		4,011		108,137
Central Vermont Public Service Corp.		1,194		28,489
CH Energy Group, Inc.		1,625		83,509

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 27

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
ELECTRIC (continued)
Cleco Corp.		6,287	$	143,532
El Paso Electric Co. (a)		4,676		84,589
Empire District Electric Co. (The)		3,478		61,213
EnerNOC, Inc. (a)		947		7,046
IDACORP, Inc.		4,724		139,122
Integrated Electrical Services, Inc. (a)		758		6,640
ITC Holdings Corp.		5,100		222,768
MGE Energy, Inc.		2,275		75,075
NorthWestern Corp.		3,705		86,956
Ormat Technologies, Inc.		1,874		59,724
Otter Tail Corp.		3,695		86,204
Pike Electric Corp. (a)		1,638		20,147
PNM Resources, Inc.		9,045		91,174
Portland General Electric Co.		6,531		127,159
Synthesis Energy Systems, Inc. (a)		1,888		1,284
U.S. Geothermal, Inc. (a)		6,079		5,046
UIL Holdings Corp.		2,633		79,069
UniSource Energy Corp.		3,520		103,347
Westar Energy, Inc.		10,818		221,877
				2,037,718
ELECTRICAL COMPONENTS & EQUIPMENT — 1.0%
Advanced Battery Technologies, Inc. (a) (b)		4,072		10,832
Advanced Energy Industries, Inc. (a)		3,376		33,591
American Superconductor Corp. (a) (b)		4,396		71,699
Beacon Power Corp. (a) (b)		8,694		4,608
Belden, Inc.		4,797		100,161
Bookham, Inc. (a)		9,876		4,444
Capstone Turbine Corp. (a)		17,935		15,065
China BAK Battery, Inc. (a)		2,963		4,800
Coleman Cable, Inc. (a) (b)		774		3,506
Encore Wire Corp. (b)		1,787		33,882
Energy Conversion Devices, Inc. (a) (b)		4,705		118,613
EnerSys (a)		2,694		29,634
Fushi Copperweld, Inc. (a)		1,413		7,447
GrafTech International, Ltd. (a)		12,513		104,108
Graham Corp.		972		10,517
Greatbatch, Inc. (a)		2,393		63,319
Harbin Electric, Inc. (a) (b)		614		4,906
Insteel Industries, Inc.		1,685		19,024
Littelfuse, Inc. (a)		2,233		37,068
Medis Technologies, Ltd. (a) (b)		2,022		910
Microtune, Inc. (a)		4,908		10,012
Orion Energy Systems, Inc. (a) (b)		793		4,290
Powell Industries, Inc. (a)		727		21,098
Power-One, Inc. (a)		6,838		8,137
PowerSecure International, Inc. (a)		1,658		5,455
Ultralife Corp. (a)		1,231		16,508
Universal Display Corp. (a)		2,835		26,791
Valence Technology, Inc. (a)		4,970		9,045
Vicor Corp.		1,873		12,381
				791,851
ELECTRONICS — 2.7%
Actel Corp. (a)		2,646		31,011
Agilysys, Inc.		2,202		9,447
American Science & Engineering, Inc.		948		70,114
Analogig Corp.		1,402		38,247
ATMI, Inc. (a)		3,312		51,104
Axsys Technologies, Inc. (a)		914		50,142
Badger Meter, Inc.		1,526		44,285
Barnes Group, Inc.		4,929		71,470
Bel Fuse, Inc., Class B		1,223		25,928
Benchmark Electronics, Inc. (a)		6,952		88,777
Brady Corp., Class A		5,136		123,007
Checkpoint Systems, Inc. (a)		4,152		40,856
China Security & Surveillance Technology, Inc. (a)		2,634		11,669
Cogent, Inc. (a)		4,232		57,428
Coherent, Inc. (a)		2,472		53,049
CTS Corp.		3,521		19,401
Cubic Corp.		1,605		43,656
Cymer, Inc. (a)		3,127		68,513
Daktronics, Inc.		3,214		30,083
Diodes, Inc. (a)		2,959		17,932
Dionex Corp. (a)		1,913		85,798
Electro Scientific Industries, Inc. (a)		2,595		17,620
FARO Technologies, Inc. (a)		1,718		28,965
FEI Co. (a)		3,758		70,876
ICx Technologies, Inc. (a)		1,343		10,623
II-VI, Inc. (a)		2,515		48,011
KEMET Corp. (a) (b)		7,743		2,091
L-1 Identity Solutions, Inc. (a)		7,460		50,280
LaBarge, Inc. (a)		1,195		17,148
Measurement Specialties, Inc. (a)		1,281		8,903
Methode Electronics, Inc., Class A		3,915		26,387
Microvision, Inc. (a) (b)		7,019		11,792
Multi-Fineline Electronix, Inc. (a)		772		9,025
Newport Corp. (a)		3,528		23,920
NVE Corp. (a) (b)		454		11,863
OSI Systems, Inc. (a)		1,575		21,814
OYO Geospace Corp. (a)		372		6,499
Park Electrochemical Corp.		2,099		39,797
Plexus Corp. (a)		4,156		70,444
Rofin-Sinar Technologies, Inc. (a)		3,036		62,481
Rogers Corp. (a)		1,876		52,097
Sanmina-SCI Corp. (a)		52,042		24,460
Stoneridge, Inc. (a)		1,309		5,969
Taser International, Inc. (a)		6,266		33,084
Technitrol, Inc.		4,012		13,962
TTM Technologies, Inc. (a)		4,398		22,914
Varian, Inc. (a)		3,084		103,345
Watts Water Technologies, Inc., Class A		2,986		74,560
Woodward Governor Co.		6,132		141,159
Zygo Corp. (a)		1,507		10,413
				2,052,419
ENERGY — ALTERNATE SOURCES — 0.2%
Akeena Solar, Inc. (a) (b)		2,048		3,523
Ascent Solar Technologies, Inc. (a) (b)		731		2,749
Aventine Renewable Energy Holdings, Inc. (a)		2,775		1,804
Clean Energy Fuels Corp. (a) (b)		2,548		15,390
Comverge, Inc. (a) (b)		2,139		10,481
Ener1, Inc. (a) (b)		4,182		29,901
Evergreen Energy, Inc. (a)		7,715		2,237
Evergreen Solar, Inc. (a) (b)		14,364		45,821
FuelCell Energy, Inc. (a) (b)		7,163		27,792
Greenhunter Energy, Inc. (b)		420		2,066
Greenhunter Energy, Inc. Warrants, Expiring 09/15/11 (a)		42		—
GT Solar International, Inc. (a)		3,037		8,777
Headwaters, Inc. (a)		4,116		27,783
Pacific Ethanol, Inc. (a) (b)		3,280		1,443
Plug Power, Inc. (a)		7,853		8,010
Quantum Fuel Systems Technologies Worldwide, Inc. (a)		6,799		5,779
				193,556
ENGINEERING & CONSTRUCTION — 0.9%
Dycom Industries, Inc. (a)		4,101		33,710
EMCOR Group, Inc. (a)		6,940		155,664
Granite Construction, Inc.		3,458		151,910
Insituform Technologies, Inc., Class A (a)		2,861		56,333
Layne Christensen Co. (a)		1,879		45,115
Michael Baker Corp. (a)		765		28,236
Orion Marine Group, Inc. (a)		2,114		20,421
Perini Corp. (a)		5,267		123,142
Stanley, Inc. (a)		884		32,018
Sterling Constrution Co., Inc. (a)		1,130		20,950
VSE Corp.		392		15,378
				682,877

The accompanying notes are an integral part of these Financial Statements.

28 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
ENTERTAINMENT — 0.8%
Bally Technologies, Inc. (a)		5,594	$	134,424
Bluegreen Corp. (a)		1,284		4,019
Churchill Downs, Inc.		986		39,854
Cinemark Holdings, Inc.		2,988		22,201
Dover Downs Gaming & Entertainment, Inc.		1,349		4,290
Dover Motorsports, Inc.		1,486		1,932
Elixir Gaming Technologies, Inc. (a) (b)		6,637		863
Great Wolf Resorts, Inc. (a)		2,829		4,357
Isle of Capri Casinos, Inc. (a)		1,530		4,896
Macrovision Solutions Corp. (a)		8,611		108,930
National CineMedia, Inc.		4,302		43,622
Pinnacle Entertainment, Inc. (a) (b)		6,187		47,516
RealNetworks, Inc. (a)		8,943		31,569
Rick’s Cabaret International, Inc. (a)		591		2,358
Shuffle Master, Inc. (a)		5,410		26,834
Six Flags, Inc. (a) (b)		6,505		2,017
Speedway Motorsports, Inc.		1,284		20,685
Steinway Musical Instruments (a)		740		12,957
Vail Resorts, Inc. (a) (b)		3,061		81,423
				594,747
ENVIRONMENTAL CONTROL — 1.2%
American Ecology Corp.		1,629		32,955
Calgon Carbon Corp. (a)		5,579		85,693
Casella Waste Systems, Inc., Class A (a)		2,037		8,311
Clean Harbors, Inc. (a)		2,063		130,877
Darling International, Inc. (a)		8,409		46,165
Energy Recovery, Inc. (a) (b)		1,487		11,271
EnergySolutions, Inc.		3,254		18,385
Fuel Tech, Inc. (a) (b)		1,891		20,026
Met-Pro Corp.		1,474		19,634
Metalico, Inc. (a)		2,370		3,673
Mine Safety Appliances Co.		3,238		77,421
Rentech, Inc. (a) (b)		15,778		10,729
Tetra Tech, Inc. (a)		6,146		148,426
Waste Connections, Inc. (a)		8,222		259,569
Waste Services, Inc. (a)		2,377		15,641
				888,776
FOOD — 2.5%
American Dairy, Inc. (a)		632		9,505
Arden Group, Inc., Class A		117		14,742
B&G Foods, Inc., Class A		1,970		10,638
Cal-Maine Foods, Inc.		1,354		38,860
Calavo Growers, Inc.		1,016		11,684
Chiquita Brands International, Inc. (a)		4,532		66,983
Diamond Foods, Inc.		1,680		33,852
Flowers Foods, Inc.		7,978		194,344
Fresh Del Monte Produce, Inc. (a)		4,321		96,877
Great Atlantic & Pacific Tea Co. (a) (b)		3,457		21,675
Hain Celestial Group, Inc. (a)		4,232		80,789
HQ Sustainable Maritime Industries, Inc. (a)		653		5,113
Imperial Sugar Co.		1,246		17,868
Ingles Markets, Inc., Class A		1,316		23,148
J&J Snack Foods Corp.		1,478		53,031
Lance, Inc.		2,752		63,131
Lifeway Foods, Inc. (a)		473		4,248
M&F Worldwide Corp. (a)		1,248		19,282
Nash Finch Co.		1,333		59,838
Ralcorp Holdings, Inc. (a)		5,800		338,720
Ruddick Corp.		4,396		121,549
Sanderson Farms, Inc.		2,122		73,336
Seaboard Corp.		34		40,596
Smart Balance, Inc. (a)		6,140		41,752
Spartan Stores, Inc.		2,285		53,126
Tootsie Roll Industries, Inc.		2,490		63,775
TreeHouse Foods, Inc. (a)		3,259		88,775
United Natural Foods, Inc. (a)		4,478		79,798
Village Super Market, Class A		329		18,881
Weis Markets, Inc.		1,144		38,473
Winn-Dixie Stores, Inc. (a)		5,572		89,709
Zhongpin, Inc. (a)		1,808		21,696
				1,895,794
FOREST PRODUCTS & PAPER — 0.5%
AbitibiBowater, Inc. (a) (b)		4,794		2,253
Boise, Inc. (a) (b)		4,032		1,734
Buckeye Technologies, Inc. (a)		3,504		12,755
Clearwater Paper Corp. (a)		2,311		19,389
Deltic Timber Corp.		1,075		49,181
Glatfelter		4,735		44,035
Kapstone Paper and Packaging Corp. (a)		1,757		4,182
Louisiana-Pacific Corp.		10,124		15,793
Mercer International, Inc. (a)		2,938		5,641
Neenah Paper, Inc.		1,366		12,075
Rock-Tenn Co., Class A		3,981		136,071
Schweitzer-Mauduit International, Inc.		1,640		32,833
Verso Paper Corp.		1,372		1,413
Wausau Paper Corp.		4,545		51,995
Xerium Technologies, Inc.		1,829		1,207
				390,557
GAS — 0.4%
Chesapeake Utilities Corp.		667		20,997
Laclede Group, Inc. (The)		2,279		106,748
Nicor, Inc.		4,714		163,764
				291,509
HAND / MACHINE TOOLS — 0.4%
Baldor Electric Co.		4,816		85,966
Franklin Electric Co., Inc.		2,388		67,127
K-Tron International, Inc. (a)		237		18,936
Regal-Beloit Corp.		3,359		127,608
Thermadyne Holdings Corp. (a)		1,311		9,007
				308,644
HEALTH CARE — 6.1%
Abiomed, Inc. (a)		3,405		55,910
Accuray, Inc. (a)		3,537		18,251
Air Methods Corp. (a)		1,107		17,701
Alliance Imaging, Inc. (a)		2,633		20,985
Almost Family, Inc. (a)		623		28,023
Alphatec Holdings, Inc. (a)		2,444		5,743
Amedisys, Inc. (a) (b)		2,766		114,360
American Medical Systems Holdings, Inc. (a)		7,599		68,315
AMERIGROUP Corp. (a)		5,592		165,076
AMN Healthcare Services, Inc. (a)		3,541		29,957
AmSurg Corp. (a)		3,243		75,692
Angiodynamics, Inc. (a)		2,370		32,445
ArthroCare Corp. (a) (b)		2,781		13,265
Assisted Living Concepts Inc., Class A (a)		5,743		23,833
athenahealth, Inc. (a)		2,161		81,297
Atrion Corp.		147		14,274
Bio-Reference Labs, Inc. (a)		1,155		30,296
Bruker Corp. (a)		4,948		19,990
Caliper Life Sciences, Inc. (a)		4,684		4,543
Cantel Medical Corp. (a)		1,287		18,880
Capital Senior Living Corp. (a)		2,017		6,011
Cardiac Science Corp. (a)		1,906		14,295
CardioNet, Inc. (a) (b)		440		10,846
Centene Corp. (a)		4,438		87,473
Cepheid, Inc. (a)		5,866		60,889
Columbia Laboratories, Inc. (a)		4,589		5,828
Conceptus, Inc. (a) (b)		3,024		46,025
CONMED Corp. (a)		2,952		70,671
Cyberonics, Inc. (a)		2,428		40,232
Cynosure, Inc., Class A (a)		956		8,728
Datascope Corp.		1,355		70,785
DexCom, Inc. (a)		2,571		7,096
Emeritus Corp. (a) (b)		1,929		19,348
Ensign Group, Inc.		832		13,928

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 29

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
HEALTH CARE (continued)
ev3, Inc. (a)		7,358	$	44,884
Exactech, Inc. (a)		690		11,620
Five Star Quality Care, Inc. (a)		3,119		4,772
Genoptix, Inc. (a)		815		27,775
Gentiva Health Services, Inc. (a)		2,620		76,661
Haemonetics Corp. (Mass) (a)		2,686		151,759
Hanger Orthopedic Group, Inc. (a)		3,173		46,040
Hansen Medical, Inc. (a)		1,671		12,065
HEALTHSOUTH Corp. (a)		8,997		98,607
Healthways, Inc. (a)		3,445		39,549
ICU Medical, Inc. (a)		1,191		39,470
Immucor, Inc. (a)		7,227		192,094
Insulet Corp. (a)		1,797		13,873
Invacare Corp.		3,358		52,116
IRIS International, Inc. (a)		1,804		25,148
Kensey Nash Corp. (a)		708		13,742
Kindred Healthcare, Inc. (a)		2,925		38,083
LHC Group, Inc. (a)		1,528		55,008
Life Sciences Research, Inc. (a)		855		8,037
Luminex Corp. (a)		4,215		90,032
Magellan Health Services, Inc. (a)		4,228		165,568
Masimo Corp. (a) (b)		4,822		143,840
Medcath Corp. (a)		1,559		16,276
Medical Action Industries, Inc. (a)		1,278		12,780
Mentor Corp.		3,534		109,307
Meridian Bioscience, Inc.		4,194		106,821
Merit Medical Systems, Inc. (a)		2,763		49,541
Micrus Endovascular Corp. (a)		1,627		18,889
Molina Healthcare, Inc. (a)		1,454		25,605
National Healthcare Corp.		832		42,132
Natus Medical, Inc. (a)		2,702		34,991
Nighthawk Radiology Holdings, Inc. (a)		1,943		9,443
NuVasive, Inc. (a)		3,723		129,002
NxStage Medical, Inc. (a)		2,670		7,129
Odyssey HealthCare, Inc. (a)		3,379		31,256
OraSure Technologies, Inc. (a)		4,834		17,789
Orthofix International NV (a)		1,675		25,678
Orthovita, Inc. (a)		6,490		22,001
Palomar Medical Technologies, Inc. (a)		1,883		21,711
PSS World Medical, Inc. (a)		6,483		122,010
Psychiatric Solutions, Inc. (a)		5,719		159,274
Quidel Corp. (a)		2,902		37,929
Radnet, Inc. (a) (b)		2,090		7,001
RehabCare Group, Inc. (a)		1,859		28,182
Res-Care, Inc. (a)		2,483		37,295
Sirona Dental Systems, Inc. (a)		1,739		18,260
Skilled Healthcare Group, Inc., Class A (a)		1,751		14,778
Somanetics Corp. (a)		1,260		20,803
SonoSite, Inc. (a)		1,718		32,779
Spectranetics Corp. (a)		2,838		7,407
Stereotaxis, Inc. (a)		2,412		10,613
STERIS Corp.		6,114		146,063
Sun Healthcare Group, Inc. (a)		4,308		38,126
Sunrise Senior Living, Inc. (a)		4,399		7,390
SurModics, Inc. (a)		1,590		40,179
Symmetry Medical, Inc. (a)		3,551		28,301
Synovis Life Technologies, Inc. (a)		1,221		22,882
Thoratec Corp. (a)		5,621		182,626
TomoTherapy, Inc. (a)		4,013		9,551
Trans1, Inc. (a)		1,195		8,616
Triple-S Management Corp., Class B (a) (b)		1,463		16,825
U.S. Physical Therapy, Inc. (a)		1,162		15,489
Virtual Radiologic Corp. (a) (b)		683		5,792
Vision-Sciences, Inc. (a) (b)		1,649		2,523
Vital Images, Inc. (a)		1,639		22,798
Vnus Medical Technologies, Inc. (a)		1,275		20,681
Volcano Corp. (a)		4,863		72,945
West Pharmaceutical Services, Inc.		3,376		127,512
Wright Medical Group, Inc. (a)		3,881		79,289
Zoll Medical Corp. (a)		2,156		40,727
				4,716,731
HOME BUILDERS — 0.3%
Amrep Corp. (a)		158		4,942
Beazer Homes USA, Inc. (a)		3,523		5,566
Brookfield Homes Corp.		1,041		4,497
Cavco Industries, Inc. (a)		634		17,048
Champion Enterprises, Inc. (a)		7,098		3,975
Fleetwood Enterprises, Inc. (a) (b)		6,028		603
Hovnanian Enterprises, Inc., Class A (a)		4,186		7,200
M/I Homes, Inc.		1,403		14,788
Meritage Homes Corp. (a)		3,138		38,189
Palm Harbor Homes, Inc. (a)		891		4,437
Ryland Group, Inc.		4,425		78,190
Skyline Corp.		644		12,874
Standard-Pacific Corp. (a)		10,374		18,466
Winnebago Industries		2,624		15,823
				226,598
HOME FURNISHINGS — 0.3%
American Woodmark Corp.		1,089		19,852
Audiovox Corp., Class A (a)		1,535		7,690
DTS, Inc. (a)		1,838		33,727
Ethan Allen Interiors, Inc.		2,412		34,660
Furniture Brands International, Inc.		4,293		9,488
Hooker Furniture Corp.		1,097		8,403
Kimball International, Inc., Class B		3,129		26,941
La-Z-Boy, Inc.		5,148		11,171
Sealy Corp.		4,123		10,349
Tempur-Pedic International, Inc.		7,637		54,146
Universal Electonics, Inc. (a)		1,457		23,633
				240,060
HOUSEHOLD PRODUCTS / WARE — 0.7%
American Greetings Corp., Class A		4,680		35,428
Blyth, Inc.		2,556		20,039
Central Garden & Pet Co., Class A (a)		6,293		37,129
CSS Industries, Inc.		722		12,808
Ennis, Inc.		2,650		32,091
Fossil, Inc. (a)		4,737		79,108
Helen of Troy, Ltd. (a)		3,088		53,608
Libbey, Inc.		1,327		1,659
National Presto Industries, Inc.		440		33,880
Prestige Brands Holdings, Inc. (a)		3,533		37,273
Russ Berrie & Co., Inc. (a)		1,533		4,553
Spectrum Brands, Inc. (a)		3,426		308
Standard Register Co. (The)		1,686		15,056
Tupperware Brands Corp.		6,488		147,278
				510,218
INSURANCE — 4.5%
AMBAC Financial Group, Inc. (b)		29,959		38,947
American Equity Investment Life Holding Co.		5,716		40,012
American Physicians Capital, Inc.		864		41,558
American Safety Insurance Holdings, Ltd. (a)		1,039		13,725
Amerisafe, Inc. (a)		1,939		39,808
AmTrust Financial Services, Inc.		1,552		18,003
Argo Group International Holdings, Ltd. (a)		3,206		108,748
Aspen Insurance Holdings, Ltd.		8,812		213,691
Assured Guaranty, Ltd.		5,839		66,565
Baldwin & Lyons, Inc., Class B		885		16,098
CastlePoint Holdings, Ltd.		3,451		46,796
Citizens, Inc. (a) (b)		3,740		36,278
CNA Surety Corp. (a)		1,751		33,619
Crawford & Co., Class B (a)		2,420		35,187
Delphi Financial Group, Inc., Class A		4,225		77,909
Donegal Group, Inc., Class A		1,227		20,577
eHealth, Inc. (a)		2,443		32,443
EMC Insurance Group, Inc.		549		14,082
Employers Holdings, Inc.		5,173		85,354
Enstar Group Ltd. (a)		571		33,769
FBL Financial Group, Inc., Class A		1,327		20,502
First Acceptance Corp. (a)		1,552		4,501

The accompanying notes are an integral part of these Financial Statements.

30 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
INSURANCE (continued)
First Mercury Financial Corp. (a)		1,424	$	20,306
Flagstone Reinsurance Holdings, Ltd.		2,952		28,841
Fpic Insurance Group, Inc. (a)		810		35,462
Greenlight Capital Re, Ltd., Class A (a)		2,823		36,671
Hallmark Financial Services (a)		423		3,710
Harleysville Group, Inc.		1,311		45,531
Horace Mann Educators Corp.		4,068		37,385
Independence Holding Co.		582		2,101
Infinity Property & Casualty Corp.		1,477		69,020
IPC Holdings, Ltd.		4,822		144,178
Kansas City Life Insurance Co.		428		18,554
Life Partners Holdings, Inc.		580		25,311
Maiden Holdings, Ltd. (b)		4,816		15,074
Max Capital Group, Ltd.		5,896		104,359
Meadowbrook Insurance Group, Inc.		5,673		36,534
Montpelier Re Holdings, Ltd.		9,752		163,736
National Interstate Corp.		643		11,490
National Western Life Insurance Co., Class A		226		38,232
Navigators Group, Inc. (a)		1,357		74,513
NYMAGIC, Inc.		547		10,420
Odyssey Re Holdings Corp.		2,269		117,557
Platinum Underwriters Holdings, Ltd.		5,049		182,168
PMA Capital Corp., Class A (a)		2,991		21,176
PMI Group, Inc. (The) (b)		7,961		15,524
Presidential Life Corp.		2,267		22,421
Primus Guaranty, Ltd. (a) (b)		2,283		2,603
ProAssurance Corp. (a)		3,348		176,707
Radian Group, Inc.		7,884		29,013
RLI Corp.		1,949		119,201
Safety Insurance Group, Inc.		1,628		61,962
SeaBright Insurance Holdings, Inc. (a)		2,219		26,051
Selective Insurance Group		5,567		127,651
State Auto Financial Corp.		1,459		43,858
Stewart Information Services Corp.		1,761		41,366
Tower Group, Inc.		2,022		57,041
United America Indemnity, Ltd., Class A (a)		1,845		23,634
United Fire & Casualty Co.		2,382		74,009
Universal American Corp. (a)		4,117		36,312
Validus Holdings, Ltd.		6,729		176,031
Zenith National Insurance Corp.		3,883		122,586
				3,436,471
INTERNET COMPANIES — 2.1%
1-800-Flowers.Com, Inc., Class A (a)		2,325		8,882
Ariba, Inc. (a)		8,928		64,371
AsiaInfo Holdings, Inc. (a)		3,625		42,920
Bidz.com, Inc. (a) (b)		567		2,608
Blue Coat Systems, Inc. (a)		3,316		27,854
Blue Nile, Inc. (a) (b)		1,336		32,719
China Information Security Technology, Inc. (a) (b)		2,246		8,086
Chordiant Software, Inc. (a)		2,942		7,826
Cogent Communications Group, Inc. (a) (b)		4,663		30,449
comScore, Inc. (a) (b)		1,762		22,465
Constant Contact, Inc. (a)		1,992		26,394
CyberSource Corp. (a)		7,205		86,388
DealerTrack Holdings, Inc. (a)		4,110		48,868
Digital River, Inc. (a)		3,877		96,150
Drugstore.Com (a)		8,190		10,156
EarthLink, Inc. (a)		11,461		77,476
Entrust, Inc. (a)		6,006		9,489
eResearch Technology, Inc. (a)		4,237		28,091
Global Sources, Ltd. (a) (b)		1,593		8,681
HSW International, Inc. (a) (b)		1,253		476
iBasis, Inc. (a)		3,059		4,313
Infospace, Inc.		3,443		25,995
Internap Network Services Corp. (a)		5,203		13,007
Internet Brands, Inc., Class A (a)		2,173		12,647
Internet Capital Group, Inc. (a)		3,994		21,767
Interwoven, Inc. (a)		4,767		60,064
Keynote Systems, Inc. (a)		1,425		10,987
Liquidity Services, Inc. (a)		1,433		11,937
LoopNet, Inc. (a)		2,929		19,976
Mercadolibre, Inc. (a)		2,497		40,976
ModusLinc Global Solutions, Inc. (a)		4,804		13,884
NetFlix, Inc. (a) (b)		4,126		123,326
NIC, Inc. (a)		4,115		18,929
NutriSystem, Inc. (b)		3,197		46,644
Online Resources Corp. (a)		2,974		14,097
Orbitz Worldwide, Inc. (a)		3,310		12,843
Overstock.Com, Inc. (a)		1,518		16,364
PC-Tel, Inc.		2,045		13,436
Rackspace Hosting, Inc. (a)		1,734		9,329
Safeguard Scientifics, Inc. (a)		11,148		7,692
Sapient Corp. (a)		8,606		38,211
Shutterfly, Inc. (a)		1,928		13,477
Sourcefire, Inc. (a)		1,962		10,987
SupportSoft, Inc. (a)		4,535		10,113
TechTarget (a)		1,363		5,888
TeleCommunication Systems, Inc., Class A (a)		3,298		28,330
Terremark Worldwide, Inc. (a)		4,932		19,185
TheStreet.com, Inc.		1,735		5,032
thinkorswim Group, Inc. (a)		5,363		30,140
TIBCO Software, Inc. (a)		19,474		101,070
United Online, Inc.		7,946		48,232
Valueclick, Inc. (a)		8,672		59,316
Vasco Data Security International, Inc. (a) (b)		2,768		28,593
Vocus, Inc. (a)		1,574		28,663
Web.com Group, Inc. (a)		2,708		9,911
Websense, Inc. (a)		4,714		70,569
				1,646,279
INVESTMENT COMPANIES — 0.3%
Ampal-American Israel Corp., Class A (a)		1,611		934
Ares Capital Corp.		10,012		63,376
BlackRock Kelso Capital Corp. (b)		1,339		13,203
Compass Diversified Trust		2,386		26,842
Fifth Street Finance Corp.		1,000		7,550
Harris & Harris Group, Inc. (a)		2,285		9,026
Hercules Technology Growth Capital, Inc.		3,152		24,964
Kohlberg Capital Corp. (b)		1,353		4,925
Medallion Financial Corp.		1,455		11,102
Prospect Capital Corp. (b)		3,058		36,604
				198,526
IRON / STEEL — 0.1%
China Precision Steel, Inc. (a)		1,682		2,102
General Steel Holdings, Inc. (a) (b)		1,055		4,157
Gibraltar Industries, Inc.		2,635		31,462
Olympic Steel, Inc.		885		18,027
Sutor Technology Group, Ltd. (a)		747		1,726
Universal Stainless & Alloy Products, Inc. (a)		612		8,868
				66,342
LEISURE TIME — 0.5%
Ambassadors Group, Inc.		1,871		17,213
Brunswick Corp.		8,586		36,147
Callaway Golf Co.		6,778		62,968
Life Time Fitness, Inc. (a) (b)		3,588		46,465
Marine Products Corp.		1,140		6,407
Nautilus, Inc. (a)		2,909		6,429
Polaris Industries, Inc.		3,442		98,613
Town Sports International Holdings, Inc. (a)		1,498		4,779
WMS Industries, Inc. (a)		4,583		123,283
				402,304
LODGING — 0.2%
Ameristar Casinos, Inc.		2,659		22,974
Gaylord Entertainment Co. (a)		4,266		46,243
Lodgian, Inc. (a)		1,728		3,681

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 31

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
LODGING (continued)
Marcus Corp.		1,951	$	31,665
Monarch Casino & Resort, Inc. (a)		1,107		12,897
Morgans Hotel Group Co. (a)		2,645		12,326
Riviera Holdings Corp. (a)		937		2,811
				132,597
MACHINERY — 1.6%
Alamo Group, Inc.		606		9,060
Albany International Corp., Class A		3,107		39,894
Altra Holdings, Inc. (a)		2,588		20,471
Applied Industrial Technologies, Inc.		4,417		83,570
Astec Industries, Inc. (a)		1,859		58,242
Briggs & Stratton Corp.		5,107		89,832
Cascade Corp.		888		26,516
Chart Industries, Inc. (a)		2,776		29,509
Cognex Corp.		4,081		60,399
DXP Enterprises, Inc. (a)		702		10,256
Flow International Corp. (a)		3,436		8,315
Gerber Scientific, Inc. (a)		2,094		10,700
Gorman-Rupp Co. (The)		1,436		44,688
Hurco Cos., Inc. (a)		661		7,932
Intermec, Inc. (a)		6,429		85,377
Intevac, Inc. (a)		2,052		10,404
iRobot Corp. (a)		1,754		15,839
Kadant, Inc. (a)		1,458		19,654
Key Technology, Inc. (a)		551		10,408
Lindsay Corp.		1,247		39,642
Middleby Corp. (a) (b)		1,747		47,640
NACCO Industries, Inc., Class A		582		21,773
Nordson Corp.		3,445		111,239
Presstek, Inc. (a)		2,704		8,680
Raser Technologies, Inc. (a) (b)		4,881		18,206
Robbins & Myers, Inc.		2,935		47,459
Sauer-Danfoss, Inc.		956		8,365
Tecumseh Products Co., Class A (a)		1,597		15,299
Tennant Co.		1,662		25,595
TurboChef Technologies, Inc. (a)		2,435		11,956
Twin Disc, Inc.		842		5,801
Wabtec Corp.		4,995		198,551
				1,201,272
MANUFACTURERS — 0.4%
AZZ, Inc. (a)		1,214		30,471
China Fire & Security Group, Inc. (a) (b)		1,372		9,343
Colfax Corp. (a)		2,113		21,954
EnPro Industries, Inc. (a)		2,023		43,575
Federal Signal Corp.		4,705		38,628
Flanders Corp. (a)		1,576		7,391
Freightcar America, Inc.		1,130		20,645
Lancaster Colony Corp.		2,110		72,373
LSB Industries, Inc. (a)		1,702		14,161
Lydall, Inc. (a)		1,626		9,349
Park-Ohio Holdings Corp. (a)		739		4,560
PMFG, Inc. (a)		1,298		12,409
Polypore International, Inc. (a)		1,460		11,038
Tredegar Corp.		2,489		45,250
				341,147
MANUFACTURING — 0.6%
Acuity Brands, Inc.		4,190		146,273
American Railcar Industries, Inc.		903		9,509
Blount International, Inc. (a)		3,931		37,266
ESCO Technologies, Inc. (a)		2,709		110,934
GenTek, Inc. (a)		798		12,010
Hexcel Corp. (a) (b)		9,812		72,511
Koppers Holdings, Inc.		2,180		47,132
Reddy Ice Holdings, Inc.		2,011		2,896
Smith & Wesson Holding Corp. (a)		3,875		8,796
Standex International Corp.		1,287		25,534
				472,861
MEDIA — 0.5%
AH Belo Corp., Class A		1,503		3,277
Belo Corp., Class A		8,736		13,628
Charter Communications, Inc., Class A (a)		36,293		2,969
Citadel Broadcasting Corp. (a)		17,948		2,872
CKX, Inc. (a)		5,157		18,926
Courier Corp.		1,092		19,547
Cox Radio, Inc., Class A (a)		2,778		16,696
Crown Media Holdings, Inc., Class A (a)		1,295		3,691
Cumulus Media, Inc., Class A (a)		2,618		6,519
DG FastChannel, Inc. (a)		1,835		22,901
Dolan Media (a)		2,549		16,798
Entercom Communications Corp., Class A		2,743		3,374
Entravision Communication Corp., Class A (a)		5,657		8,825
Fisher Communications, Inc.		689		14,221
Global Traffic Network, Inc. (a)		1,160		6,774
Gray Television, Inc. (b)		3,978		1,591
Journal Communications, Inc., Class A		3,880		9,506
Lee Enterprises, Inc. (b)		4,089		1,676
Lin TV Corp., Class A (a)		2,561		2,791
Martha Stewart Living Omnimedia, Class A (a)		2,471		6,425
McClatchy Co., Class A (b)		5,576		4,461
Media General Inc., Class A (b)		1,963		3,435
Mediacom Communications Corp., Class A (a)		4,338		18,653
Outdoor Channel Holdings, Inc. (a)		1,577		11,812
Playboy Enterprises, Inc., Class B (a)		1,975		4,266
PRIMEDIA, Inc.		2,469		5,358
R.H. Donnelley Corp. (a) (b)		6,743		2,495
RHI Entertainment, Inc. (a)		1,351		10,970
Scholastic Corp.		2,358		32,022
Sinclair Broadcast Group, Inc., Class A		5,136		15,922
TiVo, Inc. (a)		10,501		75,187
Value Line, Inc.		119		4,108
World Wrestling Entertainment, Inc., Class A		2,221		24,609
				396,305
METAL FABRICATE / HARDWARE — 0.8%
AM Castle & Co.		1,617		17,512
Ampco-Pittsburgh Corp.		811		17,599
CIRCOR International, Inc.		1,649		45,347
Dynamic Materials Corp.		1,235		23,848
Furmanite Corp. (a)		3,570		19,242
Haynes International, Inc. (a)		1,217		29,963
Kaydon Corp.		3,534		121,393
Ladish Co., Inc. (a)		1,524		21,107
Lawson Products		375		8,569
LB Foster Co., Class A (a)		1,104		34,533
Mueller Water Products, Inc., Class A		12,025		101,010
NN, Inc.		1,554		3,559
Northwest Pipe Co. (a)		942		40,139
Omega Flex, Inc.		305		6,387
RBC Bearings, Inc. (a)		2,280		46,238
Sun Hydraulics Corp.		1,201		22,627
TriMas Corp. (a)		1,235		1,704
Worthington Industries, Inc.		6,628		73,041
				633,818
METALS — DIVERSIFIED — 0.5%
Ameron International Corp.		959		60,340
Griffon Corp. (a)		4,369		40,763
Gulf Island Fabrication, Inc.		1,192		17,177
Matthews International Corp., Class A		3,257		119,467
Mueller Industries, Inc.		3,823		95,881
RTI International Metals, Inc. (a)		2,254		32,255
				365,883

The accompanying notes are an integral part of these Financial Statements.

32 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
MINING — 0.9%
Allied Nevada Gold Corp. (a)		4,413	$	22,330
AMCOL International Corp.		2,657		55,664
Apex Silver Mines Ltd. (a) (b)		5,452		5,343
Brush Engineered Materials, Inc. (a)		1,999		25,427
Coeur d’Alene Mines Corp. (a) (b)		56,850		50,028
Compass Minerals International, Inc.		3,343		196,100
General Moly, Inc. (a) (b)		6,149		7,256
Hecla Mining Co. (a) (b)		17,492		48,978
Horsehead Holding Corp. (a)		3,423		16,088
Kaiser Aluminum Corp.		1,545		34,793
Royal Gold, Inc.		3,053		150,238
Stillwater Mining Co. (a)		3,855		19,044
United States Lime & Minerals, Inc. (a)		174		4,167
Uranium Resources, Inc. (a)		4,812		3,705
USEC, Inc. (a) (b)		11,637		52,250
				691,411
OFFICE / BUSINESS EQUIPMENT — 0.2%
Herman Miller, Inc.		5,861		76,369
HNI Corp. (b)		4,579		72,531
Knoll, Inc.		4,951		44,658
				193,558
OIL & GAS — 0.6%
Abraxas Petroleum Corp. (a)		4,115		2,963
American Oil & Gas, Inc. (a)		3,596		2,877
Arena Resources, Inc. (a)		3,906		109,720
BMB Munai, Inc. (a)		3,658		5,085
Cano Petroleum, Inc. (a)		3,792		1,668
Cheniere Energy, Inc. (a) (b)		4,758		13,560
Complete Production Services, Inc. (a)		4,954		40,375
CVR Energy, Inc. (a)		2,254		9,016
Delek US Holdings, Inc.		1,084		5,734
Double Eagle Petroleum Co. (a)		799		5,609
Endeavour International Corp. (a)		11,145		5,572
Energy XXI (Bermuda) Ltd.		12,259		9,685
Geoglobal Resources, Inc. (a) (b)		2,779		4,446
GeoMet, Inc. (a)		1,667		2,867
GeoResources, Inc. (a) (b)		538		4,675
GMX Resources, Inc. (a)		1,671		42,310
Gran Tierra Energy, Inc. (a) (b)		22,437		62,824
Gulfport Energy Corp. (a)		2,570		10,151
Houston American Energy Corp.		1,461		4,938
Mitcham Industries, Inc. (a)		960		3,811
Northern Oil and Gas, Inc. (a)		1,921		4,995
Oilsands Quest, Inc. (a)		18,095		13,209
Panhandle Oil & Gas, Inc.		717		12,906
Quest Resource Corp. (a)		1,964		864
RAM Energy Resources, Inc. (a)		3,532		3,108
Rex Energy Corp. (a)		1,643		4,830
Sulphco, Inc. (a) (b)		5,963		5,605
Tri-Valley Corp. (a) (b)		2,197		3,955
TXCO Resources, Inc. (a)		3,108		4,631
Vaalco Energy, Inc. (a)		6,091		45,317
Venoco, Inc. (a)		1,984		5,377
				452,683
OIL & GAS PRODUCERS — 2.0%
APCO Argentina, Inc.		375		9,986
Approach Resources, Inc. (a)		778		5,687
ATP Oil & Gas Corp. (a)		2,723		15,930
Berry Petroleum Co., Class A		4,365		32,999
BPZ Resources, Inc. (a) (b)		5,863		37,523
Carrizo Oil & Gas, Inc. (a)		2,816		45,338
Clayton Williams Energy, Inc. (a)		532		24,174
Concho Resources Inc. (a)		5,776		131,808
Contango Oil & Gas Co. (a)		1,353		76,174
Energy Partners, Ltd. (a)		3,128		4,223
FX Energy, Inc. (a)		4,035		11,258
Gasco Energy, Inc. (a)		9,187		3,583
Goodrich Petroleum Corp. (a)		2,306		69,065
Harvest Natural Resources, Inc. (a)		3,634		15,626
McMoRan Exploration Co. (a)		6,280		61,544
Meridian Resources Corp. (The) (a)		8,065		4,597
New Jersey Resources Corp.		4,379		172,314
Northwest Natural Gas Co.		2,759		122,031
Parallel Petroleum Corp. (a)		4,056		8,153
Parker Drilling Co. (a)		11,072		32,109
Penn Virginia Corp.		4,343		112,831
Petroleum Development Corp. (a)		1,455		35,022
Petroquest Energy, Inc. (a)		4,251		28,737
Pioneer Drilling Co. (a)		4,881		27,187
PrimeEnergy Corp. (a)		92		4,779
RPC, Inc.		3,023		29,504
South Jersey Industries, Inc.		3,105		123,734
Southwest Gas Corp.		4,520		113,994
Stone Energy Corp. (a)		3,307		36,443
Swift Energy Co. (a)		3,189		53,607
Toreador Resources Corp. (a) (b)		1,451		7,966
Warren Resources, Inc. (a)		5,712		11,367
WD-40 Co.		1,644		46,509
				1,515,802
OIL & GAS SERVICES — 2.1%
Allis-Chalmers Energy, Inc. (a)		2,746		15,103
Alon USA Energy, Inc. (b)		1,195		10,934
Atlas America, Inc.		3,603		53,505
Basic Energy Services, Inc. (a)		4,318		56,307
Bill Barrett Corp. (a)		3,774		79,745
Bolt Technology Corp. (a)		844		5,874
Brigham Exploration Co. (a)		4,626		14,803
Bronco Drilling Co., Inc. (a)		2,399		15,498
Cal Dive International, Inc. (a)		4,332		28,201
Callon Petroleum Co. (a)		1,884		4,898
CARBO Ceramics, Inc.		2,144		76,176
Comstock Resources, Inc. (a)		4,700		222,075
Crosstex Energy, Inc.		3,942		15,374
Dawson Geophysical Co. (a)		711		12,663
Delta Petroleum Corp. (a) (b)		6,354		30,245
Dril-Quip, Inc. (a)		3,230		66,247
EXCO Resources, Inc. (a)		15,594		141,282
Flotek Industries, Inc. (a)		2,068		5,211
Geokinetics, Inc. (a)		630		1,556
Hornbeck Offshore Services, Inc. (a)		2,272		37,124
ION Geophysical Corp. (a)		9,225		31,642
Lufkin Industries, Inc.		1,523		52,543
Matrix Service Co. (a)		2,679		20,548
NATCO Group, Inc., Class A (a)		1,960		29,753
Natural Gas Services Group, Inc. (a)		1,185		12,004
Newpark Resources, Inc. (a)		9,188		33,996
Piedmont Natural Gas Co., Inc.		7,575		239,900
Rosetta Resources, Inc. (a)		5,041		35,690
Superior Well Services, Inc. (a)		1,618		16,180
T-3 Energy Services, Inc. (a)		1,222		11,536
Trico Marine Services, Inc. (a) (b)		1,243		5,556
Union Drilling, Inc. (a)		1,193		6,192
Western Refining, Inc.		2,927		22,714
WGL Holdings, Inc.		5,166		168,877
Willbros Group, Inc. (a)		4,002		33,897
				1,613,849
PACKAGING & CONTAINERS — 0.2%
AEP Industries, Inc. (a)		505		8,878
Bway Holding Co. (a)		733		5,835
Graphic Packaging Holding Co. (a)		14,166		16,149
Silgan Holdings, Inc.		2,633		125,884
				156,746
PHARMACEUTICALS — 4.2%
Abaxis, Inc. (a)		2,233		35,795
Acadia Pharmaceuticals, Inc. (a)		2,861		2,575
Acura Pharmaceuticals, Inc. (a) (b)		799		5,865
Adolor Corp. (a)		4,512		7,490
Akorn, Inc. (a)		5,077		11,677

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 33

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
PHARMACEUTICALS (continued)
Alexza Pharmaceuticals, Inc. (a)		1,871	$	5,931
Align Technology, Inc. (a)		6,489		56,779
Alkermes, Inc. (a)		9,772		104,072
Allos Therapeutics, Inc. (a)		5,192		31,775
Allscripts Healthcare Solutions, Inc. (b)		15,057		149,365
Alnylam Pharmaceuticals, Inc. (a)		3,715		91,872
Amicus Therapeutics, Inc. (a)		461		3,679
Ardea Biosciences, Inc. (a)		1,252		14,986
Array Biopharma, Inc. (a)		4,905		19,865
Auxilium Pharmaceuticals, Inc. (a)		4,297		122,207
Biodel, Inc. (a)		1,052		5,071
BioForm Medical, Inc. (a)		2,189		1,992
Cadence Pharmaceuticals, Inc. (a)		2,024		14,634
Caraco Pharm Labs, Inc. (a)		904		5,352
Catalyst Health Solutions, Inc. (a)		3,450		84,007
Cell Genesys, Inc. (a) (b)		7,087		1,559
China Sky One Medical, Inc. (a)		728		11,641
Cubist Pharmaceuticals, Inc. (a)		5,889		142,278
CV Therapeutics, Inc. (a)		6,081		56,006
Cypress Bioscience, Inc. (a)		3,603		24,645
Cytori Therapeutics, Inc. (a)		1,952		7,047
Dendreon Corp. (a)		9,756		44,682
Depomed, Inc. (a)		4,708		7,768
Discovery Laboratories, Inc. (a)		9,964		11,160
Durect Corp. (a)		8,366		28,361
Dyax Corp. (a)		5,451		19,842
Emergent Biosolutions, Inc. (a)		1,326		34,622
Geron Corp. (a) (b)		7,801		36,431
I-Flow Corp. (a)		1,891		9,077
Idenix Pharmaceuticals, Inc. (a)		2,290		13,259
Indevus Pharmaceuticals, Inc. (a)		7,761		24,370
Inspire Pharmaceuticals, Inc. (a)		4,138		14,897
Isis Pharmaceuticals, Inc. (a)		9,424		133,632
Javelin Pharmaceuticals, Inc. (a)		3,920		4,900
Jazz Pharmaceuticals, Inc. (a) (b)		583		1,125
K-V Pharmaceuticals Co., Class A (a)		3,439		9,904
Ligand Pharmaceuticals, Inc., Class B (a)		8,698		23,833
Mannatech, Inc. (b)		1,519		3,722
Mannkind Corp. (a) (b)		4,907		16,831
MAP Pharmaceuticals, Inc. (a)		534		3,727
Medarex, Inc. (a)		13,330		74,381
Medicines Co. (The) (a)		5,432		80,013
Medicis Pharmaceutical Corp., Class A		5,816		80,842
Middlebrook Pharmaceuticals, Inc. (a) (b)		3,513		5,270
Nabi Biopharmaceuticals (a)		5,424		18,170
Neogen Corp. (a)		1,412		35,272
Neurocrine Biosciences, Inc. (a)		3,503		11,210
Noven Pharmaceuticals, Inc. (a)		2,558		28,138
Obagi Medical Products, Inc. (a)		1,738		12,965
Omega Protein Corp. (a)		1,800		7,218
Onyx Pharmaceuticals, Inc. (a)		5,735		195,908
Opko Health, Inc. (a)		4,704		7,620
OSI Pharmaceuticals, Inc. (a) (b)		5,902		230,473
Osiris Therapeutics, Inc. (a) (b)		1,495		28,644
Pain Therapeutics, Inc. (a)		3,597		21,294
Par Pharmaceutical Cos., Inc. (a)		3,558		47,713
PetMed Express, Inc. (a)		2,376		41,889
Pharmasset, Inc. (a)		1,733		22,720
PharMerica Corp. (a)		3,134		49,110
POZEN, Inc. (a)		2,326		11,723
Progenics Pharmaceuticals, Inc. (a)		2,610		26,909
Questcor Pharmaceuticals, Inc. (a)		5,215		48,552
Rigel Pharmaceuticals, Inc. (a)		3,576		28,608
Salix Pharmaceuticals, Ltd. (a)		4,920		43,444
Schiff Nutrition International, Inc. (a)		914		5,457
Sucampo Pharmaceuticals, Inc., Class A (a)		895		5,146
Synta Pharmaceuticals Corp. (a) (b)		1,640		10,037
Synutra International, Inc. (a) (b)		1,016		11,196
Targacept, Inc. (a)		1,777		6,326
Theravance, Inc. (a) (b)		5,417		67,117
United Therapeutics, Inc. (a)		2,351		147,055
USANA Health Sciences, Inc. (a)		679		23,249
Valeant Pharmaceuticals international (a) (b)		6,568		150,407
ViroPharma, Inc. (a)		8,120		105,722
Vivus, Inc. (a)		6,913		36,777
XenoPort, Inc. (a)		2,625		65,835
Zymogenetics, Inc. (a) (b)		3,545		10,635
				3,263,353
REAL ESTATE — 0.2%
Avatar Holdings, Inc. (a)		628		16,655
Consolidated — Tomoka Land Co.		554		21,157
Forestar Real Estate Group, Inc. (a)		3,491		33,234
FX Real Estate and Entertainment, Inc. (a) (b)		698		105
Grubb & Ellis Co.		3,491		4,329
Hilltop Holdings, Inc. (a)		4,715		45,924
Meruelo Maddux Properties, Inc. (a)		4,217		5,229
Stratus Properties, Inc. (a)		620		7,725
Thomas Properties Group, Inc.		2,189		5,670
United Capital Corp. (a)		178		3,229
				143,257
REAL ESTATE INVESTMENT TRUST — 5.9%
Acadia Realty Trust		3,377		48,190
Agree Realty Corp.		728		13,199
Alexander’s, Inc.		206		52,509
American Campus Communities, Inc.		4,359		89,272
American Capital Agency Corp. (b)		979		20,911
Anthracite Capital, Inc. (b)		5,372		11,980
Anworth Mortgage Asset Corp.		9,238		59,400
Arbor Realty Trust, Inc. (b)		1,317		3,885
Ashford Hospitality Trust, Inc. (b)		9,574		11,010
Associated Estates Realty Corp.		1,450		13,238
BioMed Realty Trust, Inc.		8,280		97,042
Capital Trust, Inc., Class A (b)		1,578		5,681
CapLease, Inc.		4,611		7,977
Capstead Mortgage Corp.		5,889		63,425
Care Investment Trust, Inc.		1,301		10,135
Cedar Shopping Centers, Inc.		3,982		28,193
Chimera Investment Corp.		14,062		48,514
Cogdell Spencer, Inc.		1,034		9,678
Colonial Properties Trust		4,649		38,726
Corporate Office Properties Trust SBI MD		4,326		132,808
Cousins Properties, Inc.		4,359		60,372
DCT Industrial Trust, Inc.		17,933		90,741
DiamondRock Hospitality Co.		9,780		49,585
DuPont Fabros Technology, Inc.		1,167		2,416
EastGroup Properties, Inc.		2,599		92,472
Education Realty Trust, Inc.		2,520		13,154
Entertainment Properties Trust		3,386		100,903
Equity Lifestyle Properties, Inc.		2,125		81,515
Equity One, Inc. (b)		3,270		57,879
Extra Space Storage, Inc.		8,823		91,053
FelCor Lodging Trust, Inc.		6,166		11,345
First Industrial Realty Trust, Inc.		4,343		32,790
First Potomac Realty Trust		2,818		26,207
Franklin Street Properties Corp.		6,086		89,768
Getty Realty Corp.		1,786		37,613
Glimcher Realty Trust		3,784		10,633
Gramercy Capital Corp (New York)		3,806		4,872
Hatteras Financial Corp.		1,601		42,587
Healthcare Realty Trust, Inc.		6,142		144,214
Hersha Hospitality Trust		4,820		14,460
Highwoods Properties, Inc.		6,634		181,506
Home Properties, Inc.		3,304		134,142
Inland Real Estate Corp.		5,908		76,686
Investors Real Estate Trust		6,010		64,367
JER Investors Trust, Inc. (b)		2,386		2,219
Kite Realty Group Trust		2,439		13,561
LaSalle Hotel Properties		4,139		45,733
Lexington Realty Trust		7,764		38,820
LTC Properties, Inc.		2,376		48,185

The accompanying notes are an integral part of these Financial Statements.

34 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
REAL ESTATE INVESTMENT TRUST (continued)
Maguire Properties, Inc.		3,748	$	5,472
Medical Properties Trust, Inc. (b)		6,947		43,836
MFA Mortgage Investments, Inc.		20,383		120,056
Mid-America Apartment Communities, Inc.		2,909		108,098
Mission West Properties, Inc.		1,811		13,854
Monmouth Real Estate Investment Corp., Class A		1,938		13,566
National Health Investors, Inc.		2,293		62,897
National Retail Properties, Inc.		8,070		138,723
Newcastle Investment Corp. (b)		5,174		4,346
NorthStar Realty Finance Corp. (b)		5,735		22,424
Omega Healthcare Investors, Inc.		8,554		136,607
One Liberty Properties, Inc.		782		6,882
Parkway Properties, Inc./MD		1,481		26,658
Pennsylvania Real Estate Investment Trust (b)		3,450		25,702
Post Properties, Inc.		4,607		76,015
Potlatch Corp.		4,028		104,768
PS Business Parks, Inc.		1,571		70,161
RAIT Financial Trust (b)		6,394		16,624
Ramco-Gershenson Properties		1,713		10,586
Realty Income Corp. (b)		10,453		241,987
Redwood Trust, Inc. (b)		3,438		51,261
Resource Capital Corp.		2,030		7,775
Saul Centers, Inc.		988		39,026
Senior Housing Properties Trust		11,815		211,725
Sovran Self Storage, Inc.		2,251		81,036
Strategic Hotels & Resorts, Inc.		7,667		12,881
Sun Communities, Inc.		1,692		23,688
Sunstone Hotel Investors, Inc.		5,140		31,817
Tanger Factory Outlet Centers (b)		3,294		123,920
U-Store-It Trust		4,854		21,600
Universal Health Realty Income Trust		1,221		40,183
Urstadt Biddle Properties, Inc., Class A		2,167		34,520
Washington Real Estate Investment Trust		5,395		152,679
Winthrop Realty Trust		1,148		12,444
				4,519,388
RETAIL — 4.6%
99 Cents Only Stores (a)		4,700		51,371
Aeropostale, Inc. (a)		6,985		112,459
AFC Enterprises (a)		2,282		10,703
America’s Car-Mart, Inc. (a)		983		13,575
Aristotle Corp. (The) (a)		123		446
Asbury Automotive Group, Inc.		3,129		14,300
Bebe Stores, Inc.		3,762		28,102
Big 5 Sporting Goods Corp.		2,092		10,899
BJ’s Restaurants, Inc. (a)		1,656		17,835
Blockbuster, Inc., Class A (a)		17,258		21,745
Bob Evans Farms, Inc.		3,194		65,253
Borders Group, Inc.		5,930		2,372
Brown Shoe Co., Inc.		4,367		36,988
Buckle, Inc. (The)		2,428		52,979
Buffalo Wild Wings, Inc. (a) (b)		1,836		47,093
Build-A-Bear Workshop, Inc. (a)		1,365		6,634
Cabela’s, Inc. (a) (b)		3,933		22,929
Cache, Inc. (a)		907		1,832
California Pizza Kitchen, Inc. (a)		2,309		24,752
Casey’s General Stores, Inc.		5,296		120,590
Cash America International, Inc.		3,042		83,199
Casual Male Retail Group, Inc. (a)		3,330		1,732
Cato Corp. (The) Class A		2,755		41,600
CEC Entertainment, Inc. (a)		2,015		48,864
Charlotte Russe Holding, Inc. (a)		1,885		12,234
Charming Shoppes, Inc. (a)		11,342		27,674
Cheesecake Factory, Inc. (The) (a)		6,154		62,155
Chico’s FAS, Inc. (a)		18,183		76,005
Children’s Place Retail Stores, Inc. (The) (a)		2,406		52,162
Christopher & Banks Corp.		3,338		18,693
Citi Trends, Inc. (a)		1,470		21,638
CKE Restaurants, Inc.		5,355		46,481
Coldwater Creek, Inc. (a)		5,579		15,900
Collective Brands, Inc. (a)		6,676		78,243
Conn’s, Inc. (a) (b)		1,123		9,523
Cracker Barrel Old Country Store, Inc.		2,217		45,648
Denny’s Corp. (a)		8,992		17,894
Dillard’s, Inc., Class A (b)		5,592		22,200
DineEquity, Inc. (b)		1,792		20,716
Domino’s Pizza, Inc. (a)		3,891		18,327
Dress Barn, Inc. (a)		4,505		48,384
DSW, Inc., Class A (a) (b)		1,494		18,615
Einstein Noah Restaurant Group, Inc. (a)		440		2,530
Ezcorp, Inc., Class A (a)		3,959		60,216
FGX International Holdings, Ltd. (a)		1,415		19,442
Finish Line, Class A		4,615		25,844
First Cash Financial Services, Inc. (a)		1,945		37,072
Fred’s, Inc., Class A		3,997		43,008
Fuqi International, Inc. (a)		955		5,978
Genesco, Inc. (a)		1,890		31,979
Group 1 Automotive, Inc.		2,321		24,997
Haverty Furniture Cos., Inc. (b)		1,827		17,046
hhgregg, Inc. (a)		1,287		11,171
Hibbett Sports, Inc. (a)		2,847		44,726
HOT Topic, Inc. (a)		4,576		42,420
Insight Enterprises, Inc. (a)		4,831		33,334
J Crew Group, Inc. (a) (b)		4,425		53,985
Jack in the Box, Inc. (a)		6,137		135,566
Jo-Ann Stores, Inc. (a)		2,485		38,493
JOS A. Bank Clothiers, Inc. (a) (b)		1,820		47,593
Kenneth Cole Productions, Inc., Class A		867		6,138
Krispy Kreme Doughnuts, Inc. (a) (b)		5,962		10,016
Landry’s Restaurants, Inc.		1,162		13,479
Luby’s, Inc. (a)		2,114		8,858
Lululemon Athletica, Inc. (a) (b)		1,765		13,996
Lumber Liquidators, Inc. (a)		920		9,715
MarineMax, Inc. (a)		1,529		5,183
Men’s Wearhouse, Inc.		5,390		72,981
Movado Group, Inc.		1,586		14,893
New York & Co., Inc. (a)		1,984		4,603
Nu Skin Enterprises, Inc., Class A		5,103		53,224
O’Charleys, Inc.		1,971		3,942
Pacific Sunwear of California (a)		6,529		10,381
Pantry, Inc. (The) (a)		2,224		47,705
Papa John’s International, Inc. (a)		2,188		40,325
PC Connection, Inc. (a)		857		4,388
PC Mall, Inc. (a)		1,084		4,347
PEP Boys-Manny Moe & Jack		4,136		17,082
PF Chang’s China Bistro, Inc. (a)		2,419		50,654
Pier 1 Imports, Inc. (a)		8,231		3,045
PriceSmart, Inc.		1,486		30,701
Red Robin Gourmet Burgers, Inc. (a)		1,650		27,770
Regis Corp.		4,502		65,414
Retail Ventures, Inc. (a)		2,550		8,848
Rex Stores Corp. (a)		871		7,029
Ruby Tuesday, Inc. (a)		4,822		7,522
Rush Enterprises, Inc., Class A (a)		3,364		28,829
Ruth’s Hospitality Group, Inc. (a)		1,753		2,419
Sally Beauty Holdings, Inc. (a)		9,734		55,386
School Specialty, Inc. (a)		1,936		37,016
Sonic Automotive, Inc., Class A		2,752		10,953
Sonic Corp. (a)		6,174		75,138
Stage Stores, Inc.		3,837		31,655
Steak N Shake Co. (The) (a)		2,751		16,368
Stein Mart, Inc.		2,431		2,747
Susser Holdings Corp. (a)		762		10,127
Syms Corp. (a)		650		5,772
Systemax, Inc.		1,136		12,235
Talbots, Inc.		2,518		6,018
Texas Roadhouse, Inc., Class A (a)		5,092		39,463
Titan Machinery, Inc. (a)		661		9,294
Tractor Supply Co. (a)		3,480		125,767

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 35

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
RETAIL (continued)
Tuesday Morning Corp.		2,766	$	4,509
Tween Brands, Inc. (a)		2,296		9,919
Ulta Salon, Cosmetics & Fragrance, Inc.(a)		1,989		16,469
Under Armour, Inc., Class A (a) (b)		3,395		80,937
Wendy’s/Arby’s Group, Inc., Class A		40,919		202,140
Wet Seal, Inc., (The) Class A (a)		9,024		26,801
Zale Corp. (a)		3,204		10,669
Zumiez, Inc. (a)		1,966		14,647
				3,503,661
SEMICONDUCTORS — 2.2%
Advanced Analogic Technologies, Inc. (a)		4,570		13,801
Amkor Technology, Inc. (a)		10,685		23,293
Anadigics, Inc. (a)		5,639		8,346
Applied Micro Circuits Corp. (a)		6,677		26,241
Asyst Technologies, Inc. (a)		4,494		1,123
AuthenTec, Inc. (a)		2,455		4,100
Axcelis Technologies, Inc. (a)		9,374		4,781
Brooks Automation, Inc. (a)		6,631		38,526
Cabot Microelectronics Corp. (a)		2,418		63,037
Cavium Networks, Inc. (a)		2,968		31,194
CEVA, Inc. (a)		1,973		13,811
Cirrus Logic, Inc. (a)		6,361		17,047
Cohu, Inc.		2,376		28,868
DSP Group, Inc. (a)		2,377		19,064
EMCORE Corp. (a) (b)		7,192		9,350
Emulex Corp. (a)		8,697		60,705
Entegris, Inc. (a)		11,196		24,519
Entropic Communications, Inc. (a)		830		415
Exar Corp. (a)		3,860		25,746
Formfactor, Inc. (a)		5,099		74,445
Hittite Microwave Corp. (a)		2,013		59,303
IPG Photonics Corp. (a)		1,883		24,818
IXYS Corp.		2,524		20,848
Kopin Corp. (a)		6,762		13,794
Kulicke & Soffa Industries, Inc. (a)		5,332		9,064
Lattice Semiconductor Corp. (a)		10,584		15,982
LTX-Credence Corp. (a)		12,545		3,387
Mattson Technology, Inc. (a)		4,447		6,270
Micrel, Inc.		5,117		37,405
Microsemi Corp. (a)		8,212		103,800
MIPS Technologies, Inc. (a)		4,035		4,479
MKS Instruments, Inc. (a)		5,204		76,967
Monolithic Power Systems, Inc. (a)		2,558		32,256
Netlogic Microsystems, Inc. (a) (b)		1,711		37,659
OmniVision Technologies, Inc. (a)		4,949		25,982
Pericom Semiconductor Corp. (a)		2,442		13,382
Photronics, Inc. (a)		3,854		7,515
PLX Technology, Inc. (a)		2,643		4,546
PMC-Sierra, Inc. (a)		22,366		108,699
Power Integrations, Inc.		3,132		62,264
Rubicon Technology, Inc. (a) (b)		1,298		5,529
Rudolph Technologies, Inc. (a)		2,682		9,467
Semitool, Inc. (a)		2,039		6,219
Semtech Corp. (a)		6,362		71,700
Silicon Image, Inc. (a)		7,674		32,231
SiRF Technology Holdings, Inc. (a)		5,329		6,821
Skyworks Solutions, Inc. (a)		17,024		94,313
Spansion, Inc., Class A (a)		12,503		2,367
Standard Microsystems Corp. (a)		2,298		37,549
Supertex, Inc. (a)		1,145		27,491
Techwell, Inc. (a)		1,379		8,964
Tessera Technologies, Inc. (a)		4,983		59,198
Transmeta Corp. (a) (b)		1,191		21,676
TriQuint Semiconductor, Inc. (a)		14,051		48,335
Ultra Clean Holdings, Inc. (a)		1,750		3,518
Ultratech, Inc. (a)		2,446		29,254
Veeco Instruments, Inc. (a)		3,191		20,231
Volterra Semiconductor Corp. (a)		2,484		17,761
Zoran Corp. (a)		5,422		37,032
				1,696,488
SOFTWARE — 3.5%
Accelrys, Inc. (a)		2,626		11,449
ACI Worldwide, Inc. (a)		3,441		54,712
Acxiom Corp.		6,394		51,855
Advent Software, Inc. (a) (b)		1,745		34,848
American Reprographics Co. (a)		3,569		24,626
American Software, Inc., Class A		2,208		10,378
ArcSight, Inc. (a)		618		4,950
Avid Technology, Inc. (a)		2,956		32,250
Avocent Corp. (a)		4,610		82,565
Blackbaud, Inc.		4,608		62,208
Blackboard, Inc. (a)		3,230		84,723
Callidus Software, Inc. (a)		2,953		8,829
Commvault Systems, Inc. (a)		4,475		60,010
Computer Programs & Systems, Inc.		966		25,889
Concur Technologies, Inc. (a)		4,511		148,051
CSG Systems International, Inc. (a)		3,571		62,385
Deltek, Inc. (a)		1,298		6,023
DemandTec, Inc. (a)		1,924		15,527
Double-Take Software, Inc. (a)		1,693		15,186
Ebix, Inc. (a)		594		14,197
Eclipsys Corp. (a)		5,677		80,557
Epicor Software Corp. (a)		5,939		28,507
EPIQ Systems, Inc. (a)		3,700		61,827
Fair Isaac Corp.		5,078		85,615
FalconStor Software, Inc. (a)		3,741		10,400
Guidance Software, Inc. (a)		913		3,725
Informatica Corp. (a)		9,244		126,920
Innerworkings, Inc. (a)		3,098		20,292
Interactive Intelligence, Inc. (a)		1,201		7,698
JDA Software Group, Inc. (a)		2,651		34,808
Lawson Software, Inc. (a)		12,363		58,601
ManTech International Corp., Class A (a)		2,143		116,129
MedAssets, Inc. (a)		1,828		26,689
MicroStrategy, Inc., Class A (a)		889		33,009
Midway Games, Inc. (a) (b)		2,132		405
MSC.Software Corp. (a)		4,499		30,053
NetSuite, Inc. (a)		642		5,418
Omnicell, Inc. (a)		3,252		39,707
Omniture, Inc. (a)		6,428		68,394
OpenTV Corp., Class A (a)		8,639		10,626
Opnet Technologies, Inc. (a)		1,291		12,729
Parametric Technology Corp. (a)		12,027		152,142
Pegasystems, Inc.		1,331		16,451
Phoenix Technologies, Ltd. (a)		2,697		9,439
Progress Software Corp. (a)		4,337		83,531
PROS Holdings, Inc. (a)		1,261		7,251
Quality Systems, Inc. (b)		1,806		78,778
Renaissance Learning, Inc.		989		8,891
Schawk, Inc.		1,434		16,434
SeaChange International, Inc. (a)		3,181		22,935
Solera Holdings, Inc. (a)		5,388		129,851
SPSS, Inc. (a)		1,787		48,178
Sybase, Inc. (a)		8,181		202,643
Synchronoss Technologies, Inc. (a)		2,244		23,921
SYNNEX Corp. (a)		1,705		19,318
Take-Two Interactive Software, Inc. (a)		7,861		59,429
Taleo Corp., Class A (a)		2,605		20,397
THQ, Inc. (a)		6,534		27,377
Trident Microsystems, Inc. (a)		5,625		10,631
Unica Corp. (a)		1,440		7,891
VeriFone Holdings, Inc. (a) (b)		7,135		34,962
Wind River Systems, Inc. (a)		7,018		63,373
				2,716,593
TELECOMMUNICATIONS — 2.9%
3Com Corp. (a)		42,111		96,013
Acme Packet, Inc. (a)		2,720		14,307
Adaptec, Inc. (a)		12,462		41,125
ADTRAN, Inc.		5,867		87,301
Airvana, Inc. (a)		2,363		14,462

The accompanying notes are an integral part of these Financial Statements.

36 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
TELECOMMUNICATIONS (continued)
Alaska Communications Systems Group, Inc.		4,336	$	40,672
Anaren, Inc. (a)		1,508		18,021
Anixter International, Inc. (a)		3,054		91,986
Applied Signal Technology, Inc.		1,234		22,138
Aruba Networks, Inc. (a)		5,126		13,071
Atheros Communications, Inc. (a)		6,067		86,819
Atlantic Tele-Network, Inc.		990		26,284
Avanex Corp. (a)		1,195		1,255
BigBand Networks, Inc. (a)		3,221		17,780
Cbeyond, Inc. (a)		2,347		37,505
Centennial Communications Corp. (a)		7,050		56,823
Comtech Telecommunications Corp. (a)		2,529		115,879
Consolidated Communications Holdings, Inc.		2,425		28,813
CPI International, Inc. (a)		952		8,244
EMS Technologies, Inc. (a)		1,607		41,573
Fairpoint Communications, Inc.		9,104		29,861
FiberTower Corp. (a)		9,493		1,519
Finisar Corp. (a)		37,345		14,191
General Communication, Inc., Class A (a)		4,666		37,748
GeoEye, Inc. (a)		1,801		34,633
Global Crossing, Ltd. (a)		2,563		20,350
Globalstar, Inc. (a)		4,111		822
Globecomm Systems, Inc. (a)		1,976		10,848
Harris Stratex Networks, Inc., Class A (a)		2,348		12,116
Hughes Communications, Inc. (a)		703		11,206
Hungarian Telephone and Cable Corp. (a)		331		2,847
ICO Global Communications Holdings, Ltd. (a)		9,485		10,718
IDT Corp., Class B (a)		4,055		1,622
Infinera Corp. (a) (b)		9,562		85,676
InterDigital, Inc. (a)		4,736		130,240
Iowa Telecommunications Services, Inc.		3,203		45,739
IPC The Hospitalist Co. (a)		532		8,954
iPCS, Inc. (a)		1,567		10,750
Knology, Inc. (a)		2,970		15,325
Loral Space & Communications, Inc. (a)		1,203		17,480
MasTec, Inc. (a)		4,300		49,794
MRV Communications, Inc. (a)		14,714		11,330
Neutral Tandem, Inc. (a)		1,632		26,471
Nextwave Wireless, Inc. (a) (b)		4,749		427
Novatel Wireless, Inc. (a)		2,997		13,906
Oplink Communications, Inc. (a)		2,054		17,664
OpNext, Inc. (a)		1,721		3,012
Orbcomm, Inc. (a)		2,419		5,225
PAETEC Holding Corp. (a)		12,113		17,443
Parkervision, Inc. (a) (b)		2,252		5,562
Plantronics, Inc.		5,043		66,568
Polycom, Inc. (a)		9,143		123,522
Powerwave Technologies, Inc. (a)		12,881		6,440
Preformed Line Products Co.		278		12,799
Premiere Global Services, Inc. (a)		6,374		54,880
RCN Corp. (a)		3,690		21,771
SAVVIS, Inc. (a)		3,683		25,376
Sonus Networks, Inc. (a)		19,988		31,581
Switch & Data Facilities Co. (a)		2,011		14,861
Syniverse Holdings, Inc. (a)		5,358		63,975
Tekelec (a)		6,811		90,859
TerreStar Corp. (a)		5,699		2,280
tw Telecom, Inc. (a)		15,399		130,430
USA Mobility, Inc.		2,441		28,242
UTStarcom, Inc. (a)		10,829		20,034
Virgin Mobile USA, Inc., Class A (a) (b)		2,469		2,074
Vonage Holdings Corp. (a)		5,963		3,936
				2,213,178
TELECOMMUNICATIONS EQUIPMENT — 0.6%
Arris Group, Inc. (a)		12,632		100,424
Harmonic, Inc. (a)		9,699		54,411
Ixia (a)		4,190		24,218
NTELOS Holdings Corp.		3,080		75,953
RF Micro Devices, Inc. (a)		25,788		20,115
ShoreTel, Inc. (a)		4,245		19,060
Sycamore Networks, Inc. (a)		19,704		53,004
Symmetricom, Inc. (a)		4,263		16,839
Viasat, Inc. (a)		2,591		62,391
				426,415
TELEPHONE — 0.1%
Cincinnati Bell, Inc. (a)		23,777		45,890
Shenandoah Telecom Co.		2,463		69,087
				114,977
TEXTILES — 0.4%
G&K Services, Inc., Class A		2,022		40,885
Interface, Inc., Class A		5,336		24,759
Shoe Carnival, Inc. (a)		871		8,318
Steven Madden, Ltd. (a)		1,767		37,672
Unifi, Inc. (a)		4,425		12,479
Unifirst Corp. (MA)		1,438		42,694
Wolverine World Wide, Inc.		5,197		109,345
				276,152
TOBACCO — 0.2%
Star Scientific, Inc. (a)		6,458		24,734
Universal Corp., Richmond, VA		2,660		79,454
Vector Group, Ltd. (b)		3,450		46,989
				151,177
TOYS / GAMES / HOBBIES — 0.3%
Jakks Pacific, Inc. (a)		2,742		56,567
Leapfrog Enterprises, Inc. (a)		3,156		11,046
Marvel Entertainment, Inc. (a)		5,110		157,132
RC2 Corp. (a)		1,617		17,253
				241,998
TRANSPORTATION — 1.9%
American Commercial Lines, Inc (a)		3,500		17,150
Arkansas Best Corp.		2,333		70,247
Atlas Air Worldwide Holdings, Inc. (a)		1,371		25,912
Bristow Group, Inc. (a)		2,475		66,305
CAI International, Inc. (a)		721		2,286
Celadon Group, Inc. (a)		1,969		16,796
DHT Maritime, Inc.		3,845		21,301
Dynamex, Inc. (a)		1,028		15,163
Eagle Bulk Shipping, Inc. (b)		4,825		32,906
Forward Air Corp.		2,970		72,082
Genco Shipping & Trading, Ltd. (b)		2,432		35,994
General Maritime Corp.		4,965		53,622
Genesee & Wyoming, Inc., Class A (a)		3,203		97,691
Golar LNG, Ltd.		3,698		24,998
Greenbrier Cos., Inc.		1,474		10,126
GulfMark Offshore, Inc. (a)		2,306		54,860
Heartland Express, Inc.		5,713		90,037
Horizon Lines, Inc., Class A (b)		2,694		9,402
HUB Group, Inc., Class A (a)		3,779		100,257
International Shipholding Corp.		593		15,021
Knight Transportation, Inc.		5,978		96,365
Knightsbridge Tankers, Ltd.		1,762		25,813
Marten Transport, Ltd. (a)		1,599		30,317
Nordic American Tanker Shipping, Ltd. (b)		3,590		121,162
Old Dominion Freight Line (a)		2,889		82,221
Pacer International, Inc.		3,400		35,462
Patriot Transportation Holding, Inc. (a)		138		9,670
PHI, Inc. (a)		1,272		17,821
Saia, Inc. (a)		1,359		14,759
Ship Finance International, Ltd. (b)		4,416		48,797
TBS International Ltd., Class A (a)		1,027		10,301
Teekay Tankers Ltd., Class A		1,393		17,691
Textainer Group Holdings, Ltd.		937		9,932
Ultrapetrol Bahamas, Ltd. (a) (b)		2,450		7,816

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 37

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
TRANSPORTATION (continued)
Universal Truckload Services, Inc. (a)		527	$	7,462
Werner Enterprises, Inc.		4,381		75,967
YRC Worldwide, Inc. (a)		5,596		16,061
				1,459,773
TRUCKING & LEASING — 0.1%
Aircastle Ltd.		4,574		21,864
Amerco, Inc. (a)		982		33,908
TAL International Group, Inc.		1,497		21,108
				76,880
WATER — 0.4%
American States Water Co.		1,805		59,529
California Water Service Group		2,006		93,139
Connecticut Water Service, Inc.		824		19,455
Consolidated Water Co., Ltd.		1,398		17,475
Middlesex Water Co.		1,300		22,399
Pico Holdings, Inc. (a)		1,669		44,362
SJW Corp.		1,423		42,605
Southwest Water Co.		2,450		7,889
				306,853
TOTAL COMMON STOCKS (Cost $117,695,400)				76,516,540
CLOSED-END FUNDS — 0.0%
Kayne Anderson Energy Development Fund		973		7,307
Patriot Capital Funding, Inc.		1,777		6,468
TOTAL CLOSED-END FUNDS (Cost $48,606)				13,775
BUSINESS DEVELOPMENT COMPANY — 0.0%
PennantPark Investment Corp.		1,947		7,029
TOTAL BUSINESS DEVELOPMENT COMPANY (Cost $26,129)				7,029

	PRINCIPAL
	AMOUNT
SHORT-TERM INVESTMENT — 0.3%
U.S. Treasury Bill 1.85% (c), 01/22/2009	$	250,000		249,996
TOTAL SHORT-TERM INVESTMENT (Cost $249,730)				249,996
SECURITIES LENDING COLLATERAL — 7.3%
COMMERCIAL PAPER — 6.5%
Clipper Receivables Co., LLC 0.50%, 01/02/2009 (d) (e)		1,142,073		1,142,073
Galleon Capital LLC 0.50%, 01/02/2009 (d) (e)		3,806,909		3,806,909
				4,948,982
TIME DEPOSITS — 0.8%
Bank of Montreal 0.01%, 01/02/2009 (d)		126,465		126,465
Barclays Bank 0.01%, 01/02/2009 (d)		126,465		126,465
Credit Suisse 0.01%, 01/02/2009 (d)		126,465		126,465
Dexia Bank 0.15%, 01/02/2009 (d)		126,465		126,465
Bank of Nova Scotia 0.01%, 01/02/2009 (d)		126,464		126,464
				632,324
TOTAL SECURITIES LENDING COLLATERAL (Cost $5,581,306)				5,581,306
TOTAL INVESTMENTS — 107.3% (Cost $123,601,171)				82,368,646
LIABILITIES IN EXCESS OF CASH & OTHER ASSETS — (7.3%)				(5,618,218	)
TOTAL NET ASSETS — 100.0%			$	76,750,428

(a)	Non-income producing.
(b)	Securities (or a portion of securities) on loan (See Note 9).
(c)	Yield to Maturity.
(d)	This security was purchased with cash collateral received from securities lending.
(e)	Securities exempt from registration under section 4(2) of the Securities Act of 1933, as amended. These securities may only be resold in an exempt transaction to qualified institutional buyers. At December 31, 2008, these securities amounted to $4,948,982 or 6.5% of net assets.

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 — Quoted Prices	$	76,537,344
Level 2 — Other Significant Observable Inputs		5,831,302
Level 3 — Significant Unobservable Inputs		—
Total	$	82,368,646

			% OF TOTAL
INDUSTRY	VALUE		NET ASSETS
BANKS	$	7,906,023		10.3	%
SECURITIES LENDING COLLATERAL		5,581,306		7.3	%
COMMERCIAL SERVICES		4,969,206		6.5	%
HEALTH CARE		4,716,731		6.1	%
REAL ESTATE INVESTMENT TRUST		4,519,388		5.9	%
RETAIL		3,503,661		4.6	%
INSURANCE		3,436,471		4.5	%
PHARMACEUTICALS		3,263,353		4.2	%
SOFTWARE		2,716,593		3.5	%
BIOTECHNOLOGY		2,456,531		3.2	%
TELECOMMUNICATIONS		2,213,178		2.9	%
ELECTRONICS		2,052,419		2.7	%
ELECTRIC		2,037,718		2.7	%
FOOD		1,895,794		2.5	%
COMPUTERS		1,827,912		2.4	%
SEMICONDUCTORS		1,696,488		2.2	%
INTERNET COMPANIES		1,646,279		2.1	%
OIL & GAS SERVICES		1,613,849		2.1	%
OIL & GAS PRODUCERS		1,515,802		2.0	%
TRANSPORTATION		1,459,773		1.9	%
DIVERSIFED FINANCIAL SERVICES		1,454,990		1.9	%
CHEMICALS		1,288,692		1.7	%
AEROSPACE/DEFENSE		1,243,864		1.6	%
MACHINERY		1,201,272		1.6	%
ENVIRONMENTAL CONTROL		888,776		1.2	%
ELECTRICAL COMPONENTS & EQUIPMENT		791,851		1.0	%
APPAREL		791,299		1.0	%
AIRLINE		771,789		1.0	%
MINING		691,411		0.9	%
ENGINEERING & CONSTRUCTION		682,877		0.9	%
DISTRIBUTION / WHOLESALE		667,317		0.9	%
METAL FABRICATE / HARDWARE		633,818		0.8	%
ENTERTAINMENT		594,747		0.8	%
BUILDING MATERIALS		530,546		0.7	%
HOUSEHOLD PRODUCTS / WARE		510,218		0.7	%
COMPUTERS, PERIPHERAL & SOFTWARE		496,755		0.6	%

The accompanying notes are an integral part of these Financial Statements.

38 E*TRADE Russell 2000 Index Fund — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

				% OF TOTAL
INDUSTRY	VALUE			NET ASSETS
MANUFACTURING		472,861			0.6	%
OIL & GAS		452,683			0.6	%
TELECOMMUNICATIONS EQUIPMENT		426,415			0.6	%
LEISURE TIME		402,304			0.5	%
MEDIA		396,305			0.5	%
FOREST PRODUCTS & PAPER		390,557			0.5	%
METALS — DIVERSIFIED		365,883			0.5	%
MANUFACTURERS		341,147			0.4	%
AUTO PARTS & EQUIPMENT		330,007			0.4	%
HAND / MACHINE TOOLS		308,644			0.4	%
WATER		306,853			0.4	%
GAS		291,509			0.4	%
AUTO MANUFACTURERS		288,478			0.4	%
TEXTILES		276,152			0.4	%
TOYS / GAMES / HOBBIES		241,998			0.3	%
HOME FURNISHINGS		240,060			0.3	%
HOME BUILDERS		226,598			0.3	%
INVESTMENT COMPANIES		198,526			0.3	%
OFFICE / BUSINESS EQUIPMENT		193,558			0.2	%
ENERGY — ALTERNATE SOURCES		193,556			0.2	%
COSMETICS / PERSONAL CARE		171,171			0.2	%
BEVERAGES		168,398			0.2	%
PACKAGING & CONTAINERS		156,746			0.2	%
TOBACCO		151,177			0.2	%
REAL ESTATE		143,257			0.2	%
AGRICULTURE		134,585			0.2	%
LODGING		132,597			0.2	%
TELEPHONE		114,977			0.1	%
COAL		86,965			0.1	%
ADVERTISING		81,960			0.1	%
TRUCKING & LEASING		76,880			0.1	%
IRON / STEEL		66,342			0.1	%
CLOSED-END FUNDS		13,775			0.0	%
BUSINESS DEVELOPMENT COMPANY		7,029			0.0	%
SHORT-TERM INVESTMENTS AND LIABILITIES IN EXCESS OF CASH & OTHER ASSETS		(5,368,222	)		(7.0	%)
	$	76,750,428			100.0	%

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Russell 2000 Index Fund — 2008 Annual Report 39

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMON STOCKS — 98.2%
AUSTRALIA — 5.8%
AGL Energy, Ltd.		5,266	$	56,026
Alumina, Ltd. ADR		668		2,859
Amcor, Ltd. ADR		2,479		41,027
AMP, Ltd.		22,269		84,151
Aristocrat Leisure, Ltd.		3,843		10,396
Asciano Group		6,817		7,177
ASX, Ltd.		2,033		47,200
Australia & New Zealand Banking Group, Ltd. ADR (a)		24,238		259,347
AXA Asia Pacific Holdings, Ltd.		10,044		34,593
Babcock & Brown, Ltd.		3,013		326
Bendigo and Adelaide Bank, Ltd.		3,202		24,557
BHP Billiton, Ltd. ADR		19,931		855,040
Billabong International, Ltd.		1,971		10,787
BlueScope Steel, Ltd.		9,026		22,025
Boral, Ltd.		6,917		22,280
Brambles Industries, Ltd.		16,435		85,022
Caltex Australia, Ltd.		1,603		8,036
CFS Retail Property Trust, REIT		20,313		26,483
Coca-Cola Amatil, Ltd. ADR		3,272		41,685
Cochlear, Ltd.		663		25,608
Commonwealth Bank of Australia		16,571		333,890
Computershare, Ltd.		5,610		30,508
Crown, Ltd.		5,315		22,123
CSL, Ltd.		7,102		166,866
CSR, Ltd.		15,119		18,552
Dexus Property Group REIT		34,826		19,910
Fairfax Media, Ltd.		16,179		18,443
Fortescue Metals Group, Ltd. (b)		15,001		20,185
Foster’s Group, Ltd. ADR		22,822		91,288
Goodman Fielder, Ltd.		15,738		14,593
Goodman Group		31,356		16,177
GPT Group, REIT		52,240		33,508
Harvey Norman Holdings, Ltd.		6,309		11,656
Incitec Pivot, Ltd.		20,018		34,752
Insurance Australia Group, Ltd.		22,309		60,504
Leighton Holdings, Ltd.		1,743		33,601
Lend Lease Corp., Ltd.		4,288		21,525
Lion Nathan, Ltd.		3,490		20,001
Macquarie Airports		8,165		13,662
Macquarie Group, Ltd.		3,338		67,048
Macquarie Infrastructure Group		28,551		34,039
Macquarie Office Trust, REIT		24,257		4,059
Metcash, Ltd.		9,084		27,740
Mirvac Group, REIT		19,145		17,085
National Australia Bank, Ltd. ADR (a)		22,214		326,546
Newcrest Mining, Ltd. ADR		5,385		129,240
Nufarm, Ltd.		1,656		12,111
OneSteel, Ltd.		9,915		17,005
Orica, Ltd.		4,111		40,069
Origin Energy, Ltd.		10,465		117,615
OZ Minerals, Ltd. (c)		35,220		13,505
Perpetual, Ltd.		449		11,611
Qantas Airways, Ltd.		11,026		20,218
QBE Insurance Group, Ltd.		10,547		189,790
Rio Tinto, Ltd.		3,394		89,919
Santos, Ltd. ADR (a)		1,734		76,730
Sims Metal Management, Ltd.		1,823		22,039
Sonic Healthcare, Ltd.		3,780		38,372
Stockland, REIT		17,408		49,033
Suncorp-Metway, Ltd.		11,349		66,465
TABCORP Holdings, Ltd. ADR		623		30,361
Tatts Group, Ltd.		13,526		26,311
Telstra Corp., Ltd. ADR		10,345		141,209
Toll Holdings, Ltd.		7,801		33,558
Transurban Group		14,344		54,005
Wesfarmers, Ltd.		7,687		96,471
Wesfarmers, Ltd. PPS		1,718		21,560
Westfield Group NPV, REIT		20,831		188,077
Westpac Banking Corp.		9,461		111,935
Westpac Banking Corp. ADR (a)		6,263		377,346
Woodside Petroleum, Ltd. ADR		5,723		149,943
Woolworths, Ltd.		14,457		268,818
WorleyParsons, Ltd.		1,792		17,654
				5,533,856
AUSTRIA — 0.3%
Erste Group Bank AG		4,519		51,291
OMV AG		1,960		51,003
Raiffeisen International Bank Holding AG		643		17,250
Strabag SE		609		13,714
Telekom Austria AG ADR		2,049		59,421
Verbund, Class A		915		41,413
Vienna Insurance Group		456		15,289
Voestalpine AG		1,367		28,579
Wienerberger AG		997		16,492
				294,452
BELGIUM — 0.7%
Anheuser — Busch Inbev NV		5,703		131,437
Belgacom SA		2,007		76,246
Colruyt SA		198		42,317
Compagnie Nationale a Portefeuille		466		22,545
Delhaize Group ADR (a)		1,191		74,961
Dexia		6,280		27,934
Fortis NL SP ADR (a)		26,535		30,781
Groupe Bruxelles Lambert SA		958		75,718
KBC Ancora		372		6,324
KBC Groep NV		1,898		56,592
Mobistar SA		368		26,416
Solvay SA		704		51,914
UCB SA		1,198		38,801
Umicore		1,478		28,907
				690,893
BERMUDA — 0.0%
Frontline, Ltd.		622		18,023
SeaDrill, Ltd.		3,318		26,593
				44,616
DENMARK — 0.8%
A P Moller — Maersk A/S		13		69,134
A P Moller — Maersk A/S, Class A		7		37,723
Carlsberg A/S, Class B		847		27,409
Coloplast A/S		290		19,898
Danisco A/S		581		23,504
Danske Bank A/S		5,395		52,991
DSV A/S		2,259		24,216
FLSmidth & Co., A/S, Class B		632		21,754
Jyske Bank (b)		599		13,825
Novo-Nordisk A/S, Class B ADR		5,316		273,189
Novozymes A/S, Class A		548		43,257
Topdanmark A/S (b)		188		24,259
TrygVesta AS		323		19,968
Vestas Wind Systems A/S (b)		2,200		127,186
William Demant Holding (b)		280		11,560
				789,873
FINLAND — 1.4%
Elisa Oyj, Class A		1,679		28,884
Fortum Oyj		5,269		112,444
Kesko, Class B		785		19,558
Kone Oyj		1,820		39,764
Metso Oyj ADR		1,515		18,468
Neste Oil Oyj		1,523		22,595
Nokia Oyj, ADR		45,141		704,200
Nokian Renkaat Oyj		1,260		14,002
Orion Oyj, Class B		1,061		17,879
Outokumpu Oyj, Class A		1,401		16,298
Pohjola Bank plc		1,327		17,985
Rautaruukki Oyj		999		17,067
Sampo Oyj, Class A		5,083		94,102

The accompanying notes are an integral part of these Financial Statements.

40 E*TRADE International Index Fund — 2008 Annual Report

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
FINLAND (continued)
Sanoma-WSOY Oyj		966	$	12,439
Stora Enso Oyj ADR		6,910		54,105
UPM-Kymmene Oyj ADR		6,176		79,300
Wartsila, Corp.		996		29,415
				1,298,505
FRANCE — 10.2%
Accor SA		2,265		110,542
Aeroports de Paris		353		23,744
Air France-KLM ADR		1,605		21,138
Air Liquide SA		2,942		267,659
Alcatel — Lucent SP ADR		27,526		59,181
Alstom SA		2,523		147,228
Atos Origin SA		828		20,619
AXA SA ADR (a)		18,387		413,156
BNP Paribas ADR		19,494		418,146
Bouygues SA		2,849		119,599
Bureau Veritas SA		450		17,977
Cap Gemini SA		1,644		62,844
Carrefour SA		7,535		288,245
Casino Guichard-Perrachon SA		518		39,098
Christian Dior SA		648		36,255
Cie Generale de Geophysique-Veritas (b)		1,553		22,883
CNP Assurances		441		31,791
Compagnie de Saint-Gobain		3,408		159,149
Compagnie Generale d’Optique Essilor International SA		2,393		111,667
Compagnie Generale Des Etablissements Michelin		1,722		89,930
Credit Agricole SA		10,577		117,620
Dassault Systemes SA ADR		769		34,836
Eiffage SA		443		23,012
Electricite de France		2,381		137,353
Eramet		62		11,893
Eurazeo		296		13,804
Eutelsat Communications		1,044		24,525
France Telecom SA ADR		21,736		610,129
GDF Suez SP ADR		13,015		643,592
Gecina SA, REIT		185		12,765
Groupe Danone ADR (a)		25,934		313,283
Hermes International		819		113,845
ICADE, REIT		234		19,354
Iliad SA		193		16,633
Imerys SA		338		15,267
JC Decaux SA		795		13,587
Klepierre, REIT		987		24,010
L’Oreal SA		2,902		251,313
Lafarge SA ADR		6,023		92,875
Lagardere SCA		1,402		56,517
Legrand SA		1,088		20,659
LVMH Moet Hennessy Louis Vuitton SA		2,910		193,231
M6-Metropole Television		766		14,742
Natixis		12,089		21,005
Neopost SA		369		33,253
Pagesjaunes Groupe SA		1,500		14,658
Pernod-Ricard SA		1,955		143,948
Peugeot SA ADR (a)		1,807		31,171
PPR		902		58,428
Publicis Groupe, ADR		1,501		38,636
Renault SA		2,200		56,728
Safran SA		2,229		29,850
Sanofi-Aventis ADR		24,985		803,518
Schneider Electric SA		2,645		194,864
SCOR ADR		20,780		46,132
Societe BIC SA		319		18,256
Societe des Autoroutes Paris-Rhin-Rhone		269		18,603
Societe Generale ADR		28,064		291,866
Societe Television Francaise 1		1,394		20,230
Sodexho SP ADR		1,121		62,272
Suez Environnement SA (b)		3,199		53,583
Technip SA ADR		1,212		37,887
Thales SA		1,060		43,953
Total SA SP ADR		25,339		1,401,247
Unibail — Rodamco REIT		973		144,043
Valeo SA ADR		1,764		13,230
Vallourec		630		70,934
Veolia Environnement ADR		4,483		142,156
Vinci SA		4,984		207,840
Vivendi		13,894		449,324
Wendel		329		16,189
Zodiac SA		495		17,890
				9,717,390
GERMANY — 8.4%
Adidas AG		2,354		89,514
Allianz AG ADR		53,728		581,874
BASF AG ADR		11,236		441,687
Bayer AG ADR		9,078		539,233
Bayerische Motoren Werke AG		3,933		119,610
Beiersdorf AG		1,048		61,839
Celesio AG		1,010		27,315
Commerzbank AG ADR		8,153		79,166
Daimler AG		10,311		394,705
Deutsche Bank AG		6,440		255,019
Deutsche Boerse AG		2,316		165,419
Deutsche Lufthansa AG ADR		2,720		43,384
Deutsche Post AG		10,050		169,423
Deutsche Postbank AG		974		21,152
Deutsche Telekom AG ADR		33,671		515,166
E. ON AG ADR		22,578		920,053
Fraport AG		436		19,261
Fresenius Medical Care AG ADR		2,267		106,957
Fresenius SE		335		16,944
GEA Group AG		1,748		30,012
Hamburger Hafen und Logistik AG		291		9,624
Hannover Rueckversicherung AG		716		22,651
HeidelbergCement AG		297		13,126
Henkel KGaA		1,543		40,386
Hochtief AG		499		25,250
Hypo Real Estate Holding ADR		2,006		8,124
Hypo Real Estate Holding AG		812		3,551
Infineon Technologies AG ADR (b)		8,905		12,467
K+S AG		1,764		99,374
Linde AG		1,592		133,082
MAN AG		1,256		69,160
Merck KGaA		768		69,040
Metro AG		1,347		53,740
Muenchener Rueckversicherungs — Gesellschaft AG		2,452		382,340
Puma AG Rudolf Dassler Sport		76		15,019
Q-Cells AG (b)		731		26,779
Rwe AG SP ADR		5,284		481,637
Salzgitter AG		464		36,149
SAP AG ADR (a)		10,365		375,420
Siemens AG ADR		10,316		781,437
Solarworld AG		995		21,678
ThyssenKrupp AG		4,278		116,307
TUI AG		2,537		29,366
United Internet AG		1,493		13,232
Volkswagen AG ADR (a)		6,919		495,054
Wacker Chemie AG		186		19,670
				7,951,396
GREECE — 0.5%
Alpha Credit Bank		4,508		41,984
Coca Cola Hellenic Bottling Co. SA		1,953		28,226
EFG Eurobank Ergasias		3,759		29,787
Hellenic Petroleum SA		1,452		10,899
Hellenic Telecommunications Organization SA		3,202		52,966
Marfin Investment Group SA		7,100		28,621
National Bank of Greece SA ADR (a)		29,497		112,384

The accompanying notes are an integral part of these Financial Statements.

E*TRADE International Index Fund — 2008 Annual Report 41

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
GREECE (continued)
Opap SA		2,652	$	76,235
Piraeus Bank SA		3,718		33,076
Public Power Corp. SA		1,240		19,891
Titan Cement Co. SA		686		13,255
				447,324
HONG KONG — 2.0%
ASM Pacific Technology, Ltd.		2,320		7,603
Bank of East Asia, Ltd. ADR		16,868		33,904
BOC Hong Kong Holdings, Ltd.		43,952		49,792
Cathay Pacific Airways, Ltd. ADR		2,802		15,831
Cheung Kong Holdings, Ltd.		16,506		156,111
Cheung Kong Infrastructure Holdings, Ltd.		5,355		20,141
China CITIC Bank, Class H		26,098		8,924
Chinese Estates Holdings, Ltd.		10,775		12,235
CLP Holdings, Ltd. ADR		24,313		165,815
Esprit Holdings, Ltd.		12,533		70,992
Foxconn International Holdings, Ltd. (b)		25,157		8,342
Hang Lung Group, Ltd.		10,300		31,165
Hang Lung Properties, Ltd. ADR		4,923		53,956
Hang Seng Bank, Ltd. ADR (a)		9,083		120,441
Henderson Land Development Co. ADR (a)		12,749		48,191
Hong Kong & China Gas Co., Ltd. ADR		47,503		72,205
Hong Kong Aircraft Engineering Co., Ltd.		790		6,493
Hong Kong Electric Holdings ADR (a)		16,477		92,601
Hong Kong Exchanges and Clearing, Ltd.		12,124		115,136
Hopewell Holdings		7,416		24,400
Hutchison Telecommunications International Ltd.		19,897		5,340
Hutchison Whampoa, Ltd.		25,319		126,918
Hysan Development Co., Ltd.		6,798		10,982
Kerry Properties, Ltd.		7,627		20,322
Kingboard Chemical Holdings, Ltd.		6,509		11,674
Li & Fung, Ltd.		26,747		45,831
Lifestyle International Holdings, Ltd.		8,109		8,213
Link (The), REIT		25,640		42,346
Mongolia Energy Co., Ltd. (b)		21,551		6,618
MTR Corp.		16,762		38,844
New World Development, Ltd. ADR		14,508		29,016
Noble Group, Ltd.		19,625		13,894
NWS Holdings, Ltd.		9,777		14,558
Orient Overseas International, Ltd.		2,601		5,779
Pacific Basin Shipping, Ltd.		19,685		8,941
PCCW, Ltd. ADR (a)		4,424		20,793
Shangri-La Asia, Ltd. ADR		771		17,728
Sino Land Co.		20,276		20,982
Sun Hung Kai Properties, Ltd. ADR		16,752		142,057
Swire Pacific, Ltd. ADR		9,777		66,093
Television Broadcasts, Ltd.		3,382		11,018
Wharf Holdings, Ltd.		16,354		44,840
Wheelock and Co., Ltd.		10,860		23,821
Wing Hang Bank, Ltd.		2,103		12,116
Yue Yuen Industrial Holdings		7,904		15,624
				1,878,626
IRELAND — 0.4%
Allied Irish Bank PLC ADR		5,242		24,585
Anglo Irish Bank Corp. PLC		9,028		2,146
Bank of Ireland ADR (a)		2,981		14,219
CRH PLC ADR		6,333		164,848
Elan Corp. PLC ADR (b)		5,637		33,822
Experian Group Ltd. PLC, SP ADR (a)		12,165		77,248
Kerry Group PLC, Class A		1,660		30,228
Ryanair Holdings PLC (b)		4,964		20,494
				367,590
ITALY — 3.5%
A2A SpA		14,884		26,486
Alleanza Assicurazioni SpA		5,028		40,723
Assicurazioni Generali SpA		12,561		342,378
Atlantia SpA		3,059		56,137
Autogrill SpA		1,209		9,099
Banca Carige SpA		8,630		20,502
Banca Monte Dei Paschi di Siena SpA		29,359		62,807
Banca Popolare di Milano SCRL		4,683		27,515
Banco Popolare SCRL		7,607		52,758
Bulgari SpA		1,783		11,077
Enel SpA		51,430		325,819
Eni SpA ADR (a)		15,461		739,345
Fiat SpA ADR		8,433		55,405
Finmeccanica SpA		4,808		73,378
Fondiaria-Sai SpA		825		14,864
IFIL Investments SpA		3,701		9,360
Intesa Sanpaola		91,481		325,486
Intesa Sanpaolo, RSP		10,522		26,675
Italcementi SpA		841		10,633
Italcementi SpA		1,252		8,593
Lottomatica SpA		723		17,791
Luxottica Group SpA ADR (a)		1,650		29,898
Mediaset SpA		9,119		51,758
Mediobanca SpA		5,844		58,806
Mediolanum SpA		2,601		11,009
Parmalat SpA		19,808		32,413
Pirelli & Co. SpA		31,078		11,474
Prysmian SpA		1,286		20,029
Saipem SpA		3,145		52,368
Saras SpA		3,953		13,291
Snam Rete Gas SpA		9,295		51,382
Telecom Italia SpA (Ordinary) ADR		11,920		193,700
Telecom Italia SpA (Savings) ADR		7,157		81,160
Terna SpA		14,259		46,500
Unicredit SpA		134,948		331,169
Unione di Banche Italiane ScpA		7,212		103,762
Unipol Gruppo Finanziario SpA		7,910		12,038
				3,357,588
JAPAN — 24.8%
77 Bank, Ltd. (The)		4,097		22,122
ABC-Mart, Inc.		298		10,864
Acom Co., Ltd. ADR		2,276		24,126
Advantest Corp. ADR (a)		1,778		28,946
Aeon Co., Ltd.		7,606		75,749
Aeon Credit Service Co., Ltd.		932		9,715
Aeon Mall Co., Ltd.		753		14,385
Aioi Insurance Co., Ltd.		5,389		27,635
Aisin Seiki Co., Ltd.		2,275		31,834
Ajinomoto Co., Inc.		7,899		85,385
Alfresa Holdings Corp.		352		16,747
All Nippon Airways Co., Ltd.		7,643		29,994
Alps Electric Co., Ltd.		2,049		9,983
Amada Co., Ltd.		4,309		20,681
Aozora Bank, Ltd.		7,840		7,266
Asahi Breweries, Ltd.		4,595		78,716
Asahi Glass Co., Ltd.		11,981		67,548
Asahi Kasei Corp.		14,161		61,776
Asics Corp.		1,900		15,232
Astellas Pharma, Inc.		5,687		230,212
Bank of Kyoto, Ltd. (The)		3,663		40,453
Bank of Yokohama, Ltd. (The)		14,656		85,298
Benesse Corp.		884		38,480
Bridgestone Corp.		7,243		107,260
Brother Industries, Ltd.		2,802		16,493
Canon, Inc., ADR (a)		12,673		397,932
Canon, Marketing Japan, Inc.		808		12,898
Casio Computer Co., Ltd.		2,817		17,580
Central Japan Railway Co.		19		163,764
Chiba Bank, Ltd. (The)		9,041		55,456
Chubu Electric Power Co., Inc.		7,865		238,164
Chugai Pharmaceutical Co., Ltd.		2,659		51,072
Chugoku Bank, Ltd. (The)		1,939		29,690
Chugoku Electric Power Co., Inc. (The)		3,305		86,711
Chuo Mitsui Trust Holdings, Inc.		11,686		56,328
Citizen Holdings Co., Ltd.		3,840		13,710

The accompanying notes are an integral part of these Financial Statements.

42 E*TRADE International Index Fund — 2008 Annual Report

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
JAPAN (continued)
Coca-Cola West Holdings Co., Ltd.		660	$	14,215
Cosmo Oil Co., Ltd.		6,545		20,118
Credit Saison Co., Ltd.		1,944		26,528
Dai Nippon Printing Co., Ltd.		7,072		77,238
Daicel Chemical Industries, Ltd.		3,251		15,272
Daido Steel Co., Ltd.		3,612		10,805
Daihatsu Motor Co., Ltd.		2,283		19,943
Daiichi Sankyo Co., Ltd.		8,294		194,044
Daikin Industries, Ltd.		3,133		81,056
Dainippon Sumitomo Pharma Co., Ltd.		1,905		17,663
Daito Trust Construction Co., Ltd.		956		49,752
Daiwa House Industry Co., Ltd.		6,057		58,576
Daiwa Securities Group, Inc.		15,850		93,126
DeNA Co., Ltd.		3		9,606
Denki Kagaku Kogyo Kabushiki Kaisha		5,707		13,875
Denso Corp.		5,775		95,849
Dentsu, Inc.		23		44,909
DIC Corp.		7,063		14,748
Dowa Holdings Co., Ltd.		3,247		11,807
Dowa Mining Co., Ltd. Rights, expires 01/29/10 (b)		2,165		364
East Japan Railway Co.		40		304,026
Eisai Co., Ltd. ADR (a)		2,994		124,999
Electric Power Development Co., Ltd.		1,583		61,758
Elpida Memory, Inc. (b)		1,311		7,977
FamilyMart Co., Ltd.		696		30,111
Fanuc, Ltd.		2,276		160,739
Fast Retailing Co., Ltd.		567		82,389
Fuji Electric Holdings Co., Ltd.		6,650		9,899
Fuji Heavy Industries, Ltd.		6,974		18,782
Fuji Media Holdings, Inc.		6		8,572
Fujifilm Holdings Corp.		5,807		127,481
Fujitsu, Ltd.		22,128		106,254
Fukuoka Financial Group, Inc.		9,195		39,628
Furukawa Electric Co. (The)		7,553		36,274
Gunma Bank, Ltd. (The)		4,702		29,675
Hachijuni Bank, Ltd. (The)		5,096		29,046
Hakuhodo DY Holdings, Inc.		277		15,009
Hankyu Hanshin Holdings, Inc.		14,346		82,326
Haseko Corp.		15,375		16,167
Hikari Tsushin, Inc.		312		5,877
Hino Motors, Ltd.		3,071		6,249
Hirose Electric Co., Ltd.		380		38,114
Hiroshima Bank, Ltd. (The)		5,941		25,696
Hisamitsu Pharmaceutical Co.		791		32,118
Hitachi Chemical Co., Ltd.		1,237		12,709
Hitachi Construction Machinery Co., Ltd.		1,278		14,995
Hitachi High-Technologies Corp.		818		12,960
Hitachi Metals, Ltd.		1,959		8,988
Hitachi, Ltd. ADR (a)		4,000		156,560
Hokkaido Electric Power Co., Inc.		2,301		57,900
Hokuhoku Financial Group, Inc.		14,050		32,983
Hokuriku Electric Power Co.		2,094		59,013
Honda Motor Co., Ltd. ADR (a)		19,614		418,563
Hoya Corp. ADR		4,909		85,171
Ibiden Co., Ltd.		1,613		32,896
Idemitsu Kosan Co., Ltd.		261		16,642
INPEX Holdings, Inc.		10		78,366
Isetan Mitsukoshi Holdings, Ltd. (b)		3,915		33,466
Ishikawajima-Harima Heavy Industries Co., Ltd.		15,682		19,772
Isuzu Motors, Ltd.		15,116		19,193
Ito En, Ltd.		758		11,115
Itochu Corp.		17,883		88,765
Itochu Techno-Solutions Corp.		353		8,527
Iyo Bank, Ltd. (The)		2,884		35,536
J. Front Retailing Co., Ltd.		6,051		24,727
Jafco Co., Ltd.		402		10,105
Japan Airlines System Corp. (b)		10,710		25,134
Japan Petroleum Exploration Co., Ltd.		339		14,750
Japan Prime Realty Investment Corp., REIT		7		16,411
Japan Real Estate Investment Corp., REIT		5		44,222
Japan Retail Fund Investment Corp., REIT		4		17,091
Japan Steel Works, Ltd. (The)		4,191		57,769
Japan Tobacco, Inc.		53		173,897
JFE Holdings, Inc.		6,203		162,471
JGC Corp.		2,615		38,455
Joyo Bank, Ltd. (The)		8,301		46,982
JS Group Corp.		3,161		48,274
JSR Corp.		2,127		23,627
JTEKT Corp.		2,290		17,627
Jupiter Telecommunications Co., Ltd.		29		30,078
Kajima Corp.		10,047		34,854
Kamigumi Co., Ltd.		3,096		27,473
Kaneka Corp.		3,534		22,394
Kansai Electric Power Co., Inc. (The)		9,072		261,346
Kansai Paint Co., Ltd.		2,590		13,164
Kao Corp. ADR		620		188,418
Kawasaki Heavy Industries, Ltd. ADR		4,462		35,243
Kawasaki Kisen Kaisha, Ltd.		7,209		33,193
KDDI Corp.		35		247,246
Keihin Electric Express Railway Co., Ltd.		5,106		44,938
Keio Electric Railway Co., Ltd.		6,871		41,070
Keisei Electric Railway Co., Ltd.		3,276		20,262
Keyence Corp.		448		91,146
Kikkoman Corp.		1,874		22,005
Kinden Corp.		1,580		14,176
Kintetsu Corp.		19,308		88,487
Kirin Holdings Co., Ltd. SP ADR		9,355		123,018
Kobe Steel, Ltd.		31,449		56,905
Komatsu, Ltd. ADR		2,669		136,252
Konami Corp. ADR		1,193		30,851
Konica Minolta Holdings, Inc.		5,683		43,419
Kubota Corp. ADR		2,596		93,638
Kuraray Co., Ltd.		4,093		31,658
Kurita Water Industries, Ltd.		1,341		35,737
Kyocera Corp. ADR		1,931		139,746
Kyowa Hakko Kogyo Co., Ltd.		3,081		31,940
Kyushu Electric Power Co., Inc.		4,506		119,038
Lawson, Inc.		828		47,549
Leopalace21 Corp.		1,516		15,174
Mabuchi Motor Co., Ltd.		359		14,753
Makita Corp.		1,454		32,003
Marubeni Corp.		19,610		73,859
Marui Group Co., Ltd.		3,028		17,444
Maruichi Steel Tube, Ltd.		447		12,350
Matsui Securities Co., Ltd.		1,439		11,969
Mazda Motor Corp.		10,951		18,281
Mediceo Paltac Holdings Co., Ltd.		1,737		20,755
Meiji Dairies Corp.		3,132		16,691
Minebea Co., Ltd. ADR (a)		2,133		14,184
Mitsubishi Chemical Holdings Corp.		15,207		66,661
Mitsubishi Corp. ADR (a)		8,055		226,346
Mitsubishi Electric Corp.		22,953		141,761
Mitsubishi Estate Co., Ltd.		13,958		226,999
Mitsubishi Gas Chemical Co., Inc.		4,594		18,598
Mitsubishi Heavy Industries, Ltd.		38,067		167,789
Mitsubishi Logistics Corp.		1,358		16,941
Mitsubishi Materials Corp.		13,672		34,100
Mitsubishi Motors Corp. (b)		42,755		58,020
Mitsubishi Rayon Co., Ltd.		6,414		19,214
Mitsubishi Tanabe Pharma Corp.		2,667		39,911
Mitsubishi UFJ Financial Group, Inc.		9		57
Mitsubishi UFJ Financial Group, Inc. ADR		122,558		761,085
Mitsubishi UFJ Lease & Finance Co., Ltd.		692		17,340
Mitsui & Co., Ltd. ADR		1,029		210,955
Mitsui Chemicals, Inc.		7,526		27,626
Mitsui Engineering & Shipbuilding Co., Ltd.		8,390		13,913
Mitsui Fudosan Co., Ltd.		9,946		163,251
Mitsui Mining & Smelting Co., Ltd.		6,805		14,256
Mitsui O.S.K. Lines, Ltd.		13,611		82,756

The accompanying notes are an integral part of these Financial Statements.

E*TRADE International Index Fund — 2008 Annual Report 43

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
JAPAN (continued)
Mitsui Sumitomo Insurance Group Holdings, Inc.		4,504	$	140,625
Mitsumi Electric Co., Ltd.		987		16,983
Mizuho Financial Group, Inc.		115		326,922
Mizuho Trust & Banking Co., Ltd.		17,904		22,415
Murata Manufacturing Co., Ltd.		2,542		98,445
Namco Bandai Holdings, Inc.		2,375		25,741
NEC Corp.		24,973		83,221
NEC Electronics Corp. (b)		440		4,114
NGK Insulators, Ltd.		3,007		33,490
NGK Spark Plug Co., Ltd.		2,045		16,297
NHK Spring Co., Ltd.		1,884		6,869
Nidec Corp.		1,292		49,057
Nikon Corp.		4,039		47,823
Nintendo Co., Ltd.		1,178		443,521
Nippon Building Fund, Inc., REIT		6		65,274
Nippon Electric Glass Co., Ltd.		4,137		21,498
Nippon Express Co., Ltd.		9,463		39,465
Nippon Meat Packers, Inc.		2,171		32,666
Nippon Mining Holdings, Inc.		10,476		44,685
Nippon Oil Corp.		15,655		78,438
Nippon Paper Group, Inc.		11		43,442
Nippon Sheet Glass Co., Ltd.		7,157		23,366
Nippon Steel Corp.		60,637		196,454
Nippon Telegraph & Telephone ADR		12,241		332,833
Nippon Yusen Kabushiki Kaisha		13,150		80,159
Nipponkoa Insurance Co., Ltd.		7,761		59,294
NISHI-NIPPON City Bank, Ltd.		8,517		24,495
Nissan Chemical Industries, Ltd.		1,720		16,458
Nissan Motor Co., Ltd. ADR (a)		13,423		97,719
Nissay Dowa General Insurance Co., Ltd.		2,085		12,768
Nisshin Seifun Group, Inc.		2,091		27,325
Nisshin Steel Co., Ltd.		8,859		17,977
Nisshinbo Industries, Inc.		1,597		12,016
Nissin Food Products Co., Ltd.		984		34,073
Nitori Co., Ltd.		476		36,948
Nitto Denko Corp.		1,961		37,215
NOK Corp.		1,337		9,328
Nomura Holdings, Inc. ADR (a)		21,015		175,475
Nomura Real Estate Holdings, Inc.		621		12,214
Nomura Real Estate Office Fund, Inc., REIT		3		19,295
Nomura Research Institute, Ltd.		1,336		25,004
NSK, Ltd.		5,238		19,500
NTN Corp.		5,029		15,027
NTT Data Corp.		15		59,924
NTT DoCoMo, Inc. ADR		18,657		366,050
NTT Urban Development Corp.		14		14,950
Obayashi Corp.		7,284		43,065
Obic Co., Ltd.		83		13,602
Odakyu Electric Railway Co., Ltd.		7,441		64,971
Oji Paper Co., Ltd.		10,114		58,883
Olympus Corp.		2,739		54,002
Omron Corp. ADR (a)		2,414		31,623
Ono Pharmaceutical Co., Ltd.		1,148		59,378
Onward Holdings Co., Ltd.		1,540		12,154
Oracle Corp., Japan		453		19,454
Oriental Land Co., Ltd.		621		50,812
Orix Corp. ADR (a)		2,191		62,268
Osaka Gas Co., Ltd.		23,073		106,022
Osaka Titanium Technologies Co., Ltd.		219		5,435
Otsuka Corp.		188		8,457
Panasonic Corp.		21,852		271,839
Panasonic Electric Works Co., Ltd.		4,460		39,344
Promise Co., Ltd.		721		18,083
Rakuten, Inc. (b)		78		49,304
Resona Holdings, Inc.		61		90,238
Ricoh Co., Ltd. ADR		1,593		98,925
Rohm Co., Ltd.		1,199		59,891
Sankyo Co., Ltd., Gunma		638		31,895
Santen Pharmaceutical Co., Ltd.		877		26,321
Sanyo Electric Co., Ltd. (b)		20,015		36,953
Sapporo Hokuyo Holdings, Inc.		4		15,400
Sapporo Holdings, Ltd.		3,042		19,017
SBI Holdings, Inc.		199		30,261
Secom Co., Ltd.		2,494		127,600
Sega Sammy Holdings, Inc. ADR		8,746		25,276
Seiko Epson Corp.		1,516		23,836
Sekisui Chemical Co., Ltd.		5,126		31,710
Sekisui House, Ltd. ADR		5,226		46,198
Seven & I Holdings Co., Ltd.		9,690		329,699
Seven Bank, Ltd.		5		19,050
Sharp Corp.		11,873		84,538
Shikoku Electric Power Co., Inc.		2,165		72,717
Shimadzu Corp.		2,989		18,579
Shimamura Co., Ltd.		261		19,999
Shimano, Inc.		798		31,080
Shimizu Corp.		7,024		40,752
Shin-Etsu Chemical Co., Ltd.		4,876		222,078
Shinko Electric Industries Co., Ltd.		803		6,472
Shinko Securities Co., Ltd.		6,262		13,500
Shinsei Bank, Ltd.		18,354		28,635
Shionogi & Co., Ltd.		3,545		90,603
Shiseido Co., Ltd.		3,896		79,418
Shizuoka Bank, Ltd. (The)		7,169		82,279
Showa Denko Kabushiki Kaisha		14,085		20,097
Showa Shell Sekiyu Kabushiki Kaisha		2,238		21,944
SMC Corp.		683		69,413
Softbank Corp.		8,986		160,673
Sojitz Corp.		14,655		24,108
Sompo Japan Insurance, Inc.		9,972		71,823
Sony Corp. ADR		11,931		260,931
Sony Financial Holdings, Inc.		10		37,791
Square Enix Co., Ltd.		752		24,037
Stanley Electric Co., Ltd.		1,789		18,615
Sumco Corp.		1,531		19,131
Sumitomo Chemical Co., Ltd.		18,679		63,163
Sumitomo Corp. ADR (a)		13,369		114,305
Sumitomo Electric Industries, Ltd.		8,909		68,153
Sumitomo Heavy Industries, Ltd.		6,835		26,820
Sumitomo Metal Industries, Ltd. ADR (a)		4,567		110,795
Sumitomo Metal Mining Co.		6,563		69,458
Sumitomo Mitsui Financial Group, Inc.		80		331,826
Sumitomo Realty & Development		4,524		66,890
Sumitomo Rubber Industries, Inc.		2,031		17,537
Sumitomo Trust & Banking Co., Ltd. ADR		16,912		100,119
Suruga Bank, Ltd.		2,675		26,120
Suzuken Co., Ltd.		837		24,790
Suzuki Motor Corp.		4,193		57,715
T&D Holdings, Inc.		2,341		96,621
Taiheiyo Cement Corp.		10,723		20,382
Taisei Corp.		11,382		31,015
Taisho Pharmaceutical Co., Ltd.		1,523		32,189
Taiyo Nippon Sanso Corp.		3,351		25,545
Takashimaya Co., Ltd.		3,536		26,584
Takeda Pharmaceutical Co., Ltd.		9,682		500,064
Takefuji Corp.		1,285		10,419
TDK Corp. ADR		1,462		54,445
Teijin, Ltd.		10,527		29,553
Terumo Corp.		2,004		93,034
THK Co., Ltd.		1,431		14,876
Tobu Railway Co., Ltd.		9,689		57,533
Toho Co., Ltd.		1,347		28,672
Toho Gas Co., Ltd.		5,652		37,088
Tohoku Electric Power Co., Inc.		5,077		136,702
Tokio Marine Holdings, Inc. ADR		8,122		236,025
Tokuyama Corp.		2,619		21,909
Tokyo Broadcasting System, Inc.		452		6,820
Tokyo Electric Power Co., Inc. (The)		14,462		480,093
Tokyo Electron, Ltd.		2,038		70,775
Tokyo Gas Co., Ltd.		27,436		138,187
Tokyo Steel Manufacturing Co., Ltd.		1,289		13,363
Tokyo Tatemono Co., Ltd.		3,211		14,514

The accompanying notes are an integral part of these Financial Statements.

44 E*TRADE International Index Fund — 2008 Annual Report

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
JAPAN (continued)
Tokyu Corp.		13,507	$	67,467
Tokyu Land Corp.		5,385		20,269
TonenGeneral Sekiyu K.K.		3,356		33,400
Toppan Printing Co., Ltd.		6,230		47,642
Toray Industries, Inc.		15,814		79,635
Toshiba Corp.		36,532		148,742
Tosoh Corp.		6,069		14,775
Toto, Ltd.		3,090		19,293
Toyo Seikan Kaisha, Ltd.		1,929		33,027
Toyo Suisan Kaisha, Ltd.		1,054		30,192
Toyoda Gosei Co., Ltd.		772		8,965
Toyota Boshoku Corp.		780		6,281
Toyota Industries Corp.		2,129		45,313
Toyota Motor Corp. ADR (a)		16,381		1,071,973
Toyota Tsusho Corp.		2,523		26,751
Trend Micro, Inc. (b)		1,248		43,190
TSUMURA & Co.		714		26,370
Ube Industries, Ltd.		11,984		33,180
Uni-Charm Corp.		492		36,900
UNY Co., Ltd.		2,123		23,209
Ushio, Inc.		1,410		18,481
USS Co., Ltd.		291		15,342
West Japan Railway Co.		20		90,698
Yahoo! Japan Corp.		176		71,541
Yakult Honsha Co., Ltd.		1,149		24,380
Yamada Denki Co., Ltd.		1,030		71,217
Yamaguchi Financial Group, Inc.		2,512		27,935
Yamaha Corp.		1,991		18,262
Yamaha Motor Co., Ltd.		2,382		24,774
Yamato Holdings Co., Ltd.		4,617		59,724
Yamato Kogyo Co., Ltd.		470		12,529
Yamazaki Baking Co., Ltd.		1,439		22,015
Yaskawa Electric Corp.		2,847		11,333
Yokogawa Electric Corp.		2,712		17,615
				23,558,369
LUXEMBOURG — 0.4%
ArcelorMittal		10,325		253,892
Millicom International Cellular SA, SDR		834		38,329
SES, FDR		3,362		64,586
Tenaris SA		5,609		56,644
				413,451
NETHERLANDS — 4.6%
Aegon NV		16,618		100,539
Akzo Nobel NV ADR		2,816		117,483
ASML Holding NV		5,123		92,572
Corio NV REIT		519		23,728
European Aeronautic Defence and Space Co., NV		3,871		64,732
Fugro NV		711		20,246
Heineken Holding NV		1,310		37,166
Heineken NV		2,910		88,586
Ing Groep NV ADR		23,464		260,450
James Hardie Industries NV ADR		1,028		16,798
Koninklijke Ahold NV SP ADR		14,157		174,131
Koninklijke Boskalis Westminster NV		662		15,276
Koninklijke DSM NV SP ADR		6,466		41,706
Koninklijke Philips Electronics NV		12,007		238,579
Koninkllijke KPN NV SP ADR		21,414		315,428
Randstad Holdings NV		1,585		32,049
Reed Elsevier NV ADR		3,726		89,834
Royal Dutch Shell PLC, Class A ADR		16,130		829,566
Royal Dutch Shell PLC, Class B ADR		21,065		1,115,181
SBM Offshore NV		1,729		22,469
SNS Reaal		1,553		8,462
TNT NV ADR (a)		4,504		87,152
Unilever NV (a)		19,348		474,993
Wolters Kluwer NV ADR		3,239		61,865
				4,328,991
NEW ZEALAND — 0.1%
Auckland International Airport, Ltd.		11,617		10,998
Contact Energy, Ltd.		3,424		14,667
Fletcher Building, Ltd.		5,979		20,056
Sky City Entertainment Group, Ltd.		5,754		10,491
Telecom Corp. of New Zealand, Ltd. ADR		4,337		29,058
				85,270
NORWAY — 0.6%
Aker Solutions ASA		1,953		12,732
DNB NOR ASA		8,706		33,995
Norsk Hydro ASA ADR		8,152		33,260
Orkla ASA		9,848		64,710
Renewable Energy Corp. AS (b)		1,761		16,511
StatoilHydro ASA, SP ADR		15,245		253,982
Telenor ASA ADR		3,326		68,183
Yara International ASA ADR		2,251		49,590
				532,963
PORTUGAL — 0.3%
Banco Comercial Portugues SA, Class R		27,880		31,585
Banco Espirito Santo SA		2,672		24,848
Brisa		3,563		26,502
Cimpor Cimentos de Portugal SA		3,193		15,446
Energias de Portugal ADR		2,171		82,932
Galp Energia SGPS SA, Class B		2,290		22,855
Jeronimo Martins SGPS SA		2,616		14,436
Portugal Telecom SGPS SA ADR		7,277		62,437
PT Multimedia-Servicos de Telecomunicacoes e Multimedia SGPS SA		1,401		7,225
Zon Multimedia Servicos de Telecomunicacoes e Multimedia SGPS SA ADR		2,050		10,572
				298,838
SINGAPORE — 1.0%
Ascendas Real Estate Investment Trust, REIT		11,844		11,262
CapitaLand, Ltd. ADR		10,060		42,755
CapitalMall Trust, REIT		13,856		15,291
City Developments, Ltd.		5,940		26,263
ComfortDelgro Corp., Ltd.		22,295		22,438
Cosco Corp. Singapore, Ltd.		10,639		7,015
DBS Group Holdings ADR		3,387		90,941
Fraser And Neave, Ltd.		11,548		23,645
Genting International PLC (b)		34,339		10,725
Golden Agri-Resources, Ltd.		59,237		9,662
Jardine Cycle & Carriage, Ltd.		1,720		11,341
Keppel Corp., Ltd. ADR		7,564		46,519
Neptune Orient Lines, Ltd. ADR		1,530		4,667
Olam International, Ltd.		14,244		11,369
Oversea-Chinese Banking Corp., Ltd.		29,708		102,893
Parkway Holdings, Ltd.		10,740		9,244
SembCorp Industries, Ltd.		11,663		18,781
SembCorp Marine, Ltd.		9,841		11,475
Singapore Airlines, Ltd.		6,341		49,557
Singapore Exchange, Ltd.		10,143		35,764
Singapore Press Holdings, Ltd.		17,976		38,803
Singapore Technologies Engineering, Ltd.		16,020		26,353
Singapore Telecommunications, Ltd. ADR		9,458		168,825
United Overseas Bank, Ltd. ADR		7,240		130,320
Uol Group, Ltd.		6,146		9,470
Wilmar International, Ltd.		9,860		19,094
				954,472
SPAIN — 4.5%
Abertis Infraestructuras SA		3,185		56,143
Acciona SA		340		42,384
Acerinox SA		1,661		26,446
ACS Actividades Cons y Servicios SA		2,191		100,073
Banco Bilbao Vizcaya ADR (a)		42,291		528,214
Banco de Sabadell SA		10,904		73,615

The accompanying notes are an integral part of these Financial Statements.

E*TRADE International Index Fund — 2008 Annual Report 45

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
SPAIN (continued)
Banco de Valencia SA		2,481	$	26,103
Banco Popular Espanol SA		9,384		79,671
Banco Santander SA SP ADR		94,985		901,407
Banco Santander SA		1,634		14,930
Bankinter SA		3,134		27,617
Cintra Concesiones de Infraestructuras de Transporte SA		2,701		20,118
Criteria Caixacorp SA		9,986		38,912
EDP Renovaveis SA (b)		2,590		18,224
Enagas		2,127		46,281
Fomento de Construcciones y Contratas SA		529		17,269
Gamesa Corporacion Tecnologica SA		2,167		38,708
Gas Natural SDG SA		1,330		35,823
Gestevision Telecinco SA		1,318		13,927
Grifols SA		1,518		26,159
Grupo Ferrovial SA		750		20,549
Iberdrola Renovables (b)		10,034		42,870
Iberdrola SA		41,519		380,231
Iberia Lineas Aereas de Espana		5,660		15,677
Inditex SA		2,591		113,542
Indra Sistemas SA		1,170		26,464
Mapfre SA		8,152		27,300
Red Electrica de Espana		1,285		64,623
Repsol SA ADR (a)		8,700		187,137
Sacyr Vallehermoso SA		906		8,074
Telefonica SA ADR		16,765		1,129,793
Union Fenosa SA		4,343		107,428
Zardoya Otis SA		1,506		26,690
				4,282,402
SWEDEN — 1.9%
Alfa Laval AB		4,335		37,457
Assa Abloy AB, Class B		3,707		41,903
Atlas Copco AB, Class A ADR		7,976		69,790
Atlas Copco AB, Class B		4,635		35,294
Electrolux AB, Class B ADR (a)		1,511		26,291
Getinge AB		2,139		25,448
Hennes & Mauritz AB, Class B		6,072		236,072
Holmen AB, Class B		627		15,448
Husqvarna AB ADR		1,618		16,900
Investor AB, Class B		5,410		80,324
Loomis AB, Class B (b)		744		4,609
Lundin Petroleum AB (b)		2,614		13,717
Modern Times Group AB, Class B		603		12,958
Nordea Bank AB		24,706		171,917
Sandvik AB ADR		11,977		77,132
Scania AB, Class B		4,276		42,448
Securitas AB, Class B		3,719		30,493
Skandinaviska Enskilda Banken AB, Class A		5,512		42,673
Skanska AB		4,469		44,257
SKF AB — B Shares ADR		4,594		46,262
Ssab Svenskt Staal AB — Series A		2,145		18,646
Ssab Svenskt Staal AB — Series B		987		8,014
Svenska Cellulosa AB ADR		6,686		58,436
Svenska Handelsbanken AB		5,449		86,926
Swedbank AB, Class A		4,285		24,284
Swedish Match AB		3,029		43,101
TELE2 AB, Class B		3,621		31,818
Telefonaktiebolaget LM Ericsson ADR (a)		35,213		275,013
TeliaSonera AB		26,668		131,842
Volvo AB, Class A		5,231		29,200
Volvo AB, Class A ADR		12,924		73,150
				1,851,823
SWITZERLAND — 8.4%
ABB, Ltd., SP ADR (a)		26,133		392,256
Actelion, Ltd., Registered (b)		1,173		65,840
Adecco SA, Registered (b)		1,461		49,485
Aryzta AG (b)		938		30,140
Baloise Holding AG		594		44,154
BKW FMB Energie AG		188		18,107
Compagnie Financiere Richemont SA		6,200		118,134
Credit Suisse Group ADR (a)		12,689		358,591
EFG International, Registered		610		10,787
Geberit AG		471		50,389
Givaudan SA, Registered		78		61,212
Holcim, Ltd.		2,348		134,132
Julius Baer Holding AG, Registered		2,507		95,380
Kuehne & Nagel International AG		641		41,025
Lindt & Spruengli AG		10		18,522
Lindt & Spruengli AG		1		21,328
Logitech International SA (a) (b)		2,233		34,790
Lonza Group AG, Registered		569		52,404
Nestle SA ADR		45,491		1,805,993
Nobel Biocare Holding AG		1,403		28,497
Novartis AG, ADR		28,260		1,406,218
OC Oerlikon Corp. AG (b)		84		5,509
Pargesa Holding SA		321		21,223
Roche Holding AG ADR		16,689		1,277,543
Schindler Holding AG		605		27,520
SGS SA		56		58,169
Sonova Holding AG		561		33,724
STMicroelectronics NV		8,109		53,925
Straumann Holding AG		93		16,313
Sulzer AG		324		18,437
Swatch Group AG		366		50,653
Swatch Group AG, Class B		589		15,934
Swiss Life Holding		415		28,552
Swiss Reinsurance Co. ADR		3,984		190,435
Swisscom AG ADR		2,852		92,205
Syngenta AG ADR		5,758		225,368
Synthes, Inc.		705		88,361
UBS AG, Registered (b)		34,831		489,952
Xstrata PLC		7,548		69,454
Zurich Financial Services AG ADR		16,877		368,762
				7,969,423
UNITED KINGDOM — 17.6%
3i Group PLC		4,557		17,822
Admiral Group PLC		2,197		28,745
Amec PLC		3,931		27,849
Anglo American PLC		15,676		348,444
Antofagasta PLC		4,684		28,655
Associated British Foods PLC		4,231		44,407
AstraZeneca PLC, SP ADR		17,242		707,439
Aviva PLC		31,567		177,004
BAE Systems PLC ADR		10,468		233,541
Balfour Beatty PLC		5,673		26,855
Barclays PLC ADR (a)		24,184		237,003
Berkeley Group Holdings PLC (The)		1,005		12,593
BG Group PLC ADR		7,950		565,642
BHP Billiton PLC ADR		13,107		505,668
BP PLC ADR		37,126		1,735,269
British Airways ADR (a)		685		17,858
British American Tobacco PLC (c)		3,895		86,800
British American Tobacco PLC ADR		11,269		596,581
British Energy Group PLC		12,282		136,588
British Land Co. PLC ADR		6,073		48,110
British Sky Broadcasting Group PLC, ADR (a)		3,383		96,077
BT Group PLC ADR (a)		9,194		183,696
Bunzl PLC ADR		776		33,508
Burberry Group PLC		5,141		16,391
Cable & Wireless PLC		29,840		67,142
Cadbury PLC SP ADR		4,031		143,786
Cairn Energy PLC (b)		1,557		45,107
Capita Group PLC		7,316		77,627
Carnival PLC ADR		1,928		43,669
Carphone Warehouse Group PLC		4,886		6,305
Centrica PLC ADR (a)		15,147		230,234
Cobham PLC		13,519		39,943

The accompanying notes are an integral part of these Financial Statements.

46 E*TRADE International Index Fund — 2008 Annual Report

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
UNITED KINGDOM (continued)
Compass Group PLC ADR		21,918	$	111,343
Daily Mail & General Trust		3,360		13,043
Diageo PLC, SP ADR (a)		7,475		424,131
Drax Group PLC		4,031		32,513
Eurasian Natural Resources Corp.		3,824		18,143
Firstgroup PLC		5,722		35,704
Friends Provident PLC		27,599		34,165
G4S PLC		15,054		44,370
GKN PLC ADR		8,379		11,312
GlaxoSmithKline PLC ADR		31,070		1,157,979
Hammerson PLC, REIT		3,437		26,437
Hays PLC		16,340		16,386
HBOS PLC ADR		63,986		65,905
Home Retail Group		10,422		31,692
HSBC Holdings PLC ADR (a)		28,629		1,393,373
ICAP PLC		6,168		25,496
IMI PLC		3,795		14,827
Imperial Tobacco Group ADR		6,035		326,494
Intercontinental Hotels Group PLC ADR		3,052		25,545
International Power PLC ADR		1,793		63,203
Invensys PLC ADR (b)		9,501		23,943
Investec PLC		4,786		19,611
ITV PLC		39,264		22,440
J Sainsbury PLC ADR		3,114		60,131
Johnson Matthey PLC ADR (a)		1,310		41,422
Kazakhmys PLC		2,542		8,443
Kingfisher PLC ADR		14,020		54,818
Ladbrokes PLC ADR		7,133		19,402
Land Securities Group PLC, REIT		5,525		73,160
Legal & General Group PLC ADR (a)		14,071		83,019
Liberty International PLC, REIT		3,007		20,665
Lloyds Tsb Group PLC ADR (a)		17,733		136,544
LogicaCMG PLC		17,375		17,237
London Stock Exchange Group PLC		1,775		13,015
Lonmin PLC		1,393		18,245
Man Group PLC		20,231		69,082
Marks & Spencer Group PLC ADR		9,363		60,204
Meggitt PLC		7,897		18,138
National Express Group PLC		1,543		10,976
National Grid PLC ADR		5,816		293,475
Next PLC		2,341		36,384
Old Mutual PLC		59,523		47,069
Pearson PLC ADR (a)		9,605		91,632
Prudential Corp. PLC ADR		14,794		187,144
Reckitt Benckiser Group PLC		7,165		265,573
Reed Elsevier PLC SP ADR (a)		3,273		97,666
Rexam PLC ADR		1,527		39,839
Rio Tinto PLC ADR (a)		2,964		263,529
Rolls-Royce Group PLC SP ADR (a)		4,352		107,494
Royal Bank of Scotland Group PLC		196,525		139,582
RSA Insurance Group PLC		39,324		78,079
SABmiller PLC ADR		10,739		182,241
Sage Group PLC (The)		15,545		37,995
Schroders PLC		1,460		18,010
Scottish & Southern Energy ADR (a)		10,385		187,969
Segro PLC, REIT		5,187		18,420
Serco Group PLC		5,772		37,386
Severn Trent PLC		2,798		48,194
Shire, Ltd.		6,650		96,758
Smith & Nephew PLC ADR		2,100		67,830
Smiths Group PLC		4,607		58,624
Stagecoach Group PLC		6,405		12,915
Standard Chartered PLC		16,894		212,532
Standard Life PLC		25,864		75,116
Tate & Lyle PLC ADR		1,361		31,793
Tesco PLC ADR		31,111		493,109
Thomas Cook Group PLC		5,453		13,885
Thomson Reuters PLC (a)		357		48,484
Tomkins PLC ADR (a)		2,616		19,123
Tui Travel PLC		6,640		22,291
Tullow Oil PLC		8,608		81,621
Unilever PLC ADR		15,244		350,917
United Business Media Ltd		2,752		20,119
United Utilities Group PLC ADR		4,046		75,256
Vedanta Resources PLC		1,712		15,052
Vodafone Group PLC ADR		62,680		1,281,179
Whitbread PLC		2,069		27,274
William Morrison Supermarkets PLC		28,527		114,944
Wolseley PLC ADR		7,863		43,876
WPP PLC		13,229		76,556
WPP PLC SP ADR (a)		2,901		85,841
				16,711,690
TOTAL COMMON STOCKS (Cost $144,001,513)				93,359,801
EXCHANGE TRADED FUND — 1.7%
UNITED STATES — 1.7%
iShares MSCI EAFE Index Fund		36,366		1,631,742
TOTAL EXCHANGE TRADED FUND (Cost $1,475,885)				1,631,742
PREFERENCE STOCKS — 0.3%
GERMANY — 0.3%
Bayerische Motoren Werke AG		620		12,050
Fresenius SE		957		55,860
Henkel KGaA		2,116		66,539
Porsche Automobil Holding SE PFD		1,039		80,469
RWE AG ADR		463		34,794
Volkswagen AG		1,250		66,888
				316,600
ITALY — 0.0%
Unipol Gruppo Finanziario SpA		10,827		11,668
TOTAL PREFERENCE STOCKS (Cost $482,153)				328,268

	PRINCIPAL
	AMOUNT
SECURITIES LENDING COLLATERAL — 5.2%
COMMERCIAL PAPER — 4.6%
Clipper Receivables Co., LLC 0.50%, 01/02/2009 (f) (g)	$	1,012,090		1,012,090
Galleon Capital LLC 0.50%, 01/02/2009 (f) (g)		3,373,631		3,373,631
				4,385,721
TIME DEPOSITS — 0.6%
Bank of Montreal 0.01%, 01/02/2009 (f)		112,071		112,071
Barclays Bank 0.01%, 01/02/2009 (f)		112,071		112,071
Credit Suisse 0.01%, 01/02/2009 (f)		112,071		112,071
Dexia Bank 0.15%, 01/02/2009 (f)		112,071		112,071
Bank of Nova Scotia 0.01%, 01/02/2009 (f)		112,071		112,071
				560,355
TOTAL SECURITIES LENDING COLLATERAL (Cost $4,946,076)				4,946,076
TOTAL INVESTMENTS — 105.4% (Cost $150,905,627)				100,265,887
LIABILITIES IN EXCESS OF OTHER ASSETS — (5.4%)				(5,173,448	)
TOTAL NET ASSETS — 100.0%			$	95,092,439

The accompanying notes are an integral part of these Financial Statements.

E*TRADE International Index Fund — 2008 Annual Report 47

E*TRADE International Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

(a)	Securities (or a portion of securities) on loan. (See Note 9.)
(b)	Non-income producing.
(c)	Represents fair value as determined in good faith under the direction of the Board of Trustees. Securities represent a total aggregate market value of $100,305 or 0.1% of net assets.
(d)	This security was purchased with cash collateral received from securities lending.
(e)	Securities exempt from registration under section 4(2) of the Securities Act of 1933, as amended. These securities may only be resold in an exempt transaction to qualified institutional buyers. At December 31, 2008, these securities amounted to $4,385,721 or 4.6% of net assets.

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 — Quoted Prices	$	95,219,506
Level 2 — Other Significant Observable Inputs		5,046,381
Level 3 — Significant Unobservable Inputs		—
Total	$	100,265,887

ADR	American Depositary Receipt
FDR	Fiduciary Depositary Receipt
PPS	Price Protected Shares
REIT	Real Estate Investment Trust
SDR	Swedish Depositary Receipt
SP ADR	Sponsored American Depositary Receipt

COUNTRY	SHARES			VALUE
JAPAN	$	23,558,369			24.8	%
UNITED KINGDOM		16,711,690			17.6	%
FRANCE		9,717,390			10.2	%
GERMANY		8,267,996			8.7	%
SWITZERLAND		7,969,423			8.4	%
UNITED STATES		6,577,818			6.9	%
AUSTRALIA		5,533,856			5.8	%
NETHERLANDS		4,328,991			4.6	%
SPAIN		4,282,402			4.5	%
ITALY		3,369,256			3.5	%
HONG KONG		1,878,626			2.0	%
SWEDEN		1,851,823			1.9	%
FINLAND		1,298,505			1.4	%
SINGAPORE		954,472			1.0	%
DENMARK		789,873			0.8	%
BELGIUM		690,893			0.7	%
NORWAY		532,963			0.6	%
GREECE		447,324			0.5	%
LUXEMBOURG		413,451			0.4	%
IRELAND		367,590			0.4	%
PORTUGAL		298,838			0.3	%
AUSTRIA		294,452			0.3	%
NEW ZEALAND		85,270			0.1	%
BERMUDA		44,616			0.0	%
LIABILITIES IN EXCESS OF OTHER ASSETS		(5,173,448	)		(5.4	%)
	$	95,092,439			100.0	%

				% OF TOTAL
INDUSTRY	VALUE			NET ASSETS
BANKS	$	11,294,868			11.9	%
OIL & GAS		7,730,610			8.1	%
PHARMACEUTICALS		7,466,667			7.8	%
TELECOMMUNICATIONS		6,944,301			7.3	%
FOOD		5,113,029			5.4	%
SECURITIES LENDING COLLATERAL		4,946,076			5.2	%
INSURANCE		4,544,863			4.8	%
ELECTRIC		3,973,323			4.2	%
AUTO MANUFACTURERS		2,990,524			3.1	%
CHEMICALS		2,841,036			3.0	%
MINING		2,796,072			2.9	%
DIVERSIFED FINANCIAL SERVICES		2,271,360			2.4	%
HOLDING COMPANIES		2,218,078			2.3	%
TRANSPORTATION		2,065,292			2.2	%
REAL ESTATE		1,832,127			1.9	%
RETAIL		1,789,970			1.9	%
ELECTRONICS		1,789,444			1.9	%
ENGINEERING & CONSTRUCTION		1,605,327			1.7	%
MANUFACTURERS		1,596,209			1.7	%
MEDIA		1,517,511			1.6	%
BEVERAGES		1,485,844			1.6	%
MEMBERSHIP ORGANIZATIONS		1,356,160			1.4	%
GAS		1,323,726			1.4	%
AGRICULTURE		1,226,873			1.3	%
ELECTRICAL COMPONENTS & EQUIPMENT		1,194,071			1.3	%
ELECTRIC UTILITIES		1,159,738			1.2	%
COMMERCIAL SERVICES		1,096,293			1.1	%
BUILDING MATERIALS		1,051,896			1.1	%
COMPUTER SOFTWARE		991,118			1.0	%
DISTRIBUTION / WHOLESALE		962,987			1.0	%
MACHINE-DIVERSIFIED		959,612			1.0	%
IRON / STEEL		858,301			0.9	%
HEALTH CARE		762,271			0.8	%
AEROSPACE/DEFENSE		628,919			0.7	%
COSMETICS / PERSONAL CARE		617,888			0.6	%
AUTO PARTS & EQUIPMENT		608,237			0.6	%
HOME FURNISHINGS		596,616			0.6	%
OFFICE / BUSINESS EQUIPMENT		570,439			0.6	%
ENTERTAINMENT		513,110			0.5	%
REAL ESTATE INVESTMENT TRUST (REIT)		435,738			0.5	%
HOUSEHOLD PRODUCTS / WARE		407,654			0.4	%
COMPUTERS INDUSTRY		383,747			0.4	%
LEISURE TIME		365,616			0.4	%
WATER		354,926			0.4	%
SEMICONDUCTORS		340,436			0.4	%
APPAREL		324,821			0.3	%
FOREST PRODUCTS & PAPER		309,614			0.3	%
HAND / MACHINE TOOLS		279,900			0.3	%
METAL FABRICATE / HARDWARE		272,309			0.3	%
AIRLINE		259,285			0.3	%
INTERNET		222,898			0.2	%
TEXTILES		172,076			0.2	%
HOME BUILDERS		165,244			0.2	%
PACKAGING & CONTAINERS		113,893			0.1	%
BIOTECHNOLOGY		109,097			0.1	%
UNKNOWN		83,221			0.1	%
OIL & GAS SERVICES		80,602			0.1	%
ENERGY EQUIPMENT & SERVICES		75,251			0.1	%
ADVERTISING		74,576			0.1	%
CONGLOMERATES		64,007			0.1	%
INVESTMENT COMPANY		61,966			0.1	%
ENERGY — ALTERNATE SOURCES		18,224			0.0	%
LIABILITIES IN EXCESS OF OTHER ASSETS		(5,173,448	)		(5.4	%)
	$	95,092,439			100.0	%

The accompanying notes are an integral part of these Financial Statements.

48 E*TRADE International Index Fund — 2008 Annual Report

E*TRADE Technology Index Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMON STOCKS — 99.2%
COMMERCIAL SERVICES — 4.5%
Alliance Data Systems Corp. (a)		1,141	$	53,091
Amazon.com, Inc. (a)		5,595		286,912
Convergys Corp. (a)		2,066		13,243
eBay, Inc. (a)		18,661		260,508
Euronet Worldwide, Inc. (a)		853		9,903
Gartner, Inc., Class A (a)		1,051		18,739
Hewitt Associates, Inc., Class A (a)		1,652		46,884
Lender Processing Services, Inc.		1,415		41,672
NutriSystem, Inc.		501		7,310
Plexus Corp. (a)		665		11,272
Priceline.com, Inc. (a) (b)		659		48,535
SAIC, Inc. (a)		3,264		63,583
Western Union Co. (The)		12,449		178,519
Wright Express Corp. (a)		658		8,291
				1,048,462
COMPUTER FACILITIES MANAGEMENT — 0.4%
Cognizant Technology Solutions Corp., Class A (a)		4,946		89,325
COMPUTER INTEGRATED SYSTEMS DESIGN — 1.0%
Brocade Communications Systems, Inc. (a)		6,307		17,660
Computer Sciences Corp. (a)		2,552		89,677
Diebold, Inc.		1,115		31,320
Jack Henry & Associates, Inc.		1,284		24,922
MICROS Systems, Inc. (a)		1,368		22,326
NCR Corp. (a)		2,774		39,224
TIBCO Software, Inc. (a)		3,106		16,120
				241,249
COMPUTER PERIPHERAL EQUIPMENT — 9.5%
3Com Corp. (a)		6,906		15,746
Anixter International, Inc. (a)		506		15,241
Cisco Systems, Inc. (a)		96,882		1,579,177
Electronics For Imaging, Inc. (a)		925		8,843
Emulex Corp. (a)		1,499		10,463
Juniper Networks, Inc. (a)		9,000		157,590
Lexmark International, Inc. (a)		1,492		40,135
QLogic Corp. (a)		2,225		29,904
Research In Motion, Ltd. (a)		8,591		348,623
Synaptics, Inc. (a)		591		9,787
				2,215,509
COMPUTER PROGRAMMING SERVICES — 0.1%
Informatica Corp. (a)		1,540		21,144
COMPUTER RELATED SERVICES — 1.1%
CACI International, Inc., Class A (a)		526		23,717
FactSet Research Systems, Inc. (b)		716		31,676
IAC/InterActive Corp. (a)		1,577		24,806
Paychex, Inc.		5,586		146,800
Red Hat, Inc. (a)		3,245		42,899
				269,898
COMPUTER STORAGE DEVICES — 1.8%
EMC Corp. (a)		35,505		371,737
Imation Corp.		544		7,382
SanDisk Corp. (a)		3,816		36,634
				415,753
COMPUTERS — 6.3%
Apple, Inc. (a)		15,004		1,280,591
NetApp, Inc. (a)		5,553		77,575
Perot Systems Corp., Class A (a)		1,463		19,999
Riverbed Technology, Inc. (a)		980		11,162
Syntel, Inc.		223		5,156
Teradata Corp. (a)		3,027		44,890
Western Digital Corp. (a)		3,738		42,800
				1,482,173
COMPUTERS, PERIPHERAL & SOFTWARE — 1.8%
Autodesk, Inc. (a)		3,815		74,965
Data Domain, Inc. (a)		593		11,148
McAfee, Inc. (a)		2,566		88,707
National Instruments Corp.		960		23,386
NVIDIA Corp. (a)		9,366		75,584
Open Text Corp. (a)		890		26,816
Salesforce.com, Inc. (a)		1,825		58,418
Sybase, Inc. (a)		1,380		34,183
Zebra Technologies Corp., Class A (a)		1,132		22,934
				416,141
DATA PROCESSING & PREPARATION — 3.2%
Acxiom Corp.		1,186		9,618
Affiliated Computer Services, Inc., Class A (a)		1,649		75,772
Automatic Data Processing, Inc.		8,836		347,608
Broadridge Financial Solutions, Inc.		2,414		30,272
DST Systems, Inc. (a)		743		28,219
Fidelity National Information Services, Inc.		3,305		53,772
Fiserv, Inc. (a)		2,768		100,672
Total System Services, Inc.		3,346		46,844
VeriSign, Inc. (a)		3,287		62,716
				755,493
DISTRIBUTION / WHOLESALE — 0.2%
Ingram Micro, Inc., Class A (a)		2,868		38,403
Tech Data Corp. (a)		856		15,271
				53,674
ELECTRONIC COMPONENTS — 0.4%
AVX Corp.		840		6,670
Celestica, Inc. (a)		3,487		16,075
MEMC Electronic Materials, Inc. (a)		3,845		54,907
Vishay Intertechnology, Inc. (a)		3,261		11,153
				88,805
ELECTRONIC COMPUTERS — 15.7%
Advent Software, Inc. (a) (b)		313		6,251
Dell, Inc. (a)		30,108		308,306
Hewlett-Packard Co.		42,551		1,544,176
International Business Machines Corp.		21,049		1,771,484
Sun Microsystems, Inc. (a)		12,771		48,785
				3,679,002
ELECTRONIC PARTS & EQUIPMENT — 1.1%
Arrow Electronics, Inc. (a)		2,029		38,226
Avnet, Inc. (a)		2,551		46,454
Benchmark Electronics, Inc. (a)		1,174		14,992
Molex, Inc.		2,359		34,182
Tyco Electronics, Ltd.		7,821		126,778
				260,632
ELECTRONICS — 1.9%
Agilent Technologies, Inc. (a)		5,920		92,530
Amphenol Corp., Class A		2,998		71,892
Cogent, Inc. (a)		713		9,675
Cymer, Inc. (a)		502		10,999
Dolby Laboratories, Inc., Class A (a)		884		28,960
FLIR Systems, Inc. (a)		2,361		72,435
Itron, Inc. (a)		581		37,033
L-1 Identity Solutions, Inc. (a)		1,094		7,374
Mentor Graphics Corp. (a)		1,570		8,117
Mettler-Toledo International, Inc. (a)		579		39,025
Rofin-Sinar Technologies, Inc. (a)		489		10,064
Skyworks Solutions, Inc. (a)		2,804		15,534
Trimble Navigation, Ltd. (a)		2,050		44,301
				447,939
INTERNET SOFTWARE & SERVICES — 7.1%
CyberSource Corp. (a)		1,201		14,400
DealerTrack Holdings, Inc. (a)		483		5,743
EarthLink, Inc. (a)		1,914		12,939
Equinix, Inc. (a)		640		34,042

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Technology Index Fund — 2008 Annual Report 49

E*TRADE Technology Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
INTERNET SOFTWARE & SERVICES (continued)
Expedia, Inc. (a)		3,549	$	29,244
Google, Inc., Class A (a)		3,945		1,213,679
j2 Global Communications, Inc. (a)		773		15,491
NetFlix, Inc. (a)(b)		753		22,507
Valueclick, Inc. (a)		1,468		10,041
Yahoo!, Inc. (a)		24,143		294,545
				1,652,631
NETWORK EQUIPMENT — 0.1%
Sonus Networks, Inc. (a)		4,731		7,475
Sycamore Networks, Inc. (a)		3,405		9,159
				16,634
OFFICE ELECTRONICS — 0.5%
Xerox Corp.		14,443		115,111
PREPACKAGED SOFTWARE — 16.5%
Adobe Systems, Inc. (a)		9,237		196,656
BMC Software, Inc. (a)		3,225		86,785
Cadence Design System, Inc. (a)		4,490		16,433
Citrix Systems, Inc. (a)		3,093		72,902
Compuware Corp. (a)		4,323		29,180
Electronic Arts, Inc. (a)		5,582		89,535
Intuit, Inc. (a)		5,568		132,463
Lawson Software, Inc. (a)		1,905		9,030
Macrovision Solutions Corp. (a)		1,448		18,317
Microsoft Corp.		89,027		1,730,685
MicroStrategy, Inc., Class A (a)		163		6,052
Novell, Inc. (a)		5,856		22,780
Nuance Communications, Inc. (a)		3,049		31,588
Oracle Corp. (a)		64,575		1,144,915
Quest Software, Inc. (a)		1,212		15,259
RealNetworks, Inc. (a)		1,644		5,803
Symantec Corp. (a)		14,545		196,648
Synopsys, Inc. (a)		2,444		45,263
Wind River Systems, Inc. (a)		1,179		10,646
				3,860,940
PRINTED CIRCUIT BOARDS — 0.1%
Jabil Circuit, Inc.		3,562		24,044
PROCESS CONTROL INSTRUMENTS — 0.1%
Teradyne, Inc. (a)		2,864		12,086
RADIO & TV COMMUNICATIONS EQUIPMENT — 5.5%
Motorola, Inc.		39,430		174,675
QUALCOMM, Inc.		31,232		1,119,043
				1,293,718
SEMICONDUCTORS — 0.5%
Formfactor, Inc. (a)		814		11,884
Intersil Corp., Class A		2,098		19,281
Microsemi Corp. (a)		1,350		17,064
ON Semiconductor Corp. (a)		5,713		19,424
PMC-Sierra, Inc. (a)		3,822		18,575
Semtech Corp. (a)		1,076		12,127
Silicon Laboratories, Inc. (a)		810		20,072
Zoran Corp. (a)		946		6,461
				124,888
SEMICONDUCTORS EQUIPMENT — 11.2%
Advanced Micro Devices, Inc. (a) (b)		10,299		22,246
Altera Corp.		5,102		85,254
Amkor Technology, Inc. (a)		2,062		4,495
Analog Devices, Inc.		4,898		93,160
Atmel Corp. (a)		7,568		23,688
Broadcom Corp., Class A (a)		7,727		131,127
Cree, Inc. (a)		1,494		23,710
Cypress Semiconductor Corp. (a)		2,519		11,260
Fairchild Semiconductor International, Inc. (a)		2,169		10,606
Hittite Microwave Corp. (a)		295		8,691
Integrated Device Technology, Inc. (a)		2,881		16,162
Intel Corp.		91,064		1,334,998
International Rectifier Corp. (a)		1,262		17,037
JDS Uniphase Corp. (a)		3,636		13,271
KLA-Tencor Corp.		2,938		64,019
Linear Technology Corp.		3,746		82,862
LSI Logic Corp. (a)		10,917		35,917
Micrel, Inc.		904		6,608
Microchip Technology, Inc.		3,123		60,992
Micron Technology, Inc. (a) (b)		12,908		34,077
MKS Instruments, Inc. (a)		763		11,285
National Semiconductor Corp.		3,462		34,862
Rambus, Inc. (a)		1,563		24,883
Tessera Technologies, Inc. (a)		828		9,837
Texas Instruments, Inc.		22,555		350,054
Varian Semiconductor Equipment Associates, Inc. (a)		1,231		22,306
Xilinx, Inc.		4,577		81,562
				2,614,969
SOFTWARE — 4.8%
Activision Blizzard, Inc. (a)		10,599		91,575
Akamai Technologies, Inc. (a)		2,840		42,856
Ansys, Inc. (a)		1,508		42,058
Avid Technology, Inc. (a)		564		6,153
Avocent Corp. (a)		759		13,594
CA, Inc.		6,853		126,986
Concur Technologies, Inc. (a)		837		27,470
Digital River, Inc. (a)		646		16,021
F5 Networks, Inc. (a)		1,365		31,204
Fair Isaac Corp.		821		13,842
Global Payments, Inc.		1,353		44,365
ManTech International Corp., Class A (a)		352		19,075
MasterCard, Inc., Class A		1,259		179,949
Metavante Technologies, Inc. (a)		1,542		24,842
Omniture, Inc. (a)		727		7,735
Parametric Technology Corp. (a)		1,956		24,743
Progress Software Corp. (a)		723		13,925
Quality Systems, Inc. (b)		315		13,740
Solera Holdings, Inc. (a)		966		23,281
SRA International, Inc., Class A (a)		711		12,265
Take-Two Interactive Software, Inc.		1,322		9,994
Visa, Inc., Class A		6,182		324,246
Websense, Inc. (a)		785		11,751
				1,121,670
SPECIAL INDUSTRY MACHINERY — 1.3%
Applied Materials, Inc.		23,342		236,454
Intermec, Inc. (a)		842		11,182
Lam Research Corp. (a)		2,127		45,263
Novellus Systems, Inc. (a)		1,681		20,744
				313,643
TELECOMMUNICATIONS — 0.5%
Atheros Communications, Inc. (a)		1,033		14,782
Comtech Telecommunications Corp. (a)		430		19,703
EchoStar Corp (a)		734		10,915
Infinera Corp. (a)		1,632		14,623
NeuStar, Inc., Class A (a)		1,350		25,826
Polycom, Inc. (a)		1,443		19,495
SAVVIS, Inc. (a)		495		3,411
				108,755
TELECOMMUNICATIONS EQUIPMENT — 1.8%
ADTRAN, Inc.		946		14,076
Arris Group, Inc. (a)		2,134		16,965
CommScope, Inc. (a)		1,191		18,507
Corning, Inc.		27,042		257,709
Harris Corp.		2,274		86,525
InterDigital, Inc. (a)		789		21,697
Tekelec (a)		1,135		15,140
				430,619

The accompanying notes are an integral part of these Financial Statements.

50 E*TRADE Technology Index Fund — 2008 Annual Report

E*TRADE Technology Index Fund
SCHEDULE OF INVESTMENTS (Continued)
December 31, 2008

			VALUE
	SHARES		(Note 2)
TELEPHONE & TELEGRAPH APPARATUS — 0.2%
ADC Telecommunications, Inc. (a)		2,049	$	11,207
Ciena Corp. (a)		1,546		10,357
Tellabs, Inc. (a)		6,920		28,509
				50,073
TOTAL COMMON STOCKS (Cost $31,297,105)				23,224,980

	SHARES/
	PRINCIPAL
	AMOUNT
SHORT-TERM INVESTMENTS — 1.0%
BlackRock Liquidity Funds TempCash Portfolio		3,860		3,860
U.S. Treasury Bill 1.85% (c) , 01/22/2009 (d)	$	220,000		219,997
TOTAL SHORT-TERM INVESTMENTS (Cost $223,622)				223,857
SECURITIES LENDING COLLATERAL — 0.7%
COMMERCIAL PAPER — 0.6%
Clipper Receivables Co., LLC 0.50%, 01/02/2009 (e) (f)		35,231		35,231
Galleon Capital LLC 0.50%, 01/02/2009 (e) (f)		117,434		117,434
				152,665
TIME DEPOSITS — 0.1%
Bank of Montreal 0.01%, 01/02/2009 (e)		3,901		3,901
Barclays Bank 0.01%, 01/02/2009 (e)		3,901		3,901
Credit Suisse 0.01%, 01/02/2009 (e)		3,901		3,901
Dexia Bank 0.15%, 01/02/2009 (e)		3,901		3,901
Nova Scotia Bank 0.01%, 01/02/2009 (e)		3,901		3,901
				19,505
TOTAL SECURITIES LENDING COLLATERAL (Cost $172,170)				172,170
TOTAL INVESTMENTS — 100.9% (Cost $31,692,897)				23,621,007
LIABILITIES IN EXCESS OF CASH & OTHER ASSETS — (0.9%)				(218,589	)
TOTAL NET ASSETS -100.0%			$	23,402,418

(a)	Non-income producing.
(b)	Securities (or a portion of securities) on loan (See Note 9).
(c)	Yield to Maturity.
(d)	See Note 5 regarding futures contracts.
(e)	This security was purchased with cash collateral received from securities lending.
(f)	Securities exempt from registration under section 4(2) of the Securities Act of 1933, as amended. These securities may only be resold in an exempt transaction to qualified institutional buyers. At December 31, 2008, these securities amounted to $152,665 or 0.6% of net assets.

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 — Quoted Prices	$	23,228,840
Level 2 — Other Significant Observable Inputs		392,167
Level 3 — Significant Unobservable Inputs		—
Total	$	23,621,007

			% OF TOTAL
INDUSTRY	VALUE		NET ASSETS
PREPACKAGED SOFTWARE	$	3,860,940		16.5	%
ELECTRONIC COMPUTERS		3,679,002		15.7	%
SEMICONDUCTORS EQUIPMENT		2,614,969		11.2	%
COMPUTER PERIPHERAL EQUIPMENT		2,215,509		9.5	%
INTERNET SOFTWARE & SERVICES		1,652,631		7.1	%
COMPUTERS		1,482,173		6.3	%
RADIO & TV COMMUNICATIONS EQUIPMENT		1,293,718		5.5	%
SOFTWARE		1,121,670		4.8	%
COMMERCIAL SERVICES		1,048,462		4.5	%
DATA PROCESSING & PREPARATION		755,493		3.2	%
ELECTRONICS		447,939		1.9	%
TELECOMMUNICATIONS EQUIPMENT		430,619		1.8	%
COMPUTERS, PERIPHERAL & SOFTWARE		416,141		1.8	%
COMPUTER STORAGE DEVICES		415,753		1.8	%
SPECIAL INDUSTRY MACHINERY		313,643		1.3	%
COMPUTER RELATED SERVICES		269,898		1.1	%
ELECTRONIC PARTS & EQUIPMENT		260,632		1.1	%
COMPUTER INTEGRATED SYSTEMS DESIGN		241,249		1.0	%
SECURITIES LENDING COLLATERAL		172,170		0.7	%
SEMICONDUCTORS		124,888		0.5	%
OFFICE ELECTRONICS		115,111		0.5	%
TELECOMMUNICATIONS		108,755		0.5	%
COMPUTER FACILITIES MANAGEMENT		89,325		0.4	%
ELECTRONIC COMPONENTS		88,805		0.4	%
DISTRIBUTION / WHOLESALE		53,674		0.2	%
TELEPHONE & TELEGRAPH APPARATUS		50,073		0.2	%
PRINTED CIRCUIT BOARDS		24,044		0.1	%
COMPUTER PROGRAMMING SERVICES		21,144		0.1	%
NETWORK EQUIPMENT		16,634		0.1	%
PROCESS CONTROL INSTRUMENTS		12,086		0.1	%
SHORT-TERM INVESTMENTS AND LIABILITIES IN EXCESS OF CASH & OTHER ASSETS		5,268		0.1	%
	$	23,402,418		100.0	%

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Technology Index Fund — 2008 Annual Report 51

STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008

	E*TRADE			E*TRADE			E*TRADE			E*TRADE
	S&P 500			Russell 2000			International			Technology
	Index Fund			Index Fund			Index Fund			Index Fund
ASSETS:
Investments in securities at market value: (Note 2)
Unaffiliated issuers, at value(a)	$	250,338,326		$	82,368,646		$	100,265,887		$	23,621,007
Affiliated issuers, at value (Cost $464,398) (Note 6)		112,759			—			—			—
Cash held as collateral for securities loaned (Note 9)		63,679			138,060			122,348			4,259
Foreign currency at value(b)		—			—			69,162			—
Receivable for fund shares purchased		313,253			71,854			87,302			43,251
Receivable for securities sold		8,648			217,522			—			517
Variation margin receivable		50,400			—			—			1,298
Dividends and interest receivable		564,219			140,991			131,801			14,330
Foreign reclaim receivable		—			—			97,521			—
Due from E*TRADE Asset Management, Inc. (Note 3)		79,892			43,242			68,648			16,123
TOTAL ASSETS		251,531,176			82,980,315			100,842,669			23,700,785
LIABILITIES:
Due to Custodian		8			186,880			234,559			—
Payable upon receipt of securities loaned (Note 9)		2,637,995			5,719,366			5,068,424			176,429
Payable for fund shares redeemed		981,138			219,962			316,215			54,060
Payable for securities purchased		403,346			—			—			—
Accrued advisory fee (Note 3)		14,325			9,188			19,301			4,883
Accrued administration fee (Note 3)		30,697			9,188			11,581			2,930
Trustee fees (Note 3)		330			341			2,130			526
Audit and tax services		21,900			21,900			21,900			21,900
Transfer and dividend disbursing agent		39,548			16,101			22,051			18,569
Accrued other expenses		47,264			46,961			54,069			19,070
TOTAL LIABILITIES		4,176,551			6,229,887			5,750,230			298,367
TOTAL NET ASSETS	$	247,354,625		$	76,750,428		$	95,092,439		$	23,402,418
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par	$	347,665		$	105,104		$	127,084		$	61,657
Paid-in capital, in excess of par		330,505,129			118,967,945			148,928,243			81,550,748
Accumulated undistributed (distribution in excess of) net investment income		1,459,080			119,407			(32,212	)		94,355
Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions		(8,650,978	)		(1,209,503	)		(3,292,103	)		(50,230,331	)
Net unrealized appreciation (depreciation) of investments, futures contracts and translation of assets and liabilities in foreign currency		(76,306,271	)		(41,232,525	)		(50,638,573	)		(8,074,011	)
TOTAL NET ASSETS	$	247,354,625		$	76,750,428		$	95,092,439		$	23,402,418
SHARES OUTSTANDING (UNLIMITED AUTHORIZED, PAR VALUE $0.01)		34,766,471			10,510,362			12,708,425			6,165,685
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE	$	7.11		$	7.30		$	7.48		$	3.80

(a)	Investments at cost for E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund and E*TRADE Technology Index Fund were $326,278,107, $123,601,171, $150,905,627 and $31,692,897 respectively.
(b)	Foreign currency at cost for E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund and E*TRADE Technology Index Fund, was $0, $0, $68,989, and $0, respectively.

The accompanying notes are an integral part of these Financial Statements.

52 E*TRADE Funds — 2008 Annual Report

STATEMENT OF OPERATIONS
For the Year Ended December 31, 2008

	E*TRADE			E*TRADE			E*TRADE			E*TRADE
	S&P 500			Russell 2000			International			Technology
	Index Fund			Index Fund			Index Fund			Index Fund
INVESTMENT INCOME:
Dividends
Unaffiliated issuers	$	7,111,462		$	1,375,834		$	6,168,106		$	286,961
Affiliated issuers (Note 6)		10,044			—			—			—
Less: Foreign taxes withheld		—			(458	)		(508,571	)		—
Interest		182,356			64,122			1,581			4,811
Security lending income		142,180			528,226			119,536			17,972
TOTAL INVESTMENT INCOME		7,446,042			1,967,724			5,780,652			309,744
EXPENSES (NOTES 3 and 4):
Advisory fee		221,631			150,916			368,725			89,745
Administration fee		474,924			150,916			221,235			53,847
Sub-administration fee		156,542			145,096			245,464			58,389
Transfer and dividend disbursing agent		236,579			95,034			127,506			103,440
Legal services		97,119			37,719			57,494			19,863
Custodian fees		24,948			27,084			104,097			7,388
Trustee fees		75,363			24,523			38,091			9,324
Registration fees		48,369			30,355			34,148			27,279
Audit and tax services		22,900			22,900			22,900			22,900
Insurance		10,161			3,331			4,776			1,192
Printing		28,900			8,599			13,500			4,101
Other expenses		47,915			28,296			18,500			25,063
TOTAL EXPENSES BEFORE WAIVER AND REIMBURSEMENT		1,445,351			724,769			1,256,436			422,531
Waived fees and reimbursed expenses (Note 3)		(1,039,003	)		(503,426	)		(979,019	)		(207,142	)
NET EXPENSES		406,348			221,343			277,417			215,389
NET INVESTMENT INCOME		7,039,694			1,746,381			5,503,235			94,355
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Sale of investments		(4,213,064	)		4,320,925			(1,279,281	)		(1,510,328	)
Futures contracts		(4,144,605	)		(1,351,483	)		—			(382,981	)
Foreign currency transactions		—			—			(41,953	)		—
Net change in unrealized appreciation (depreciation) of:
Investments		(139,129,995	)		(44,283,226	)		(80,920,416	)		(17,452,744	)
Futures contracts		49,547			(4,239	)		—			(20,821	)
Translation of assets and liabilities denominated in foreign currency		—			—			(5,200	)		—
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY		(147,438,117	)		(41,318,023	)		(82,246,850	)		(19,366,874	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(140,398,423	)	$	(39,571,642	)	$	(76,743,615	)	$	(19,272,519	)

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Funds — 2008 Annual Report 53

STATEMENT OF CHANGES IN NET ASSETS

	E*TRADE						E*TRADE
	S&P 500						Russell 2000
	Index Fund						Index Fund
	Year Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
NET INCREASE (DECREASE) IN NET ASSETS OPERATIONS:
Net investment income	$	7,039,694		$	7,262,277		$	1,746,381		$	1,375,743
Net realized gain (loss) on sale of investments and futures contracts		(8,357,669	)		6,391,857			2,969,442			10,308,375
Net change in unrealized appreciation (depreciation) on investments and futures contracts		(139,080,448	)		5,443,510			(44,287,465	)		(13,852,456	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(140,398,423	)		19,097,644			(39,571,642	)		(2,168,338	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(5,627,370	)		(7,290,848	)		(1,664,487	)		(2,200,310	)
Net realized gain on investments		(1,320,333	)		—			(6,657,851	)		(7,670,092	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(6,947,703	)		(7,290,848	)		(8,322,338	)		(9,870,402	)
TRANSACTIONS IN COMMON SHARES:
Net proceeds from sale of shares		84,304,386			113,100,108			22,161,366			41,293,013
Value of shares issued in reinvestment of dividends and distributions		6,466,447			6,789,789			7,819,460			9,212,215
Cost of shares redeemed		(73,302,956	)		(92,926,863	)		(25,137,655	)		(43,547,855	)
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS		17,467,877			26,963,034			4,843,171			6,957,373
REDEMPTION FEES (Note 2)		144,142			89,597			13,720			39,189
NET INCREASE (DECREASE) IN NET ASSETS		(129,734,107	)		38,859,427			(43,037,089	)		(5,042,178	)
NET ASSETS:
BEGINNING OF PERIOD		377,088,732			338,229,305			119,787,517			124,829,695
END OF PERIOD (a)	$	247,354,625		$	377,088,732		$	76,750,428		$	119,787,517
SHARE TRANSACTIONS:
Number of shares sold		9,116,975			9,692,003			2,131,070			2,970,901
Number of shares reinvested		926,425			577,273			1,101,333			719,070
Number of shares redeemed		(7,679,722	)		(7,931,693	)		(2,428,560	)		(3,152,264	)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING		2,363,678			2,337,583			803,843			537,707

^(a) Includes accumulated undistributed net investment income of $1,459,080 and $1,683 for the years ended December 31, 2008 and 2007, respectively, for the E*TRADE S&P 500 Index Fund, and $119,407 and $0 for the years ended December 31, 2008 and 2007, respectively, for the E*TRADE Russell 2000 Index Fund.

The accompanying notes are an integral part of these Financial Statements.

54 E*TRADE Funds — 2008 Annual Report

STATEMENT OF CHANGES IN NET ASSETS

	E*TRADE						E*TRADE
	International						Technology
	Index Fund						Index Fund
	Year Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
NET INCREASE (DECREASE) IN NET ASSETS OPERATIONS:
Net investment income	$	5,503,235		$	4,641,348		$	94,355		$	37,388
Net realized gain (loss) on sale of investments, futures contracts and foreign currency transactions		(1,321,234	)		2,841,495			(1,893,309	)		11,147
Net change in unrealized appreciation (depreciation) of investments, futures contracts and translation of assets and liabilities in foreign currency		(80,925,616	)		8,045,397			(17,473,565	)		6,992,750
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(76,743,615	)		15,528,240			(19,272,519	)		7,041,285
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		(4,828,032	)		(5,725,742	)		—			(41,488	)
Net realized gain on investments		(1,735,377	)		(3,643,900	)		—			—
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(6,563,409	)		(9,369,642	)		—			(41,488	)
TRANSACTIONS IN COMMON SHARES:
Net proceeds from sale of shares		24,642,306			102,948,398			5,411,607			9,872,547
Value of shares issued in reinvestment of dividends and distributions		6,120,242			8,643,238			—			38,617
Cost of shares redeemed		(44,063,013	)		(51,155,486	)		(9,333,577	)		(15,629,101	)
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS		(13,300,465	)		60,436,150			(3,921,970	)		(5,717,937	)
REDEMPTION FEES (Note 2)		22,452			116,258			5,003			11,374
NET INCREASE (DECREASE) IN NET ASSETS		(96,585,037	)		66,711,006			(23,189,486	)		1,293,234
NET ASSETS:
BEGINNING OF PERIOD		191,677,476			124,966,470			46,591,904			45,298,670
END OF PERIOD (a)	$	95,092,439		$	191,677,476		$	23,402,418		$	46,591,904
SHARE TRANSACTIONS:
Number of shares sold		2,151,808			7,279,132			1,009,202			1,547,725
Number of shares reinvested		847,679			626,864			—			5,665
Number of shares redeemed		(4,037,237	)		(3,591,827	)		(1,740,378	)		(2,466,552	)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING		(1,037,750	)		4,314,169			(731,176	)		(913,162	)

^(a) Includes accumulated undistributed (distribution in excess of) net investment income of $(32,212) and $(894,040) for the years ended December 31, 2008 and 2007, respectively, for the E*TRADE International Index Fund, and $94,355 and $0 for the years ended December 31, 2008 and 2007, respectively, for the E*TRADE Technology Index Fund.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Funds — 2008 Annual Report 55

E*TRADE S&P 500 Index Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

	Year Ended December 31,
	2008			2007			2006			2005			2004
NET ASSET VALUE, BEGINNING OF PERIOD	$	11.64		$	11.25		$	9.90		$	9.61		$	8.84
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income		0.20			0.23			0.19			0.17	(2)		0.17	(2)
Net realized and unrealized gain (loss) on investments		(4.53	)		0.39			1.35			0.29			0.76
TOTAL FROM INVESTMENT OPERATIONS		(4.33	)		0.62			1.54			0.46			0.93
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		(0.16	)		(0.23	)		(0.19	)		(0.17	)		(0.16	)
Net realized gain on investments		(0.04	)		—			—			—			—
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.20	)		(0.23	)		(0.19	)		(0.17	)		(0.16	)
REDEMPTION FEES ADDED TO PAID-IN-CAPITAL(3)		—			—			—			—			—
NET ASSET VALUE, END OF PERIOD	$	7.11		$	11.64		$	11.25		$	9.90		$	9.61
TOTAL RETURN (1)		(37.14	)%		5.46	%		15.66	%		4.79	%		10.62	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000’s omitted)	$	247,355		$	377,089		$	338,229		$	260,697		$	198,965
Ratio of net expenses to average net assets (4)		0.13	%		0.09	%		0.09	%		0.09	%		0.19	%
Ratio of net investment income to average net assets (5)		2.22	%		1.91	%		1.83	%		1.77	%		1.85	%
Portfolio turnover rate		4.97	%		4.92	%		2.54	%		3.87	%		2.22	%

(1)	The total return is calculated by assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions.
(2)	Calculated based on average shares outstanding.
(3)	Rounds to less than $0.01 each year.
(4)	The ratio of expenses to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 0.46%, 0.42%, 0.72%, 0.79% and 0.73%, respectively.
(5)	The ratio of net investment income to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 1.90%, 1.58%, 1.20%, 1.06% and 1.31%, respectively.

The accompanying notes are an integral part of these Financial Statements.

56 E*TRADE Funds — 2008 Annual Report

E*TRADE Russell 2000 Index Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

	Year Ended December 31,
	2008			2007			2006			2005			2004
NET ASSET VALUE, BEGINNING OF PERIOD	$	12.34		$	13.61		$	12.41		$	12.55		$	11.17
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income		0.18			0.15			0.15			0.13	(2)		0.11	(2)
Net realized and unrealized gain (loss) on investments		(4.35	)		(0.37	)		2.08			0.41			1.80
TOTAL FROM INVESTMENT OPERATIONS		(4.17	)		(0.22	)		2.23			0.54			1.91
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		(0.17	)		(0.23	)		(0.14	)		(0.12	)		(0.08	)
Net realized gain on investments		(0.70	)		(0.83	)		(0.90	)		(0.56	)		(0.45	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.87	)		(1.06	)		(1.04	)		(0.68	)		(0.53	)
REDEMPTION FEES ADDED TO PAID-IN-CAPITAL		—	(3)		0.01			0.01			—	(3)		—	(3)
NET ASSET VALUE, END OF PERIOD	$	7.30		$	12.34		$	13.61		$	12.41		$	12.55
TOTAL RETURN (1)		(33.56	)%		(1.73	)%		18.05	%		4.21	%		17.30	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000’s omitted)	$	76,750		$	119,788		$	124,830		$	81,157		$	68,119
Ratio of expenses to average net assets (4)		0.22	%		0.22	%		0.22	%		0.22	%		0.37	%
Ratio of net investment income to average net assets (5)		1.74	%		1.03	%		1.17	%		1.04	%		0.93	%
Portfolio turnover rate		23.95	%		17.92	%		24.98	%		29.62	%		34.58	%

(1)	The total return is calculated by assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions.
(2)	Calculated based on average shares outstanding.
(3)	Rounds to less than $0.01 each year.
(4)	The ratio of expenses to average net assets prior to waived fees and reimbursed expenses for years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 0.72%, 0.64%, 0.94%, 1.11% and 1.00%, respectively.
(5)	The ratio of net investment income (loss) to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 1.24%, 0.61%, 0.45%, 0.15% and 0.29%, respectively.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Funds — 2008 Annual Report 57

E*TRADE International Index Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

	Year Ended December 31,
	2008			2007			2006			2005			2004
NET ASSET VALUE, BEGINNING OF PERIOD	$	13.94		$	13.25		$	10.89		$	9.84		$	8.41
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income		0.45			0.36			0.31			0.24	(2)		0.18	(2)
Net realized and unrealized gain (loss) on investments		(6.37	)		1.04			2.47			1.06			1.43
TOTAL FROM INVESTMENT OPERATIONS		(5.92	)		1.40			2.78			1.30			1.61
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		(0.40	)		(0.44	)		(0.30	)		(0.25	)		(0.18	)
Net realized gain on investments		(0.14	)		(0.28	)		(0.13	)		—			—
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.54	)		(0.72	)		(0.43	)		(0.25	)		(0.18	)
REDEMPTION FEES ADDED TO PAID-IN-CAPITAL		—	(3)		0.01			0.01			—	(3)		—	(3)
NET ASSET VALUE, END OF PERIOD	$	7.48		$	13.94		$	13.25		$	10.89		$	9.84
TOTAL RETURN(1)		(42.29	)%		10.68	%		25.91	%		13.43	%		19.38	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000’s omitted)	$	95,092		$	191,677		$	124,966		$	55,167		$	27,515
Ratio of expenses to average net assets (4)		0.19	%		0.09	%		0.09	%		0.09	%		0.32	%
Ratio of net investment income to average net assets (5)		3.73	%		2.65	%		2.56	%		2.41	%		2.07	%
Portfolio turnover rate		19.66	%		46.44	%		54.64	%		58.31	%		41.97	%

(1)	The total return is calculated by assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions.
(2)	Calculated based on average shares outstanding.
(3)	Rounds to less than $0.01.
(4)	The ratio of expenses to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 0.85%, 0.83%, 1.37%, 1.85%, and 2.87%, respectively.
(5)	The ratio of net investment income (loss) to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 3.07%, 1.91%, 1.28%, 0.64% and (0.48)%, respectively.

The accompanying notes are an integral part of these Financial Statements.

58 E*TRADE Funds — 2008 Annual Report

E*TRADE Technology Index Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

	Year Ended December 31,
	2008			2007			2006			2005			2004
NET ASSET VALUE, BEGINNING OF PERIOD	$	6.76		$	5.80		$	5.39		$	5.31		$	5.23
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income		0.02			0.01			—	(3)		(0.01	)(2)		0.03	(2)
Net realized and unrealized gain (loss) on investments		(2.98	)		0.96			0.41			0.09			0.08
TOTAL FROM INVESTMENT OPERATIONS		(2.96	)		0.97			0.41			0.08			0.11
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		—			(0.01	)		—			—			(0.03	)
Net realized gain on investments		—			—			—			—			—
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		—			(0.01	)		—			—			(0.03	)
REDEMPTION FEES ADDED TO PAID-IN-CAPITAL(3)		—			—			—			—			—
NET ASSET VALUE, END OF PERIOD	$	3.80		$	6.76		$	5.80		$	5.39		$	5.31
TOTAL RETURN (1)		(43.79	)%		16.65	%		7.61	%		1.51	%		2.15	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000’s omitted)	$	23,402		$	46,592		$	45,299		$	47,752		$	55,928
Ratio of expenses to average net assets (4)		0.60	%		0.60	%		0.60	%		0.60	%		0.68	%
Ratio of net investment income to average net assets (5)		0.26	%		0.08	%		0.01	%		(0.12	)%		0.64	%
Portfolio turnover rate		6.20	%		13.56	%		7.44	%		3.55	%		10.04	%

(1)	The total return is calculated by assuming a purchase of shares on the first day and a sale on the last day of each period and includes reinvestment of dividends and distributions.
(2)	Calculated based on average shares outstanding.
(3)	Rounds to less than $0.01 each year.
(4)	The ratio of expenses to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was 1.18%, 0.94%, 1.25%, 1.32%, and 1.25%, respectively.
(5)	The ratio of net investment income (loss) to average net assets prior to waived fees and reimbursed expenses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was (0.32)%, (0.26)%, (0.64)%, (0.84)% and 0.07%, respectively.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Funds — 2008 Annual Report 59

NOTES TO FINANCIAL STATEMENTS
December 31, 2008

1. ORGANIZATION

E*TRADE Funds (the “Trust”) is an open-end management investment company registered under the Investment Company Act of 1940, as amended (“1940 Act”). The Trust is organized as a Delaware statutory trust and was formed on November 4, 1998. As of December 31, 2008, the Trust consisted of six operating series: E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund, E*TRADE Technology Index Fund, E*TRADE Kobren Growth Fund and E*TRADE Delphi Value Fund. Information in these financial statements pertains to four series of the Trust: E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund, and E*TRADE Technology Index Fund (each a “Fund”, together the “Funds”). Information with regard to the other two series can be found in separate financial statements at www.etradefunds.etrade.com.

The investment objectives of each Fund are as follows:

E*TRADE S&P 500 Index Fund — to provide investment results that attempt to match, as closely as practicable, before fees and expenses, the total return of the stocks making up the Standard & Poor’s 500 Composite Stock Price Index (S&P 500™ Index)^(a). The Fund seeks to provide investment results that match the total return performance of publicly traded common stocks in the S&P 500™ Index by investing substantially all of its assets in the same stocks and in substantially the same percentages as the S&P 500™ Index.

^(a) “Standard & Poor’s⁽™⁾”, “S&P 500^TM”, “Standard & Poor’s 500^®”, “500” and “S&P⁽™⁾” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by E*TRADE Asset Management, Inc. (“ETAM”), the Fund’s investment adviser, for use in connection with the Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and Standard & Poor’s does not make any representation regarding the advisability of investing in the Fund.

E*TRADE Russell 2000 Index Fund — to provide investment results that match as closely as practicable, before fees and expenses, the performance of the Russell 2000™ Index^(b). The Fund seeks to match the total return performance of the small-capitalization sector of the U.S. stock market by investing in the securities comprising the Russell 2000™ Index.

^(b) “Russell 2000™ Index” and “Frank Russell Company” are service marks of the Frank Russell Company and have been licensed for use for certain purposes by ETAM. Frank Russell Company does not sponsor the Fund nor is it affiliated in any way with the investment adviser or the Fund. The Fund is not sponsored, endorsed, sold, or promoted by Frank Russell Company, and Frank Russell Company makes no representation or warranty, express or implied, regarding the advisability of investing in the Fund.

E*TRADE International Index Fund — to match, as closely as practicable, before fees and expenses, the performance of an international portfolio of common stocks represented by the MSCI, Inc. Europe, Australasia and Far East Index (“MSCI EAFE Index”)^(c). The Fund seeks to match the total return performance of the MSCI EAFE Index by investing in common stocks of issuers that comprise the MSCI EAFE Index (including depositary receipts of such issuers) and other investments that replicate the performance of the MSCI EAFE Index.

^(c) The MSCI EAFE Index is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”). Morgan Stanley Capital International is a service mark of MSCI. MSCI does not sponsor the Fund, nor is it affiliated in any way with E*TRADE FINANCIAL Corp. (“E*TRADE FINANCIAL”). “Morgan Stanley Capital International Europe, Australasia, Far East Free Index™”,“EAFE Index™” and “EAFE™” are trademarks of MSCI. The Fund is not sponsored, endorsed, sold or promoted by the MSCI EAFE Index or MSCI, and neither the MSCI EAFE Index nor MSCI make any representation or warranty, express or implied, regarding the advisability of investing in the Fund.

E*TRADE Technology Index Fund — to match, before fees and expenses, the total return of the stocks making up the S&P North American Technology Sector Index™^(d). The Fund seeks to match the total return performance of the S&P North American Technology Sector Index™ by investing substantially all of its assets in the same stocks and in substantially the same percentages as the securities that comprise the S&P North American Technology Sector Index™.

60 E*TRADE Funds — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

^(d) “S&P™”,“Standard & Poor’s™”, and “S&P North American Technology Sector Index™” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by ETAM for use in connection with the Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or any of its affiliates and neither Standard & Poor’s nor any of its affiliates make any representation regarding the advisability of investing in the Fund.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies that are followed by the Funds in the preparation of their financial statements and are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to establish estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

Investments of the Funds are valued at the last reported sale price on the securities or commodities exchange on which such securities are primarily traded. If there is no sale that day, then the value will be based on the most recent bid prices. If market quotations or official closing prices are not readily available or are determined not to accurately reflect the current value of the securities, then such securities are valued at fair value as determined in good faith under procedures established by the Board of Trustees of the Trust (“Board”). To the extent that a Fund has portfolio securities that are primarily listed on foreign exchanges that trade on days when the Fund does not price its shares, the value of the securities held by a Fund and accordingly, its net asset value may change on days when shareholders will not be able to purchase or redeem the Fund’s shares. In this regard, the Board has approved the use of certain independent pricing services in determining the fair value of foreign securities that are principally traded in foreign markets when events reasonably determined to be significant occur subsequent to the close of such foreign markets and prior to the time the Fund’s NAV is determined. The fair value of such foreign securities are determined by the Funds (with the assistance of independent pricing services) using correlations between the movement of prices of the foreign securities and indices of domestic securities and other appropriate indicators. Unlike the closing price of a security on a foreign exchange, fair value determinations employ elements of judgment and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell a security at the time of the close of the New York Stock Exchange. Investments in short-term debt securities that mature in 60 days or less are valued at amortized cost, which approximates fair market value, based on valuation procedures approved by the Board.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157 (“FAS 157”) Fair Value Measurement, which is effective for financial statements issued for fiscal years beginning after November 15, 2007. This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The Funds have adopted FAS 157 as of

E*TRADE Funds — 2008 Annual Report 61

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

December 1, 2008. The three levels of the fair value hierarchy under FAS 157 are described below:

•	Level 1	—	quoted prices in active markets for identical securities
•	Level 2	—	other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
•	Level 3	—	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. A summary of the inputs used to value the Funds’ net assets as of December 31, 2008 is included with each Fund’s Schedule of Investments.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on the date the securities are purchased or sold (trade date). Revenue is recognized as follows: dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Realized gains and losses on sales of securities are calculated based upon the identified cost basis. The E*TRADE Russell 2000 Index Fund estimates the components of distributions received from Real Estate Investment Trusts (“REITs”). Distributions received in excess of income are recorded as a reduction of cost of investments and/or as a realized gain. All discounts/premiums are accreted/amortized using the effective yield method.

Expenses attributable to a single fund of the Trust are charged to that fund. Expenses of the Trust not attributable to a single fund are charged to each fund in proportion to the average net assets of each fund in the Trust or other appropriate allocation methods.

FOREIGN CURRENCY TRANSLATIONS

The accounting records of the Trust are maintained in U.S. dollars. The Funds may purchase securities that are denominated in foreign currencies. Investment securities and other assets and liabilities denominated in foreign currency are translated into U.S. dollars at the current exchange rates. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the exchange rates on the dates of the respective transactions.

Although the net assets of the Funds are presented at the foreign exchange rates and market values at the close of the period, the Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term securities held at the end of the period. Similarly, the Funds do not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, foreign currency gains or losses are included in the reported net realized and unrealized gain or loss on investments.

Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from the holding of foreign currencies, currency gains or losses realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.

62 E*TRADE Funds — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

DISTRIBUTIONS TO SHAREHOLDERS

Dividends to shareholders from net investment income of the Funds are declared and distributed annually. Distributions to shareholders from any net realized capital gains are declared and distributed annually; generally in December, unless offset by any applicable capital loss carryforward. Additional distributions of net investment income and capital gains for a Fund may be made in order to avoid the application of a 4% non-deductible excise tax on certain undistributed amounts of ordinary income and capital gains. All dividends and distributions will be automatically reinvested in additional shares of the Fund unless the shareholder elects otherwise. Such dividends and distributions to shareholders are recorded on the ex-dividend date.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP. These differences are primarily due to differing treatments for foreign currency transactions, market discount, losses deferred as wash sales, excise tax regulations and employing equalization in determining amounts to be distributed to Fund shareholders. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid-in capital and may impact net investment income per share. Undistributed net investment income may include temporary book and tax basis differences, which will reverse in a subsequent period. Any taxable income or gain remaining at fiscal year end is distributed in the following year.

The tax character and amount of distributions paid during 2008 and 2007 were as follows:

	Distributions Paid in 2008						Distributions Paid in 2007
	Ordinary		Long-Term		Distributions		Ordinary		Long-Term
Fund	Income*		Capital Gains		In Excess		Income		Capital Gains
E*TRADE S&P 500 Index Fund	$	5,627,494	$	1,320,209	$	—	$	7,290,848	$	—
E*TRADE Russell 2000 Index Fund		1,752,210		6,570,128		—		3,182,121		6,688,281
E*TRADE International Index Fund		4,793,020		1,709,798		60,591		8,042,641		1,327,001
E*TRADE Technology Index Fund		—		—		—		41,488		—

As of December 31, 2008, the components of distributable earnings on a tax basis were as follows:

	Accumulated
	Capital and			Undistributed		Unrealized
Fund	Other Losses			Ordinary Income*		Depreciation			Total
E*TRADE S&P 500 Index Fund	$	(7,933,796	)	$	1,459,080	$	(77,023,453	)	$	(83,498,169	)
E*TRADE Russell 2000 Index Fund		(818,743	)		119,407		(41,623,285	)		(42,322,621	)
E*TRADE International Index Fund		(3,222,026	)		—		(50,740,862	)		(53,962,888	)
E*TRADE Technology Index Fund		(45,614,934	)		94,355		(12,689,408	)		(58,209,987	)

* For tax purposes, short-term capital gain distributions are considered ordinary income.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity of the Trust for federal income tax purposes. It is each Fund’s intention to continue to qualify annually as a regulated investment company under the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute annually all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provisions are required.

E*TRADE Funds — 2008 Annual Report 63

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

As of December 31, 2008, for federal income tax purposes, the E*TRADE S&P 500 Index Fund and E*TRADE Technology Index Fund had capital loss carryforwards, which will expire in the indicated years:

E*TRADE		E*TRADE
S&P 500		Technology		Expiration
Index Fund		Index Fund		Date
$	—	$	4,029,927	2009
	—		4,341,208	2010
	—		9,887,414	2011
	—		2,833,613	2012
	—		11,845,903	2013
	—		8,196,886	2014
	—		257,050	2015
	6,516,697		2,454,734	2016
$	6,516,697	$	43,846,735	Total

Capital loss carryforwards of $7,356,047 for the E*TRADE Technology Index Fund expired.

The E*TRADE S&P 500 Index Fund and E*TRADE Technology Index Fund will not distribute any realized capital gains until the capital loss carryforwards have been fully utilized or until they expire.

For the year ended December 31, 2008, the E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund and E*TRADE Technology Index Fund had elected to defer capital losses of $1,417,099, $818,743, $3,222,026 and $1,768,199, respectively, attributable to post-October losses.

At December 31, 2008, the aggregate gross unrealized appreciation (depreciation), net unrealized appreciation (depreciation) and cost of investments for federal income tax purposes for each Fund were as follows:

	Gross		Gross			Net
Fund	Appreciation		Depreciation			Depreciation			Cost
E*TRADE S&P 500 Index Fund	$	20,150,173	$	(97,173,626	)	$	(77,023,453	)	$	327,474,538
E*TRADE Russell 2000 Index Fund		5,029,295		(46,652,580	)		(41,623,285	)		123,991,931
E*TRADE International Index Fund		2,611,023		(53,353,052	)		(50,742,029	)		151,007,916
E*TRADE Technology Index Fund		2,145,375		(14,834,783	)		(12,689,408	)		36,310,415

The difference between book basis and tax basis is attributable primarily to the return of capital adjustments from REITs and the tax deferral of losses on wash sales for the E*TRADE S&P 500 Index and E*TRADE Russell 2000 Index Funds. The E*TRADE International Index Fund’s differences are attributable primarily to the treatment of passive foreign investment company shares and tax deferral of losses on wash sales. The difference between book basis and tax basis for the E*TRADE Technology Index Fund is attributable primarily to the tax deferral of losses on wash sales.

The Trust is subject to FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, a clarification of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 establishes financial accounting and disclosure requirements for recognition and measurement of tax positions taken or expected to be taken on an income tax return. Adoption of FIN 48 was required for fiscal years beginning after December 15, 2006 and is applied to all open tax years as of the effective date. The Funds have analyzed their tax positions taken on federal income tax returns for all open tax years (tax years ended December 31, 2005 through 2008) for purposes of FIN 48 and have concluded that no provision for income tax is required in their financial statements.

64 E*TRADE Funds — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

REDEMPTION FEES

Redemption of shares of the Funds held for less than 120 days is subject to a fee of 1%, calculated as a percentage of redemption proceeds. The fees, which are retained by the Funds, are accounted for as an addition to paid-in-capital.

Total redemption fee proceeds which are set forth in the Statement of Changes in Net Assets for the years ended December 31, 2008 and 2007 for the Funds were as follows:

Fund	December 31, 2008		December 31, 2007
E*TRADE S&P 500 Index Fund	$	144,142	$	89,597
E*TRADE Russell 2000 Index Fund		13,720		39,189
E*TRADE International Index Fund		22,452		116,258
E*TRADE Technology Index Fund		5,003		11,374

RECLASSIFICATION OF CAPITAL ACCOUNTS

In order to present undistributed net investment income and accumulated net realized gain (loss) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to undistributed net investment income, accumulated net realized gain (loss) on investments and paid-in-capital. For the year ended December 31, 2008, the adjustments to the Funds were as follows:

	Undistributed Net		Accumulated Net Realized			Paid-in-Capital, in
Fund	Investment Income		Gain (Loss) on Investments			Excess of Par
E*TRADE S&P 500 Index Fund	$	45,073	$	(45,073	)	$	—
E*TRADE Russell 2000 Index Fund		37,513		(37,512	)		(1	)
E*TRADE International Index Fund		186,625		(126,042	)		(60,583	)
E*TRADE Technology Index Fund		—		7,356,047			(7,356,047	)

These adjustments are primarily due to redesignation of income distributions to gain distributions for the E*TRADE S&P 500 Index Fund and E*TRADE Russell 2000 Index Fund. The adjustments for the E*TRADE International Index Fund were attributed to differences between book and tax treatment of investments in passive foreign investment trusts, expiration of capital loss carryforwards, foreign currency translations and distributions in excess. E*TRADE Technology Index Fund adjustments were primarily due to the expiration of capital loss carryforwards.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Trust enters into contracts on behalf of the Funds that contain a variety of provisions for general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that are not known at this time. However, based on experience, the Funds believe the risk of loss is remote.

ADDITIONAL ACCOUNTING STANDARDS

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Funds’ financial statement disclosures, if any.

E*TRADE Funds — 2008 Annual Report 65

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

ETAM, a wholly owned subsidiary of E*TRADE FINANCIAL, serves as the investment adviser for the Funds pursuant to an Investment Advisory Agreement between ETAM and the Trust, on behalf of the Funds. For its services as investment adviser, ETAM is currently paid by the Funds an annual rate based on the Funds’ average daily net assets as follows:

Fund	Annual Rate
E*TRADE S&P 500 Index Fund		0.07	%
E*TRADE Russell 2000 Index Fund		0.15	%
E*TRADE International Index Fund		0.25	%
E*TRADE Technology Index Fund		0.25	%

World Asset Management, Inc. (“World Asset”) serves as the Funds’ investment sub-adviser. World Asset is a Delaware corporation incorporated on September 15, 2006 and is an indirect, wholly-owned subsidiary of Comerica Bank. For its services, World Asset is paid by ETAM out of ETAM’s investment advisory fees based on each Fund’s average daily net assets subject to the break points listed in the table below:

Fund	Sub-Advisory Fee
E*TRADE S&P 500 Index Fund	0.03% up to $900 million
	0.02% over $900 million
E*TRADE Russell 2000 Index Fund	0.07% up to $174 million
	0.04% between $174 million and $200 million
	0.02% over $200 million
E*TRADE International Index Fund	0.15% up to $60 million
	0.12% between $60 million and $100 million
	0.06% between $100 million and $200 million
	0.03% over $200 million
E*TRADE Technology Index Fund	0.12% up to $130 million
	0.06% between $130 million and $200 million
	0.03% over $200 million

ETAM also serves as the Funds’ administrator and shareholder servicing agent pursuant to an Administrative Services Agreement with the Trust, on behalf of the Funds. For its services, ETAM is entitled to receive an administrative services fee at an annual rate equal to 0.15% of the Funds’ average daily net assets.

Since September 30, 2004, ETAM assesses an account maintenance fee of $2.50 per quarter per Fund to offset shareholder servicing costs if an account balance in a Fund falls below $5,000 (for any reason, including a decline in the value of the Funds’ shares). The account maintenance fee is determined and paid at the end of the calendar quarter. The fee is not assessed in certain circumstances, as described in the Funds’ Prospectus, including waiver of the fee if total E*TRADE Funds assets held by a shareholder are $10,000 or more. The fee will not be applied to: (1) assets held in any retirement plan account, including an IRA, Roth IRA, one person SEP-IRA, profit sharing plan, money purchase pension plan or 401(a) or 401(k) account; (2) assets held in any Coverdell education savings account; or (3) shareholders investing in the Funds through means of the Automatic Investment Plan privilege.

E*TRADE Securities serves as the principal underwriter for the Funds at no cost to the Funds. E*TRADE Securities may receive compensation from ETAM that may be equal to the maximum shareholder servicing fee.

The amount “Due from E*TRADE Asset Management, Inc.” listed on the Funds’ Statements of Assets and Liabilities reflects a contractual agreement between ETAM and the Trust on behalf of the Funds (“Expense Limitation Agreement”) in which ETAM has agreed to waive or limit its fees or to assume other expenses through April 30, 2009. ETAM has agreed to waive or limit ETAM’s fees and assume other expenses so that the total operating expenses of each Fund (other than

66 E*TRADE Funds — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with U.S. GAAP, expenses borne by the Fund as a result of investing in any underlying fund (including but not limited to any exchange-traded fund or money market fund), “Acquired Fund Fees and Expenses” (as interpreted by the U.S. Securities and Exchange Commission (the “Commission”) from time to time), annual account maintenance fees that may be collected by the Funds and payable to ETAM for any shareholder account that fails to maintain the required account minimum amount, and extraordinary fees and expenses not incurred in the ordinary course of a Fund’s business) are limited to a certain percentage of the Fund’s average daily net assets.

The Fund may, at a later date, reimburse ETAM the fees waived or limited and any other expenses assumed and paid by ETAM, provided that, among other things, the Fund has reached a sufficient size to permit such reimbursement to be made without causing the total annual expense ratio of the Fund to exceed the current percentage limits stated below. No reimbursement by any Fund will be made unless: (i) the Fund’s total annual expense ratio is less than the current percentage stated below and (ii) the payment of such reimbursement has been approved by the Trust’s Board on a quarterly basis. The total amount of reimbursement to which ETAM may be entitled will equal, at any time, the sum of (i) all fees previously waived or reduced by ETAM and (ii) all other payments previously remitted by ETAM to the Fund in accordance with the Expense Limitation Agreement during any of the previous three (3) fiscal years, less any reimbursement that the Fund has previously paid to ETAM with respect to (a) such fees previously waived or reduced and (b) such other payments previously remitted by ETAM to the Fund.

Details for the Funds prior to May 1, 2008 are as follows:

	Expense
	Limitation		Expense
	Agreement		Limitation		Expense Cap
Fund	Effective Date		Through At Least		Effective Date		Expense Cap
E*TRADE S&P 500 Index Fund		09/03/2004		04/30/2008		09/03/2004		0.09	%
E*TRADE Russell 2000 Index Fund		04/01/2005		04/30/2008		04/01/2005		0.22	%
E*TRADE International Index Fund		09/03/2004		04/30/2008		09/03/2004		0.09	%
E*TRADE Technology Index Fund		04/29/2004		04/30/2008		04/29/2004		0.60	%

Details for the Funds effective May 1, 2008 are as follows:

	Expense
	Limitation		Expense
	Agreement		Limitation		Expense Cap
Fund	Effective Date		Through at Least		Effective Date		Expense Cap
E*TRADE S&P 500 Index Fund		05/01/2008		04/30/2009		05/01/2008		0.15	%
E*TRADE Russell 2000 Index Fund		04/01/2005		04/30/2009		04/01/2005		0.22	%
E*TRADE International Index Fund		05/01/2008		04/30/2009		05/01/2008		0.25	%
E*TRADE Technology Index Fund		04/29/2004		04/30/2009		04/29/2004		0.60	%

Amounts eligible for reimbursements along with their expiration dates are as follows:

Fund	Expires in 2009		Expires in 2010		Expires in 2011		Total as of 12/31/2008
E*TRADE S&P 500 Index Fund	$	1,833,819	$	1,236,936	$	1,039,003	$	4,109,758
E*TRADE Russell 2000 Index Fund		749,194		561,173		503,426		1,813,793
E*TRADE International Index Fund		1,108,683		1,299,065		979,019		3,386,767
E*TRADE Technology Index Fund		297,017		156,711		207,142		660,870

E*TRADE Funds — 2008 Annual Report 67

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

Each member of the Board who is not an “interested person” of the Trust (as defined in the 1940 Act) (“Independent Trustee”) receives from the Trust an annual fee (payable in quarterly installments) of $30,000 for his or her service as an Independent Trustee (including participation in all Committee meetings) plus an additional fee of: (i) $2,500 for each Board meeting attended, and (ii) $1,500 for each telephonic Board meeting attended. The Chairman receives additional compensation of $4,000 and the Chairperson of the Audit Committee is paid an additional $2,000 per year for his or her services in such capacity.

Each Independent Trustee is reimbursed for all reasonable and necessary expenses associated with his or her service as an Independent Trustee, including travel and other expenses incurred in connection with attendance at Board and Committee meetings. The Trust does not compensate its officers or Trustee who are affiliated with ETAM.

4. AGREEMENTS AND OTHER TRANSACTIONS WITH NON-AFFILIATES

PNC Global Investment Servicing (U.S.) Inc. (“PNC”), formerly known as PFPC Inc., serves as sub-administrator, transfer agent and dividend-disbursing agent for the Funds. PFPC Trust Company provides custodial and securities lending agency services to the Funds.

5. FUTURES CONTRACTS

The Funds may purchase or sell futures contracts to gain exposure to market changes. The purchase of futures contracts may be more efficient or cost effective than actually buying the securities only if there is an active market for such contracts. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date and is exchange traded. Upon entering into a futures contract, the Funds are required to pledge to the broker an amount of cash, U.S. Government securities or other high-quality debt securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to a contract entered into with a futures commission merchant, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the Funds as unrealized gains or losses. When the contract is closed, the Funds record a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Pursuant to regulations and/or published positions of the Commission, the Funds may be required to segregate cash, U.S. Government obligations or other liquid securities in connection with futures transactions in an amount generally equal to the entire futures contract amount. The risks of entering into futures contracts include the possibility that there may be an illiquid market and that a change in the value of the contracts may not correlate with changes in the value of the underlying securities.

The following futures contracts were outstanding as of December 31, 2008:

U.S. Treasury

Notional

Net Unrealized

Bill Pledged for

Number of

Futures

Expiration

Contract

Appreciation

Initial Margin

Fund

Contracts

Index

Date

Value

(Depreciation)

Requirements

E*TRADE S&P 500 Index Fund

84

S&P 500 Futures

03/20/2009

$

3,780,420

$

(14,851

)

$

1,249,982

E*TRADE Russell 2000 Index Fund

N/A

N/A

N/A

N/A

N/A

N/A

E*TRADE International Index Fund

N/A

N/A

N/A

N/A

N/A

N/A

E*TRADE Technology Index Fund

10

NASDAQ 100 Futures

03/20/2009

242,500

(2,121

)

219,997

68 E*TRADE Funds — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

6. AFFILIATED ISSUERS

Investments in companies considered to be affiliates of the Funds (such companies are defined as “Affiliated Persons” in Section 2(a)(3) of the 1940 Act) are as follows:

		# Shares				# Shares
		Held				Held at		Value
		at Start		Gross		End		at End		Investment
Fund	Name of Issuer	of Period		Additions		of Period		of Period		Income
E*TRADE S&P 500 Index Fund	Comerica, Inc.		4,348		321		4,669	$	92,680	$	10,044
E*TRADE S&P 500 Index Fund	E*TRADE FINANCIAL Corp.		12,268		5,192		17,460		20,079		—
	Total Affiliated Issuers						22,129	$	112,759	$	10,044

As of December 31, 2008, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund and E*TRADE Technology Index Fund did not invest in securities of any Affiliated Issuers.

7. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments, exclusive of short-term securities, for the year ended December 31, 2008 are as follows:

Fund	Purchases		Sales
E*TRADE S&P 500 Index Fund	$	36,291,831	$	15,548,141
E*TRADE Russell 2000 Index Fund		27,824,075		23,792,578
E*TRADE International Index Fund		29,187,339		41,830,221
E*TRADE Technology Index Fund		2,191,552		5,224,341

8. SHARES OF BENEFICIAL INTEREST

The Trust is authorized to issue an unlimited number of shares of beneficial interest at $0.01 par value.

9. SECURITIES LENDING

The Funds may lend portfolio securities to certain broker-dealers and institutions to the extent permitted by the 1940 Act, as modified or interpreted by regulatory authorities having jurisdiction, from time to time, in accordance with procedures adopted by the Board. By lending its securities, a Fund attempts to increase its net investment income through the receipt of interest on the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would belong to the Fund. Such loans must be secured by collateral in cash or U.S. Government securities maintained on a current basis in an amount at least equal to 100% of the current market value of the securities loaned. As with other extensions of credit, there are risks of delay in recovery of, or even loss of rights in, the collateral should the borrower of the securities fail financially or breach its agreement with a Fund. The value of the securities loaned will not exceed 33 1/3% of the value of the total assets of the lending Fund. The market value of the securities on loan and collateral at December 31, 2008, and the income generated from the program during the twelve month period ended December 31, 2008, with respect to such loans are as follows:

	Market Value of				Income Received from
Fund	Securities Loaned		Market Value of Collateral		Securities Lending
E*TRADE S&P 500 Index Fund	$	2,424,812	$	2,637,995	$	142,180
E*TRADE Russell 2000 Index Fund		5,422,123		5,719,366		528,226
E*TRADE International Index Fund		4,915,424		5,068,424		119,536
E*TRADE Technology Index Fund		163,258		176,429		17,972

E*TRADE Funds — 2008 Annual Report 69

NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2008

10. LIQUIDATION OF THE FUNDS.

Upon the recommendation of ETAM, the Board of Trustees of the Trust has approved the liquidation of the Funds to take place on a date no later than March 27, 2009 (the “Liquidation Date”). On the Liquidation Date, each Fund will automatically redeem all of its outstanding shares at the net asset value of such shares after provision for all charges, expenses and liabilities of the Fund. ETAM has agreed to pay all liquidation related expenses other than brokerage expenses. Liquidation proceeds will be paid entirely in cash.

Shares of the Funds may no longer be purchased as of the close of business on February 23, 2009. Shareholders may continue to redeem their shares up to the Liquidation Date and any account maintenance fees or redemption fees are being waived as of the close of business on February 23, 2009.

70 E*TRADE Funds — 2008 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees of
E*TRADE Funds and
Shareholders of:
E*TRADE S&P 500 Index Fund
E*TRADE Russell 2000 Index Fund
E*TRADE International Index Fund
E*TRADE Technology Index Fund

We have audited the accompanying statements of assets and liabilities of the E*TRADE S&P 500 Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE International Index Fund, and E*TRADE Technology Index Fund, each a series of E*TRADE Funds (the “Trust”), including the schedules of investments, as of December 31, 2008, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2004 have been audited by other auditors, whose report dated February 25, 2005 expressed an unqualified opinion on such financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian and brokers or by other appropriate procedures where broker replies were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the series of the E*TRADE Funds referred to above, as of December 31, 2008, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania	TAIT, WELLER & BAKER LLP
February 9, 2009

E*TRADE Funds — 2008 Annual Report 71

ADDITIONAL INFORMATION (Continued)
December 31, 2008

DISCLOSURE OF FUND EXPENSES / SHAREHOLDER FEE EXAMPLE

We believe it is important for you to understand the impact of fees regarding your investment. All mutual funds have expenses and as a shareholder of a mutual fund, you can incur two types of expenses (1) transaction expenses, including redemption fees; and (2) ongoing expenses, including management fees, distribution and/or service (12b-1) fees; and other fund expenses such as for shareholder reports (like this one). A fund’s expenses directly reduce the investment return of the fund. A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. This Example is intended to help you understand the ongoing fees (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on a $1,000 investment made at the beginning of the period and held for the entire period from July 1, 2008 to December 31, 2008. The Funds do not assess sales loads or Rule 12b-1 fees.

This table illustrates the Fund’s expenses in two ways:

Actual Fund Return: This section helps you to estimate the actual expenses, after any applicable fee waivers, that you paid over the period. The “Ending Account Value” shown for each Fund is derived from the Fund’s actual return for the six month period, the “Expense Ratio” column shows the period’s annualized expense ratio, and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in each Fund at the beginning of the period.

You may use the information here, together with your account value, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund in the first line under the heading entitled “Expenses Paid During Period”. The expense estimate does not include redemption fees and account maintenance fees because they are not charged to all shareholders. A 1% redemption fee is calculated as a percentage of the total redemption proceeds and would be added to your estimated expenses calculated in the table for shares held less than 120 days. A quarterly Account Maintenance Fee (“AMF”) is charged to shareholders with account balances of less than $5,000 at the end of each calendar quarter. The AMF is equal to $2.50 per quarter and would be added to your estimated expenses calculated in the table. The AMF is not applied to: (1) assets held in any retirement plan account, including an IRA, Roth IRA, one person SEP-IRA, profit sharing plan, money purchase pension plan or 401(a) or 401(k) account; (2) assets held in any Coverdell education savings account; or (3) shareholders investing in the Fund through means of the Automatic Investment Plan privilege, described in the section of the Funds’ Prospectus entitled “How to Buy, Sell and Exchange Shares – Automatic Investment Plan.” Moreover, the AMF is waived if your total E*TRADE Funds assets are $10,000 or more.

Hypothetical 5% Return: This section is intended to help you compare the Funds’ costs with those of other mutual funds based on the Funds’ actual expense ratios and an assumed rate of 5% per year before expenses, which is not the Funds’ actual return. In this case, because the return used is not the Funds’ actual return, the results do not apply to your investment. This example is useful in making comparisons to other mutual funds because the SEC requires all mutual funds to calculate expenses based on an assumed 5% annual return. You can assess your Funds’ costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

The expense estimate does not include redemption fees and account maintenance fees because they are not charged to all shareholders. A 1% redemption fee is calculated as a percentage of the total redemption proceeds for shares held less than 120 days, and would be added to your estimated expenses calculated in the table. A quarterly AMF is charged to shareholders with account balances of less than $5,000 at the end of each calendar quarter. The AMF is equal to $2.50 per quarter and would be added to your estimated expenses calculated in the table. The AMF is not applied to: (1) assets held in any retirement plan account, including an IRA, Roth IRA, one person SEP-IRA, profit sharing plan, money purchase pension plan or 401(a) or 401(k) account; (2) assets held in any Coverdell education savings account; or (3) shareholders

72 E*TRADE Funds — 2008 Annual Report

ADDITIONAL INFORMATION (Continued)
December 31, 2008

investing in the Fund through means of the Automatic Investment Plan privilege, described in the section of the Funds’ Prospectus entitled “How to Buy, Sell and Exchange Shares – Automatic Investment Plan.” Moreover, the AMF is waived if your total E*TRADE Funds assets are $10,000 or more.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees, which are described in the Prospectus.

Therefore, the hypothetical 5% return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning		Ending
	Account		Account					Expenses
	Value		Value		Expense			Paid During
Fund	07/01/08		12/31/08		Ratio(1)			Period(2)
E*TRADE S&P 500 Index Fund
Actual	$	1,000.00	$	713.90		0.15	%	$	0.65
Hypothetical	$	1,000.00	$	1,024.38		0.15	%	$	0.76
E*TRADE Russell 2000 Index Fund
Actual	$	1,000.00	$	732.70		0.22	%	$	0.96
Hypothetical	$	1,000.00	$	1,024.03		0.22	%	$	1.12
E*TRADE International Index Fund
Actual	$	1,000.00	$	646.20		0.25	%	$	1.03
Hypothetical	$	1,000.00	$	1,023.88		0.25	%	$	1.27
E*TRADE Technology Index Fund
Actual	$	1,000.00	$	643.00		0.60	%	$	2.48
Hypothetical	$	1,000.00	$	1,022.12		0.60	%	$	3.05

(1)	Annualized, based on the Fund’s most recent fiscal half-year expenses.
(2)	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366.

TAX INFORMATION

During the year ended December 31, 2008, the E*TRADE S&P 500 Index Fund, the E*TRADE Russell 2000 Index Fund and the E*TRADE International Index Fund declared long-term capital gains of $1,320,333, $6,601,575 and $1,718,770, respectively.

All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Funds to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

The following are the percentage of the income dividends qualifying for the dividends received deduction available to corporations:

Fund	Percentage
E*TRADE S&P 500 Index Fund		100.00	%
E*TRADE Russell 2000 Index Fund		47.56	%
E*TRADE International Index Fund		0.31	%

E*TRADE Funds — 2008 Annual Report 73

ADDITIONAL INFORMATION (Continued)
December 31, 2008

For the fiscal year ended December 31, 2008 certain distributions paid by the Funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate. Complete information will be computed and reported in conjunction with your 2008 Form 1099-DIV.

Fund	Percentage
E*TRADE S&P 500 Index Fund		100.00	%
E*TRADE Russell 2000 Index Fund		50.40	%
E*TRADE International Index Fund		100.00	%

TRUSTEES’ APPROVAL/RENEWAL OF INVESTMENT ADVISORY CONTRACTS

At a meeting held on September 18, 2008, the Board unanimously approved the renewal of the Investment Advisory Agreement between the Trust and ETAM for the Funds and approved the renewal of the Investment Sub-Advisory Agreement among the Trust, ETAM and World Asset for World Asset to provide subadvisory services to the Funds.

In connection with these approvals, the Board, including the Independent Trustees of the Board, reviewed various factors including: (1) the nature, extent and quality of services that had been provided and would be provided to the Funds by ETAM and World Asset; (2) the fees and expenses paid to ETAM (and by ETAM to World Asset) and the contractual limitations on the Funds’ expenses to be provided by ETAM; (3) the cost of the services provided by ETAM (including the fees paid to World Asset) and the profits realized by ETAM and World Asset from their relationship to the Funds; (4) comparative investment performance information for the Funds; (5) the extent to which economies of scale have been realized or will be realized for the benefit of shareholders of the Funds as the Funds grow; and (6) any benefits that are derived or which may be derived by ETAM, World Asset or their affiliates from their relationship with the Funds. All factors were applied to the Funds. The Board, assisted by the advice of counsel to the Independent Trustees, considered a broad range of information regarding the Funds, including the factors described above. However, no single factor was determinative. Rather, it was the totality of the circumstances that drove the Board’s decisions. Below is a discussion of these factors as they applied to the Board’s consideration of the two agreements.

NATURE, EXTENT AND QUALITY OF SERVICES.

The Board members discussed the nature, extent and quality of the investment advisory services provided by ETAM and its affiliates to the Funds as detailed in materials provided by ETAM, including ETAM’s role in evaluating and supervising World Asset’s investment advisory activities, including monitoring the tracking of each of the Funds with its relevant index, assessing the stock selection techniques used by World Asset, and reviewing reports from, and conducting periodic due diligence reviews of, World Asset. The Board noted the breadth and quality of services provided by the Trust’s Chief Compliance Officer, which were paid for by ETAM and not by the Funds. The Board also noted the additional duties ETAM assumed during the year to establish and supervise the Funds’ securities lending program and the support services for the Funds’ anti-money laundering program. The Board members also discussed the nature, extent and quality of the sub-advisory services provided by World Asset, including the investment process and techniques used by World Asset in managing each Fund’s assets in accordance with its respective investment objectives, investment policies and restrictions, and the qualifications of World Asset’s investment personnel dedicated to providing sub-advisory services to each Fund. The Board also reviewed World Asset’s organizational structure. Based on this review, the Board determined that ETAM and World Asset had provided and would continue to provide satisfactory advisory and sub-advisory services to the Funds. For the E*TRADE International Index Fund, the Board members also considered information on the Fund’s investments in other investment companies. Based on the information provided, the Board determined that the Fund’s advisory fee was based on services that are in addition to, rather than duplicative of, the services provided under the advisory contracts of the other investment companies in which the E*TRADE International Index Fund invests.

74 E*TRADE Funds — 2008 Annual Report

ADDITIONAL INFORMATION (Continued)
December 31, 2008

FEES AND EXPENSES.

The Board discussed the advisory fees paid by each Fund to ETAM (and indirectly to World Asset) and the contractual expense limitations and fee waivers to which ETAM had agreed for each Fund. At the outset, the Board members considered and discussed the comparative expense data provided by ETAM. The Board considered that beginning in fiscal year 2008, the Funds were no longer marketed as the “lowest cost” index funds, but rather under a low cost strategy, and noted that the comparative expense data supports the fact that the Funds operate as low cost index funds, due to ETAM’s fee waiver and expense limitation agreement. The Board observed that for each Fund, 100% of the advisory fee was waived. The Board noted that ETAM had arranged for securities lending beginning in 2008 and noted the positive impact on certain Funds’ expense ratios. The Board further noted the commitment of E*TRADE to provide ETAM with necessary and appropriate resources in connection with its services to the Funds. Based on these considerations, the Board concluded that the advisory fees and expense ratios of the Funds were at an appropriate level and competitive with their respective peers and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

COSTS AND PROFITABILITY.

The Board discussed the costs of the services provided by ETAM (including the fees payable to World Asset) and the estimated profits realized by ETAM and World Asset from their relationship to the Funds. The Board noted that one significant factor in approving the continuation of the Advisory Agreement and the Sub-Advisory Agreement relating to the Funds was the fact that the expense ratios of the Funds are among the lowest of their peers. With regard to the advisory services provided by ETAM for each of the Funds, as well as the costs of such services and any profits realized by ETAM with respect to the Funds, the Board noted that ETAM currently waives all of its fees for advisory services that it provides to each of the Funds in order to market the Funds as low cost index funds. In addition, the Board noted ETAM’s continuing efforts to increase the assets of each of the Funds and to seek to recognize economies of scale through a careful service provider selection process and negotiations with service providers to reduce and/or limit their fees and expenses. Moreover, the Board noted that ETAM had advised the Board that it expects that, provided the assets of the Funds continue to grow, the Funds will become profitable. The Board concluded that the information regarding the costs of the services provided and the profitability of the Funds supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

COMPARATIVE PERFORMANCE.

The Board reviewed the comparative investment performance of each of the Funds. The Board first noted that each Fund’s investment objective is to track its relevant index or benchmark as closely as possible while taking into account the impact of expenses related to operating a registered investment company. Therefore, the Board focused on Fund’s performance as compared to its relevant index and peer group of index funds (or in the case of the E*TRADE Technology Index Fund, similar exchange-traded funds). The Board noted that all information for the peer group of index funds was provided by Morningstar. The Board then reviewed the tracking of each Fund’s performance over the past year against its respective benchmark and the methods that had been employed by World Asset to mitigate the deviation of each Fund’s performance from that of its relevant benchmark. The Board favorably noted that there were no significant deviations between the performance of the Funds and their respective benchmarks. The Board noted the E*TRADE International Index Fund’s improvement in tracking its benchmark. Based on these considerations, the Board concluded that the investment performance of the Funds was adequate and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

ECONOMIES OF SCALE.

The Board discussed the extent to which economies of scale have been realized or will be realized for the benefit of shareholders of the Funds as the Funds grow. The Board noted that the fee schedules in the Advisory Agreements do not contain asset-based breakpoints. The Board discussed the fact that, because the Funds currently are low cost index funds,

E*TRADE Funds — 2008 Annual Report 75

ADDITIONAL INFORMATION (Continued)
December 31, 2008

regardless of the level of Fund assets, shareholders of the Funds are already benefiting from low expenses. The Board further noted that it would have the opportunity to reconsider whether fee breakpoints are necessary or appropriate in the future with respect to each of the Funds as each Fund’s asset levels grow. Based on the information provided, the Board concluded that ETAM’s efforts in limiting the expense ratios of the Funds supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

OTHER BENEFITS TO ETAM AND THE SUB-ADVISER.

The Board then discussed the benefits that are derived or which may be derived by ETAM, World Asset and their affiliates from their relationship with the Funds. While the Board observed that there were no direct fall out benefits to ETAM, World Asset or their affiliates from their relationship to the Funds (other than the fees received by ETAM pursuant to Shareholder Services Agreements), the Board noted that the relationship between the Funds and ETAM (and its affiliates), or between the Funds and World Asset (and its affiliates), may indirectly benefit ETAM, World Asset or their affiliates by potentially attracting clients and/or customers to other products and services offered by them. In this regard, the Board noted the indirect fall out benefits to E*TRADE that may result from using the Funds as a “marketing tool” to bring other assets into E*TRADE and add to the variety of investment choices provided by E*TRADE to its customers. The Board also noted that World Asset does not use soft dollars in connection with the management of the Funds, and that ETAM does not use soft dollars.

76 E*TRADE Funds — 2008 Annual Report

ADDITIONAL INFORMATION (Unaudited) (Continued)
December 31, 2008

TRUSTEES AND OFFICERS

The Board has the responsibility for the overall management of the Trust, including general supervision and review of the Funds’ investment activities and conformity with Delaware Law and the stated policies of the Funds. The Board elects the officers of the Trust who are responsible for administering the Funds’ day-to-day operations. Trustees and officers of the Trust, together with information as to their principal business occupations during the last five years, and other information are shown below as of December 31, 2008. The Trust consists of six active series.

	Term of		Number of
	Office and		Portfolios in Fund		Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen		Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee		Held by Trustee
INDEPENDENT TRUSTEES
Cheryl A. Burgermeister Age: 57 Trustee	Since February 2004	Ms. Burgermeister is Trustee, Treasurer and Finance Committee Chairman of the Portland Community College Foundation since 2001. She was a Trustee of the Zero Gravity Internet Fund from 2000 to 2001. She was a Director and Treasurer of the Crabbe Huson family of funds from 1988-1999.		6	The Select Sector SPDR Trust (9 portfolios)
Arthur Dubroff Age: 58 Trustee	Since August 2006	Mr. Dubroff is the Managing Principal of Turnberry Consulting, LLC from February 2002 to present. He served as Chief Financial Officer of Net2Phone, Inc., a provider of Voice over Internet Protocol telephone services, from November 2002 to May 2006. He also served as Chief Financial Officer of Virtual Communities, Inc., a software provider, from July 2000 to December 2007.		6	None
Steven Grenadier Age: 44 Trustee	Since February 1999	Mr. Grenadier is a Professor of Finance at the Graduate School of Business at Stanford University, where he has been employed as a professor since 1992.		6	Nicholas-Applegate Institutional Funds (13 portfolios); AQR Funds (8 portfolios)
George J. Rebhan Age: 74 Chairman & Trustee	Since December 1999	Mr. Rebhan retired in December 1993, and prior to that he was President of Hotchkis and Wiley Funds (investment company) from 1985 to 1993.		6	Advisor Series Trust (20 portfolios)
INTERESTED TRUSTEE3
Michael Curcio Age: 47 Trustee	Since November 2007	Mr. Curcio has been Managing Director, Americas of E*TRADE FINANCIAL since 2002 and President of ETAM since December 2007. He also holds officer or director positions in various other companies in the E*TRADE FINANCIAL organization. Prior to that time, he was Executive Vice President, Customer Relationship Management at TD Waterhouse from January 2002 to September 2002.		6	None
OFFICER(S) WHO ARE NOT TRUSTEES
Elizabeth Gottfried Age: 48 President	Since March 2006	Ms. Gottfried is Vice President of ETAM. She is also a Senior Director of E*TRADE FINANCIAL and holds officer positions with registered investment advisers that are E*TRADE affiliates. Ms. Gottfried joined E*TRADE in September 2000 and served as Vice President and Treasurer of the Trust before becoming President. Previously, she worked at Wells Fargo Bank from 1984 to 2000 and managed various areas of Wells Fargo’s mutual fund group.		N/A	N/A
Dilia Caballero Age: 37 Secretary and Chief Legal Officer	Since November 2006	Ms. Caballero joined E*TRADE in October 2006 and currently is an Associate General Counsel of E*TRADE Brokerage Services, Inc. She is also Secretary of ETAM and of various other registered investment advisers that are E*TRADE affiliates. Prior to that time, Ms. Caballero practiced law at Dechert LLP from 1997 through 2006 in the firm’s Financial Services Group.		N/A	N/A

E*TRADE Funds — 2008 Annual Report 77

ADDITIONAL INFORMATION (Unaudited) (Continued)
December 31, 2008

	Term of		Number of
	Office and		Portfolios in Fund	Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen	Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee	Held by Trustee
OFFICERS WHO ARE NOT TRUSTEES (Continued)
Matthew Audette Age: 34 Vice President and Treasurer	Since March 2006	Mr. Audette is Vice President and Chief Financial Officer of ETAM. He also holds other positions at E*TRADE affiliates. He joined E*TRADE in 1999.	N/A	N/A
Tim Williams Age: 59 Chief Compliance Officer	Since February 2005	Mr. Williams is Chief Compliance Officer of ETAM and has general compliance management oversight for the asset management functions of various E*TRADE affiliates. Mr. Williams joined E*TRADE in January 2005. Prior to that he worked at Riggs Bank from 1971 to 2005 where he held various positions involving compliance, audit, risk management, trust operations and trust administration. He was the Chief Compliance Officer of Riggs Investment Advisors Inc. from 1995 to 2005.	N/A	N/A

1	The address of each Trustee and Officer is E*TRADE Funds, 4500 Bohannon Drive, Menlo Park, California 94025.
2	Each Trustee is elected to serve in accordance with the Trust Instrument and By-laws of the Trust until his or her successor is duly elected and qualified. Each Officer is elected to hold office until his or her successor is elected and qualified to carry out the duties and responsibilities of such office, or until he or she resigns or is removed from office.
3	“Interested person” of the Trust as defined in the Investment Company Act of 1940, as amended, by virtue of his affiliation with ETAM.

The Funds’ statement of additional information includes additional information about the Trustees and is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1.

QUARTERLY PORTFOLIO SCHEDULE

The Funds file their complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. This information is available, without charge and upon request, by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Quarterly Holdings”) or by accessing the Funds’ Form N-Q on the Commission’s website at www.sec.gov. The Funds’ Form N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

PROXY VOTING POLICIES AND PROCEDURES

A description of the Funds’ proxy voting policies and procedures is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1. This information is also included in the Funds’ Statement of Additional Information, which is available by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Prospectus” and then “Statement of Additional Information”) and by accessing the Commission’s website at www.sec.gov.

PROXY VOTING RECORD

Information regarding how the Funds voted proxies for portfolio securities, during the most recent 12-month period ended June 30, is also available, without charge and upon request, by:

1. calling E*TRADE Funds at 1-800-ETRADE-1;

2. visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Proxy Voting Results”); or

3. accessing the Funds’ Form N-PX on the Commission’s website at www.sec.gov.

This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.

78 E*TRADE Funds — 2008 Annual Report

E *TRADE
Delphi Value Fund

Annual REPORT December 31, 2008

Dear Shareholders,

Scott M. Black

     The past year 2008 marked the worst performance of the US equity markets since the Great Depression of 1931 as the twin crises in housing and banking rippled through the US and global economies ravaging capital markets worldwide. While the general market index, as measured by the Standard & Poor’s 500, lost 37.0%, the Delphi Value Fund declined 43.5% (43.3% for the Institutional Class) versus a 38.4% drop for the Russell Midcap Value benchmark. Having personally witnessed all of the major US stock market reversals since the 1966 credit crunch (comprising the 1970 bombing of Cambodia, the 1973 rollover of the nifty fifty, the 1982 recession, the October 19, 1987 meltdown, and the 2001 piercing of the tech bubble), I was surprised by several salient factors: (i) The celerity and magnitude of the decline. Historically, bear markets (peak to trough) span three and one-half years. The 2008 edition encapsulated a 52.6% diminution from its all time high of 1576.09 on November 11, 2007 within a fifty-three week span. Amazingly, the three month interval alone, September 1^st through November 30^th, registered a 29.6% pullback. (ii) Normally, value investing, as defined by stocks with low price/earnings and price/book ratios, should cushion the downside exposure. Unfortunately, to paraphrase David Dodd, “This time was different”; notwithstanding the fact that forty-six of the sixty-eight Delphi Value Fund year-end holdings posted year over year earnings increases in their latest quarterly report. (iii) The unprecedented capitulation of the US economy as measured by consumer confidence, housing starts, and automobile sales coupled with the global bust in commodity prices.

     An analysis of portfolio activity in the second half of 2008 indicates that we effected some strategic repositioning. Congruent with the macroeconomic climate for consumers, we divested four retail concerns; namely, Abercrombie & Fitch, American Eagle Outfitters, Ethan Allen, and Macy’s. Similarly, we divested three technology companies with deteriorating fundamentals – KLA Tencor, Micron Technology, and Seagate Technology. Given the weakness in the financial sector, the Fund eliminated Southwest Bancorp, Endurance Holdings, American Express, Ares Capital, and Northstar Realty Finance. Conversely, we reallocated the proceeds to high return on equity powerhouse franchises like Automatic Data Processing, Oracle Corp, Hewlett Packard, and Fluor Corp. Additionally, well managed industrial businesses like ABB, General Dynamics, Emerson Electric, and IT&T were acquired at favorable valuations of the forthcoming year’s estimated earnings. From a performance standpoint, the second half winners encompassed Wells Fargo, Viropharma, ABB Limited, Automatic Data Processing, and Endo Pharmaceuticals, all appreciating more than 10%. Despite good sustainable earning power, the metals contingent recorded the worst period performance with Gerdau Ameristeel (minimill steel), Commercial Metals (minimill steel), and Vale (Brazilian iron ore) all falling more than 60%.

     The obvious question is “What is the outlook for the US stock market in 2009?” As I stated in the latest Barron’s Roundtable, the economic and equities recovery will be dependent on public policy. First, the underlying cause of this economic morass, the deflation in home prices and the ensuing consumer credit defaults, has yet to be addressed by the Troubled Asset Relief Program legislation. Nearly one sixth of all US homeowners has negative equity in their houses. In my opinion, instead of handing $350 Billion to his Wall Street colleagues, former Treasury Secretary Henry Paulson should have insisted on banks and mortgage pools restructuring a portion of the principal outstanding to make the defaulted mortgages perform. If one looks rationally at reviving the US economy, one concludes that government spending seems to be the best viable alternative. The consumer is “tapped out” with rising unemployment, declining household net worth, an increased savings rate, and all time low consumer confidence. Investment tax credits to spur gross private domestic investment are wrong minded with industrial capacity utilization at 73.6%. Exports are stagnant at roughly $12.55 Trillion annually. Hence, the US government should provide meaningful stimulus to create demand for US goods and services. “Shovel ready” projects at the state and local level should be funded from the federal government creating demand for US aggregates, cement, and structural steel while employing American workers. Additionally, rebuilding our conventional weapons (tanks, planes, helicopters) which have been depleted by our incursions in Iraq and Afghanistan would help both our national defense and aggregate employment.

     While the Standard & Poor’s 500 Index finished 2008 at 903.25, it is nearly impossible to opine on its true multiple valuation. Operating earnings for 2009 range from 54.70 on a “top down” macroeconomic basis to 68.88 on a “bottom up” individual stock metric. Hence, the general market is somewhere between 13.1x and 16.5x forecast 2009 earnings; not expensive by historical standards. My expectation is that with good fiscal policy, the US economy will resurge in the fourth quarter of this year. Since equities discount recoveries in advance, I am cautiously optimistic that the popular industrial averages will be higher at year-end. Downward earnings revisions and poor macroeconomic data will cause further volatility in the interim, but like all previous business cycles, the United States economy should ultimately recover. I thank you for your continued support.

Very truly yours,

Scott M. Black

FUND OVERVIEW

December 31, 2008

Total Return

	12 Months			5 Year			10 Year
	Ended			Annualized			Annualized
	12/31/08			Return			Return
Retail Class		-43.54	%		-4.88	%		+2.19	%
Institutional Class		-43.25	%		-4.55	%		+2.50	%
Russell Midcap Value		-38.44	%		0.33	%		+4.44	%

Total Net Assets
$45,855,242

	Retail Class			Institutional Class
Net Asset Value 12/31/08	$	8.18		$	8.40
Gross Expense Ratio		1.56	%		1.26	%
Net Expense Ratio		1.56	%		1.26	%

The expense ratios include “Acquired Fund Fees and Expenses” and exclude any contractual expense limitation. The Fund is subject to a contractual expense limitation which will remain in effect until at least April 30, 2009; however, the expense limitation is 1.75% and 1.50% of the average net assets of the Retail and Institutional Classes, respectively. As indicated above, the expense ratios were less than their expense limitations.

Top Ten Equity Holdings*

Security	Sector	ALLOC (%)
Berkshire Hathaway, Inc., Class B	Conglomerates		3.86
Avnet, Inc.	Aerospace/Technology		1.64
Jack in the Box, Inc.	Food & Beverage		1.61
Liberty Media
Corp-Entertainment Class A	Publishing & Broadcasting		1.60
Automatic Data Processing, Inc.	Business Products		1.59
XTO Energy, Inc.	Energy		1.58
Oracle Corp.	Aerospace/Technology		1.57
Goldman Sachs Group, Inc (The)	Financial Services		1.55
General Dynamics Corp.	Aerospace/Technology		1.51
Darden Restaurants, Inc.	Food & Beverage		1.51

* As a percentage of total net assets.

E*TRADE Asset Management, Inc. is the Fund’s adviser, Delphi Management, Inc. is the sub-adviser and E*TRADE Securities LLC is the distributor of the Fund. Performance data reflects past performance and is not a guarantee of future returns. Past performance data does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate with market conditions and shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. To obtain performance information current to the most recent month-end, please visit www.etradefunds.etrade.com or call 1-800-ETRADE-1. The Russell Midcap Value Index is an unmanaged index of common stocks.

2  E*TRADE Delphi Value Fund — 2008 Annual Report

E*TRADE Delphi Value Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
COMMON STOCKS – 96.0%
ADVERTISING – 2.9%
Publicis Groupe, ADR		24,500	$	630,630
WPP PLC SP ADR		22,800		674,652
				1,305,282
AEROSPACE / TECHNOLOGY – 19.1%
Applied Materials, Inc.		61,000		617,930
Arrow Electronics, Inc. (a)		34,000		640,560
Avnet, Inc. (a)		41,200		750,252
Boeing Co. (The)		12,100		516,307
Canon, Inc., ADR (b)		20,500		643,700
Check Point Software Technologies, Ltd. (a)		34,000		645,660
Cisco Systems, Inc. (a)		39,900		650,370
General Dynamics Corp.		12,000		691,080
Hewlett-Packard Co.		14,000		508,060
NVIDIA Corp. (a)		74,000		597,180
Oracle Corp. (a)		40,500		718,065
Texas Instruments, Inc.		36,000		558,720
Western Digital Corp. (a)		49,200		563,340
Xilinx, Inc.		37,000		659,340
				8,760,564
BANKING – 1.4%
Wells Fargo & Co.		22,500		663,300
BASIC MATERIALS – 4.9%
Commercial Metals Co.		44,500		528,215
Companhia Vale do Rio Doce, ADR		50,350		609,738
Dow Chemical Co.		29,500		445,155
Gerdau Ameristeel Corp. (b)		106,800		647,208
				2,230,316
BUSINESS PRODUCTS – 1.6%
Automatic Data Processing, Inc.		18,500		727,790
CONGLOMERATES – 11.1%
Berkshire Hathaway, Inc., Class B (a)		551		1,770,914
Dover Corp.		20,000		658,400
Emerson Electric Co.		18,000		658,980
ITT Corp.		14,300		657,657
Loews Corp.		24,000		678,000
United Technologies Corp.		12,500		670,000
				5,093,951
CONSTRUCTION & ENGINEERING – 1.3%
Fluor Corp.		12,900		578,823
CONSUMER RELATED – 4.4%
Nokia Oyj, ADR		42,500		663,000
Toyota Motor Corp. ADR		10,500		687,120
Walt Disney Co. (The)		30,000		680,700
				2,030,820
ENERGY – 11.1%
Apache Corp.		8,800		655,864
Devon Energy Corp.		9,000		591,390
Diamond Offshore Drilling, Inc.		10,500		618,870
ENSCO International, Inc.		22,000		624,580
Nexen, Inc.		36,000		632,880
StatoilHydro ASA, SP ADR		38,000		633,080
Whiting Petroleum Corp. (a)		18,000		602,280
XTO Energy, Inc.		20,500		723,035
				5,081,979
FINANCIAL SERVICES – 1.5%
Goldman Sachs Group, Inc. (The)		8,400		708,876
FOOD & BEVERAGE – 7.1%
Darden Restaurants, Inc.		24,500		690,410
Diageo PLC, SP ADR		11,500		652,510
Jack in the Box, Inc. (a)		33,500		740,015
Pepsi Bottling Group, Inc.		30,500		686,555
Sysco Corp.		21,500		493,210
				3,262,700
MANUFACTURING – 8.1%
ABB, Ltd., SP ADR		43,000		645,430
Altra Holdings, Inc. (a)		83,500		660,485
Illinois Tool Works, Inc.		19,000		665,950
Ingersoll-Rand Co., Ltd., Class A		38,000		659,300
Johnson Controls, Inc.		36,500		662,840
Terex Corp. (a)		24,500		424,340
				3,718,345
PHARMACEUTICALS – 6.6%
Aetna, Inc.		22,500		641,250
AstraZeneca PLC, SP ADR		16,000		656,480
Endo Pharmaceuticals Holdings, Inc. (a)		17,390		450,053
Novartis AG, ADR		13,500		671,760
ViroPharma, Inc. (a)		46,000		598,920
				3,018,463
PUBLISHING & BROADCASTING – 7.3%
British Sky Broadcasting Group PLC, ADR (b)		22,500		639,000
Comcast Corp., Class A		42,000		678,300
Liberty Media Corp - Entertainment, Class A (a)		41,900		732,412
News Corp., Class B		66,000		632,280
Washington Post Co. (The), Class B		1,687		658,352
				3,340,344
RETAIL – 3.5%
Best Buy Co., Inc.		17,300		486,303
Ross Stores, Inc.		22,000		654,060
Tiffany & Co.		20,500		484,415
				1,624,778

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Delphi Value Fund — 2008 Annual Report  3

E*TRADE Delphi Value Fund
SCHEDULE OF INVESTMENTS
December 31, 2008 (Continued)

			VALUE
	SHARES		(Note 2)
TEXTILES & APPAREL – 1.2%
Phillips-Van Heusen Corp.		27,000	$	543,510
TRANSPORTATION – 2.9%
FedEx Corp.		10,500		673,575
Norfolk Southern Corp.		14,000		658,700
				1,332,275
TOTAL COMMON STOCKS (COST $53,107,126)				44,022,116
MONEY MARKET – 1.9%
BlackRock Liquidity Funds TempCash Portfolio		844,040		844,040
TOTAL MONEY MARKET (COST $844,040)				844,040

	PRINCIPAL
	AMOUNT
SECURITIES LENDING COLLATERAL – 3.0%
COMMERCIAL PAPER– 2.7%
Clipper Receivables Co., LLC 0.50%, 01/02/09 (c) (d)	$	283,756		283,756
Galleon Capital LLC 0.05%, 01/02/09 (c) (d)		945,853		945,853
				1,229,609
TIME DEPOSITS - 0.3%
Bank of Montreal 0.01%, 01/02/09 (c)		31,421		31,421
Bank of Nova Scotia 0.01%, 01/02/09 (c)		31,421		31,421
Barclays Bank 0.01%, 01/02/09 (c)		31,421		31,421
Credit Suisse 0.01%, 01/02/09 (c)		31,421		31,421
Dexia Bank 0.01%, 01/02/09 (c)		31,421		31,421
				157,105
TOTAL SECURITIES LENDING COLLATERAL				1,386,714
(COST $1,386,714)
TOTAL INVESTMENTS - 100.9% (COST $55,337,880)				46,252,870
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.9)%				(397,628	)
TOTAL NET ASSETS - 100.0%			$	45,855,242

(a)	Non-income producing.
(b)	Securities (or a portion of securities) on loan. (See Note 7)
(c)	This security was purchased with cash collateral received from securities lending.
(d)	Securities exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. These securities may only be resold in an exempt transaction to qualified institutional buyers. At December 31, 2008, these securities amounted to $1,229,609 or 2.7% of net assets.
ADR	American Depositary Receipt
SP ADR	Sponsored American Depositary Receipt

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 – Quoted Prices	$	44,866,156
Level 2 – Other Significant Observable Inputs		1,386,714
Level 3 – Significant Unobservable Inputs		—
Total	$	46,252,870

	VALUE			% OF TOTAL
INDUSTRY	(Note 2)			NET ASSETS
AEROSPACE / TECHNOLOGY	$	8,760,564			19.1	%
CONGLOMERATES		5,093,951			11.1	%
ENERGY		5,081,979			11.1	%
MANUFACTURING		3,718,345			8.1	%
PUBLISHING & BROADCASTING		3,340,344			7.3	%
FOOD & BEVERAGE		3,262,700			7.1	%
PHARMACEUTICALS		3,018,463			6.6	%
BASIC MATERIALS		2,230,316			4.9	%
CONSUMER RELATED		2,030,820			4.4	%
RETAIL		1,624,778			3.5	%
SECURITIES LENDING COLLATERAL		1,386,714			3.0	%
TRANSPORTATION		1,332,275			2.9	%
ADVERTISING		1,305,282			2.9	%
MONEY MARKET		844,040			1.9	%
BUSNESS PRODUCTS		727,790			1.6	%
FINANCIAL SERVICES		708,876			1.5	%
BANKING		663,300			1.4	%
CONSTRUCTION & ENGINEERING		578,823			1.3	%
TEXTILES & APPAREL		543,510			1.2	%
LIABILITIES IN EXCESS OF OTHER ASSETS		(397,628	)		(0.9	)%
	$	45,855,242			100.0	%

The accompanying notes are an integral part of these Financial Statements.

4  E*TRADE Delphi Value Fund — 2008 Annual Report

E*TRADE Delphi Value Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008

ASSETS:
Investments in securities at market value, (Cost $55,337,880) (Note 2)	$	46,252,870
Cash held as collateral for securities loaned (Note 7)		34,302
Receivable for fund shares purchased		7,306
Receivable for securities sold		1,681,408
Dividends and interest receivable		74,918
TOTAL ASSETS		48,050,804
LIABILITIES:
Payable upon receipt of securities loaned (Note 7)		1,421,016
Payable for fund shares redeemed		656,139
Accrued advisory fee (Note 3)		35,438
Accrued administration fee (Note 3)		6,254
Accrued distribution fees (Note 3)		3,875
Trustee fees (Note 3)		759
Audit and tax services		21,900
Printing fees		21,793
Accrued other expenses		28,388
TOTAL LIABILITIES		2,195,562
TOTAL NET ASSETS	$	45,855,242
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par	$	5,520
Paid-in capital, in excess of par		66,924,043
Accumulated undistributed net investment income		751,159
Accumulated net realized gain (loss) on investments		(12,740,470	)
Net unrealized appreciation (depreciation) of investments		(9,085,010	)
TOTAL NET ASSETS	$	45,855,242
RETAIL CLASS SHARES:
NET ASSETS	$	18,611,136
SHARES OUTSTANDING (UNLIMITED AUTHORIZED, PAR VALUE $0.001)		2,276,238
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE	$	8.18
INSTITUTIONAL CLASS SHARES:
NET ASSETS	$	27,244,106
SHARES OUTSTANDING (UNLIMITED AUTHORIZED, PAR VALUE $0.001)		3,243,933
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE	$	8.40

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Delphi Value Fund — 2008 Annual Report  5

E*TRADE Delphi Value Fund
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2008

NET INVESTMENT INCOME:
Dividends	$	1,935,664
Less foreign taxes withheld		(46,455	)
Security lending income		116,485
TOTAL INVESTMENT INCOME		2,005,694
EXPENSES (NOTES 3 and 4):
Advisory fee		796,106
Administration fee		140,489
Sub-administration fee		77,662
Distribution expenses (Retail Class)		85,593
Transfer and dividend disbursing agent		21,628
Network fee (Retail Class)		13,206
Legal services		41,257
Custodian fees		11,542
Trustee fees		23,842
Registration fees		43,894
Audit and tax services		22,900
Insurance		3,563
Printing		32,676
Other expenses		9,961
NET EXPENSES		1,324,319
NET INVESTMENT INCOME		681,375
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Sale of investments		(12,725,856	)
Net change in unrealized appreciation (depreciation) of:
Investments		(34,588,990	)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		(47,314,846	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(46,633,471	)

The accompanying notes are an integral part of these Financial Statements.

6  E*TRADE Delphi Value Fund — 2008 Annual Report

E*TRADE Delphi Value Fund
STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended December 31,
	2008			2007
NET INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income	$	681,375		$	1,993,685
Net realized gain (loss) on sale of investments		(12,725,856	)		17,563,305
Net change in unrealized appreciation (depreciation) of investments		(34,588,990	)		(21,964,678	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(46,633,471	)		(2,407,688	)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Retail Class:
Net investment income		—			(826,355	)
Net realized gain on investments		(855,352	)		(7,169,036	)
Total Retail Class distributions		(855,352	)		(7,995,391	)
Institutional Class:
Net investment income		—			(1,468,667	)
Net realized gain on investments		(1,354,013	)		(10,506,568	)
Total Institutional Class distributions		(1,354,013	)		(11,975,235	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(2,209,365	)		(19,970,626	)
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS (NOTE 6)		(24,045,905	)		(96,775	)
NET INCREASE (DECREASE) IN NET ASSETS		(72,888,741	)		(22,475,089	)
NET ASSETS:
BEGINNING OF PERIOD		118,743,983			141,219,072
END OF PERIOD(1)	$	45,855,242		$	118,743,983

(1) Includes accumulated undistributed net investment income of $751,159 and $0 for the years ended December 31, 2008 and 2007, respectively.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Delphi Value Fund — 2008 Annual Report  7

E*TRADE Delphi Value Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

RETAIL CLASS SHARES

	Year Ended December 31,
	2008			2007			2006			2005(1)			2004(1)
NET ASSET VALUE, BEGINNING OF PERIOD	$	15.16		$	18.46		$	17.32		$	17.23		$	15.79
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (loss)		0.07	(2)		0.26			0.04			0.02			(0.05	)
Net realized and unrealized gain (loss) on investments		(6.66	)		(0.67	)		3.02			1.12			2.04
TOTAL FROM INVESTMENT OPERATIONS		(6.59	)		(0.41	)		3.06			1.14			1.99
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		—			(0.30	)		(0.04	)		(0.03	)		—
Net realized gain on investments		(0.39	)		(2.59	)		(1.88	)		(1.02	)		(0.55	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.39	)		(2.89	)		(1.92	)		(1.05	)		(0.55	)
NET ASSET VALUE, END OF PERIOD	$	8.18		$	15.16		$	18.46		$	17.32		$	17.23
TOTAL RETURN (3)		(43.54	)%		(2.30	)%		17.65	%		6.66	%		12.52	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)	$	18,611		$	47,352		$	57,271		$	65,959		$	65,446
Ratio of net expenses to average net assets (4)		1.60	%		1.54	%		1.54	%		1.57	%		1.58	%
Ratio of net investment income to average net assets		0.54	%		1.23	%		0.22	%		0.13	%		(0.28	)%
Portfolio turnover rate		32	%		29	%		28	%		22	%		31	%

(1)	Predecessor Fund, See Note 1.
(2)	Calculated based on average shares outstanding.
(3)	Total return represents aggregate total return for the period indicated and assumes reinvestment of all distributions.
(4)	There were no fees waived or expenses reimbursed for the Fund.

The accompanying notes are an integral part of these Financial Statements.

8  E*TRADE Delphi Value Fund — 2008 Annual Report

E*TRADE Delphi Value Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

INSTITUTIONAL CLASS SHARES

	Year Ended December 31,
	2008			2007			2006			2005(1)			2004(1)
NET ASSET VALUE, BEGINNING OF PERIOD	$	15.49		$	18.80		$	17.61		$	17.49		$	15.98
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income		0.11	(2)		0.32			0.10			0.07			—
Net realized and unrealized gain (loss) on investments		(6.81	)		(0.68	)		3.07			1.15			2.06
TOTAL FROM INVESTMENT OPERATIONS		(6.70	)		(0.36	)		3.17			1.22			2.06
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		—			(0.36	)		(0.10	)		(0.08	)		—
Net realized gain on investments		(0.39	)		(2.59	)		(1.88	)		(1.02	)		(0.55	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.39	)		(2.95	)		(1.98	)		(1.10	)		(0.55	)
NET ASSET VALUE, END OF PERIOD	$	8.40		$	15.49		$	18.80		$	17.61		$	17.49
TOTAL RETURN (3)		(43.25	)%		(1.98	)%		17.94	%		6.97	%		12.87	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)	$	27,244		$	71,392		$	83,948		$	58,561		$	55,390
Ratio of net expenses to average net assets (4)		1.31	%		1.24	%		1.25	%		1.28	%		1.28	%
Ratio of net investment income to average net assets		0.83	%		1.53	%		0.51	%		0.42	%		0.02	%
Portfolio turnover rate		32	%		29	%		28	%		22	%		31	%

(1)	Predecessor Fund, See Note 1.
(2)	Calculated based on average shares outstanding.
(3)	Total return represents aggregate total return for the period indicated and assumes reinvestment of all distributions.
(4)	There were no fees waived or expenses reimbursed for the Fund.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Delphi Value Fund — 2008 Annual Report  9

NOTES TO FINANCIAL STATEMENTS
December 31, 2008

1. ORGANIZATION

The E*TRADE Delphi Value Fund (the “Fund”) is a series of the E*TRADE Funds (the “Trust”) which was organized on November 4, 1998 as a Delaware statutory trust. Prior to November 17, 2006, the Fund was a series of the Kobren Insight Funds which was organized on September 13, 1996 as a Massachusetts business trust (the “Predecessor Fund”). On November 17, 2006, the Predecessor Fund exchanged all of its assets for shares of the Fund and the Fund became the legal and accounting successor of the Predecessor Fund (the “Reorganization”). The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a no-load, open-end diversified management investment company. As of December 31, 2008, the Trust offered shares of six funds, E*TRADE S&P 500 Index Fund, E*TRADE International Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE Technology Index Fund, E*TRADE Kobren Growth Fund and E*TRADE Delphi Value Fund. Information presented in these financial statements pertains only to the E*TRADE Delphi Value Fund. The Fund is authorized to issue two classes of shares — the Retail Class and the Institutional Class. Each class of shares outstanding bears the same voting, dividend, liquidation and other rights and conditions, except that the expenses incurred in the distribution and marketing of such shares are different for each class. Additionally, the Retail Class is subject to 12b-1 fees and sub-transfer agent fees. Investment income, common expenses and realized and unrealized gains and losses are allocated between the share classes of the Fund based on the relative average net assets of each class. Information with regard to the other series of the Trust can be found in separate financial statements at www.etradefunds.etrade.com.

The investment objective of the Fund is long-term growth of capital. The Fund seeks to achieve its investment objective by investing at least 50% of its assets in equity securities of U.S. companies. The Fund may invest in a mix of large, medium and small capitalization companies. The Fund may invest up to 50% of its assets in securities of foreign issuers, including emerging market issuers.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies that are followed by the Fund in the preparation of its financial statements and are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to establish estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

Investments of the Fund are valued at the last reported sale price on the securities or commodities exchange on which such securities are primarily traded. If there is no sale that day, then the value will be based on the most recent bid prices. If market quotations or official closing prices are not readily available or are determined not to accurately reflect the current value of the securities, then such securities are valued at fair value as determined in good faith under procedures established by the Board of Trustees of the Trust (“Board”), which may include the use of pricing services. To the extent that the Fund has portfolio securities that are primarily listed on foreign exchanges that trade on days when the Fund does not price its shares, the value of the securities held by the Fund, and accordingly, its net asset value, may change on days when shareholders will not be able to purchase or redeem the Fund’s shares. In this regard, the Board has approved the use of certain independent pricing services in determining the fair value of foreign securities that are principally traded in foreign markets when events reasonably determined to be significant occur subsequent to the close of such foreign markets and prior to the time the Fund’s NAV is determined. The fair value of such foreign securities are determined by the Fund (with the assistance of independent pricing services) using correlations between the movement of prices of the foreign securities and indices of domestic securities and other appropriate indicators. Unlike the closing price of a security on a foreign exchange, fair value determinations employ elements of judgment and the fair value assigned to a security may not represent the actual value that the Fund could obtain if it were to sell a security at the time of the close of the New York Stock Exchange. Investments in short-term debt securities that mature in 60 days or less are valued at amortized cost, which approximates fair market value, based on valuation procedures approved by the Board.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurement, which is effective for financial statements issued for fiscal years beginning after November 15, 2007. This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The Fund has adopted FAS 157 as of January 1, 2008. The three levels of the fair value hierarchy under FAS 157 are described below:

10  E*TRADE Delphi Value Fund — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

• Level 1 – quoted prices in active markets for identical securities

• Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. A summary of the inputs used to value the Fund’s net assets as of December 31, 2008 is included with the Schedule of Investments.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on the date the securities are purchased or sold (trade date). Revenue is recognized as follows: dividend income is recognized on the ex-dividend date and interest income is recorded on an accrual basis. Realized gains and losses on sales of securities are calculated on the identified cost basis.

Expenses attributable to a single fund of the Trust are charged to that fund. Expenses of the Trust not attributable to a single fund are charged to each fund in proportion to the average net assets of each fund in the Trust or other appropriate allocation methods. General expenses (expenses not specific to a particular class), income and realized and unrealized gains and losses attributable to the Fund are prorated between the Fund’s two classes based on the relative average net assets of those classes.

DISTRIBUTIONS TO SHAREHOLDERS

The Fund intends to declare and pay dividends from net investment income annually. The Fund will distribute net realized capital gains (including net short-term capital gains), if any, annually, unless offset by any available capital loss carryforward. Additional distributions of net investment income and capital gains for the Fund may be made in order to avoid the application of a 4% non-deductible excise tax on certain undistributed amounts of ordinary income and capital gains.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP. These differences are due primarily to the redesignation of income distributions to gain distributions. The tax character and amount of distributions paid during 2008 and 2007 were as follows:

Distributions Paid in 2008		Distributions Paid in 2007
Ordinary	Long-Term	Ordinary	Long-Term
Income*	Capital Gains	Income	Capital Gains
$932,601	$1,276,764	$3,870,069	$16,100,557

As of December 31, 2008, the components of distributable earnings on a tax basis were as follows:

Accumulated		Net	Undistributed
Capital	Undistributed	Unrealized	Long-Term
and Other Losses	Ordinary Income*	Depreciation	Capital Gains	Total
$(12,729,588)	$751,159	$(9,095,892)	$—	$(21,074,321)

* For tax purposes, short-term capital gain distributions are considered ordinary income.

FEDERAL INCOME TAXES

The Fund is treated as a separate entity of the Trust for federal income tax purposes. It is the Fund’s intention to continue to qualify annually as a regulated investment company under the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute annually all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provisions are required.

As of December 31, 2008, for federal income tax purposes, the Fund has capital loss carryforwards of $1,622,388, which will expire at December 31, 2016. Capital loss carryforwards are available to offset future capital gains of the Fund until the expiration date.

E*TRADE Delphi Value Fund — 2008 Annual Report  11

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

For the year ended December 31, 2008, the Fund elected to defer capital losses of $11,107,200 attributable to post-October losses.

At December 31, 2008, the cost of investments for federal income tax purposes was $55,348,762. Net unrealized depreciation aggregated $9,095,892, of which $13,040,243 represented gross unrealized depreciation on securities and $3,944,351 represented gross unrealized appreciation on securities.

The Trust is subject to FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, a clarification of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 establishes financial accounting and disclosure requirements for recognition and measurement of tax positions taken or expected to be taken on an income tax return. Adoption of FIN 48 was required for fiscal years beginning after December 15, 2006 and is applied to all open tax years as of the effective date. The Fund analyzed its tax positions taken on federal income tax returns for all open tax years (tax years ended December 31, 2005 through 2008) for purposes of FIN 48 and concluded that no provision for income tax was required in its financial statements.

RECLASSIFICATION OF CAPITAL ACCOUNTS

In order to present undistributed net investment income and accumulated net realized gain (loss) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments of $69,784 and $(69,784) were made on December 31, 2008 to undistributed net investment income and accumulated net realized gain (loss) on investments, respectively. These adjustments were related to a redesignation of income distributions to gain distributions.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Trust enters into contracts on behalf of the Fund that contain a variety of provisions for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that are not known at this time. However, based on experience, the Fund believes the risk of loss is remote.

ADDITIONAL ACCOUNTING STANDARDS

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund’s financial statement disclosures, if any.

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

Effective November 17, 2006, E*TRADE Asset Management, Inc. (“ETAM”) became the Fund’s investment adviser. ETAM is a wholly-owned subsidiary of E*TRADE FINANCIAL Corporation (“E*TRADE FINANCIAL”). Pursuant to the Investment Advisory Agreement, the Fund has agreed to pay ETAM a monthly advisory fee at the annual rate of 0.85% of the Fund’s average daily net assets. ETAM serves as the Fund’s administrator and shareholder servicing agent pursuant to an Administrative Services Agreement with the Trust, on behalf of the Fund. For its services, ETAM receives an administrative services fee of 0.15% of the Fund’s average daily net assets.

Delphi Management, Inc. (“Delphi”) serves as the Fund’s sub-adviser pursuant to an agreement with ETAM. ETAM pays Delphi a monthly sub-advisory fee at the annual rate of 0.50% of the Fund’s average daily net assets. The Fund is not responsible for paying Delphi’s sub-advisory fee.

ETAM has entered into an expense limitation agreement with the Trust for the Fund (the “Expense Limitation Agreement”). The Expense Limitation Agreement will continue through at least April 30, 2009. There is no guarantee that the Expense Limitation Agreement will continue after this date. Pursuant to the Expense Limitation Agreement, ETAM has agreed to waive or limit its fees and to assume certain other expenses of the Fund so that, on an annualized basis, the total annual fund operating expenses (other than interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with U.S. GAAP, expenses borne by the Fund as a result of investing in any underlying fund (including but not limited to any exchange-traded fund or money market fund), “Acquired Fund Fees and Expenses” (as interpreted by the U.S. Securities and Exchange

12  E*TRADE Delphi Value Fund — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

Commission (the “Commission”) from time to time), annual account maintenance fees (if applicable as described in the Prospectus), and extraordinary fees and expenses not incurred in the ordinary course of the Fund’s business) of the Retail Class and the Institutional Class of the Fund do not exceed 1.75% and 1.50%, respectively, of the Fund’s average daily net assets.

If the Fund were to exceed its expense limits, the Fund may, at a later date, reimburse ETAM any fees waived and any other expenses assumed and paid by ETAM pursuant to the Expense Limitation Agreement provided that, among other things, the Fund has reached a sufficient size to permit such reimbursement to be made without causing the total annual expense ratio of the Fund to exceed the current percentage limit stated above. No reimbursement by the Fund will be made unless: (i) the Fund’s total annual expense ratio is less than the percentage stated above and (ii) the payment of such reimbursement has been approved by the Trust’s Board on a quarterly basis. The total amount of reimbursement to which ETAM may be entitled will equal, at any time, the sum of (i) all fees previously waived or reduced by ETAM and (ii) all other payments previously remitted by ETAM to the Fund in accordance with the Expense Limitation Agreement during any of the previous three (3) fiscal years, less any reimbursement that the Fund has previously paid to ETAM with respect to (a) such fees previously waived or reduced and (b) such other payments previously remitted by ETAM to the Fund.

E*TRADE Securities LLC (“E*TRADE Securities”), a subsidiary of E*TRADE FINANCIAL, serves as principal underwriter of the Fund. The Retail Class of shares of the Fund pays a portion of the costs of participation in various network programs, including the program sponsored by E*TRADE FINANCIAL.

The Trust, on behalf of the Fund, has adopted a plan of distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (“1940 Act”), with respect to the Retail Class shares of the Fund (the “Distribution Plan”). The Predecessor Fund had a similar plan of distribution pursuant to Rule 12b-1 under the 1940 Act with respect to its Retail Class shares. Pursuant to the Distribution Plan, the Fund uses its assets attributable to Retail Class shares to finance activities relating to the distribution of Retail Class shares to investors and the provision of certain shareholder services. Certain categories of such expenditures have been approved by the Board and include, among other things, the following: compensation to, and expenses (including overhead and telephone expenses) of, account executives and other employees of the principal underwriter or of other broker-dealers who engage in or support the distribution of the Retail Class shares; and printing and mailing of prospectuses and other reports for other than existing shareholders, advertising and allowances to other broker-dealers. The Fund compensates E*TRADE Securities, principal underwriter of the Fund, at a fee calculated at an annual rate of 0.25% of the Fund’s average daily net assets attributable to Retail Class shares regardless of E*TRADE Securities’ expenses.

Each member of the Board who is not an “interested person” of the Trust (as defined in the 1940 Act) (“Independent Trustees”) receives from the Trust an annual fee (payable in quarterly installments) of $30,000 for his or her service as an Independent Trustee (including participation in all Committee meetings) plus an additional fee of: (i) $2,500 for each Board meeting attended, and (ii) $1,500 for each telephonic Board meeting attended. The Chairman receives additional compensation of $4,000 and the Chairperson of the Audit Committee is paid an additional $2,000 per year for his or her services in such capacity.

Each Independent Trustee is reimbursed for all reasonable and necessary expenses associated with his or her service as an Independent Trustee, including travel and other expenses incurred in connection with attendance at Board and Committee meetings. The Trust does not compensate its officers or Trustee who are affiliated with ETAM.

4. AGREEMENTS AND OTHER TRANSACTIONS WITH NON-AFFILIATES

PNC Global Investment Servicing (U.S.) Inc. (“PNC”), formerly known as PFPC Inc., serves as sub-administrator, transfer agent and dividend-disbursing agent for the Fund. PFPC Trust Company provides custodial and securities lending agency services to the Fund.

E*TRADE Delphi Value Fund — 2008 Annual Report  13

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

5. INVESTMENT PORTFOLIO TRANSACTIONS

The aggregate amounts of purchases and sales of the Fund’s investment securities, other than short-term securities, for the year ended December 31, 2008, were $28,162,532 and $53,157,261 of non-governmental issues, respectively.

6. SHARES OF BENEFICIAL INTEREST

As of December 31, 2008, an unlimited number of shares of beneficial interest, par value $0.001, were authorized for the Trust. Changes in shares of beneficial interest for the Fund for the years ended December 31, 2008 and 2007 were as follows:

	Year Ended						Year Ended
	December 31, 2008						December 31, 2007
	Shares			Amount			Shares			Amount
Retail Class:
Shares sold		140,802		$	1,792,527			330,325		$	6,205,795
Shares issued as reinvestment of distributions		96,888			783,230			464,974			7,086,296
Shares redeemed		(1,085,146	)		(13,407,839	)		(774,499	)		(14,168,573	)
Net increase (decrease) — Retail Class		(847,456	)		(10,832,082	)		20,800			(876,482	)
Institutional Class:
Shares sold		769,987			10,542,265			272,844			5,301,458
Shares issued as reinvestment of distributions		162,568			1,349,313			708,311			11,028,397
Shares redeemed		(2,298,752	)		(25,105,401	)		(836,541	)		(15,550,148	)
Net increase (decrease) — Institutional Class		(1,366,197	)		(13,213,823	)		144,614			779,707
Total net increase (decrease) from fund share transactions				$	(24,045,905	)				$	(96,775	)

At December 31, 2008, Kobren Insight Management, Inc. (“KIM”), the Predecessor Fund’s investment adviser, Delphi and their affiliates owned 829,788 Institutional Class shares of the Fund representing 25.6% of the outstanding shares. Discretionary accounts managed by KIM for management clients collectively held 1,489,363 shares of the Institutional Class representing 45.9% of the outstanding shares.

7. SECURITIES LENDING

The Fund may lend portfolio securities to certain broker-dealers and institutions to the extent permitted by the 1940 Act, as modified or interpreted by regulatory authorities having jurisdiction, from time to time, in accordance with procedures adopted by the Board. By lending its securities, a fund attempts to increase its net investment income through the receipt of interest on the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would belong to the Fund. Such loans must be secured by collateral in cash or U.S. government securities maintained on a current basis in an amount at least equal to 100% of the current market value of the securities loaned. As with other extensions of credit, there are risks of delay in recovery of, or even loss of rights in, the collateral should the borrower of the securities fail financially or breach its agreement with the Fund. The value of the securities loaned will not exceed 33 1/3% of the value of the total assets of the Fund. As of December 31, 2008, the market value of the securities on loan for the Fund was $1,311,621. The loans were secured with cash and cash equivalent collateral of $1,421,016. The income generated from the program during the year ended December 31, 2008, with respect to such loans was $116,485.

14  E*TRADE Delphi Value Fund — 2008 Annual Report

REPORT OF INDEPENDENT AUDITORS
December 31, 2008 (Continued)

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of
E*TRADE Funds and Shareholders of:
E*TRADE Delphi Value Fund

We have audited the accompanying statement of assets and liabilities of the E*TRADE Delphi Value Fund, a series of E*TRADE Funds (the “Trust”), including the schedule of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2004 have been audited by other auditors, whose report dated February 11, 2005 expressed an unqualified opinion on such financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the E*TRADE Delphi Value Fund, as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania	TAIT, WELLER & BAKER LLP
February 9, 2009

E*TRADE Delphi Value Fund — 2008 Annual Report  15

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008

DISCLOSURE OF FUND EXPENSES/SHAREHOLDER FEE EXAMPLE

We believe it is important for you to understand the impact of fees regarding your investment. All mutual funds have expenses and as a shareholder of a mutual fund, you can incur two types of expenses (1) transaction expenses; and (2) ongoing expenses, including management fees, distribution and/or service (12b-1) fees; and other fund expenses such as for shareholder reports (like this one). A fund’s expenses directly reduce the investment return of the fund. A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. This Example is intended to help you understand the ongoing fees (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on a $1,000 investment made at the beginning of the period and held for the entire period from July 1, 2008 to December 31, 2008. The Fund does not assess a sales load.

This table illustrates the Fund’s expenses in two ways:

Actual Fund Return: This section helps you to estimate the actual expenses, after any applicable fee waivers, that you paid over the period. The “Ending Account Value” shown is derived from the Fund’s actual return for the six month period, the “Expense Ratio” column shows the period’s annualized expense ratio, and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund at the beginning of the period.

You may use the information here, together with your account value, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund in the first line under the heading entitled “Expenses Paid During Period”.

Hypothetical 5% Return: This section is intended to help you compare the Fund’s costs with those of other mutual funds based on the Fund’s actual expense ratio and an assumed rate of 5% per year before expenses, which is not the Fund’s actual return. In this case, because the return used is not the Fund’s actual return, the results do not apply to your investment. This example is useful in making comparisons to other mutual funds because the SEC requires all mutual funds to calculate expenses based on an assumed 5% annual return. You can assess your Fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees, which are described in the Prospectus. Therefore, the hypothetical 5% return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account		Ending Account		Expense			Expenses Paid
	Value 07/01/08		Value 12/31/08		Ratio(1)			During Period(2)
Actual Fund Return
Retail Class	$	1,000	$	593		1.66	%	$	6.65
Institutional Class	$	1,000	$	595		1.40	%	$	5.61
Hypothetical 5% Return
Retail Class	$	1,000	$	1,017		1.66	%	$	8.42
Institutional Class	$	1,000	$	1,018		1.40	%	$	7.10

(1)	Annualized, based on the Fund’s most recent fiscal half-year expenses.
(2)	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366.

TAX INFORMATION

During the year ended December 31, 2008, the Fund designated long-term capital gains of $1,276,764.

For the fiscal year ended December 31, 2008, 75.81% of the income dividends qualified for the dividends received deduction available to corporations.

16  E*TRADE Delphi Value Fund — 2008 Annual Report

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

For the fiscal year ended December 31, 2008, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the income earned, 100.00% of income may qualify for the 15% dividend income tax rate. All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder. Complete information will be computed and reported in conjunction with your 2008 Form 1099-DIV.

TRUSTEES’ APPROVAL/RENEWAL OF INVESTMENT ADVISORY CONTRACTS

At a meeting held on September 18, 2008, the Board unanimously approved the renewal of the Investment Advisory Agreement between the Trust and ETAM for the Fund and approved the renewal of the Investment Sub-Advisory Agreement among the Trust, ETAM and Delphi for Delphi to provide subadvisory services to the Fund.

In connection with these approvals, the Board, including the Independent Trustees of the Board, reviewed various factors including: (1) the nature, extent and quality of services provided to the Fund by ETAM and Delphi; (2) the fees paid by the Fund to ETAM (and indirectly to Delphi) and the contractual limitations on the Fund’s expense ratios provided by ETAM; (3) the cost of the services provided and the profits realized by ETAM, Delphi and their affiliates from their relationship to the Fund; (4) comparative investment performance information for the Fund; (5) the extent to which economies of scale are realized or will be realized for the benefit of shareholders of the Fund as the Fund grows; and (6) any benefits that are derived or expected to be derived by ETAM, KIM or their affiliates from their relationship with the Fund. All factors were applied to the Fund. The Board, assisted by the advice of counsel to the Independent Trustees, considered a broad range of information regarding the Fund, including the factors described above. However, no single factor was determinative. Rather, it was the totality of the circumstances that drove the Board’s decisions. Below is a discussion of these factors as they applied to the Board’s consideration of the two agreements.

NATURE, EXTENT AND QUALITY OF SERVICES.

The Board members discussed the nature, extent and quality of the investment advisory services provided by ETAM and its affiliates to the Fund as detailed in materials provided by ETAM, including ETAM’s role in evaluating and supervising the investment advisory activities of Delphi, monitoring the performance of the Fund compared to its benchmarks and other comparable funds, assessing the stock selection techniques used by Delphi, and reviewing reports from, and conducting periodic due diligence reviews of, Delphi. The Board noted the breadth and quality of services provided by the Trust’s Chief Compliance Officer, which were paid for by ETAM and not by the Fund. The Board also noted the additional duties ETAM assumed during the year to establish and supervise the Fund’s securities lending program and the support services for the Fund’s anti-money laundering program.

With respect to Delphi and the Investment Sub-Advisory Agreement among the Fund, ETAM and Delphi with respect to the Fund, the Board members also discussed the nature, extent and quality of the sub-advisory services provided by Delphi, including the investment process and techniques used by Delphi in managing the Fund’s assets in accordance with its investment objective, investment policies and restrictions, and the qualifications of Delphi’s investment personnel dedicated to providing sub-advisory services to the Fund. Based on this review, the Board determined that ETAM and Delphi had provided and would continue to provide satisfactory advisory and sub-advisory services to the Fund.

FEES AND EXPENSES.

The Board discussed the advisory fees paid by the Fund to ETAM (and indirectly to Delphi) and the contractual expense limitations and fee waivers to which ETAM had agreed for the Fund. At the outset, the Board members considered and discussed the comparative expense data provided by ETAM. The Board observed that the advisory fees and expense ratios of the Fund’s Retail Class and Institutional Class were somewhat higher than those of the median of peer groups of retail and institutional mid-cap value funds of similar size. The Board noted that ETAM paid Delphi for its services to the Fund and that ETAM had arranged for securities lending beginning in 2008 and noted the positive impact on the Fund’s expense ratio. The Board further noted the commitment of E*TRADE to provide ETAM with necessary and appropriate resources in connection with its services to the Fund. Based on these considerations, the Board concluded that the advisory fee and expense ratio of the Fund were at an appropriate level and competitive with its peers and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

E*TRADE Delphi Value Fund — 2008 Annual Report  17

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

COSTS AND PROFITABILITY.

The Board discussed the costs of the services provided by ETAM (including the fees payable to Delphi) and the estimated profits realized by ETAM. The Board noted that ETAM has also put in place a contractual expense limitation agreement with respect to the Fund. In addition, the Board noted ETAM’s continuing efforts to increase the assets of the Fund and to seek to recognize economies of scale through a careful service provider selection process and negotiations with service providers to reduce and/or limit their fees and expenses. In addition, the Board noted that ETAM had advised the Board that it expects that, provided the assets of the Fund continues to grow, the Fund will remain profitable. The Board concluded that the information regarding the costs of the services provided and the profitability of the Fund supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

COMPARATIVE PERFORMANCE.

The Board reviewed the comparative investment performance of the Fund for the 1-, 3- and 5-year and since-inception periods ended June 30, 2008 as prepared by Morningstar and provided by ETAM. The Board noted that the Fund outperformed the average returns of its peer group for the 1- and 3-year periods ended June 30, 2008 (ranking in the top quartile for the 1-year period), while underperforming for the 5-year period. Based on these considerations, the Board concluded that the investment performance of the Fund was adequate and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

ECONOMIES OF SCALE.

The Board discussed the extent to which economies of scale have been realized or will be realized for the benefit of shareholders of the Fund as the Fund grows. The Board noted that the fee schedule in the Advisory Agreement does not contain asset-based breakpoints. The Board noted that ETAM had agreed to limit the expense ratio of the Fund. The Board further noted that it would have the opportunity to reconsider whether fee breakpoints are necessary or appropriate in the future with respect to the Fund as its asset levels grow. Based on the information provided, the Board concluded that ETAM’s efforts in limiting the expense ratio of the Fund supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

OTHER BENEFITS TO ETAM AND THE SUB-ADVISER.

The Board discussed the benefits that are derived or which may be derived by ETAM, Delphi and their affiliates from their relationship with the Fund. While the Board observed that there were no direct fall out benefits to ETAM, Delphi or their affiliates from their relationship to the Fund (other than the fees received by ETAM pursuant to the Shareholder Services Agreement and fees received under the Rule 12b-1 Plan by E*TRADE Securities for promotion of the Fund’s Retail Class on E*TRADE’s website), the Board noted that the relationship between the Fund and ETAM (and its affiliates), or between the Fund and Delphi (and its affiliates), may indirectly benefit ETAM, Delphi or their affiliates by potentially attracting clients and/or customers to other products and services offered by them. In this regard, the Board noted the indirect fall out benefits to E*TRADE that may result from using the Fund as a “marketing tool” to bring other assets into E*TRADE and add to the variety of investment choices provided by E*TRADE to its customers. The Board also noted that Delphi does not use soft dollars in connection with the management of the Fund, and that ETAM does not use soft dollars.

18  E*TRADE Delphi Value Fund — 2008 Annual Report

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

TRUSTEES AND OFFICERS

The Board has the responsibility for the overall management of the Trust, including general supervision and review of the Fund’s investment activities and conformity with Delaware Law and the stated policies of the Fund. The Board elects the officers of the Trust who are responsible for administering the Fund’s day-to-day operations. Trustees and officers of the Trust, together with information as to their principal business occupations during the last five years, and other information are shown below as of December 31, 2008. The Trust consists of six active series.

	Term of		Number of Port-
	Office and		folios in Fund		Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen		Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee		Held by Trustee
		INDEPENDENT TRUSTEES
Cheryl A. Burgermeister Age: 57 Trustee	Since February 2004	Ms. Burgermeister is Trustee, Treasurer and Finance Committee Chairman of the Portland Community College Foundation since 2001. She was a Trustee of the Zero Gravity Internet Fund from 2000 to 2001. She was a Director and Treasurer of the Crabbe Huson family of funds from 1988-1999.		6	The Select Sector SPDR Trust (9 portfolios)
Arthur Dubroff Age: 58 Trustee	Since August 2006	Mr. Dubroff is the Managing Principal of Turnberry Consulting, LLC from February 2002 to present. He served as Chief Financial Officer of Net2Phone, Inc., a provider of Voice over Internet Protocol telephone services, from November 2002 to May 2006. He also served as Chief Financial Officer of Virtual Communities, Inc., a software provider, from July 2000 to December 2007.		6	None
Steven Grenadier Age: 44 Trustee	Since February 1999	Mr. Grenadier is a Professor of Finance at the Graduate School of Business at Stanford University, where he has been employed as a professor since 1992.		6	Nicholas-Applegate Institutional Funds (13 portfolios); AQR Funds (8 portfolios)
George J. Rebhan Age: 74 Chairman & Trustee	Since December 1999	Mr. Rebhan retired in December 1993, and prior to that he was President of Hotchkis and Wiley Funds (investment company) from 1985 to 1993.		6	Advisor Series Trust (20 portfolios)
		INTERESTED TRUSTEE3
Michael Curcio Age: 47 Trustee	Since November 2007	Mr. Curcio has been Managing Director, Americas of E*TRADE FINANCIAL since 2002 and President of ETAM since December 2007. He also holds officer or director positions in various other companies in the E*TRADE FINANCIAL organization. Prior to that time, he was Executive Vice President, Customer Relationship Management at TD Waterhouse from January 2002 to September 2002.		6	None
		OFFICER(S) WHO ARE NOT TRUSTEES
Elizabeth Gottfried Age: 48 President	Since March 2006	Ms. Gottfried is Vice President of ETAM. She is also a Senior Director of E*TRADE FINANCIAL and holds officer positions with registered investment advisers that are E*TRADE affiliates. Ms. Gottfried joined E*TRADE in September 2000 and served as Vice President and Treasurer of the Trust before becoming President. Previously, she worked at Wells Fargo Bank from 1984 to 2000 and managed various areas of Wells Fargo’s mutual fund group.		N/A	N/A
Dilia Caballero Age: 37 Secretary and Chief Legal Officer	Since November 2006	Ms. Caballero joined E*TRADE in October 2006 and currently is an Associate General Counsel of E*TRADE Brokerage Services, Inc. She is also Secretary of ETAM and of various other registered investment advisers that are E*TRADE affiliates. Prior to that time, Ms. Caballero practiced law at Dechert LLP from 1997 through 2006 in the firm’s Financial Services Group.		N/A	N/A

E*TRADE Delphi Value Fund — 2008 Annual Report  19

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

	Term of		Number of Port-
	Office and		folios in Fund	Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen	Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee	Held by Trustee
		OFFICERS WHO ARE NOT TRUSTEES (Continued)
Matthew Audette Age: 34 Vice President and Treasurer	Since March 2006	Mr. Audette is Vice President and Chief Financial Officer of ETAM. He also holds other positions at E*TRADE affiliates. He joined E*TRADE in 1999.	N/A	N/A
Tim Williams Age: 59 Chief Compliance Officer	Since February 2005	Mr. Williams is Chief Compliance Officer of ETAM and has general compliance management oversight for the asset management functions of various E*TRADE affiliates. Mr. Williams joined E*TRADE in January 2005. Prior to that he worked at Riggs Bank from 1971 to 2005 where he held various positions involving compliance, audit, risk management, trust operations and trust administration. He was the Chief Compliance Officer of Riggs Investment Advisors Inc. from 1995 to 2005.	N/A	N/A

1	The address of each Trustee and Officer is E*TRADE Funds, 4500 Bohannon Drive, Menlo Park, CA 94025.
2	Each Trustee is elected to serve in accordance with the Trust Instrument and By-laws of the Trust until his or her successor is duly elected and qualified. Each Officer is elected to hold office until his or her successor is elected and qualified to carry out the duties and responsibilities of such office, or until he or she resigns or is removed from office.
3	“Interested person” of the Trust as defined in the Investment Company Act of 1940, as amended, by virtue of his affiliation with ETAM.

The Fund’s statement of additional information includes additional information about the Trustees and is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1.

QUARTERLY PORTFOLIO SCHEDULE

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. This information is available, without charge and upon request, by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Quarterly Holdings”) or by accessing the Fund’s Form N-Q on the Commission’s website at www.sec.gov. The Fund’s Form N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

PROXY VOTING POLICIES AND PROCEDURES

A description of the Fund’s proxy voting policies and procedures is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1. This information is also included in the Fund’s Statement of Additional Information, which is available by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Prospectus” and then “Statement of Additional Information”) and by accessing the Commission’s website at www.sec.gov.

PROXY VOTING RECORD

Information regarding how the Fund voted proxies for portfolio securities during the most recent 12-month period ended June 30 is also available, without charge and upon request, by

1. calling E*TRADE Funds at 1-800-ETRADE-1;

2. visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Proxy Voting Results”); or

3. accessing the Fund’s Form N-PX on the Commission’s website at www.sec.gov.

This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.

20  E*TRADE Delphi Value Fund — 2008 Annual Report

Message to Shareholders

Gloomy Economic Outlook Creates Plenty of Opportunities

     All of us know that 2008 was a very difficult time for the world financial markets and economy. And, despite the aggressive steps taken by federal government, the recession is likely to be the worst since 1973-’75. It may even be deeper and last longer. Businesses are in a very challenging environment. Car sales are anemic and housing inventories remain stubbornly high. Mortgage defaults are rising and layoffs are sending unemployment rolls soaring. Personal and corporate bankruptcies are projected to hit record levels in 2009.

Silver Lining

     We acknowledge that times will be tough in 2009 and beyond. Still, as bad as things are, we think that a lot of the bad news may already be discounted in stock and bond prices. As result, there could be solid investment opportunities unfolding. It’s always helpful to remember that the market is always several steps ahead of the economy and it will start to recover before there is clear evidence of an economic recovery. Times have been tough before in the economy, yet the financial markets have always recovered. One catalyst for a stock recovery could actually be corporate earnings. While corporate earnings were decimated in 2008, the reality is that this also sets the stage for easier comparisons going forward. “Less bad” is typically good for the stock market. Also, stocks are cheap on a variety of valuation metrics, in some cases going back several decades. In addition, low interest rates will spur mortgage applications and refinancings. More TARP money will also help. The surviving financial institutions and other companies should be those with healthier balance sheets. Not only are these companies expected to survive, but they are expected to prosper as the weaker competition falls by the wayside.

Selective Opportunities

     We see 2009 as a stock picker’s market and identifying those winners will be key. In addition, diversifying your money across asset classes with good managers — what we have always strived to do — remains a sound recipe for success. Remember that during normal times, predicting the economy is a difficult game. Today’s volatility makes such a task even more difficult. For this reason, it would be foolish for us to make a major market call. Nonetheless, there are opportunities. Stocks of larger, higher-quality companies seem best positioned to fare relatively well in a challenging economic environment. Larger companies also have the benefit of better valuations.     Treasury bonds have gotten expensive while corporate bonds (including riskier high-yield debt) are now more attractively valued. In short, being opportunistic as certain areas of the fixed-income market become mispriced at both extremes seems like a reasonable course of action.

Time to Say Goodbye — And Thank You

     As you will see in the accompanying Notes to the Fund’s Financial Statements, at the recommendation of E*TRADE Asset Management, Inc., the Fund’s investment adviser, the E*TRADE Funds Board recently voted to liquidate this Fund, as well as the E*TRADE Index Funds, by the end of March. The decision to liquidate these Funds had nothing to do with the Funds’ performance or ratings. When we started the Kobren Growth Fund in 1996, it was primarily to provide an investment option for our clients who maintained accounts that did not meet our minimums for private asset management. At that time, funds of funds were rare and our fund filled a much needed void in the mutual fund landscape. Over the past 13 years, many such funds have been introduced and we feel confident our shareholders will find a suitable alternative. Please note that this decision does not materially impact Kobren Insight Management which continues as a strong, vibrant asset manager serving over 1,000 high net worth individuals and institutions. We greatly appreciate our long-term client’s confidence and loyalty. As we have for the past 20 years, we will continue to manage assets for private clients maintaining a $250,000 minimum account, researching the best portfolio managers in the country and assembling appropriate portfolios for individual client situations. Please continue to stay in touch with us through our web site (www.kobreninsightmanagment.com) and let us know if we can be of service.

Sincerely,

Rusty Vanneman, CFA
Portfolio Manager

E*TRADE Kobren Growth Fund (12/13/08)

*   Historical performance information prior to November 17, 2006 reflects the performance of the Kobren Growth Fund (the “Predecessor Fund”). The Fund acquired all of the assets and assumed all of the liabilities of the Predecessor Fund as of the close of business on November 17, 2006, with the Predecessor Fund exchanging all of its assets for shares of the Fund and the Fund becoming the accounting successor of the Predecessor Fund.

	12 Months			5 Year			10 Year
	Ended			Annualized			Annualized
Total Return (%)	12/31/08			Return			Return
E*TRADE Kobren Growth		- 37.61	%		-1.99	%		1.09	%
S&P 500 Index		-36.99	%		-2.19	%		-1.38	%
Gross Expense Ratio		+1.88	%	Net Expense Ratio				+0.98	%

The gross expense ratio includes “Acquired Fund Fees and Expenses” and excludes the Fund’s contractual expense limitation. The net expense ratio excludes “Acquired Fund Fees and Expenses” and includes the Fund’s contractual expense limitation. The Fund is subject to a contractual expense limitation which will remain in effect until at least April 30, 2009.

Asset Allocation*

Style Allocation*

* As a percentage of total net assets

E*TRADE Kobren Growth Fund (Ticker: KOGRX): This past year was extremely difficult for the economy and markets. With the overall stock market suffering its steepest losses and sharpest volatility since the 1930s, your Fund was not able to avoid the damage.

     While nearly all holdings suffered losses in 2008, the biggest losses came from international funds as overseas markets suffered even larger losses than the United States. However, the relative valuations of foreign stocks compared to their U.S. counterparts made international markets look especially interesting.

     Nonetheless, U.S. stocks will continue to dominate your Fund’s holdings. Each of these holdings had significant losses in 2008. The largest loss among these funds was the long-term holding Longleaf Partners. Given this fund’s concentrated nature, it has had periods of underperformance in the past. Even so, we remain optimistic about this fund and increased our holdings in the fund before year-end. We also increased our positions in exchange-traded funds (ETFs) in 2008, in particular Rydex Russell Top 50 (XLG) and iShares Morningstar Large Value Index Fund (JKF). ETFs are very similar to our other holdings with one exception — they can be traded intra-day during market hours. We bought them, however, for their pure large-cap exposure and low expense ratios.

     Heading into the New Year we remain optimistic in our asset allocation strategy and current fund selections. ņ

Top Ten Holdings*

Security	Sector	Alloc (%)
Rydex Russell Top 50 ETF	Large Cap Blend		22.9
Longleaf Patners Fund	Large Cap Blend		11.5
Edgewood Growth Fund	Large Cap Growth		10.7
Selected American Shares, Inc — Class D	Large Cap Value		9.4
Longleaf Patners Small Cap	Small Cap Value		6.8
Loomis Sayles Bond Fund	Bond		6.0
T. Rowe Price Blue Chip Growth	Large Cap Growth		5.5
iShares Morningstar Large Value Index Fund ETF	Large Cap Value		5.4
Artio International Equity	International		4.6
Hussman Strategic Growth Fund	Alternative		4.5

* As a percent of total net assets

Top Sectors**

**       Equities Only

E*TRADE Asset Management, Inc. is the adviser, Kobren Insight Management, Inc. is the sub-adviser and E*TRADE Securities LLC is the distributor for the Fund. Performance data reflects past performance and is not a guarantee of future returns. Past performance data does not reflect taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares and would have been lower in the absence of fee waivers and expense reimbursements. Portfolio holdings and allocations of the Fund may change at any time. Investment return and principal value will fluctuate with market conditions and shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. To obtain performance information current to the most recent month-end, please visit www.etradefunds.etrade.com or call 1-800-ETRADE-1.

2  E*TRADE Kobren Growth Fund — 2008 Annual report

E*TRADE Kobren Growth Fund
SCHEDULE OF INVESTMENTS
December 31, 2008

			VALUE
	SHARES		(Note 2)
INVESTMENT COMPANIES — 100.1%
LARGE CAP GROWTH — 16.2%
Edgewood Growth Fund(a)		608,657	$	4,674,490
T. Rowe Price Blue Chip Growth Fund		104,385		2,401,890
				7,076,380
LARGE CAP BLEND — 34.4%
Longleaf Partners Fund		320,619		5,030,513
Rydex Russell Top 50 ETF		140,200		10,006,074
				15,036,587
LARGE CAP VALUE — 14.8%
iShares Morningstar Large Value Index Fund, ETF		47,800		2,380,440
Selected American Shares, Inc. — Class D		143,643		4,093,826
				6,474,266
SMALL CAP VALUE — 6.8%
Longleaf Partners Small Cap Fund		204,842		2,986,604
INTERNATIONAL EQUITY — DEVELOPED — 8.4%
Artio International Equity — Class I		81,184		1,994,692
Third Avenue International Value Fund		144,606		1,674,535
				3,669,227
INTERNATIONAL EQUITY — EMERGING — 2.2%
Vanguard Emerging Markets, ETF		40,000		948,000
ALTERNATIVE — 8.6%
Hussman Strategic Growth Fund		159,337		1,948,693
PIMCO All Asset Fund — Class I		180,740		1,823,663
				3,772,356
BOND — 7.2%
Fidelity Strategic Income Fund		59,242		516,588
Loomis Sayles Bond Fund		253,471		2,633,564
				3,150,152
MONEY MARKET — 1.5%
BlackRock Liquidity Funds TempCash Portfolio		645,411		645,411
TOTAL INVESTMENT COMPANIES (COST $51,478,440)				43,758,983
TOTAL INVESTMENTS — 100.1% (COST $51,478,440)				43,758,983
LIABILITIES IN EXCESS OF CASH & OTHER ASSETS — (0.1%)				(30,095	)
NET ASSETS — 100.0%			$	43,728,888

(a)	Non-income producing security.
ETF	Exchange Traded Fund

Summary of inputs used to value the Fund’s net assets as of December 31, 2008 is as follows (See Note 2):

	Investments
Valuation Inputs	in Securities
Level 1 — Quoted Prices	$	43,758,983
Level 2 — Other Significant Observable Inputs		—
Level 3 — Significant Unobservable Inputs		—
Total	$	43,758,983

	VALUE			% OF TOTAL
INVESTMENT COMPANY	(Note 2)			NET ASSETS
LARGE CAP BLEND	$	15,036,587			34.4	%
LARGE CAP GROWTH		7,076,380			16.2	%
LARGE CAP VALUE		6,474,266			14.8	%
ALTERNATIVE		3,772,356			8.6	%
INTERNATIONAL EQUITY — DEVELOPED		3,669,227			8.4	%
BOND		3,150,152			7.2	%
SMALL CAP VALUE		2,986,604			6.8	%
INTERNATIONAL EQUITY — EMERGING		948,000			2.2	%
MONEY MARKET		645,411			1.5	%
LIABILITIES IN EXCESS OF CASH & OTHER ASSETS		(30,095	)		(0.1	)%
	$	43,728,888			100.0	%

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Kobren Growth Fund — 2008 Annual Report  3

E*TRADE Kobren Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2008

ASSETS:
Investments in securities at market value, (Cost $51,478,440) (Note 2)	$	43,758,983
Cash		45,733
Receivable for fund shares purchased		3,524
Dividends and interest receivable		151,347
Due from E*TRADE Asset Management, Inc. (Note 3)		7,592
TOTAL ASSETS		43,967,179
LIABILITIES:
Distribution payable		57,836
Payable for fund shares redeemed		92,431
Accrued advisory fee (Note 3)		21,758
Accrued administration fee (Note 3)		5,439
Trustee fees (Note 3)		144
Audit and tax services		21,900
Printing fees		17,768
Accrued other expenses		21,015
TOTAL LIABILITIES		238,291
TOTAL NET ASSETS	$	43,728,888
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par	$	5,139
Paid-in capital, in excess of par		58,227,657
Accumulated undistributed net investment income		486,059
Accumulated net realized gain (loss) on investments		(7,270,510	)
Net unrealized appreciation (depreciation) of investments		(7,719,457	)
TOTAL NET ASSETS	$	43,728,888
SHARES OUTSTANDING (UNLIMITED AUTHORIZED, PAR VALUE $0.001)		5,138,877
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE	$	8.51

The accompanying notes are an integral part of these Financial Statements.

4  E*TRADE Kobren Growth Fund — 2008 Annual Report

E*TRADE Kobren Growth Fund
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2008

NET INVESTMENT INCOME:
Dividends	$	1,082,253
TOTAL INVESTMENT INCOME		1,082,253
EXPENSES (NOTES 3 and 4):
Advisory fee		384,574
Administration fee		96,144
Sub-administration fee		64,242
Transfer and dividend disbursing agent		28,316
Network fee		16,322
Legal services		25,467
Custodian fees		5,441
Trustee fees		15,442
Registration fees		31,496
Audit and tax services		22,900
Insurance		2,197
Printing		20,719
Other expenses		6,074
TOTAL EXPENSES BEFORE REIMBURSEMENT AND REDUCTION		719,334
Reimbursed expenses (Note 3)		(78,378	)
Other reductions (Note 3)		(2,096	)
NET EXPENSES		638,860
NET INVESTMENT INCOME		443,393
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Sale of investments		(7,884,177	)
Short-term capital gain distributions received		42,703
Long-term capital gain distributions received		680,297
Net change in unrealized appreciation (depreciation) of:
Investments		(21,120,378	)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		(28,281,555	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(27,838,162	)

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended December 31,
	2008			2007
NET INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income	$	443,393		$	863,041
Net realized gain (loss) on sale of investments		(7,884,177	)		1,140,075
Short-term capital gain distributions received		42,703			230,233
Long-term capital gain distributions received		680,297			2,884,917
Net change in unrealized appreciation (depreciation) of investments		(21,120,378	)		(302,890	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(27,838,162	)		4,815,376
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income		—			(1,226,153	)
Net realized gain on investments		(2,572,092	)		(4,688,512	)
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(2,572,092	)		(5,914,665	)
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE TRANSACTIONS (NOTE 6)		(5,492,164	)		3,122,146
NET INCREASE (DECREASE) IN NET ASSETS		(35,902,418	)		2,022,857
NET ASSETS:
BEGINNING OF PERIOD		79,631,306			77,608,449
END OF PERIOD(1)	$	43,728,888		$	79,631,306

⁽¹⁾ Includes accumulated undistributed net investment income of $486,059 and $0 for the years ended December 31, 2008 and 2007, respectively.

The accompanying notes are an integral part of these Financial Statements.

E*TRADE Kobren Growth Fund — 2008 Annual Report   5

E*TRADE Kobren Growth Fund
FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout each Period

	Year Ended December 31,
	2008			2007			2006			2005(1)			2004(1)
NET ASSET VALUE, BEGINNING OF PERIOD	$	14.49		$	14.71		$	14.42		$	14.02		$	12.69
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment income (2) (3)		0.09			0.17			0.16			0.12			0.08
Short-term capital gain distributions received		0.01			0.04			0.07			0.04			0.03
Net realized and unrealized gain (loss) on investments		(5.55	)		0.72			1.72			0.99			1.29
TOTAL FROM INVESTMENT OPERATIONS		(5.45	)		0.93			1.95			1.15			1.40
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income		—			(0.24	)		(0.27	)		(0.17	)		(0.07	)
Net realized gain on investments		(0.53	)		(0.91	)		(1.39	)		(0.58	)		—
TOTAL DISTRIBUTIONS TO SHAREHOLDERS		(0.53	)		(1.15	)		(1.66	)		(0.75	)		(0.07	)
NET ASSET VALUE, END OF PERIOD	$	8.51		$	14.49		$	14.71		$	14.42		$	14.02
TOTAL RETURN (4)		(37.61	)%		6.24	%		13.54	%		8.22	%		11.05	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)	$	43,729		$	79,631		$	77,608		$	66,605		$	56,843
Ratio of total expenses before reimbursement and reduction to average net assets (5)		1.12	%		1.07	%		1.08	%		1.12	%		1.16	%
Ratio of net expenses to average net assets (5)		1.00	%		0.98	%		0.98	%		0.98	%		0.98	%
Ratio of net investment income to average net assets (3)		0.69	%		1.06	%		1.07	%		0.93	%		0.63	%
Portfolio turnover rate		59	%		35	%		49	%		29	%		30	%

(1)	Predecessor Fund. See Note 1.
(2)	Recognition of net investment income (loss) by the Fund is affected by the timing of the declaration of dividends by underlying investment companies in which the Fund invests.
(3)	Net investment income (loss) would have been lower (greater) in the absence of fee waivers and expense reimbursements.
(4)	Total return represents aggregate total return for the period indicated and would have been lower in the absence of fee waivers and expense reimbursements and assumes reinvestment of all distributions.
(5)	Does not include expenses of the investment companies in which the Fund invests.

The accompanying notes are an integral part of these Financial Statements.

6  E*TRADE Kobren Growth Fund — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS
December 31, 2008

1. ORGANIZATION

The E*TRADE Kobren Growth Fund (the “Fund”) is a series of the E*TRADE Funds (the “Trust”), which was organized on November 4, 1998 as a Delaware statutory trust. Prior to November 17, 2006, the Fund was a series of the Kobren Insight Funds, which was organized on September 13, 1996 as a Massachusetts business trust (the “Predecessor Fund”). On November 17, 2006, the Predecessor Fund exchanged all of its assets for shares of the Fund and the Fund became the legal and accounting successor of the Predecessor Fund (the “Reorganization”). The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a no-load, open-end diversified management investment company. As of December 31, 2008, the Trust offered shares of six funds, E*TRADE S&P 500 Index Fund, E*TRADE International Index Fund, E*TRADE Russell 2000 Index Fund, E*TRADE Technology Index Fund, E*TRADE Kobren Growth Fund and E*TRADE Delphi Value Fund. Information presented in these financial statements pertains only to the E*TRADE Kobren Growth Fund. Information with regard to the other series of the Trust can be found in separate financial statements at www.etradefunds.etrade.com.

The Fund’s investment objective is long-term growth of capital primarily through capital appreciation and (secondarily) through income. Additionally, the goal of the Fund is to exhibit a “volatility” level over a full market cycle approximating that of the Standard & Poor’s Composite Stock Price Index (“S&P 500^TM Index”). The Fund seeks to achieve its investment objective by investing primarily in shares of other investment companies (“underlying funds”), but also may invest directly in securities that are suitable investments for the Fund.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies that are followed by the Fund in the preparation of its financial statements and are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to establish estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

The underlying funds are valued according to their stated net asset value or, if their net asset value is not reported, at their fair value. The Fund’s other investment securities, if any, are valued at the last reported sale price on the securities or commodities exchange on which such securities are primarily traded. If there is no sale that day, then the value will be based on the most recent bid prices. If market quotations or official closing prices are not readily available or are determined not to accurately reflect the current value of the securities, such securities are valued at fair value as determined in good faith under procedures established by the Board of Trustees of the Trust (“Board”). To the extent that the Fund has portfolio securities that are primarily listed on foreign exchanges that trade on days when the Fund does not price its shares, the value of the securities held by the Fund and accordingly, its net asset value may change on days when shareholders will not be able to purchase or redeem the Fund’s shares. In this regard, the Board has approved the use of certain independent pricing services in determining the fair value of foreign securities that are principally traded in foreign markets when events reasonably determined to be significant occur subsequent to the close of such foreign markets and prior to the time the Fund’s NAV is determined. The fair value of such foreign securities are determined by the Fund (with the assistance of independent pricing services) using correlations between the movement of prices of the foreign securities and indices of domestic securities and other appropriate indicators. Unlike the closing price of a security on a foreign exchange, fair value determinations employ elements of judgment and the fair value assigned to a security may not represent the actual value that the Fund could obtain if it were to sell a security at the time of the close of the New York Stock Exchange. Investments in short-term debt securities that mature in 60 days or less are valued at amortized cost, which approximates fair market value, based on valuation procedures approved by the Board.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurement, which is effective for financial statements issued for fiscal years beginning after November 15, 2007. This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The Fund has adopted FAS 157 as of January 1, 2008. The three levels of the fair value hierarchy under FAS 157 are described below:

• Level 1 — quoted prices in active markets for identical securities

• Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. A summary of the inputs used to value the Fund’s net assets as of December 31, 2008 is included with the Schedule of Investments.

E*TRADE Kobren Growth Fund — 2008 Annual Report   7

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on the date the securities are purchased or sold (trade date). Revenue is recognized as follows: dividend income is recognized on the ex-dividend date and interest income is recorded on an accrual basis. Realized gains and losses on sales of securities are calculated on the identified cost basis.

Expenses attributable to a single fund of the Trust are charged to that fund. Expenses of the Trust not attributable to a single fund are charged to each fund in proportion to the average net assets of each fund in the Trust or other appropriate allocation methods.

DISTRIBUTIONS TO SHAREHOLDERS

The Fund intends to declare and pay dividends from net investment income annually. The Fund will distribute net realized capital gains (including net short-term capital gains), if any, annually, unless offset by any available capital loss carryforward. Additional distributions of net investment income and capital gains for the Fund may be made in order to avoid the application of a 4% non-deductible excise tax on certain undistributed amounts of ordinary income and capital gains.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP. These differences are due primarily to the redesignation of income distributions to gain distributions. The tax character and amount of distributions paid during 2008 and 2007 were as follows:

Distributions Paid in 2008			Distributions Paid in 2007
Ordinary	Long-Term		Ordinary		Long-Term
Income*	Capital Gains		Income		Capital Gains
$   37	$	2,572,055	$	1,212,677	$	4,701,988

As of December 31, 2008, the components of distributable earnings on a tax basis were as follows:

			Net			Undistributed
Accumulated Capital	Undistributed		Unrealized			Long-Term
and Other Losses	Ordinary Income*		Depreciation			Capital Gains	Total
$(7,065,205)	$	486,059	$	(7,924,762	)	$ —	$(14,503,908)

* For tax purposes, short-term capital gain distributions are considered ordinary income.

FEDERAL INCOME TAXES

The Fund is treated as a separate entity of the Trust for federal income tax purposes. It is the Fund’s intention to continue to qualify annually as a regulated investment company under the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute annually all of its taxable net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provisions are required.

As of December 31, 2008, for federal income tax purposes, the Fund has capital loss carryforwards of $1,508,851, which will expire at December 31, 2016. Capital loss carryforwards are available to offset future capital gains of the Fund until the expiration date.

For the year ended December 31, 2008, the Fund elected to defer capital losses of $5,556,354 attributable to post-October losses.

At December 31, 2008, the cost of investments for federal income tax purposes was $51,683,745. Net unrealized depreciation aggregated $7,924,762, of which $8,887,364 represented gross unrealized depreciation on securities and $962,602 represented gross unrealized appreciation on securities.

The Trust is subject to FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, a clarification of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 establishes financial accounting and disclosure requirements for recognition and measurement of tax positions taken or expected to be taken on an income tax return. Adoption of FIN 48 was required for fiscal years beginning after December 15, 2006 and is applied to all open tax years as of the effective date. The Fund analyzed its tax positions taken on federal income tax returns for all open tax years (tax years ended December 31, 2005 through 2008) for purposes of FIN 48 and concluded that no provision for income tax was required in its financial statements.

8  E*TRADE Kobren Growth Fund — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

RECLASSIFICATION OF CAPITAL ACCOUNTS

In order to present undistributed net investment income and accumulated net realized gain (loss) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments of $42,666 and $(42,666) were made on December 31, 2008 to undistributed net investment income and accumulated net realized gain (loss) on investments, respectively. These adjustments were related to short-term capital gain dividends reclassified as ordinary income. The difference between book and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Trust enters into contracts on behalf of the Fund that contain a variety of provisions for general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that are not known at this time. However, based on experience, the Fund believes the risk of loss is remote.

ADDITIONAL ACCOUNTING STANDARDS

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about a fund’s derivative and hedging activities. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund’s financial statement disclosures, if any.

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

Effective November 17, 2006, E*TRADE Asset Management, Inc. (“ETAM”) became the Fund’s investment adviser. ETAM is a wholly-owned subsidiary of E*TRADE FINANCIAL Corporation (“E*TRADE FINANCIAL”). Pursuant to the Investment Advisory Agreement, the Fund has agreed to pay ETAM a monthly advisory fee at the annual rate of 0.60% of the Fund’s average daily net assets. ETAM serves as the Fund’s administrator and shareholder services agent pursuant to an Administrative Services Agreement with the Trust, on behalf of the Fund. For its services, ETAM receives an administrative services fee of 0.15% of the Fund’s average daily net assets.

Kobren Insight Management, Inc. (“KIM”), serves as the Fund’s sub-adviser pursuant to an agreement with ETAM. ETAM pays KIM a monthly sub-advisory fee at the annual rate of 0.50% of the Fund’s average daily net assets. The Fund is not responsible for paying KIM’s sub-advisory fee.

ETAM has entered into an expense limitation agreement with the Trust for the Fund (the “Expense Limitation Agreement”). The Expense Limitation Agreement will continue through at least April 30, 2009. There is no guarantee that the Expense Limitation Agreement will continue after this date. Pursuant to the Expense Limitation Agreement, ETAM has agreed to waive or limit its fees and to assume certain other expenses of the Fund so that, on an annualized basis, the total annual fund operating expenses of the Fund (other than interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with U.S. GAAP, expenses borne by the Fund as a result of investing in any underlying fund, “Acquired Fund Fees and Expenses” (as interpreted by the U.S. Securities and Exchange Commission (the “Commission”) from time to time), annual account maintenance fees (if applicable as described in the Prospectus), and extraordinary fees and expenses not incurred in the ordinary course of the Fund’s business) do not exceed 1.00% of the Fund’s average daily net assets.

The Fund may, at a later date, reimburse ETAM the fees waived or limited and any other expenses assumed and paid by ETAM pursuant to the Expense Limitation Agreement provided that, among other things, the Fund has reached a sufficient size to permit such reimbursement to be made without causing the total annual expense ratio of the Fund to exceed the current percentage limit stated above. No reimbursement by the Fund will be made unless: (i) the Fund’s total annual expense ratio is less than the percentage stated above and (ii) the payment of such reimbursement has been approved by the Trust’s Board on a quarterly basis. The total amount of reimbursement to which ETAM may be entitled will equal, at any time, the sum of (i) all fees previously waived or reduced by ETAM and (ii) all other payments previously remitted by ETAM to the Fund in accordance with the Expense Limitation Agreement during any of the previous three (3) fiscal years, less any reimbursement that the Fund has previously paid to ETAM with respect to (a) such fees previously waived or reduced and (b) such other payments previously remitted by ETAM to the Fund. Approximately $137,406 was eligible for reimbursement as of December 31, 2008, with $1,664 expiring in 2009, $57,364 expiring in 2010 and $78,378 expiring in 2011. The expenses reimbursed by the previous adviser prior to the Reorganization were not eligible for the reimbursement.

E*TRADE Securities LLC (“E*TRADE Securities”), a subsidiary of E*TRADE FINANCIAL, serves as the principal underwriter of the Fund’s shares and bears all distribution costs. No distribution fees are paid by the Fund. Pursuant to the Fund’s Investment Advisory Agreement, any 12b-1 payments, service fees or revenue sharing payments received by ETAM or its affiliates with respect to shares of any underlying fund held by the Fund will be applied against the

E*TRADE Kobren Growth Fund — 2008 Annual Report  9

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

advisory fees owed to ETAM by the Fund, thereby reducing the amount of advisory fee paid by the Fund to ETAM. The Fund pays a portion of the costs of participation in various network programs, including the program sponsored by E*TRADE FINANCIAL.

For the year ended December 31, 2008, expense reimbursements and other reductions were as follows:

Expenses Reimbursed By Investment Adviser	Other Reductions(1)
$78,378	$	2,096

⁽¹⁾ Reimbursements to the Fund from underlying fund fees described above.

Each member of the Board who is not an “interested person” of the Trust (as defined in the 1940 Act) (“Independent Trustees”) receives from the Trust an annual fee (payable in quarterly installments) of $30,000 for his or her service as an Independent Trustee (including participation in all Committee meetings) plus an additional fee of: (i) $2,500 for each Board meeting attended, and (ii) $1,500 for each telephonic Board meeting attended. The Chairman receives additional compensation of $4,000 and the Chairperson of the Audit Committee is paid an additional $2,000 per year for his or her services in such capacity.

Each Independent Trustee is reimbursed for all reasonable and necessary expenses associated with his or her service as an Independent Trustee, including travel and other expenses incurred in connection with attendance at Board and Committee meetings. The Trust does not compensate its officers or Trustee who are affiliated with ETAM.

4. AGREEMENTS AND OTHER TRANSACTIONS WITH NON-AFFILIATES

PNC Global Investment Servicing (U.S.) Inc., formerly known as PFPC Inc., serves as sub-administrator, transfer agent and dividend-disbursing agent for the Fund. PFPC Trust Company provides custodial services to the Fund.

5. INVESTMENT PORTFOLIO TRANSACTIONS

The aggregate amounts of purchases and sales of the Fund’s investment securities, other than short-term securities, for the year ended December 31, 2008, were $37,623,530 and $41,901,762 of non-governmental issues, respectively.

6. SHARES OF BENEFICIAL INTEREST

As of December 31, 2008, an unlimited number of shares of beneficial interest, par value $0.001, were authorized for the Trust. Changes in shares of beneficial interest for the Fund for the years ended December 31, 2008 and 2007 were as follows:

	Year Ended						Year Ended
	December 31, 2008						December 31, 2007
	Shares			Amount			Shares			Amount
Shares sold		579,717		$	7,341,429			836,567		$	12,890,081
Shares issued as reinvestment of distributions		294,207			2,503,415			328,953			4,789,552
Shares redeemed		(1,229,358	)		(15,337,008	)		(946,536	)		(14,557,487	)
Net increase (decrease)		(355,434	)	$	(5,492,164	)		218,984		$	3,122,146

At December 31, 2008, KIM and its affiliates owned 1,040,844 shares of the Fund representing 20.3% of the total outstanding shares.

7. RISK FACTORS OF THE FUND

Indirectly investing in underlying funds through the Fund involves additional and duplicative expenses and certain tax results that would not be present if an investor were to make a direct investment in the underlying funds. The Fund, together with any “affiliated persons” (as such term is defined in the 1940 Act), may purchase only up to 3% of the total outstanding securities of an underlying fund. Accordingly, when the Trust, ETAM, KIM or their affiliates hold shares of any of the underlying funds, the Fund’s ability to invest in shares of such underlying funds may be restricted, and KIM must then, in some instances, select alternative investments for the Fund.

10  E*TRADE Kobren Growth Fund — 2008 Annual Report

NOTES TO FINANCIAL STATEMENTS
December 31, 2008 (Continued)

8. SUBSEQUENT EVENTS (Unaudited)

Resignation of Eric Kobren. Eric M. Kobren, primary Portfolio Manager of the Fund, resigned from his positions at Kobren Insight Management, Inc. and as primary Portfolio Manager of the Fund on February 1, 2009. John Russel (Rusty) Vanneman, the Fund’s Co-Portfolio Manager since 2001, became Portfolio Manager of the Fund on February 1, 2009.

Liquidation of the Fund. Upon the recommendation of ETAM, the Board of Trustees of the Trust has approved the liquidation of the Fund to take place on a date no later than March 27, 2009 (the “Liquidation Date”). On the Liquidation Date, the Fund will automatically redeem all of its outstanding shares at the net asset value of such shares after provision for all charges, expenses and liabilities of the Fund. ETAM has agreed to pay all liquidation related expenses other than brokerage expenses. Liquidation proceeds will be paid entirely in cash.

Shares of the Fund may no longer be purchased as of the close of business on February 23, 2009. Shareholders may continue to redeem their shares up to the Liquidation Date and any account maintenance fees or redemption fees are being waived as of the close of business on February 23, 2009.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of
E*TRADE Funds and
Shareholders of:
E*TRADE Kobren Growth Fund

We have audited the accompanying statement of assets and liabilities of the E*TRADE Kobren Growth Fund, a series of E*TRADE Funds (the “Trust”), including the schedule of investments, as of December 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2004 have been audited by other auditors, whose report dated February 11, 2005 expressed an unqualified opinion on such financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the E*TRADE Kobren Growth Fund, as of December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania	TAIT, WELLER & BAKER LLP
February 9, 2009

E*TRADE Kobren Growth Fund — 2008 Annual Report  11

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008

DISCLOSURE OF FUND EXPENSES/SHAREHOLDER FEE EXAMPLE

We believe it is important for you to understand the impact of fees regarding your investment. All mutual funds have expenses and as a shareholder of a mutual fund, you can incur two types of expenses (1) transaction expenses; and (2) ongoing expenses, including management fees, distribution and/or service (12b-1) fees; and other fund expenses such as for shareholder reports (like this one). A fund’s expenses directly reduce the investment return of the fund. A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. This Example is intended to help you understand the ongoing fees (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on a $1,000 investment made at the beginning of the period and held for the entire period from July 1, 2008 to December 31, 2008. The Fund does not assess a sales load or Rule 12b-1 fee.

This table illustrates the Fund’s expenses in two ways:

Actual Fund Return: This section helps you to estimate the actual expenses, after any applicable fee waivers, that you paid over the period. The “Ending Account Value” shown is derived from the Fund’s actual return for the six month period, the “Expense Ratio” column shows the period’s annualized expense ratio, and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund at the beginning of the period.

You may use the information here, together with your account value, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your Fund in the first line under the heading entitled “Expenses Paid During Period”.

Hypothetical 5% Return: This section is intended to help you compare the Fund’s costs with those of other mutual funds based on the Fund’s actual expense ratio and an assumed rate of 5% per year before expenses, which is not the Fund’s actual return. In this case, because the return used is not the Fund’s actual return, the results do not apply to your investment. This example is useful in making comparisons to other mutual funds because the SEC requires all mutual funds to calculate expenses based on an assumed 5% annual return. You can assess your Fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the hypothetical 5% return is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account		Ending Account		Expense			Expenses Paid
	Value 07/01/08		Value 12/31/08		Ratio (1)			During Period (2)
Actual Fund Return	$	1,000	$	688.00		1.00	%	$	4.24
Hypothetical 5% Return	$	1,000	$	1,020.11		1.00	%	$	5.08

(1)	Annualized, based on the Fund’s most recent fiscal half-year expenses.
(2)	Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 366.

TAX INFORMATION

During the year ended December 31, 2008, the Fund declared long-term capital gain distributions of $2,572,055.

All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

12  E*TRADE Kobren Growth Fund — 2008 Annual Report

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

TRUSTEES’ APPROVAL/RENEWAL OF INVESTMENT ADVISORY CONTRACTS

At a meeting held on September 18, 2008, the Board unanimously approved the renewal of the Investment Advisory Agreement between the Trust and ETAM for the Fund and approved the renewal of the Investment Sub-Advisory Agreement among the Trust, ETAM and KIM for KIM to provide subadvisory services to the Fund.

In connection with these approvals, the Board, including the Independent Trustees of the Board, reviewed various factors including: (1) the nature, extent and quality of services provided to the Fund by ETAM and KIM; (2) the fees paid by the Fund to ETAM (and indirectly to KIM) and the contractual limitations on the Fund’s expense ratios provided by ETAM; (3) the cost of the services provided and the profits realized by ETAM, KIM and their affiliates from their relationship to the Fund; (4) comparative investment performance information for the Fund; (5) the extent to which economies of scale are realized or will be realized for the benefit of shareholders of the Fund as the Fund grows; and (6) any benefits that are derived or expected to be derived by ETAM, KIM or their affiliates from their relationship with the Fund. All factors were applied to the Fund. The Board, assisted by the advice of counsel to the Independent Trustees, considered a broad range of information regarding the Fund, including the factors described above. However, no single factor was determinative. Rather, it was the totality of the circumstances that drove the Board’s decisions. Below is a discussion of these factors as they applied to the Board’s consideration of the two agreements.

NATURE, EXTENT AND QUALITY OF SERVICES.

The Board members discussed the nature, extent and quality of the investment advisory services provided by ETAM and its affiliates to the Fund, as detailed in materials provided by ETAM, including ETAM’s role in evaluating and supervising the investment advisory activities of KIM, monitoring the performance of the Fund compared to its benchmark and other comparable funds, assessing the stock selection techniques used by KIM, and reviewing reports from, and conducting periodic due diligence reviews of, KIM. The Board noted the breadth and quality of services provided by the Trust’s Chief Compliance Officer, which were paid for by ETAM and not by the Fund. The Board also noted the additional duties ETAM assumed during the year to establish and supervise the Fund’s securities lending program and the support services for the Fund’s anti-money laundering program. The Board members also discussed the nature, extent and quality of the sub-advisory services provided by KIM, including the investment process and techniques used by KIM in managing the Fund’s assets in accordance with its investment objective, investment policies and restrictions, and the qualifications of KIM’s investment personnel dedicated to providing sub-advisory services to the Fund. The Board also reviewed KIM’s organizational structure. The Board considered that Eric M. Kobren would be resigning his positions at KIM and ETAM, including his position as portfolio manager of the Fund, effective February 1, 2009, but noted that KIM had an appropriate succession plan in place and that John Russel (Rusty) Vanneman, who has served as co-portfolio manager of the Fund since 2001, would remain as the portfolio manager of the Fund. Based on this review, the Board determined that ETAM and KIM had provided and would continue to provide satisfactory advisory and sub-advisory services to the Fund. The Board members also considered information on the Fund’s investments in other investment companies. Based on the information provided, the Board also determined that the Fund’s advisory fee was based on services that are in addition to, rather than duplicative of, the services provided under the advisory contracts of the other investment companies in which the Fund invests.

FEES AND EXPENSES.

The Board discussed the advisory fees paid by the Fund to ETAM (and indirectly to KIM) and the contractual expense limitations and fee waivers to which ETAM had agreed for the Fund. At the outset, the Board members considered and discussed the comparative expense data provided to them by ETAM. The Board noted that the Fund’s advisory fees and expense ratio were below the median and the average of its peer group and considered information provided by KIM to the Fund as to its strategy of generally investing in lower-expense funds. The Board noted that ETAM paid KIM for their services to the Fund and that ETAM’s agreement to limit expenses of the Fund had resulted in a reduction of the Fund’s expense ratio. The Board further noted the commitment of E*TRADE to provide ETAM with necessary and appropriate resources in connection with its services to the Fund. Based on these considerations, the Board concluded that the advisory fees and expense ratios of the Fund were at an appropriate level and competitive with its peers and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

COSTS AND PROFITABILITY.

The Board discussed the costs of the services provided by ETAM (including the fees payable to KIM) and the estimated profits realized by ETAM and KIM from their relationship to the Fund. The Board noted that ETAM has also put in place a contractual expense limitation agreement with respect to the Fund.

E*TRADE Kobren Growth Fund — 2008 Annual Report  13

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

In addition, the Board noted ETAM’s continuing efforts to increase the assets of the Fund and to seek to recognize economies of scale through a careful service provider selection process and negotiations with service providers to reduce and/or limit their fees and expenses. In addition, the Board noted that ETAM had advised the Board that it expects that, provided the assets of the Fund continue to grow, the Fund would remain profitable. The Board concluded that the information regarding the costs of the services provided and the profitability of the Fund supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

COMPARATIVE PERFORMANCE.

The Board reviewed the comparative investment performance of the Fund for the 1-, 3- and 5-year and since-inception periods ended June 30, 2008. The Board noted that the Fund performed near the average of its peer group for each such period. Based on these considerations, the Board concluded that the investment performance of the Fund was adequate and supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

ECONOMIES OF SCALE.

The Board discussed the extent to which economies of scale have been realized or will be realized for the benefit of shareholders of the Fund as the Fund grows. The Board noted that the fee schedule in the Advisory Agreement does not contain asset-based breakpoints. The Board noted that the contractual expense limitation agreement applicable to the Fund enabled shareholders of the Fund to benefit from a lower expense ratio. The Board further noted that it would have the opportunity to reconsider whether fee breakpoints are necessary or appropriate in the future with respect to the Fund as the Fund’s asset levels grow. Based on the information provided, the Board concluded that ETAM’s efforts in limiting the expense ratios of the Fund supported approval of the continuation of the Advisory and Sub-Advisory Agreements.

OTHER BENEFITS TO THE ADVISER AND SUB-ADVISER.

The Board then discussed the benefits that are derived or which may be derived by ETAM, KIM and their affiliates from their relationship with the Fund. While the Board observed that there were no direct fall out benefits to ETAM, KIM or their affiliates from their relationship to the Fund (other than the fees received by ETAM pursuant to Shareholder Services Agreements), the Board noted that the relationship between the Fund and ETAM (and its affiliates), or between the Fund and KIM (and its affiliates), may indirectly benefit ETAM, KIM or their affiliates by potentially attracting clients and/or customers to other products and services offered by them. In this regard, the Board noted the indirect fall out benefits to E*TRADE that may result from using the Fund as a “marketing tool” to bring other assets into E*TRADE and add to the variety of investment choices provided by E*TRADE to its customers. The Board also noted that KIM does not use soft dollars in connection with the management of the Fund, and that ETAM does not use soft dollars.

14  E*TRADE Kobren Growth Fund — 2008 Annual Report

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

TRUSTEES AND OFFICERS

The Board has the responsibility for the overall management of the Trust, including general supervision and review of the Fund’s investment activities and conformity with Delaware Law and the stated policies of the Fund. The Board elects the officers of the Trust who are responsible for administering the Fund’s day-to-day operations. Trustees and officers of the Trust, together with information as to their principal business occupations during the last five years, and other information are shown below as of December 31, 2008. The Trust consists of six active series.

	Term of		Number of Port-
	Office and		folios in Fund		Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen		Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee		Held by Trustee
		INDEPENDENT TRUSTEES
Cheryl A. Burgermeister Age: 57 Trustee	Since February 2004	Ms. Burgermeister is Trustee, Treasurer and Finance Committee Chairman of the Portland Community College Foundation since 2001. She was a Trustee of the Zero Gravity Internet Fund from 2000 to 2001. She was a Director and Treasurer of the Crabbe Huson family of funds from 1988-1999.		6	The Select Sector SPDR Trust (9 portfolios)
Arthur Dubroff Age: 58 Trustee	Since August 2006	Mr. Dubroff is the Managing Principal of Turnberry Consulting, LLC from February 2002 to present. He served as Chief Financial Officer of Net2Phone, Inc., a provider of Voice over Internet Protocol telephone services, from November 2002 to May 2006. He also served as Chief Financial Officer of Virtual Communities, Inc., a software provider, from July 2000 to December 2007.		6	None
Steven Grenadier Age: 44 Trustee	Since February 1999	Mr. Grenadier is a Professor of Finance at the Graduate School of Business at Stanford University, where he has been employed as a professor since 1992.		6	Nicholas-Applegate Institutional Funds (13 portfolios); AQR Funds (8 portfolios)
George J. Rebhan Age: 74 Chairman & Trustee	Since December 1999	Mr. Rebhan retired in December 1993, and prior to that he was President of Hotchkis and Wiley Funds (investment company) from 1985 to 1993.		6	Advisor Series Trust (20 portfolios)
		INTERESTED TRUSTEE3
Michael Curcio Age: 47 Trustee	Since November 2007	Mr. Curcio has been Managing Director, Americas of E*TRADE FINANCIAL since 2002 and President of ETAM since December 2007. He also holds officer or director positions in various other companies in the E*TRADE FINANCIAL organization. Prior to that time, he was Executive Vice President, Customer Relationship Management at TD Waterhouse from January 2002 to September 2002.		6	None
		OFFICER(S) WHO ARE NOT TRUSTEES
Elizabeth Gottfried Age: 48 President	Since March 2006	Ms. Gottfried is Vice President of ETAM. She is also a Senior Director of E*TRADE FINANCIAL and holds officer positions with registered investment advisers that are E*TRADE affiliates. Ms. Gottfried joined E*TRADE in September 2000 and served as Vice President and Treasurer of the Trust before becoming President. Previously, she worked at Wells Fargo Bank from 1984 to 2000 and managed various areas of Wells Fargo’s mutual fund group.		N/A	N/A
Dilia Caballero Age: 37 Secretary and Chief Legal Officer	Since November 2006	Ms. Caballero joined E*TRADE in October 2006 and currently is an Associate General Counsel of E*TRADE Brokerage Services, Inc. She is also Secretary of ETAM and of various other registered investment advisers that are E*TRADE affiliates. Prior to that time, Ms. Caballero practiced law at Dechert LLP from 1997 through 2006 in the firm’s Financial Services Group.		N/A	N/A

E*TRADE Kobren Growth Fund — 2008 Annual Report  15

ADDITIONAL INFORMATION (Unaudited)
December 31, 2008 (Continued)

	Term of		Number of Port-
	Office and		folios in Fund	Other Trusteeships/
Name, Address1, Age and	Length of		Complex Overseen	Directorships
Position(s) with Trust	Time Served2	Principal Occupation(s) During Past 5 Years	by Trustee	Held by Trustee
		OFFICERS WHO ARE NOT TRUSTEES (Continued)
Matthew Audette Age: 34 Vice President and Treasurer	Since March 2006	Mr. Audette is Vice President and Chief Financial Officer of ETAM. He also holds other positions at E*TRADE affiliates. He joined E*TRADE in 1999.	N/A	N/A
Tim Williams Age: 59 Chief Compliance Officer	Since February 2005	Mr. Williams is Chief Compliance Officer of ETAM and has general compliance management oversight for the asset management functions of various E*TRADE affiliates. Mr. Williams joined E*TRADE in January 2005. Prior to that he worked at Riggs Bank from 1971 to 2005 where he held various positions involving compliance, audit, risk management, trust operations and trust administration. He was the Chief Compliance Officer of Riggs Investment Advisors Inc. from 1995 to 2005.	N/A	N/A

1	The address of each Trustee and Officer is E*TRADE Funds, 4500 Bohannon Drive, Menlo Park, CA 94025.
2	Each Trustee is elected to serve in accordance with the Trust Instrument and By-laws of the Trust until his or her successor is duly elected and qualified. Each Officer is elected to hold office until his or her successor is elected and qualified to carry out the duties and responsibilities of such office, or until he or she resigns or is removed from office.
3	“Interested person” of the Trust as defined in the Investment Company Act of 1940, as amended, by virtue of his affiliation with ETAM.

The Fund’s statement of additional information includes additional information about the Trustees and is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1.

QUARTERLY PORTFOLIO SCHEDULE

The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. This information is available, without charge and upon request, by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Quarterly Holdings”) or by accessing the Fund’s Form N-Q on the Commission’s website at www.sec.gov. The Fund’s Form N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

PROXY VOTING POLICIES AND PROCEDURES

A description of the Fund’s proxy voting policies and procedures is available, without charge and upon request, by calling E*TRADE Funds at 1-800-ETRADE-1. This information is also included in the Fund’s Statement of Additional Information, which is available by visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Prospectus” and then “Statement of Additional Information”) and by accessing the Commission’s website at www.sec.gov.

PROXY VOTING RECORD

Information regarding how the Fund voted proxies for portfolio securities, during the most recent 12-month period ended June 30, is also available, without charge and upon request, by

1. calling E*TRADE Funds at 1-800-ETRADE-1;

2. visiting the E*TRADE Funds website at www.etradefunds.etrade.com (click on “Proxy Voting Results”); or

3. accessing the Fund’s Form N-PX on the Commission’s website at www.sec.gov.

This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.

16  E*TRADE Kobren Growth Fund — 2008 Annual Report

Item 2. Code of Ethics.

E*TRADE Funds (“Funds” or “Registrant”) has adopted a code of ethics that applies to the Registrant’s President and Treasurer. No waivers have been granted or approved during the period covered by this report. The only amendments made to the code during the period were to update Appendix A’s list of Executive Officers.

The code of ethics is attached hereto as Exhibit 12(a)(1).

Item 3. Audit Committee Financial Expert.

The Funds’ Board of Trustees (“Board”) has determined that the Funds have at least one Audit Committee Financial Expert (“ACFE”) serving on the Funds’ Audit Committee. On November 16, 2004, the Board determined that Cheryl A. Burgermeister should be the Funds’ “ACFE,” and was “independent” (as each term in defined in Item 3 of Form N-CSR). Ms. Burgermeister, also an Independent Trustee, has acquired the attributes of an ACFE as a result of, among other things, her position as treasurer and finance committee chairman of a community college foundation. Ms. Burgermeister is also a certified public accountant. The Board reviews the ACFE designation on an annual basis.

A person who is determined to be an ACFE will not be deemed an “expert” for any purpose, including without limitation for purposes of Section 11 of the Securities Act of 1933, as amended, as a result of being designated or identified as an ACFE pursuant to this Item. The designation or identification of a person as an ACFE pursuant to this Item does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the Audit Committee and Board in the absence of such designation or identification. The designation or identification of a person as an ACFE pursuant to this Item does not affect the duties, obligations, or liability of any other member of the Audit Committee or Board.

Item 4. Principal Accountant Fees and Services.

Audit Fees

(a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial

statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are as follows:

2008: $109,800
2007: $104,400

Audit-Related Fees

(b) There were no aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the Registrant’s financial statements and that were not reported under paragraph (a) of this Item.

Tax Fees

(c)	The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are as follows:
	2008: $16,200 2007: $15,600
	The nature of the services includes the review of the preparation of and execution as preparer of the Funds’ State and Federal Tax returns and income and excise tax returns.

All Other Fees

(d) None.

(e)(1)

Audit Committee Pre-Approval Policies and Procedures

Pursuant to the Funds’ Audit Committee Charter (“Charter”), the Audit Committee is responsible for approving in advance the firm to be employed as the Funds’ independent registered public accounting firm. In addition, the Charter provides that the Audit Committee is responsible for approving any and all proposals by the Funds, its investment adviser (not including any unaffiliated sub-adviser whose role is primarily portfolio management and that is subcontracted or overseen by the investment adviser to the Funds) and any entity controlling, controlled by, or under common control with the investment adviser that provides services to the Funds to employ the independent registered public accounting firm to render permissible non-audit services to such entity, provided those permissible non-audit services relate directly to the operations and financial reporting of the Funds. In determining whether to pre-approve non-audit services, the Audit Committee considers whether such services are consistent with the independent registered public accounting firm’s independence. The Charter further permits the Audit Committee to delegate to the Chairperson and one or more of its

	members authority to pre-approve permissible non-audit services to the Funds, provided that any pre-approval determination of a delegate be presented to the full Audit Committee at its next meeting.
	Pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X, pre-approval is required for non-audit services billed by the Funds’ independent registered public accounting firm to the Funds’ investment adviser (not including any sub-adviser whose role is primarily portfolio management and that is subcontracted or overseen by the investment adviser to the Funds), and any other entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Funds if the services relate directly to the operations and financial reporting of the Funds.
	Pre-approval of any permissible non-audit service is not required provided that (1) the aggregate amount paid to the independent registered public accounting firm for such non-audit services during the fiscal year in which such non-audit services are provided does not constitute more that five percent of the total amount of fees charged by the independent registered public accounting firm with respect to audit services for the Funds and permissible ongoing non-audit services for the Funds or any investment adviser to the Funds (not including any sub-adviser whose role is primarily portfolio management and that is subcontracted or overseen by the investment adviser to the Funds) and any entity controlling, controlled by, or under common control with such investment adviser that provides services to the Funds, (2) such services were not recognized by the Funds at the time of engagement to be non-audit services, and (3) such services are promptly brought to the attention of the Audit Committee of the Funds and approved prior to the completion of the audit by the Audit Committee or its delegate(s).
(e)(2)	None of the services included in (b)-(d) above required pre-approval by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f)	Not applicable.
(g)	None.
(h)	Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

(a)	Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the Report to Shareholders filed under Item 1 of this form.
(b)	Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrant’s Board of Trustees, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

(a)

The Registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1) Code of Ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto.

(a)(2)	Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3)	Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the 1940 Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) E*TRADE Funds

By (Signature and Title)*	/s/ Elizabeth Gottfried Elizabeth Gottfried, President
	(Principal Executive Officer)
Date  February 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the 1940 Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By (Signature and Title)*	/s/ Elizabeth Gottfried Elizabeth Gottfried, President
	(Principal Executive Officer)
Date  February 27, 2009
By (Signature and Title)*	/s/ Matthew Audette Matthew Audette, Treasurer
	(Principal Financial Officer)
Date  February 27, 2009

EX-99.CODE ETH

EX-99.CODE ETH

E*TRADE FUNDS

CODE OF ETHICS – SARBANES-OXLEY

Fund Procedure FP 12

Approved 09-07-06 and last amended on 02-18-09

POLICY

The E*TRADE Funds (“Trust”) expects each officer to adhere to the highest possible standards of honest and ethical conduct. Each officer shall comply with the principles expressed in the Code of Ethics and follow the recordkeeping requirements enumerated therein.

Regulatory References

Rule 17j-1 under the Investment Company Act of 1940, as amended (“1940 Act”)

Sarbanes-Oxley Act of 2002 (“SOX Act”)

E*TRADE FUNDS – CODE OF ETHICS

Pursuant to the Sarbanes-Oxley Act of 2002

     Introduction.

The Board of Trustees (“Board”) has established this Code of Ethics (“Code”) in accordance with the SOX Act and the rules promulgated thereunder. This Code does not supersede or otherwise effect any separate code of ethics that the Trust, E*TRADE Asset Management, Inc. and E*TRADE Securities LLC have adopted pursuant to, among other things, Rule 17j-1 under the 1940 Act, or any other applicable laws, regulations or corporate governance provisions.

This Code is designed to deter wrongdoing and promote:

     honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

     full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trust files with, or submits to, the U.S. Securities and Exchange Commission (“SEC”) and in other public communications made by the Trust or any of its separate series (each a “Fund”);

     compliance with applicable governmental laws, rules, and regulations;

     prompt internal reporting of violations of the Code to an appropriate person or persons; and

     accountability for adherence to the Code.

This Code applies to the Trust’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Trust or a third party (collectively, “Covered Officers”). The Trust’s Covered Officers are those individuals listed in Appendix A, attached hereto.

     Principles of Honest and Ethical Conduct.

     General Objectives.

The Trust expects each Covered Officer to adhere to the highest possible standards of honest and ethical conduct. Each Covered Officer is expected to handle actual or apparent conflicts of interest between personal and professional relationships in a manner that is above reproach and to place the interests of the Trust above the Covered Officer’s own personal interests.

     Conflicts of Interest.

All Covered Officers of the Trust should be scrupulous in avoiding a conflict of interest with the Trust’s interests. A “conflict of interest” occurs when a Covered Officer’s private or personal

interests interfere or may appear to interfere with the best interests of the Trust. It is the duty of each Covered Officer to be aware of and to avoid any transaction, interest, personal activity, or investment that interferes or may appear to interfere with the Covered Officer’s objective execution of his or her duties and responsibilities for the Trust. Under no circumstances should a Covered Officer have any undisclosed or unapproved financial or other business relationship with the Trust or a third party that might impair or might be viewed as impairing the exercise of the Covered Officer’s best judgment with respect to matters involving the Trust.

Examples of possible conflicts of interest might include, but are not limited to:

     Personal Business Transactions. A Covered Officer may not cause the Trust to engage in any business transaction with his or her family members or relatives or utilize the Covered Officer’s relationship with the Trust to cause any third party to engage in any business transaction with his or her family members or relatives.

     Use of Nonpublic or Confidential Information. A Covered Officer may not use nonpublic or confidential information about the Trust or any of its service providers for personal gain by the Covered Officer or his or her family members or relatives (including securities transactions based on such information).

     Outside Employment or Activities. A Covered Officer may not engage in any outside employment or activity that interferes with his or her duties and responsibilities with respect to the Trust or is otherwise in conflict with or prejudicial to the Trust. A Covered Officer must disclose to the Trust’s Compliance Officer (for purposes of administering this Code) any outside employment or activity that may constitute a conflict of interest and obtain the Compliance Officer’s approval before engaging in such employment or activity. The Trust’s Compliance Officer (for purposes of administering this Code) is the person listed in Appendix A to this Code.

     Gifts. A Covered Officer may not accept gifts or other items of more than de minimis value from any person or entity that does, or seeks to do, business with or on behalf of the Trust. In this regard, each Covered Officer should refer to any other applicable procedures regarding accepting or giving gifts that may have been adopted by E*TRADE Financial Corp.

     Corporate Opportunities. A Covered Officer may not exploit for his or her personal gain, or the personal gain of the Covered Officer’s family members or relatives, opportunities that are discovered through the use of Trust property, information, or the Covered Officer’s position, unless the opportunity is first fully disclosed in writing to the Trust’s Board and the Board determines not to pursue such opportunity for the Trust.

     Other Situations. Because other conflicts of interest may arise, it is impractical to attempt to list in this Code all possible situations that could result in a conflict of interest. If a proposed transaction, interest, personal activity, or investment raises any concerns, questions or doubts, a Covered Officer should consult with the Trust’s Compliance Officer before engaging in such transaction or investment or pursuing such interest or activity.

     Reporting.

Any potential conflict of interest must be disclosed and reported by the Covered Officer to the Compliance Officer and resolved before the Covered Officer takes any action.

     Full, Fair, Accurate, Timely, and Understandable Disclosure in Trust Disclosure and Reporting Documents.

As a registered investment company, it is of critical importance that the Trust’s public communications, reports, and SEC filings contain full, fair, accurate, timely, and understandable disclosure. Accordingly, each Covered Officer is expected to consider it central to his or her duties and responsibilities to the Trust to promote full, fair, accurate, timely, and understandable disclosure in the Trust’s public communications and reports, and in the documents that the Trust files with, or submits to, the SEC. In this regard, the Trust has adopted Disclosure Controls and Procedures that, “under the supervision and oversight” of the Covered Officers, are designed to ensure that all information the Trust is required to disclose in its annual and semi-annual reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC under its rules and regulations.

In addition to adhering to the specific requirements set forth in those Disclosure Controls and Procedures and all applicable governmental laws, rules and regulations, each Covered Officer shall exercise the highest standard of care in complying with the Trust’s system of internal accounting controls, and in preparing and providing all necessary information to make the Trust’s public reports, communications, and SEC filings and submissions complete, fair, and understandable.

Accordingly, each Covered Officer must not knowingly misrepresent or cause others to misrepresent facts about the Trust. In addition, each Covered Officer must seek to ensure that all of the Trust’s books, records, accounts and financial information, as well as reports produced from those materials:

     are supported by accurate documentation maintained in reasonable detail;

     are recorded in the proper account and in the proper accounting period;

     do not contain any false or intentionally misleading entries;

     fairly and accurately reflect the transactions or occurrences to which they relate; and

     conform to both the Trust’s system of internal controls, including its Disclosure Controls Procedures, and to all applicable laws, rules and regulations.

Each Covered Officer shall promptly bring to the attention of Trust Counsel or the Board’s Audit Committee any information he or she may have concerning any violation of the provisions of this Code, involving any Trust management, employees or agents thereof who have a significant role in the Trust’s financial reporting, disclosures or internal controls.

     Compliance with Applicable Governmental Laws, Rules and Regulations.

As a registered investment company, the Trust must comply with all applicable federal securities laws and regulations, as well as other applicable laws and regulations. The Trust insists on strict compliance with the spirit and the letter of these laws and regulations. Each Covered Officer must comply with all laws, rules, and regulations applicable to the Trust’s operations and business.

A Covered Officer should seek guidance whenever he or she is in doubt as to the applicability of any law, rule, or regulation with respect to the contemplated course of action. If in doubt on a course of action, a good guideline is “always ask first, act later” — if a Covered Officer is unsure of what to do in any situation, he or she should seek guidance before acting.

Each Covered Officer shall cooperate with Trust Counsel, the Compliance Officer, the Trust’s independent accountants, and the Trust’s other service providers with the goal of maintaining the Trust’s material compliance with applicable laws, rules and regulations.

Each Covered Officer is encouraged to attend courses and seminars for the purpose of keeping apprised of developments relating to those governmental laws, rules, and regulations applicable to the Trust. Each Covered Officer also should consult with the various procedures, guidelines and other related materials which the Trust and its service providers have prepared on specific laws and regulations.

     Prompt Internal Reporting of Violations of the Code; Evaluation of Possible Violations; Determination of Sanctions.

     Reporting to Compliance Officer or Trust Counsel. Each Covered Officer shall promptly bring to the attention of the Compliance Officer any knowledge or information the Covered Officer may have concerning a violation of this Code. If no written report is made by a Covered Officer, the Compliance Officer shall document such receipt of a report by the Compliance Officer of a suspected violation of this Code.

     Evaluation of Reports. The Compliance Officer, in consultation with Trust Counsel, shall determine whether the reported conduct actually violates the Code. If it is determined that there has been a violation of the Code, the Compliance Officer, in consultation with Trust

Counsel, shall determine whether the violation of the Code has had or may have a material adverse impact upon the Trust or any Fund.

     No Material Adverse Impact on the Trust or any Fund. If the Compliance Officer and Trust Counsel determine that the violation has not caused a material adverse impact upon the Trust or any Fund, the Trust Counsel shall determine what sanctions, if any, may be appropriate for the violation.

     Material Adverse Impact on the Trust or any Fund. If the Compliance Officer and Trust Counsel determine that the violation has caused a material adverse impact upon the Trust or any Fund, the Compliance Officer or Trust Counsel shall promptly notify the Board’s Audit Committee of such violation. The Board’s Audit Committee shall be entitled to consult with independent legal counsel to determine whether the violation actually has had a material adverse impact upon the Trust or any Fund and to formulate appropriate actions or sanctions that the Audit Committee, in its business judgment, determines to be necessary or advisable.

     Compliance Reports.

     Quarterly Reports by Covered Officers to Compliance Officer. Each Covered Officer shall provide a written report to the Compliance Officer on a quarterly basis, a form of which is attached hereto as Appendix B, indicating whether the Officer has complied with this Code since the last report submitted by that Covered Officer. The Compliance Officer may rely on such reports when preparing the Compliance Officer’s written report to the Board as required in this Section 6(b) below.

     Quarterly Reports by Compliance Officer to Board. The Compliance Officer shall provide a written report to the Board at each regularly scheduled Board meeting of any and all violations of this Code (whether or not they caused a material adverse impact upon the Trust or any Fund) that have occurred since the previous regularly scheduled Board meeting, and all sanctions imposed. If no violations of this Code have occurred since the previous Board meeting, the Compliance Officer shall so indicate in his or her written report.

     Waivers of Provisions of the Code.

          Waivers.

A Covered Officer may request a waiver from a provision of this Code if there is a reasonable likelihood that a contemplated action would be a material departure from a provision of the Code. Waivers will not be granted except under extraordinary or special circumstances. The process of requesting a waiver shall consist of the following steps:

     The Covered Officer shall set forth a request for waiver in writing and submit such request to the Compliance Officer. The request shall describe the conduct, activity, or

transaction for which the Covered Officer seeks a waiver, and shall briefly explain the reason for engaging in the conduct, activity, or transaction.

     The determination with respect to the waiver shall be made in a timely fashion by the Compliance Officer, subject to consultation and approval of Trust Counsel, and submitted to the Board for ratification.

     The decision with respect to the waiver request shall be documented and maintained in the Trust’s records for a period of not less than six years following the end of the fiscal year in which the waiver occurred.

          Disclosure of Waivers.

     To the extent required by applicable law, waivers (including “implicit waivers”) shall be publicly disclosed on a timely basis. An “implicit waiver” for these purposes is defined as the Trust’s failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that “has been made known” to an executive officer of the Trust within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended (“1934 Act”).

     Rule 3b-7 under the 1934 Act defines an “executive officer” of the Trust as the president of the Trust; any vice president of the Trust in charge of a principal business unit, division or function; any other officer who performs a policy making function; or any other person who performs similar policy making functions for the Trust. A list of such executive officers is included in Appendix A to the Code.

     If a material departure from a provision of the Code is known only by the Covered Person who has caused the material departure from the Code, the material departure will not be considered to have been made known to an executive officer of the Trust.

     Accountability for Adherence to the Code.

The matters covered in this Code are of the utmost importance to the Trust and its shareholders and are essential to the Trust’s ability to conduct its business in accordance with its stated values. Each Covered Officer is expected to adhere to these rules in carrying out his or her duties for the Trust. The conduct of each Covered Officer can reinforce an ethical atmosphere and positively influence the conduct of all employees and agents of the Trust.

The Trust will, if appropriate, take action against any Covered Officer whose actions are found to violate this Code. As discussed in Section 5 of the Code, appropriate sanctions for violations of the Code will depend on the materiality of the violation to the Trust.

Sanctions may include, among other things, a requirement that the violator undergo training related to the violation, a letter of sanction or written censure by the Board, the imposition of a monetary penalty, suspension of the violator as an officer of the Trust or termination of the

employment of the violator. If the Trust or any Fund has suffered a loss because of violations of this Code, it may pursue its remedies against the individuals or entities responsible. Accordingly, each Covered Officer shall cooperate or take such steps as may be necessary or appropriate to remedy any material violation of this Code.

     Recordkeeping, Amendments and Disclosure of Code.

     Records. A copy of this Code, any amendments hereto, and any reports or other records created in relation to waivers of or amendments to provisions of this Code shall be kept as records of the Trust for six years from the end of the fiscal year in which such document was created. Such records shall be furnished to the SEC or its staff upon request.

     Amendments. Each Covered Officer, the Compliance Officer and Trust Counsel are encouraged to recommend improvements to this Code to the Board. The Board may amend the Code in its discretion.

     Disclosure of Code. The Trust must disclose this Code, any substantive amendments and any waivers (including implicit waivers) by: (i) filing with the SEC a copy of the Code, any such amendments and waivers in the Trust’s annual report on Form N-CSR; (ii) posting the text of the Code, any such amendments and waivers on the Trust’s Internet website and disclosing in each report on Form N-CSR, its Internet address and the fact that it has posted the Code on the website; or (iii) undertake in each report on Form N-CSR to provide to any person without charge, upon request, a copy of the Code, any such amendments and waivers and explain the manner in which such request may be made.

Adopted: May 20, 2003.

APPENDIX A

E*TRADE FUNDS

CODE OF ETHICS

PURSUANT TO THE SARBANES-OXLEY ACT OF 2002

     Covered Officers

     Elizbeth Gottfried (principal executive officer (President))

     Matthew Audette (principal financial officer (Treasurer))

     Compliance Officer

     Timothy Williams

     Trust Counsel

     Dilia Caballero

     Executive Officers for purposes of Disclosure of “Implicit Waivers” in Section 7(b)

     Elizabeth Gottfried (President)

     Matthew Audette (Vice President)

APPENDIX B

E*TRADE FUNDS

CODE OF ETHICS

PURSUANT TO THE SARBANES-OXLEY ACT OF 2002

Covered Officer’s
Certification of Compliance

     I,                                                             , hereby certify that I have received, have read and understand the E*TRADE Funds Code of Ethics (pursuant to the Sarbanes-Oxley Act of 2002), as amended (the “Code”). I further certify that I am subject to the Code and have complied with each of the Code’s provisions to which I am subject, for the period from                      through                     .

	By:
	Name:
	Title:
, 20___

Received by:
	Name:
	Title: Chief Compliance Officer Date:

EX-99.CERT

EX-99.CERT

Certification Pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (“1940
Act”) and Section 302 of the Sarbanes-Oxley Act

I, Elizabeth Gottfried, certify that:

1.	I have reviewed this report on Form N-CSR of E*TRADE Funds;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Elizabeth Gottfried Elizabeth Gottfried, President
	(Principal Executive Officer)

Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the
Sarbanes-Oxley Act

I, Matthew Audette, certify that:

1.	I have reviewed this report on Form N-CSR of E*TRADE Funds;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2009	/s/ Matthew Audette Matthew Audette, Treasurer
	(Principal Financial Officer)

EX-99.906CERT

EX-99.906CERT

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the
Sarbanes-Oxley Act

I, Elizabeth Gottfried, President of E*TRADE Funds (the “Registrant”), certify that:

1.	The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 27, 2009	/s/ Elizabeth Gottfried Elizabeth Gottfried, President
	(Principal Executive Officer)

I, Matthew Audette, Treasurer of E*TRADE Funds (the “Registrant”), certify that:

1.	The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 27, 2009	/s/ Matthew Audette Matthew Audette, Treasurer
	(Principal Financial Officer)