CONSECO FUND GROUP
Equity Fund
Asset Allocation Fund
Fixed Income Fund
11815 North Pennsylvania Street
Carmel, Indiana 46032
March 7, 1997
Dear Shareholder:
You are cordially invited to attend a special shareholder
meeting of the Equity Fund, the Asset Allocation Fund and the
Fixed Income Fund on Friday, March 28, 1997, to be held at
1:00 p.m. in your Fund's offices at the location shown on the
enclosed proxy statement. At this meeting, you will be asked
to consider and approve proposals pertaining to your Fund.
The proposals are highlighted below, and are discussed in more
detail in your proxy statement.
You will notice that this proxy statement addresses three
Funds. This is part of our effort to minimize printing and
administrative expenses. However, if you invest in more than
one of the three Funds, you will receive more than one proxy
card. It is important that you review and vote each proxy
card.
The proposals summarized below have been carefully reviewed by
the Board of Trustees. The Board of Trustees is responsible
for protecting your interests as a shareholder. The Trustees
believe that the proposals are in the best interests of the
shareholders of each Fund. They recommend that you vote for
each proposal.
Proposal 1 is to approve the investment advisory agreements
between Conseco Fund Group, on behalf of each Fund, and
Conseco Capital Management, Inc., each Fund s investment
adviser.
Proposal 2 is to approve the Rule 12b-1 distribution and
service plan for Class A shares of each Fund.
Proposal 3 is to ratify the selection of Coopers & Lybrand LLP
as independent accountants of Conseco Fund Group.
THESE PROPOSALS HAVE BEEN REVIEWED AND UNANIMOUSLY APPROVED BY
YOUR FUND'S BOARD OF TRUSTEES, WHO BELIEVE THAT THE PROPOSALS
WILL BE BENEFICIAL TO YOU AND YOUR FUND.
YOUR VOTE IS IMPORTANT!
PAGE
<PAGE>
No matter how large or small your investment may be, your vote
makes a difference. We urge you to review the enclosed proxy
statement carefully, and to vote by completing, signing and
returning the enclosed proxy card(s) to us immediately. Your
prompt response will help avoid the cost of additional
mailings. For your convenience, we have enclosed a
postage-paid envelope.
If you have any questions, please call your Customer Service
Representative at 1-800-986-3384, Monday through Friday
between 8:00 a.m. and 6:00 p.m., Eastern time.
Sincerely,
/s/ Maxwell E. Bublitz
Maxwell E. Bublitz
President and Trustee
PAGE
<PAGE>
CONSECO FUND GROUP
Equity Fund
Asset Allocation Fund
Fixed Income Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 28, 1997
To the Shareholders of the above Funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Shareholders (the Meeting ) of the Equity Fund, the Asset
Allocation Fund and the Fixed Income Fund (the Funds ) will
be held at the offices of Conseco Fund Group (the Trust ),
11815 North Pennsylvania Street, Carmel, Indiana 46032, at
1:00 p.m., Eastern time, on Friday, March 28, 1997. The
purpose of the Meeting is to consider and act upon the
following proposals, and to transact such other business as
may properly come before the Meeting or any adjournments
thereof:
1. To approve the investment advisory
agreements between the Trust, on behalf of
each Fund, and Conseco Capital Management,
Inc.
2. To approve each Fund's Class A
distribution and service plan for Class A
shares of each Fund.
3. To ratify the selection of Coopers &
Lybrand LLP as independent accountants of
the Trust.
YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE PROPOSALS.
Shareholders of record as of the close of business on February
21, 1997 are entitled to notice of, and to vote at, the
Meeting or any adjournments of the Meeting. The proxy
statement and proxy card are being mailed to shareholders on
or about March 7, 1997.
By order of the Board of
Trustees,
WILLIAM P. LATIMER,
Secretary
Carmel, Indiana
March 7, 1997
PAGE
<PAGE>
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY CARD(S). YOU MAY STILL
VOTE IN PERSON IF YOU ATTEND THE MEETING.
PAGE
<PAGE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
CONSECO FUND GROUP:
Equity Fund
Asset Allocation Fund
Fixed Income Fund
11815 North Pennsylvania Street
Carmel, Indiana 46032
This Proxy Statement is furnished in connection with the
solicitation of proxies by, and on behalf of, the Board of
Trustees (the Trustees ) of Conseco Fund Group (the Trust )
to be used at a Special Meeting of Shareholders of the Equity
Fund, the Asset Allocation Fund and the Fixed Income Fund (the
Funds ) and at any adjournments thereof (the Meeting ), to
be held at the offices of the Trust, its investment adviser,
Conseco Capital Management, Inc. (the Adviser ), and its
distributor, Conseco Equity Sales, Inc. (the Distributor ),
located at 11815 North Pennsylvania Street, Carmel, Indiana
46032 at 1:00 p.m., Eastern time, on Friday, March 28, 1997.
The purpose of the Meeting is set forth in the
accompanying Notice. The solicitation of proxies is being
made primarily through mailing this Proxy Statement and
accompanying proxy card on or about March 7, 1997. Additional
solicitation may be made by mail, telephone, or in person by
officers or Trustees of the Trust, and by employees, officers
and/or directors of the Adviser. It is not anticipated that
any solicitations will be made by specially-engaged employees
or paid proxy solicitors. The cost of the preparation of this
Proxy Statement and proxy and the costs of solicitation will
be borne by the Adviser.
The Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under
the Investment Company Act of 1940 (the Act ) and is
organized as a business trust under the laws of the
Commonwealth of Massachusetts. The Trust is comprised of the
Funds, each of which represents a separate investment
portfolio (a mutual fund ). Each Fund offers two classes of
shares: Class A and Class Y. The Trust has authorized an
unlimited number of shares of beneficial interest having no
par value. The shares of the Trust do not have cumulative
voting rights.
If the enclosed proxy card(s) is executed and returned,
it may nevertheless be revoked at any time prior to its use by
written notification received by the Trust, by the execution
of a later-dated proxy card, or by attending the Meeting and
voting in person.<PAGE>
All proxy cards solicited by the Trustees that are
properly executed and received by the Secretary prior to the
Meeting, and which are not revoked, will be voted at the
Meeting. Shares represented by such proxies will be voted in
accordance with the instructions thereon. If no specification
is made on a proxy card, it will be voted FOR the matters
specified on the proxy card. Only proxies that are voted will
be counted towards establishing a quorum. Broker non-votes
are not considered voted for this purpose. Shareholders
should note that while votes to ABSTAIN will count toward
establishing a quorum, passage of any proposal being
considered at the Meeting will occur only if a sufficient
number of votes are cast FOR the proposal. Accordingly, votes
to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved.
The Trustees have fixed the close of business on February
21, 1997, as the record date (the Record Date ) for
determining the shareholders of the Trust entitled to notice
of and to vote at the Meeting. Shareholders of record of the
Trust are entitled to one vote per share and to a
proportionate vote for each fraction of a share at the
Meeting. A quorum must be present for the transaction of
business at the Meeting. The holders of a majority of the
outstanding shares of Trust entitled to vote at the Meeting,
present in person or represented by proxy, shall constitute a
quorum for the Meeting. If either (i) a quorum is not present
at the Meeting or (ii) a quorum is present but sufficient
votes in favor of a matter proposed at the Meeting, as set
forth in the Notice of this Meeting, are not received by 12:00
p.m., Eastern time, on Friday, March 28, 1997, then the
persons named as attorneys and proxies in the enclosed proxy
card may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of at least a majority of
the shares represented, in person or by proxy, at the session
of the Meeting to be adjourned. The persons named as proxies
will vote those proxies that are required to be voted FOR the
proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST such proposal against
such an adjournment. A shareholder vote may be taken on one
or more of the items in this Proxy Statement if sufficient
votes have been received and it is otherwise appropriate.
As of the Record Date, shares of each Fund of the Trust
issued and outstanding are indicated in the following table:
PAGE
<PAGE>
<TABLE>
<CAPTION>
Class A Class Y
<S> <C> <C>
Equity Fund 14,714 1,000,182
Asset Allocation Fund 3,457 1,001,667
Fixed Income Fund 2,068 1,004,357
</TABLE>
To the knowledge of the Trust, as of the Record Date,
substantial (5% or more) record ownership of each Fund was as
follows:
<TABLE>
<CAPTION>
EQUITY FUND - CLASS A
Name Address Number of Percentage
Shares Owned Ownership
<S> <C> <C> <C>
Stephen C. Hilbert 11815 N. Pennsylvania St.
Carmel, IN 46032 2,439 16.58%
St. Vincent Emergency
Physicians Profit
Sharing Trust 824 Wedgewood Lane
Carmel, IN 46033 2,224 15.12%
Conseco Capital
Management, Inc. 11825 N. Pennsylvania St.
Carmel, IN 46032 1,668 11.34%
Ronald H. Wilson 511 Governor s Green Dr.
Venice, FL 34293 980 6.66%
Tom C. Fix 2124 S. Racine Way #V204
Aurora, CO 80014 972 6.60%
PAGE
<PAGE>
EQUITY FUND - CLASS Y
Bankers Life And
Casualty 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 15.00%
Philadelphia Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 15.00%
Transport Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 15.00%
American Travellers Life 11815 N. Pennsylvania St.
Carmel, IN 46032 148,515 14.85%
Beneficial Standard Life 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 10.00%
Great American Reserve 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 10.00%
Massachusetts General 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 10.00%
National Fidelity Life 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 10.00%
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND - CLASS A
Name Address Number of Percentage
Shares Owned Ownership
<S> <C> <C> <C>
Conseco Capital
Management, Inc. 11825 N. Pennsylvania St.
Carmel, IN 46032 1,668 48.26%
Ronald H. Wilson 511 Governor s Green Dr.
Venice, FL 34293 985 28.50%
Michael A. Orlando
Trust 30 Park Avenue
Manhassett, NY 11030 246 7.10%
Jeffrey S. La Pietra 694 Waukegan Rd.
Lake Forest, IL 60045 197 5.70%
PAGE
<PAGE>
ASSET ALLOCATION FUND - CLASS Y
American Travellers
Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 14.98%
National Fidelity Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 14.98%
Philadelphia Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 14.98%
Transport Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,000 14.98%
Bankers Life And
Casualty 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 9.98%
Beneficial Standard 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 9.98%
Great American Reserve 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 9.98%
Massachusetts General 11815 N. Pennsylvania St.
Carmel, IN 46032 100,000 9.98%
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND - CLASS A
Name Address Number of Percentage
Shares Owned Ownership
<S> <C> <C> <C>
Conseco Capital
Management, Inc. 11825 N. Pennsylvania St.
Carmel, IN 46032 1,673 80.89%
Jeffrey S. La Pietra 694 Waukegan Rd.
Lake Forest, IL 60045 198 9.56%
PAGE
<PAGE>
FIXED INCOME FUND - CLASS Y
Bankers Life And
Casualty 11815 N. Pennsylvania St.
Carmel, IN 46032 150,448 14.98%
Philadelphia Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,448 14.98%
Transport Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,448 14.98%
American Travellers Life 11815 N. Pennsylvania St.
Carmel, IN 46032 150,147 14.95%
Beneficial Standard Life 11815 N. Pennsylvania St.
Carmel, IN 46032 100,299 9.99%
Great American Reserve 11815 N. Pennsylvania St.
Carmel, IN 46032 100,299 9.99%
Massachusetts General 11815 N. Pennsylvania St.
Carmel, IN 46032 100,299 9.99%
National Fidelity Life 11815 N. Pennsylvania St.
Carmel, IN 46032 100,299 9.99%
</TABLE>
As of the Record Date, Trustees and officers of the Trust owned in the
aggregate less than 1% of the outstanding shares of the Trust.
Summary of Proposals and Trustees Recommendations
The following table summarizes each proposal to be presented at the
Meeting and the Funds solicited with respect to each proposal:
<TABLE>
<CAPTION>
Proposal Affected Funds
<S> <C>
1. Approval of Advisory Agreements Each Fund*
2. Approval of Class A Distribution Class A Shareholders
and Service Plans of Each Fund**
3. Ratification of the Selection of All Funds***
Independent Accountant
</TABLE>
PAGE
<PAGE>
* All shareholders of each Fund will vote separately from
shareholders of the other Funds.
** Class A shareholders of each Fund only will vote
separately from Class A shareholders of the other Funds.
*** All shareholders of each Fund will vote together.
The Board of Trustees recommends that you cast your vote:
- FOR approval of each investment advisory Agreement
- FOR approval of each Fund s Class A distribution and
service plan
- FOR ratification of the selection of Coopers &
Lybrand LLP as independent accountants for the Trust
Proposals
Each of the proposals is described in detail below. The
Exhibits are important parts of this Proxy Statement; please
consult them carefully as you review this Proxy Statement and
evaluate the proposals.
PROPOSAL 1. TO APPROVE INVESTMENT ADVISORY AGREEMENTS
BETWEEN THE TRUST, ON BEHALF OF EACH FUND, AND
CONSECO CAPITAL MANAGEMENT, INC.
For All Shareholders of the Equity Fund, the Asset Allocation
Fund, and the Fixed Income Fund, voting separately.
The Trustees are requesting that shareholders of each
Fund approve each Fund s investment advisory Agreement with
the Adviser (collectively, the Advisory Agreements ).
Shareholders are not being asked, however, to approve any
changes to the Advisory Agreements, but are being asked to
approve each Fund s Advisory Agreement in its current form.
Each Advisory Agreement is attached to this Proxy Statement as
Exhibit A for your review. Also attached to this Proxy
Statement for your review as Exhibit B are audited financial
statements of the Adviser.
The Act has certain provisions applicable to the board of
trustees and the shareholders of a mutual fund in respect of
investment advisory agreements. One provision requires that
the trustees of a mutual fund, including a majority of the
trustees who are not interested persons of the fund (the
Disinterested Trustees ), vote, in person, to approve an
PAGE
<PAGE>
investment advisory Agreement. The Act also requires that the
shareholders of a mutual fund approve an investment advisory
Agreement. In accordance with their obligation under the Act,
the Trustees first approved the Advisory Agreements on
December 5, 1996. After approval by the Trustees, the sole
shareholder of each Fund, on December 31, 1996, voted to
approve each Fund s Advisory Agreement.
It has come to the Trustees attention that there may
have been a flaw in their initial approval of the Advisory
Agreements on December 5, 1996. Therefore, on February 21,
1997, the Trustees, including a majority of the Disinterested
Trustees, voted, in person, to re-approve each Advisory
Agreement and to submit those Agreements to the vote of
shareholders of each Fund in accordance with the requirements
of the Act.
Required Vote
Approval of each Fund s Advisory Agreement by each Fund s
shareholders requires an affirmative vote of the lesser of (i)
67% or more of the voting securities present at the Meeting,
if the holders of more than 50% of the outstanding voting
securities of each Fund are present or represented by proxy;
or (ii) more than 50% of the outstanding voting securities of
each Fund. Shareholders of each Fund will vote separately.
Therefore, three votes will be taken; that is, separate votes
will be taken with respect to each of the three Advisory
Agreements. If you are a shareholder of more than one Fund,
you are entitled to vote on the proposal as it pertains to
each of your Funds and you will receive more than one proxy
card for this purpose. Therefore, it is important that you
review, complete and sign each proxy card.
Descriptions of the Adviser and the Advisory Agreements
The Adviser has been retained to provide investment
advice, and, in general, to supervise the management and
investment program of the Trust and each Fund. The Adviser is
a wholly-owned subsidiary of Conseco, Inc., a publicly-owned
financial services company, the principal operations of which
are in development, marketing administration of specialized
annuity, life and health insurance products. The Adviser
generally manages the affairs of the Trust, subject to the
supervision of the Board of Trustees.
Under the Advisory Agreements, the Adviser is entitled to
receive an investment advisory fee equal to an annual rate of
0.70% of the daily net asset value of the Equity Fund, 0.70%
of the daily net asset value of the Asset Allocation Fund and
0.45% of the daily net asset value of the Fixed Income Fund.
The Adviser also manages another registered investment
PAGE
<PAGE>
company, all of the invested assets of its parent company,
Conseco, Inc., which owns or manages several life insurance
subsidiaries, and provides investment and servicing functions
to the Conseco companies and affiliates.
The Adviser will reduce its aggregate fees for any fiscal
year, or reimburse the Funds, to the extent required, so that
the Funds expenses do not exceed the expense limitations
applicable to the Trust under the securities laws or
regulations of those states or jurisdictions in which the
Funds shares are registered or qualified for sale. Expenses
for purposes of these expense limitations include the
management fee, but exclude brokerage commissions and fees,
taxes, interest and extraordinary expenses such as litigation,
paid or incurred by the Funds. In addition, the state with
the most restrictive expense limitation allows the Trust to
exclude distribution expenses.
The Adviser has voluntarily agreed to waive the
investment advisory fee payable by each Fund to the extent
that the Funds ratios of total operating expenses to net
assets on an annual basis exceed: 1.50% and 1.00% for Class A
shares and Class Y shares of the Equity Fund, respectively;
1.50% and 1.00% for Class A shares and Class Y shares of the
Asset Allocation Fund, respectively; and 1.25% and 0.60% for
Class A shares and Class Y shares of the Fixed Income Fund,
respectively. These voluntary limits may be discontinued at
any time after April 30, 1998. The voluntary commitment of
the Adviser to waive its fees (as described above) was
undertaken in conjunction with similar commitments made by the
Distributor and the Trust s administrator, Conseco Services
LLC (the Administrator ), 11815 North Pennsylvania Street,
Carmel, Indiana 46032. In connection with the Adviser s
voluntary Agreement to waive its advisory fee, as described
above, the Adviser has reduced the advisory fee of the Fixed
Income Fund from 0.45% to 0.40% of the daily net assets of the
Fixed Income Fund. This voluntary limit also may be
discontinued at any time after April 30, 1998.
Trustees Evaluation of the Advisory Agreements and
Recommendation
In approving each Advisory Agreement, the Trustees,
including the Disinterested Trustees, requested and evaluated
information provided by the Adviser which, in their opinion,
constituted all the information reasonably necessary for the
Trustees to form a judgment as to whether each Advisory
Agreement would be in the best interests of each respective
Fund and its shareholders.
In recommending that each Fund s shareholders approve
their respective Advisory Agreement, the Trustees took into
PAGE
<PAGE>
account all factors they deemed relevant, including: (i) the
advisory fees and other expenses that would be paid by the
Funds under the Advisory Agreements as compared to those of
similar mutual funds managed by other investment advisers;
(ii) the nature, quality and extent of the portfolio
management and non-advisory services furnished by the Adviser
to the Funds; (iii) the Adviser s need to maintain and enhance
its ability to retain and attract capable personnel to serve
the Funds; (iv) the nature of the Adviser s research
capability and the related benefits to the Funds; (v)
brokerage and research services received by the Adviser as
described more fully below; (vi) the relationship of the
advisory fee structures under the Advisory Agreements to the
fee structures of comparable mutual funds; (vii) the financial
strength of the Adviser; (viii) the cost and complexity of
providing portfolio management services; (ix) the Adviser s
experience and performance attained in managing comparable
mutual funds; and (x) payments to be made by the Funds to
affiliates of the Adviser or third parties for services other
than investment advisory services.
In addition, the Trustees considered that the Adviser,
the Distributor and the Administrator have each voluntarily
agreed to waive a portion of its fees and/or reimburse to the
Funds a portion of the fees due it through April 30, 1998 to
the extent that annual total operating expenses exceed 1.50%
for Class A shares of the Equity and Asset Allocation Funds
and 1.25% for the Class A shares of the Fixed Income Fund and
1.00% for Class Y shares of the Equity and Asset Allocation
Funds and 0.60% for Class Y shares of the Fixed Income Fund.
With respect to the services to be provided on behalf of
each Fund, the Trustees determined that the compensation to be
paid to the Adviser under the Advisory Agreements is fair and
reasonable, and that the Advisory Agreements will allow the
Adviser to receive fees for its services that are competitive
with fees paid by other mutual funds to other investment
advisers.
As a result of their careful consideration of the above
factors and other relevant matters, the Trustees, including a
majority of the Disinterested Trustees, concluded, in the
exercise of their reasonable business judgment and in light
of their fiduciary duties under the Act, that the retention of
the Adviser to provide advisory and other services to each
Fund under the respective Advisory Agreement for each Fund
would be in the best interests of each Fund and its
shareholders and recommended that each Advisory Agreement be
submitted to the shareholders of the respective Fund for their
approval. In the event that one or more Advisory Agreements
are not approved by shareholders, the Trustees would seek to
obtain for the Fund(s) interim investment advisory services at
PAGE
<PAGE>
the lesser of cost or the current fee rate either from the
Adviser or from another advisory organization. Thereafter,
the Trustees would either negotiate a new investment advisory
Agreement with the Adviser or another advisory organization
selected by the Trustees, in any event subject to the approval
of the shareholders of the Fund(s). Given the uncertain
validity of the Advisory Agreements approved at the December
5, 1996 Trustees meeting, no advisory fees have been paid or
will be paid by a Fund until an Advisory Agreement is approved
by shareholders of that Fund.
Management of the Adviser
The names of the principal executive officer and
directors of the Adviser, their addresses and principal
occupations are set forth in the table immediately below:
<TABLE>
<CAPTION>
Name and Position
with Adviser Address Principal Occupation
<S> <C> <C>
Maxwell E. 11815 N. Chartered Financial
Bublitz,* Pennsylvania Street Analyst
Director and Carmel, IN 46032
President
Rollin M. Dick 11815 N.
Director Pennsylvania Street
Carmel, IN 46032
William P. 11815 N. Attorney
Latimer,* Pennsylvania Street
Director, Chief Carmel, IN 46032
Compliance
Officer, Vice
President,
Secretary and
Senior
Counsel
Gregory J. Hahn,* 11815 N. Chartered Financial
Senior Vice Pennsylvania Street Analyst
President, Carmel, IN 46032
Portfolio
Analytics
</TABLE>
* The persons indicated with an asterisk also maintain
positions with the Trust as follows: Mr. Bublitz is the
President and a Trustee of the Trust; Mr. Hahn is Vice
PAGE
<PAGE>
President for Investments and a Trustee of the Trust; and
Mr. Latimer is Vice President and Secretary of the Trust.
In addition, both James S. Adams, the Treasurer of the
Trust, and William T. Devanney, Jr., a Vice President of
the Trust, beneficially own shares of Conseco, Inc. and
are Senior Vice Presidents of both Bankers National Life
Insurance Company and Great American Reserve Life
Insurance, both of which companies are affiliates of the
Adviser.
Portfolio Allocation
Decisions regarding the placement of portfolio brokerage
are made by the Adviser with the primary considerations being
to obtain efficiency in execution of orders and the most
favorable net prices for each Fund. Consistent with those
objectives, transactions may be allocated to brokers and
dealers who furnish certain research services to the Adviser.
Such research services supplement the Adviser s own research
activities and provide a benefit to the Adviser which is not
easily evaluated in terms of dollar amount and is not
reflected in a direct monetary benefit to the Funds. Such
research may be used to benefit any other investment companies
and accounts advised by the Adviser, as well as the Funds.
Transactions may also be executed through brokers and dealers
who sell shares of the Funds, but such sales will not be a
qualifying or disqualifying factor in the selection of
executing broker-dealers. The Adviser may place portfolio
transactions for the Fund with broker-dealers for commissions
which are greater than another broker or dealer might charge
if the Adviser determines in good faith that the commission
paid was reasonable in relation to the brokerage or research
services provided by such broker or dealer, viewed in terms of
that particular transaction or the Adviser s overall
responsibilities with respect to its accounts, including the
Funds, as to which it exercises investment discretion.
Other Information Pertaining to the Adviser
The Adviser is a wholly-owned subsidiary of Conseco,
Inc., 11815 North Pennsylvania Street, Carmel, Indiana 46032.
Because all of the outstanding securities of the Adviser are
owned by Conseco, Inc., no other person owns securities issued
by the Adviser.
The Distributor, Conseco Equity Sales, Inc., is an
affiliated person of the Adviser and will receive compensation
from each Fund pursuant to each Fund s plan of distribution,
as described more fully below under Proposal 2. The services
provided by the Distributor will continue after approval of
each Advisory Agreement by the shareholders of each Fund.
PAGE
<PAGE>
The Administrator, Conseco Services, LLC, is also an
affiliated person of the Adviser and receives compensation
from the Trust pursuant to an administration Agreement. Under
that Agreement, the Administrator supervises the preparation
and filing of all documents required for compliance by the
Trust with applicable laws and regulations, supervises the
maintenance of books and records of the Trust and provides
other general and administrative services. For providing
these services, the Administrator receives compensation at the
annual rate of 0.20% based on the average daily net assets
attributable to Class A and Y shares. The Administrator has
voluntarily agreed to waive its fees and/or reimburse the
Funds a portion of the fees due it under the administration
Agreement with the Trust through April 30, 1998 to the extent
that annual total operating expenses exceed 1.50% for Class A
shares of the Equity and Asset Allocation Funds and 1.25% for
the Class A shares of the Fixed Income Fund and 1.00% for
Class Y shares of the Equity and Asset Allocation Funds and
0.60% for Class Y shares of the Fixed Income Fund. This
voluntary commitment of the Administrator was undertaken in
conjunction with similar commitments made by the Adviser and
the Distributor. The services provided by the Administrator
will continue after approval of each Advisory Agreement by the
shareholders of each Fund.
The Adviser also serves as investment adviser to Conseco
Series Trust (the Series Trust ). The three Funds that
comprise the Conseco Fund Group (i.e., the Trust) have been
modeled after three funds of the Series Trust: the Equity Fund
is modeled after the Common Stock Portfolio of the Series
Trust; the Asset Allocation Fund is modeled after the Asset
Allocation Portfolio of the Series Trust; and the Fixed Income
Fund is modeled after the Corporate Bond Portfolio of the
Series Trust (the Common Stock, Asset Allocation and Corporate
Bond Portfolios of the Series Trust are collectively referred
to hereafter as the Portfolios ). Each Portfolio, like each
Fund, is managed by the Adviser and has investment objectives
and policies substantially similar to its corresponding Fund.
Under an advisory Agreement with Conseco Series Trust, the
Adviser receives compensation from each Portfolio at the
annual rate of 0.60% of the average daily net assets of the
Common Stock Portfolio, 0.55% of the average daily net assets
of the Asset Allocation Portfolio and 0.50% of the average
daily net assets of the Corporate Bond Portfolio. As of
December 31, 1996, the asset size of each of the Portfolios
was as follows: Common Stock Portfolio - $171,332,490; Asset
Allocation Portfolio - $16,732,206; and Corporate Bond
Portfolio - $17,463,340. The Adviser has voluntarily agreed
to reimburse all expenses, including its advisory fees, in
excess of the following percentage of the average annual net
assets of the Portfolios: 0.80% for the Common Stock
PAGE
<PAGE>
Portfolio; 0.75% of the Asset Allocation Portfolio; and 0.70%
for the Corporate Bond Portfolio.
Conclusion
The Trustees are asking shareholders to approve each
Advisory Agreement as it presently exists and under which the
Adviser currently provides advisory and other services. The
Trustees are not proposing to modify, amend or change the
Advisory Agreements in any respect. The Trustees, including a
majority of the Disinterested Trustees, previously have
reviewed the Advisory Agreements, and other materials relating
to the Agreements, and found that terms of, and the
compensation to be paid by each Fund under, the Advisory
Agreements are fair and reasonable and that the retention of
the Adviser pursuant to each Advisory Agreement would be in
the best interests of each Fund and its shareholders.
The Trustees recommend that shareholders of each Fund vote FOR
approval of each Fund s Advisory Agreement.
PROPOSAL 2. TO APPROVE A DISTRIBUTION AND SERVICE PLAN FOR
EACH FUND S CLASS A SHARES TO INCREASE
DISTRIBUTION FEES
For Class A Shareholders Only of the Equity Fund, the Asset
Allocation Fund, and the Fixed Income Fund, voting separately.
As noted above with respect to the Advisory Agreements,
it has come to the Trustees attention that there may have
been a flaw in their initial approval of each Fund s Rule 12b-
1 Class A distribution and service plan (the Old Distribution
Plans ) at the Trustees meeting on December 5, 1996.
Therefore, on February 21, 1997, the Trustees, including a
majority of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the
operation of the New Distribution Plans (defined below) or in
any agreements related to those Plans (the Independent
Trustees ), approved, a new distribution and service plan for
each Fund s Class A shares pursuant to Rule 12b-1 under the
Act (the New Distribution Plans ), and voted to recommend to
each Fund s Class A shareholders that they approve, each New
Distribution Plan. In addition, in the course of their review
and evaluation on February 21, 1997, the Trustees determined
that an increase in distribution fees for each Fund is
reasonably likely to benefit the Fund and its Class A
shareholders for the reasons set forth below. Therefore, the
New Distribution Plans would increase the maximum amount
payable under the Equity Fund s and the Asset Allocation
Fund s Old Distribution Plans from 0.35% to 0.50% and under
the Fixed Income Fund s Old Distribution Plan from 0.35% to
PAGE
<PAGE>
0.65% annually of each Fund's average daily net assets
attributable to its Class A shares. As described more fully
below, in approving the New Distribution Plans, the Trustees
determined that the increased fee is likely to result in
higher levels of sales and, ultimately, lower levels of
redemptions of each Fund s Class A shares than would otherwise
be obtainable. This in turn should assist in the goal of
achieving an increase in Fund asset size. There can be no
assurance, however, that the Fund will achieve an increase in
asset size. Upon shareholder approval, each New Distribution
Plan will become effective immediately. Each Fund s New
Distribution Plan is attached to this Proxy Statement as
Exhibit B for your review.
Required Vote
Approval of each Fund s New Distribution Plan by each
Fund s shareholders requires an affirmative vote of the lesser
of (i) 67% or more of the Class A voting securities present at
the Meeting, if the holders of more than 50% of the
outstanding Class A voting securities of each Fund are present
or represented by proxy; or (ii) more than 50% of the
outstanding Class A voting securities of each Fund. Class A
shareholders of each Fund will vote separately. Therefore,
three votes will be taken. If you are a Class A shareholder
of more than one Fund, you are entitled to vote on the
proposal as it pertains to each of your Funds and you will
receive more than one proxy card for this purpose. Therefore,
it is important that you review, complete and sign each proxy
card.
The New Distribution Plans
The New Distribution Plans set forth the terms and
conditions on which a Fund will pay, from the assets
attributable to Class A shares of the respective Fund,
distribution fees and service fees to the Distributor in
connection with the provision by the Distributor of certain
services to each Fund and its Class A shareholders. The terms
of each New Distribution Plan authorize the respective Funds
to engage in any activity primarily intended to result in the
sale of their Class A shares. Each Fund is authorized to
engage in such activities directly, or through other persons
with whom the Fund or the Distributor enters into agreements.
Distribution fees are used to reimburse the Distributor
for expenses primarily intended to result in sales of Class A
shares of each Fund, including, but not limited to, printing
prospectuses, statements of additional information and reports
used for sales purposes, expenses of preparation of sales
literature and related expenses, advertisements, other
distribution-related expenses (including personnel of the
PAGE
<PAGE>
Distributor), certain overhead expenses attributable to the
distribution of Class A shares of a Fund such as
communications, salaries, training, supplies, photocopying and
similar types of expenses. Service fees are used to reimburse
the Distributor for payments made to, or on account of,
underwriters, dealers, brokers, banks or selling entities who
provide personal and shareholder account maintenance services
to Class A shareholders, including, but not limited to, the
establishment and maintenance of shareholder accounts,
processing purchase, redemption and exchange orders,
processing requests and orders with respect to shareholder
services and programs described in the Trust s prospectus and
statement of additional information, and responding to
inquiries regarding the shareholders accounts, the policies
of the Trust and the performance of their investment. These
payments represent compensation in addition to any
commissions the Distributor might receive on sales of each
Fund s Class A shares.
Under the Old Distribution Plans (approved at the
Trustees December 5, 1996 meeting), each Fund would have been
obligated to pay up to an aggregate of 0.35% annually of its
average daily net assets attributable to its Class A shares
for both distribution fees and service fees. Within this
maximum amount, 0.25% could have been used as service fees and
the remainder for distribution fees. The Trustees had limited
the fees to be paid under the Old Distribution Plans to 0.25%
of each Fund s average daily net assets attributable to Class
A shares.
Subject to the approval of each Fund s Class A
shareholders at the Meeting, under the New Distribution Plans,
the Equity Fund and the Asset Allocation Fund would pay up to
an aggregate of 0.50% annually of their average daily net
assets attributable to their Class A shares for both
distribution and service fees; under its New Distribution
Plan, the Fixed Income Fund would pay up to an aggregate of
0.65% annually of its average daily net assets attributable to
its Class A shares for both distribution and service fees.
Within these maximum amounts, each Fund may pay up to 0.25% in
service fees and the remainder in distribution fees. Given
the uncertain validity of the Old Distribution Plans approved
at the December 5, 1996 Trustees meeting, no distribution
fees have been paid or will be paid by a Fund until its New
Distribution Plan is approved.
Expenditures under each New Distribution Plan will be
calculated and accrued daily, charged against the assets
attributable to Class A shares of a respective Fund only and
paid monthly or at such other intervals as the Trustees may
determine. Pursuant to each New Distribution Plan, the
Distributor will provide the Trust, at least quarterly, with a
PAGE
<PAGE>
written report of the amounts expended under each New
Distribution Plan and the purpose for which such expenditures
were made together with such other information as from time to
time is reasonably requested by the Trustees. The Trustees
will review such reports on a quarterly basis. In the event
the Distributor is not fully reimbursed for payments made or
other expenses incurred by it under each New Distribution
Plan, such expenses may be carried forward for no more than
three years from the date such expenses were first incurred.
Reimbursement of expenses is calculated on a first in, first
out basis.
The expenditures made pursuant to each New Distribution
Plan, and the basis upon which such expenditures are made,
will be determined by the Trust in accordance with Rule 12b-1
under the Act and the Conduct Rules of the National
Association of Securities Dealers, Inc. (the NASD Rules ).
If any amendment to Rule 12b-1 or the NASD Rules is adopted,
the Trustees will consider what, if any, modification of each
New Distribution Plan or each Fund s distribution practices
may be appropriate.
If approved by Class A shareholders, each New
Distribution Plan will continue in effect for successive
annual periods provided that it is approved at least annually
by a vote of the majority of the Trustees, including a
majority of the Independent Trustees. Each Fund may terminate
its New Distribution Plan at any time by vote of a majority of
the Independent Trustees or a majority of the outstanding
voting Class A shares of the respective Fund. No material
amendment to a New Distribution Plan will be effective unless
it is approved by a vote of a majority of the Trustees,
including a majority of the Independent Trustees. Each New
Distribution Plan requires that amendments which would
materially increase the amount of compensation payable
thereunder be approved by a majority of the outstanding voting
Class A shares of the affected Fund.
Comparative Expense Tables
Set forth below are (1) the Shareholder Transaction
Expenses Table which applies to Class A shares of each Fund
and which is not proposed to be modified in any respect and
(2) Comparative Annual Operating Expenses Tables For Class A
Shares showing the amount of fees and expenses paid by each
Fund with respect to its Class A shares under the Old
Distribution Plan as if it were in effect and the amount of
fees and expenses the Class A shareholders would have paid
indirectly if the New Distribution Plan had been in effect for
each Fund. The information concerning other expenses in the
fee tables is an estimate. The amount of total operating
PAGE
<PAGE>
expenses shown in the New Distribution Plan column of the
Comparative Annual Operating Expenses Tables would be higher
absent the continued voluntary commitment of the Adviser,
Distributor and Administrator to waive a portion of their fees
and/or reimburse the Funds for expenses that exceed a Fund s
total operating expenses set forth in the expense tables.
Shareholder Transaction Expenses Table For Class A Shares
Of Each Fund
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchase
(as a percentage of offering price) 5%
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Deferred Sales Charge None
Redemption Fees None
</TABLE>
Comparative Annual Operating Expenses Tables For Class A
Shares
<TABLE>
<CAPTION>
Equity Fund
Old New
Distribution Plan Distribution Plan
Annual Fund Operating Expenses
(as a percentage of average
net assets)
<S> <C> <C>
Management Fees 0.70% 0.70%
Administrative Fees 0.20% 0.20%
12b-1 Distribution and Service Fees(1) 0.25% 0.50%
Other expenses (less voluntary
fee waivers) 0.35% 0.10%
and reimbursements)
Total Equity Fund 1.50% 1.50%
Operating Expenses (2)
</TABLE>
PAGE
<PAGE>
Asset Allocation Fund
<TABLE>
<CAPTION>
Old New
Distribution Plan Distribution Plan
Annual Fund Operating Expenses
(as a percentage of average net assets)
<S> <C> <C>
Management Fees 0.70% 0.70%
Administrative Fees 0.20% 0.20%
12b-1 Distribution and Service Fees(1) 0.25% 0.50%
Other expenses (less voluntary fee 0.35% 0.10%
waivers and reimbursements)
Total Asset Allocation Fund 1.50% 1.50%
Operating Expenses (2)
</TABLE>
Fixed Income Fund
<TABLE>
<CAPTION>
Old New
Distribution Plan Distribution Plan
<S> <C> <C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.45% 0.40%(3)
Administrative Fees 0.20% 0.20%
12b-1 Distribution and Service Fees(1) 0.25% 0.65%
Other expenses (less voluntary fee 0.35% 0.00%
waivers and reimbursements)
Total Fixed Income Fund 1.25% 1.25%
Operating Expenses (2)
</TABLE>
PAGE
<PAGE>
Notes to Comparative Annual Operating Expenses Tables:
(1) As a result of Rule 12b-1 fees, a long-term shareholder
in the Funds may pay more than the economic equivalent of
the maximum sales charges permitted by the NASD Rules.
(2) The expense information set forth above reflects a
voluntary commitment of the Adviser, the Administrator
and the Distributor to waive their fees and/or reimburse
to the Funds a portion of the fees due them under the
Investment Advisory Agreement, Administration Agreement
and/or New Distribution Plans through April 30, 1998.
The voluntary commitment provides that the Total
Operating Expenses for the Funds, on an annual basis,
will not exceed the amounts set forth above. In the
absence of such reimbursements, it is estimated that the
Total Operating Expenses under the Old Distribution Plans
would have been 1.85%, 1.85% and 1.60% for the Equity,
Asset Allocation and Fixed Income Funds, respectively.
In the absence of such reimbursements, it is estimated
that the Total Operating Expenses under the New
Distribution Plans would be 2.10%, 2.10% and 2.00% for
the Equity, Asset Allocation and Fixed Income Funds,
respectively
(3) The Adviser has voluntarily undertaken to reduce its
advisory fee with respect to the Fixed Income Fund to
0.40% of the Fund s average daily net assets until April
30, 1998. Absent such undertaking, the advisory fee
would have been 0.45% of the Fund s average daily net
assets.
Comparative Examples
Assuming a hypothetical investment of $1,000, a 5% annual
return and redemption at the end of each time period, an
investor in Class A shares of each of the Funds would have
paid transaction and operating expenses at the end of each
year as follows:
PAGE
<PAGE>
<TABLE>
<CAPTION>
1 Year 3 Years
Equity Fund
<S> <C> <C>
Old Distribution Plan $65 $96
New Distribution Plan $65 $96
Asset Allocation Fund
Old Distribution Plan $65 $96
New Distribution Plan $65 $96
Fixed Income Fund
Old Distribution Plan $62 $88
New Distribution Plan $62 $88
</TABLE>
The same level of expenses would be incurred if the
investments were held throughout the period indicated. The
above examples illustrate the effect of expenses, but are not
meant to suggest actual or expected costs or returns, all of
which may vary.
Trustees Evaluation of the New Distribution Plans and
Recommendation
In connection with their decision to approve the New
Distribution Plan for each Fund and to recommend to each
Fund s Class A shareholders that they do the same, the
Trustees, including a majority of the Independent Trustees,
reviewed all information which they deemed necessary to arrive
at an informed determination. The Independent Trustees
consulted with their legal counsel in determining whether to
approve each Fund s New Distribution Plan. Among the matters
considered by the Trustees were: (1) the potential costs and
benefits of the New Distribution Plan to Class A shareholders
of each Fund, including the fact that payments made to the
Distributor would ultimately increase the level of expenses
incurred by Class A shareholders of each Fund; (2) whether the
New Distribution Plan would assist the Distributor in
marketing Class A shares of each Fund and, ultimately, reduce
the level of share redemptions; (3) the advantages to each
Fund and its Class A shareholders that might result from
growth in the Fund s assets, including economies of scale,
reduced expense ratios, and greater portfolio diversification;
and (4) the fact that anticipated net positive cash flow into
each Fund as a result of new sales could facilitate portfolio
management by eliminating the need to liquidate favorable
portfolio positions in order to generate sufficient cash to
satisfy redemption requests. The Trustees determined that
the compensation in each Fund s New Distribution Plan for
PAGE
<PAGE>
additional sales and continuing shareholder service incentives
and the Distributor s expenses is likely to result in higher
levels of sales and, ultimately, lower levels of redemptions
of Class A shares of each Fund than would otherwise occur.
This in turn should assist each Fund in increasing its asset
size and achieving and maintaining net positive cash flow.
The Trustees found the fees to be paid under the New
Distribution Plan reasonable in view of the services that the
Distributor will provide and the anticipated expenses that the
Distributor will incur in distributing and marketing each
Fund's Class A shares and paying authorized broker-dealers and
others for ongoing service to Class A shareholders. The
Trustees also noted that the level of fees payable under each
Fund s Old Distribution Plan (if it were in effect) is
comparable to or below that of most other funds, whose shares
are sold through similar broker-dealer networks, as well as
many funds with which each Fund competes for the customers and
sales efforts of broker-dealers. The Trustees determined that
the Rule 12b-1 fee payable under each Fund s New Distribution
Plan will enable the Distributor to compensate broker-dealers
in an amount comparable to the compensation they receive in
connection with sales of shares of comparable mutual funds,
while at the same time affording the Distributor the means to
effectively market Class A shares to the public.
The Trustees also recognized and considered that possible
benefits may be realized by the Adviser as a result of the
New Distribution Plans. If a Fund s net assets grow more
rapidly as a result of the implementation of the New
Distribution Plan, the investment advisory fees payable to the
Adviser (which fees are calculated as a percentage of the
Fund s net assets) will also increase. The Trustees
recognized that possible benefits may be realized by the
Distributor as a result of each Fund s New Distribution Plan
through the payment of sales charges to the Distributor for
sales and distribution of each Fund s Class A shares.
The Trustees also considered that the Adviser, the
Distributor and the Administrator voluntarily have agreed,
until April 30, 1998, to reimburse the Equity Fund, the Asset
Allocation Fund and the Fixed Income Fund for total annual
operating expenses which exceed 1.50%, 1.50% and 1.25%,
respectively. The New Distribution Plans will provide the
Distributor with the flexibility, in the future, to increase
marketing and distribution efforts, such as increased
advertising and compensation of broker-dealers for their
distribution and service-related activities in respect of
Class A shares of the Funds, which efforts are anticipated
ultimately to increase the assets of each of the Funds which
in turn should result in economies of scale (which means that
total annual operating expenses for each Fund will be spread
PAGE
<PAGE>
over a greater amount of assets thereby effectively reducing
each Class A shareholder s burden for the payment of these
expenses).
As a result of their careful consideration of the above
factors and other relevant matters, the Trustees, including a
majority of the Independent Trustees, concluded, in the
exercise of their reasonable business judgment and in light
of their fiduciary duties under the Act, that each Fund s New
Distribution Plan is likely to benefit each Fund and its Class
A shareholders and recommended that it be submitted to the
Class A shareholders of each Fund for their approval. The New
Distribution Plans will not become effective as to a
particular Fund unless approved by that Fund s Class A
shareholders. In the event that Class A shareholders of each
Fund do not approve their respective New Distribution Plan,
the Trustees will consider what action to take, including
proposing another distribution and service plan for
shareholder approval.
The Trustees recommend that Class A shareholders of each Fund
vote FOR approval of each Fund s New Distribution Plan.
PROPOSAL 3. TO RATIFY THE SELECTION OF COOPERS & LYBRAND
LLP AS INDEPENDENT ACCOUNTANTS OF THE TRUST
For All Shareholders of the Equity Fund, the Asset Allocation
Fund and the Fixed Income Fund, voting together.
On February 21, 1997, the Disinterested Trustees selected
the firm of Coopers & Lybrand LLP to serve as independent
accountants for the Trust to sign or certify any financial
statements of the Trust required by any law or regulation to
be certified by an independent accountant and filed with the
Securities and Exchange Commission or any state. This
selection is being presented to shareholders for ratification.
In addition, as required by the Act, the vote of the Trustees
is subject to the right of the Trust, by vote of a majority of
its outstanding voting securities at any meeting called for
the purpose of voting on such action, to terminate such
employment without penalty. Coopers & Lybrand LLP has advised
the Trust that it has no direct or material indirect ownership
interest in the Trust.
The independent accountants examine annual financial
statements for the Trust and provide other audit and tax-
related services. In recommending the selection of the
Trust s accountants, the Disinterested Trustees reviewed the
nature and scope of the services to be provided (including
non-audit services) and whether the performance of such
services would affect the accountants independence.
PAGE
<PAGE>
Representatives of Coopers & Lybrand LLP are not expected to
be present at the Meeting, but have been given the opportunity
to make a statement if they so desire and will be available
should any matter arise requiring their presence.
Required Vote
Approval of the proposal to ratify the selection of
Coopers & Lybrand LLP as independent accountants of the Trust
by the Trust s shareholders requires an affirmative vote of a
majority of the outstanding voting securities present at the
Meeting. If you are a shareholder of more than one Fund, you
are entitled to vote on the proposal as it pertains to each of
your Funds and you will receive more than one proxy card for
this purpose. Therefore, it is important that you review,
complete and sign each proxy card.
The Trustees recommend that shareholders of the Trust vote FOR
the proposal to ratify the selection of Coopers & Lybrand LLP
as the Trust s independent accountants.
OTHER BUSINESS
The Trustees know of no business which will be presented
for consideration at the Meeting. However, if any other
matters properly come before the Meeting, it is the intention
of the persons named in the enclosed proxy to vote in
accordance with their best judgment.
SHAREHOLDERS PROPOSALS
The Trust does not hold annual shareholder meetings.
Shareholders desiring to present a proposal for consideration
at the next shareholder meeting should send their written
proposals to the Secretary of the Trust, 11815 North
Pennsylvania Street, Carmel, Indiana 46032.
PAGE
<PAGE>
Exhibit 1:
Investment Advisory Agreements<PAGE>
Exhibit 1A
INVESTMENT ADVISORY AGREEMENT
Between CONSECO FUND GROUP
on behalf of EQUITY FUND
and
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of
this ___ day of __________, 1997, by and between Conseco Fund
Group (the Trust ), a Massachusetts business trust, on behalf
of its series Equity Fund (the Fund ), and Conseco Capital
Management, Inc. (the Adviser ).
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such pursuant to the provisions of the
Investment Company Act of 1940 (the 1940 Act );
WHEREAS, the Fund is a diversified series of the Trust
operating as an open-end management investment company under
the 1940 Act, and is currently divided into Class A and Class
Y shares to be offered to individual and institutional
investors, respectively;
WHEREAS, the Adviser is an investment adviser, registered
as such pursuant to the provisions of the Investment Advisers
Act of 1940, and is engaged in the business of rendering
investment advice and investment management services as an
independent contractor;
WHEREAS, the Fund desires and has agreed to retain the
Adviser to render advice and services to the Fund in
connection with management and operation of the Fund pursuant
to terms and conditions set forth herein; and
WHEREAS, the Adviser desires and has agreed to render
such advice and furnish such services pursuant to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of
the mutual promises, covenants, conditions and agreements
contained herein, and for such other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties, each intending to be legally bound
hereby, mutually agree as follows:
PAGE
<PAGE>
1. Employment. The Fund hereby employs the Adviser
and the Adviser hereby accepts such employment, to render
investment advice and investment management services with
respect to the Fund, subject to the supervision and direction
of the Board of Trustees of the Trust (the Trustees ). The
Adviser shall, except as otherwise provided herein, render or
make available all services needed for the management and
operation of the Fund, and shall, as part of its duties
hereunder, (i) furnish the Fund with advice and
recommendations with respect to the investment of the assets
of the Fund and the purchase and sale of the portfolio
securities of the Fund, including the taking of such other
steps as may be necessary to implement such advice and
r e c o mmendations, (ii) furnish the Fund with reports,
statements and other data on securities, economic conditions
and other pertinent subjects which the Trustees may request,
(iii) furnish such office space and personnel as is needed by
the Fund, and (iv) in general, superintend and manage the
investments of the Fund, subject to the ultimate supervision
and direction of the Trustees.
2. Best Efforts. The Adviser hereby agrees to use
its best judgment and efforts in rendering the advice and
services with respect to the Fund as contemplated by this
Agreement. The Adviser further agrees to use its best efforts
in the furnishing of such advice and recommendations with
respect to the Fund, in the preparation of reports and
information, and in the management of the respective assets of
the Fund pursuant to this Agreement. For this purpose the
Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be
necessary to the performance of its obligations under this
Agreement. Without limiting the generality of the foregoing,
the staff and personnel of the Adviser shall be deemed to
include persons employed or retained by the Adviser to furnish
statistical, research, and other factual information, advice
regarding economic factors and trends, information with
respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may
desire and request.
3. Independent Contractor Status. The Adviser shall,
for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent
of the Trust or the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to the
Fund pursuant to the provisions of this Agreement are not to
be deemed exclusive with respect to the Adviser s rendering of
PAGE
<PAGE>
services, and the Adviser shall therefore be free to render
similar or different services to others, provided that, its
ability to render the services described herein shall not be
impaired thereby.
4. Furnishing of Information. The Fund shall from
time to time furnish to the Adviser detailed statements of the
investments and assets of the Fund and information pertaining
to the investment objectives and needs of the Fund, and shall
make available to the Adviser such financial reports, proxy
statements, legal and other information in the possession of
or available to the Fund relating to its investments, as the
same may be relevant to the performance by the Adviser of its
obligations hereunder. The Fund shall furnish such other
information as the Adviser may reasonably request.
5. Fund Records. The Adviser agrees that all records
which it maintains for the Fund shall be the property of the
Fund and that it will surrender promptly to the designated
officers of the Fund any of such records upon request. The
Adviser further agrees to preserve for the period prescribed
by the rules and regulations of the Securities and Exchange
Commission all such records as are required to be maintained
pursuant to said rules. The Adviser agrees that it will
maintain all records and accounts regarding the investment
activities of the Fund in a confidential manner. All such
accounts or records shall be made available within five (5)
business days of request to the accountants or auditors of the
Fund during regular business hours at the Adviser s offices
upon reasonable prior written notice. In addition, the
Adviser will provide any materials reasonably related to the
investment advisory services provided hereunder as may be
reasonably requested in writing by the designated officers of
the Fund or as may be required by any governmental agency
having jurisdiction.
6. Tender Offers. The Adviser hereby agrees that
whenever the Adviser has determined that the Fund should
tender securities pursuant to a tender offer solicitation,
the Adviser shall designate an affiliate as the tendering
dealer, so long as such affiliate is legally permitted to act
in such capacity under the federal securities laws, the rules
promulgated thereunder and the rules of any securities
exchange or association of which such affiliate may be a
member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel
beyond that committed as of the date of this Agreement (other
than normal periodic fees or payments necessary to maintain
its corporate existence and its membership in the National
Association of Securities Dealers, Inc.). This Agreement
shall not obligate the Adviser or such affiliate to (i) act
pursuant to the foregoing requirement under any circumstance
PAGE
<PAGE>
in which either might reasonably believe that liability might
be imposed upon it as a result of so acting, or (ii) institute
legal or other proceedings to collect fees which may be
considered to be due to it from others as a result of such a
tender, unless the Fund shall enter into an agreement with the
Adviser or such affiliate to reimburse it for all expenses
connected with attempting to collect such fees (including
legal fees and expenses and that portion of the compensation
due to their respective employees, which amount is directly
attributable to the time involved in attempting to collect
such fees).
7. Allocation of Costs and Expenses. The Adviser
shall bear and pay the costs of rendering its services
pursuant to the terms of this Agreement, including the fees
paid to any sub-adviser which the Adviser may retain and any
value added taxes due in connection therewith. The Fund shall
bear and pay for all other expenses of its operation,
including but not limited to, organizational and offering
expenses of the Fund and expenses incurred in connection with
the issuance and registration of shares of the Fund; fees of
the Fund s custodian, transfer and shareholder servicing
agent; costs and expenses of pricing and calculating the daily
net asset value of the shares of the Fund and of maintaining
the books of account required by the 1940 Act; expenditures in
connection with meetings of shareholders and Trustees, other
than those called solely to accommodate the Adviser; salaries
of officers and fees and expenses of Trustees or members of
any advisory board or committee who are not affiliated with or
interested persons of the Fund or the Adviser; salaries of
personnel involved in placing orders for the execution of the
p o r tfolio transactions of the Fund or in maintaining
registration of shares of the Fund under state securities
laws; insurance premiums on property or personnel of the Fund
which inure to its benefit; the cost of preparing and printing
reports, proxy statements and prospectuses of the Trust or
other communications for distribution to its shareholders;
legal, auditing, and accounting fees; trade association dues;
fees and expenses or registering and maintaining registration
of shares of the Fund for sale under applicable federal and
state securities laws; and all other charges and costs
associated with the Fund s operations, plus any extraordinary
and non-recurring expenses, except as otherwise prescribed
herein. To the extent the Adviser incurs any costs or
performs any services which are an obligation of the Fund as
set forth herein and to the extent such costs or services have
b e en reasonably rendered, (a) the Fund shall promptly
reimburse the Adviser for such costs and expenses, and (b) the
Adviser shall be entitled to recover from the Fund the actual
costs incurred by the Adviser in rendering such services.
PAGE
<PAGE>
8. Management Fees. (a) In exchange for the
rendering of advice and services pursuant hereto, the Fund
shall pay to the Adviser, and the Adviser shall accept as full
compensation for all investment management services furnished
or provided to the Fund and as full reimbursement for all
expenses assumed by the Adviser, a management fee computed at
the annual rate of .70% of the average daily net assets of the
Fund.
(b) The management fee shall be accrued daily by
the Fund and paid to the Adviser at the end of each calendar
month.
(c) In the case of termination of this Agreement
during any month, the management fee for that month shall be
calculated on the basis of the number of business days during
which it is in effect for that month.
(d) To the extent that the gross operating costs
and expenses of the Fund (excluding any interest, taxes,
brokerage commissions, distribution expenses and, to the
e x t ent permitted, any extraordinary expenses, such as
litigation and non-recurring expenses) exceed the allowable
expense limitations of the state in which shares of the Fund
are registered for sale having the most stringent expenses
reimbursement provisions, the Adviser shall reimburse the Fund
for the amount of such excess.
(e) T h e management fee payable by the Fund
hereunder shall be reduced to the extent that an affiliate of
the Adviser has actually received cash payments of tender
offer solicitation fees (less certain costs and expenses
incurred in connection therewith) as referred to in Paragraph
6 hereof.
9. Prohibition on Purchase of Shares. The Adviser
agrees that neither it nor any of its officers or employees
shall take any short position in the shares of beneficial
interest of the Fund. This prohibition shall not prevent the
purchase of such shares by any of the officers and directors
or bona fide employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the 1940 Act.
10. Compliance with Applicable Law. Nothing contained
herein shall be deemed to require the Fund to take any action
contrary to (a) the Agreement and Declaration of Trust of the
Trust, (b) the By-laws of the Trust, or (c) any applicable
statute or regulation. Nothing contained herein shall be
d e e m ed to relieve or deprive the Trustees of their
PAGE
<PAGE>
responsibility for and control of the conduct of the affairs
of the Fund.
11. Liability. (a) In the absence of willful
m i s feasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of
the Adviser, the Adviser shall not be subject to liability to
the Fund or to any shareholder of the Fund for any act or
omission in the course of or in connection with rendering
services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Adviser
agrees to reimburse the Fund for any and all costs, expenses,
and counsel and Trustees fees reasonably incurred by the Fund
in connection with (i) preparation, printing and distribution
of proxy statements, (ii) amendments to its Registration
Statement, (iii) the holding of meetings of shareholders or
Trustees, (iv) the conduct of factual investigations, (v) any
l e gal or administrative proceedings (including any
a p p l ications for exemptions or determinations by the
Securities and Exchange Commission) which the Fund incurs as a
result of action or inaction on the part of the Adviser or any
of its shareholders where the action or inaction necessitating
such expenditures is (A) directly or indirectly related to any
transactions or proposed transaction in the shares or control
of the Adviser or its affiliates (or litigation related to any
transactions or proposed transaction involving such shares or
control) which shall have been undertaken without the prior
express approval of the Trustees, or (B) within the sole
control of the Adviser or any of its affiliates or any of
t h eir respective officers, directors, employees or
shareholders. The Adviser shall not be obligated pursuant to
the provisions of this Subparagraph 10(b) to reimburse the
Fund for any expenditures related to the institution of an
administrative proceeding or related to civil litigation by
the Fund or by a shareholder of the Trust seeking to recover
all or a portion of the proceeds derived by any shareholder of
the Adviser or any of its affiliates from the sale of shares
of the Adviser or similar matters. So long as this Agreement
remains in effect, the Adviser shall pay to the Fund the
amount due for expenses subject to this Subparagraph 10(b)
within thirty (30) days after a bill or statement has been
received by the Fund therefor. This provision shall not be
deemed to be a waiver of any claim which the Fund may have or
may assert against the Adviser or others for costs, expenses,
or damages heretofore incurred by the Trust or for costs,
expenses, or damages the fund may hereafter incur which are
not reimbursable to it hereunder.
(c) N o provision of this Agreement shall be
construed to protect any Trustee of the Trust or officer of
PAGE
<PAGE>
the Fund, or any director or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940
Act.
(d) The Adviser understands that the obligations of
this Agreement are not personally binding upon any shareholder
of the Fund, but bind only the Trust s property. The Adviser
represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming shareholder
liability for acts or obligations of the Trust.
12. Term of Agreement. This Agreement shall become
effective on the date hereof and shall continue in effect for
t w o years from such date unless sooner terminated as
hereinafter provided, and shall continue in effect from year
to year thereafter so long as such continuation is approved at
least annually by (i) the Trustees of the Trust or by the vote
of a majority of the outstanding voting securities of the
Fund, and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or interested
persons of any such party, with such vote being cast in person
at a meeting called for the purpose of voting on such
approval.
13. Termination. This Agreement may be terminated at
any time without payment of any penalty (a) by the Trustees of
the Trust or by vote of a majority of the outstanding voting
securities of the Fund, upon delivery of sixty (60) days
written notice to the Adviser, or (b) by the Adviser upon
sixty (60) days written notice to the Fund. This Agreement
shall terminate automatically in the event of any transfer or
assignment hereof, as defined in the 1940 Act.
14. No Waiver. The waiver by any party of any breach
of or default under any provision or portion of this Agreement
shall not operate as or be construed to be a waiver of any
subsequent breach or default.
15. Severability. The provisions of this Agreement
shall be considered severable and if for any reason any
provision of this Agreement which is not essential to the
effectuation of the basic purpose of this Agreement is deemed
to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect any
other provision of this Agreement which is valid.
16. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be an original,
but all of which together shall constitute one and the same
agreement.
PAGE
<PAGE>
17. Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
p r ior understandings or agreements between the parties
pertaining to the subject matter hereof, whether oral or
written. This Agreement may only be modified or amended by
mutual written agreement of the parties hereto and, as
required, upon approval of a majority of the outstanding
voting securities of the Fund.
18. Definitions. For purposes of application and
operation of the provisions of this Agreement, the term
majority of the outstanding voting securities shall have the
meaning as set forth in the 1940 Act.
19. Use of Name. In consideration of the execution of
this Agreement, the Adviser hereby grants to the Trust the
right to use the name Conseco as part of its name and the
names of series thereof. The Trust agrees that in the event
this Agreement is terminated, it shall immediately take such
steps as are necessary to amend its name to remove the
reference to Conseco.
20. Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested by their duly
authorized officers on the day and year first above written.
CONSECO FUND GROUP,
on behalf of Equity Fund
ATTEST: By:
[Title]
CONSECO CAPITAL MANAGEMENT,
INC.
ATTEST: By:
PAGE
<PAGE>
[Title]
PAGE
<PAGE>
Exhibit 1B
INVESTMENT ADVISORY AGREEMENT
Between CONSECO FUND GROUP
on behalf of ASSET ALLOCATION FUND
and
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of
this ___ day of ________, 1997, by and between Conseco Fund
Group (the Trust ), a Massachusetts business trust, on behalf
of its series Asset Allocation Fund (the Fund ), and Conseco
Capital Management, Inc. (the Adviser ).
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such pursuant to the provisions of the
Investment Company Act of 1940 (the 1940 Act );
WHEREAS, the Fund is a diversified series of the Trust
operating as an open-end management investment company under
the 1940 Act, and is currently divided into Class A and Class
Y shares to be offered to individual and institutional
investors, respectively;
WHEREAS, the Adviser is an investment adviser, registered
as such pursuant to the provisions of the Investment Advisers
Act of 1940, and is engaged in the business of rendering
investment advice and investment management services as an
independent contractor;
WHEREAS, the Fund desires and has agreed to retain the
Adviser to render advice and services to the Fund in
connection with management and operation of the Fund pursuant
to terms and conditions set forth herein; and
WHEREAS, the Adviser desires and has agreed to render
such advice and furnish such services pursuant to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of
the mutual promises, covenants, conditions and agreements
contained herein, and for such other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties, each intending to be legally bound
hereby, mutually agree as follows:
PAGE
<PAGE>
1. Employment. The Fund hereby employs the Adviser
and the Adviser hereby accepts such employment, to render
investment advice and investment management services with
respect to the Fund, subject to the supervision and direction
of the Board of Trustees of the Trust (the Trustees ). The
Adviser shall, except as otherwise provided herein, render or
make available all services needed for the management and
operation of the Fund, and shall, as part of its duties
hereunder, (i) furnish the Fund with advice and
recommendations with respect to the investment of the assets
of the Fund and the purchase and sale of the portfolio
securities of the Fund, including the taking of such other
steps as may be necessary to implement such advice and
r e c o mmendations, (ii) furnish the Fund with reports,
statements and other data on securities, economic conditions
and other pertinent subjects which the Trustees may request,
(iii) furnish such office space and personnel as is needed by
the Fund, and (iv) in general, superintend and manage the
investments of the Fund, subject to the ultimate supervision
and direction of the Trustees.
2. Best Efforts. The Adviser hereby agrees to use
its best judgment and efforts in rendering the advice and
services with respect to the Fund as contemplated by this
Agreement. The Adviser further agrees to use its best efforts
in the furnishing of such advice and recommendations with
respect to the Fund, in the preparation of reports and
information, and in the management of the respective assets of
the Fund pursuant to this Agreement. For this purpose the
Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be
necessary to the performance of its obligations under this
Agreement. Without limiting the generality of the foregoing,
the staff and personnel of the Adviser shall be deemed to
include persons employed or retained by the Adviser to furnish
statistical, research, and other factual information, advice
regarding economic factors and trends, information with
respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may
desire and request.
3. Independent Contractor Status. The Adviser shall,
for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent
of the Trust or the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to the
Fund pursuant to the provisions of this Agreement are not to
be deemed exclusive with respect to the Adviser s rendering of
PAGE
<PAGE>
services, and the Adviser shall therefore be free to render
similar or different services to others, provided that, its
ability to render the services described herein shall not be
impaired thereby.
4. Furnishing of Information. The Fund shall from
time to time furnish to the Adviser detailed statements of the
investments and assets of the Fund and information pertaining
to the investment objectives and needs of the Fund, and shall
make available to the Adviser such financial reports, proxy
statements, legal and other information in the possession of
or available to the Fund relating to its investments, as the
same may be relevant to the performance by the Adviser of its
obligations hereunder. The Fund shall furnish such other
information as the Adviser may reasonably request.
5. Fund Records. The Adviser agrees that all records
which it maintains for the Fund shall be the property of the
Fund and that it will surrender promptly to the designated
officers of the Fund any of such records upon request. The
Adviser further agrees to preserve for the period prescribed
by the rules and regulations of the Securities and Exchange
Commission all such records as are required to be maintained
pursuant to said rules. The Adviser agrees that it will
maintain all records and accounts regarding the investment
activities of the Fund in a confidential manner. All such
accounts or records shall be made available within five (5)
business days of request to the accountants or auditors of the
Fund during regular business hours at the Adviser s offices
upon reasonable prior written notice. In addition, the
Adviser will provide any materials reasonably related to the
investment advisory services provided hereunder as may be
reasonably requested in writing by the designated officers of
the Fund or as may be required by any governmental agency
having jurisdiction.
6. Tender Offers. The Adviser hereby agrees that
whenever the Adviser has determined that the Fund should
tender securities pursuant to a tender offer solicitation,
the Adviser shall designate an affiliate as the tendering
dealer, so long as such affiliate is legally permitted to act
in such capacity under the federal securities laws, the rules
promulgated thereunder and the rules of any securities
exchange or association of which such affiliate may be a
member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel
beyond that committed as of the date of this Agreement (other
than normal periodic fees or payments necessary to maintain
its corporate existence and its membership in the National
Association of Securities Dealers, Inc.). This Agreement
shall not obligate the Adviser or such affiliate to (i) act
pursuant to the foregoing requirement under any circumstance
PAGE
<PAGE>
in which either might reasonably believe that liability might
be imposed upon it as a result of so acting, or (ii) institute
legal or other proceedings to collect fees which may be
considered to be due to it from others as a result of such a
tender, unless the Fund shall enter into an agreement with the
Adviser or such affiliate to reimburse it for all expenses
connected with attempting to collect such fees (including
legal fees and expenses and that portion of the compensation
due to their respective employees, which amount is directly
attributable to the time involved in attempting to collect
such fees).
7. Allocation of Costs and Expenses. The Adviser
shall bear and pay the costs of rendering its services
pursuant to the terms of this Agreement, including the fees
paid to any sub-adviser which the Adviser may retain and any
value added taxes due in connection therewith. The Fund shall
bear and pay for all other expenses of its operation,
including but not limited to, organizational and offering
expenses of the Fund and expenses incurred in connection with
the issuance and registration of shares of the Fund; fees of
the Fund s custodian, transfer and shareholder servicing
agent; costs and expenses of pricing and calculating the daily
net asset value of the shares of the Fund and of maintaining
the books of account required by the 1940 Act; expenditures in
connection with meetings of shareholders and Trustees, other
than those called solely to accommodate the Adviser; salaries
of officers and fees and expenses of Trustees or members of
any advisory board or committee who are not affiliated with or
interested persons of the Fund or the Adviser; salaries of
personnel involved in placing orders for the execution of the
p o r tfolio transactions of the Fund or in maintaining
registration of shares of the Fund under state securities
laws; insurance premiums on property or personnel of the Fund
which inure to its benefit; the cost of preparing and printing
reports, proxy statements and prospectuses of the Trust or
other communications for distribution to its shareholders;
legal, auditing, and accounting fees; trade association dues;
fees and expenses or registering and maintaining registration
of shares of the Fund for sale under applicable federal and
state securities laws; and all other charges and costs
associated with the Fund s operations, plus any extraordinary
and non-recurring expenses, except as otherwise prescribed
herein. To the extent the Adviser incurs any costs or
performs any services which are an obligation of the Fund as
set forth herein and to the extent such costs or services have
b e en reasonably rendered, (a) the Fund shall promptly
reimburse the Adviser for such costs and expenses, and (b) the
Adviser shall be entitled to recover from the Fund the actual
costs incurred by the Adviser in rendering such services.
PAGE
<PAGE>
8. Management Fees. (a) In exchange for the
rendering of advice and services pursuant hereto, the Fund
shall pay to the Adviser, and the Adviser shall accept as full
compensation for all investment management services furnished
or provided to the Fund and as full reimbursement for all
expenses assumed by the Adviser, a management fee computed at
the annual rate of .70% of the average daily net assets of the
Fund.
(b) The management fee shall be accrued daily by
the Fund and paid to the Adviser at the end of each calendar
month.
(c) In the case of termination of this Agreement
during any month, the management fee for that month shall be
calculated on the basis of the number of business days during
which it is in effect for that month.
(d) To the extent that the gross operating costs
and expenses of the Fund (excluding any interest, taxes,
brokerage commissions, distribution expenses and, to the
e x t ent permitted, any extraordinary expenses, such as
litigation and non-recurring expenses) exceed the allowable
expense limitations of the state in which shares of the Fund
are registered for sale having the most stringent expenses
reimbursement provisions, the Adviser shall reimburse the Fund
for the amount of such excess.
(e) T h e management fee payable by the Fund
hereunder shall be reduced to the extent that an affiliate of
the Adviser has actually received cash payments of tender
offer solicitation fees (less certain costs and expenses
incurred in connection therewith) as referred to in Paragraph
6 hereof.
9. Prohibition on Purchase of Shares. The Adviser
agrees that neither it nor any of its officers or employees
shall take any short position in the shares of beneficial
interest of the Fund. This prohibition shall not prevent the
purchase of such shares by any of the officers and directors
or bona fide employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the 1940 Act.
10. Compliance with Applicable Law. Nothing contained
herein shall be deemed to require the Fund to take any action
contrary to (a) the Agreement and Declaration of Trust of the
Trust, (b) the By-laws of the Trust, or (c) any applicable
statute or regulation. Nothing contained herein shall be
d e e m ed to relieve or deprive the Trustees of their
PAGE
<PAGE>
responsibility for and control of the conduct of the affairs
of the Fund.
11. Liability. (a) In the absence of willful
m i s feasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of
the Adviser, the Adviser shall not be subject to liability to
the Fund or to any shareholder of the Fund for any act or
omission in the course of or in connection with rendering
services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Adviser
agrees to reimburse the Fund for any and all costs, expenses,
and counsel and Trustees fees reasonably incurred by the Fund
in connection with (i) preparation, printing and distribution
of proxy statements, (ii) amendments to its Registration
Statement, (iii) the holding of meetings of shareholders or
Trustees, (iv) the conduct of factual investigations, (v) any
l e gal or administrative proceedings (including any
a p p l ications for exemptions or determinations by the
Securities and Exchange Commission) which the Fund incurs as a
result of action or inaction on the part of the Adviser or any
of its shareholders where the action or inaction necessitating
such expenditures is (A) directly or indirectly related to any
transactions or proposed transaction in the shares or control
of the Adviser or its affiliates (or litigation related to any
transactions or proposed transaction involving such shares or
control) which shall have been undertaken without the prior
express approval of the Trustees, or (B) within the sole
control of the Adviser or any of its affiliates or any of
t h eir respective officers, directors, employees or
shareholders. The Adviser shall not be obligated pursuant to
the provisions of this Subparagraph 10(b) to reimburse the
Fund for any expenditures related to the institution of an
administrative proceeding or related to civil litigation by
the Fund or by a shareholder of the Trust seeking to recover
all or a portion of the proceeds derived by any shareholder of
the Adviser or any of its affiliates from the sale of shares
of the Adviser or similar matters. So long as this Agreement
remains in effect, the Adviser shall pay to the Fund the
amount due for expenses subject to this Subparagraph 10(b)
within thirty (30) days after a bill or statement has been
received by the Fund therefor. This provision shall not be
deemed to be a waiver of any claim which the Fund may have or
may assert against the Adviser or others for costs, expenses,
or damages heretofore incurred by the Trust or for costs,
expenses, or damages the fund may hereafter incur which are
not reimbursable to it hereunder.
(c) N o provision of this Agreement shall be
construed to protect any Trustee of the Trust or officer of
PAGE
<PAGE>
the Fund, or any director or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940
Act.
(d) The Adviser understands that the obligations of
this Agreement are not personally binding upon any shareholder
of the Fund, but bind only the Trust s property. The Adviser
represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming shareholder
liability for acts or obligations of the Trust.
12. Term of Agreement. This Agreement shall become
effective on the date hereof and shall continue in effect for
t w o years from such date unless sooner terminated as
hereinafter provided, and shall continue in effect from year
to year thereafter so long as such continuation is approved at
least annually by (i) the Trustees of the Trust or by the vote
of a majority of the outstanding voting securities of the
Fund, and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or interested
persons of any such party, with such vote being cast in person
at a meeting called for the purpose of voting on such
approval.
13. Termination. This Agreement may be terminated at
any time without payment of any penalty (a) by the Trustees of
the Trust or by vote of a majority of the outstanding voting
securities of the Fund, upon delivery of sixty (60) days
written notice to the Adviser, or (b) by the Adviser upon
sixty (60) days written notice to the Fund. This Agreement
shall terminate automatically in the event of any transfer or
assignment hereof, as defined in the 1940 Act.
14. No Waiver. The waiver by any party of any breach
of or default under any provision or portion of this Agreement
shall not operate as or be construed to be a waiver of any
subsequent breach or default.
15. Severability. The provisions of this Agreement
shall be considered severable and if for any reason any
provision of this Agreement which is not essential to the
effectuation of the basic purpose of this Agreement is deemed
to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect any
other provision of this Agreement which is valid.
16. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be an original,
but all of which together shall constitute one and the same
agreement.
PAGE
<PAGE>
17. Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
p r ior understandings or agreements between the parties
pertaining to the subject matter hereof, whether oral or
written. This Agreement may only be modified or amended by
mutual written agreement of the parties hereto and, as
required, upon approval of a majority of the outstanding
voting securities of the Fund.
18. Definitions. For purposes of application and
operation of the provisions of this Agreement, the term
majority of the outstanding voting securities shall have the
meaning as set forth in the 1940 Act.
19. Use of Name. In consideration of the execution of
this Agreement, the Adviser hereby grants to the Trust the
right to use the name Conseco as part of its name and the
names of series thereof. The Trust agrees that in the event
this Agreement is terminated, it shall immediately take such
steps as are necessary to amend its name to remove the
reference to Conseco.
20. Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested by their duly
authorized officers on the day and year first above written.
CONSECO FUND GROUP,
on behalf of Asset Allocation
Fund
ATTEST:
By:
CONSECO CAPITAL MANAGEMENT,
INC.
ATTEST:
By:
PAGE
<PAGE>
[Title]
PAGE
<PAGE>
Exhibit 1C
INVESTMENT ADVISORY AGREEMENT
Between CONSECO FUND GROUP
on behalf of FIXED INCOME FUND
and
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of
this ___ day of ________, 1997, by and between Conseco Fund
Group (the Trust ), a Massachusetts business trust, on behalf
of its series Fixed Income Fund (the Fund ), and Conseco
Capital Management, Inc. (the Adviser ).
WITNESSETH:
WHEREAS, the Trust is an open-end management investment
company, registered as such pursuant to the provisions of the
Investment Company Act of 1940 (the 1940 Act );
WHEREAS, the Fund is a diversified series of the Trust
operating as an open-end management investment company under
the 1940 Act, and is currently divided into Class A and Class
Y shares to be offered to individual and institutional
investors, respectively;
WHEREAS, the Adviser is an investment adviser, registered
as such pursuant to the provisions of the Investment Advisers
Act of 1940, and is engaged in the business of rendering
investment advice and investment management services as an
independent contractor;
WHEREAS, the Fund desires and has agreed to retain the
Adviser to render advice and services to the Fund in
connection with management and operation of the Fund pursuant
to terms and conditions set forth herein; and
WHEREAS, the Adviser desires and has agreed to render
such advice and furnish such services pursuant to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of
the mutual promises, covenants, conditions and agreements
contained herein, and for such other good and valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties, each intending to be legally bound
hereby, mutually agree as follows:
PAGE
<PAGE>
1. Employment. The Fund hereby employs the Adviser
and the Adviser hereby accepts such employment, to render
investment advice and investment management services with
respect to the Fund, subject to the supervision and direction
of the Board of Trustees of the Trust (the Trustees ). The
Adviser shall, except as otherwise provided herein, render or
make available all services needed for the management and
operation of the Fund, and shall, as part of its duties
hereunder, (i) furnish the Fund with advice and
recommendations with respect to the investment of the assets
of the Fund and the purchase and sale of the portfolio
securities of the Fund, including the taking of such other
steps as may be necessary to implement such advice and
r e c o mmendations, (ii) furnish the Fund with reports,
statements and other data on securities, economic conditions
and other pertinent subjects which the Trustees may request,
(iii) furnish such office space and personnel as is needed by
the Fund, and (iv) in general, superintend and manage the
investments of the Fund, subject to the ultimate supervision
and direction of the Trustees.
2. Best Efforts. The Adviser hereby agrees to use
its best judgment and efforts in rendering the advice and
services with respect to the Fund as contemplated by this
Agreement. The Adviser further agrees to use its best efforts
in the furnishing of such advice and recommendations with
respect to the Fund, in the preparation of reports and
information, and in the management of the respective assets of
the Fund pursuant to this Agreement. For this purpose the
Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be
necessary to the performance of its obligations under this
Agreement. Without limiting the generality of the foregoing,
the staff and personnel of the Adviser shall be deemed to
include persons employed or retained by the Adviser to furnish
statistical, research, and other factual information, advice
regarding economic factors and trends, information with
respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may
desire and request.
3. Independent Contractor Status. The Adviser shall,
for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent
of the Trust or the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to the
Fund pursuant to the provisions of this Agreement are not to
PAGE
<PAGE>
be deemed exclusive with respect to the Adviser s rendering of
services, and the Adviser shall therefore be free to render
similar or different services to others, provided that, its
ability to render the services described herein shall not be
impaired thereby.
4. Furnishing of Information. The Fund shall from
time to time furnish to the Adviser detailed statements of the
investments and assets of the Fund and information pertaining
to the investment objectives and needs of the Fund, and shall
make available to the Adviser such financial reports, proxy
statements, legal and other information in the possession of
or available to the Fund relating to its investments, as the
same may be relevant to the performance by the Adviser of its
obligations hereunder. The Fund shall furnish such other
information as the Adviser may reasonably request.
5. Fund Records. The Adviser agrees that all records
which it maintains for the Fund shall be the property of the
Fund and that it will surrender promptly to the designated
officers of the Fund any of such records upon request. The
Adviser further agrees to preserve for the period prescribed
by the rules and regulations of the Securities and Exchange
Commission all such records as are required to be maintained
pursuant to said rules. The Adviser agrees that it will
maintain all records and accounts regarding the investment
activities of the Fund in a confidential manner. All such
accounts or records shall be made available within five (5)
business days of request to the accountants or auditors of the
Fund during regular business hours at the Adviser s offices
upon reasonable prior written notice. In addition, the
Adviser will provide any materials reasonably related to the
investment advisory services provided hereunder as may be
reasonably requested in writing by the designated officers of
the Fund or as may be required by any governmental agency
having jurisdiction.
6. Tender Offers. The Adviser hereby agrees that
whenever the Adviser has determined that the Fund should
tender securities pursuant to a tender offer solicitation,
the Adviser shall designate an affiliate as the tendering
dealer, so long as such affiliate is legally permitted to act
in such capacity under the federal securities laws, the rules
promulgated thereunder and the rules of any securities
exchange or association of which such affiliate may be a
member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel
beyond that committed as of the date of this Agreement (other
than normal periodic fees or payments necessary to maintain
its corporate existence and its membership in the National
Association of Securities Dealers, Inc.). This Agreement
shall not obligate the Adviser or such affiliate to (i) act
PAGE
<PAGE>
pursuant to the foregoing requirement under any circumstance
in which either might reasonably believe that liability might
be imposed upon it as a result of so acting, or (ii) institute
legal or other proceedings to collect fees which may be
considered to be due to it from others as a result of such a
tender, unless the Fund shall enter into an agreement with the
Adviser or such affiliate to reimburse it for all expenses
connected with attempting to collect such fees (including
legal fees and expenses and that portion of the compensation
due to their respective employees, which amount is directly
attributable to the time involved in attempting to collect
such fees).
7. Allocation of Costs and Expenses. The Adviser
shall bear and pay the costs of rendering its services
pursuant to the terms of this Agreement, including the fees
paid to any sub-adviser which the Adviser may retain and any
value added taxes due in connection therewith. The Fund shall
bear and pay for all other expenses of its operation,
including but not limited to, organizational and offering
expenses of the Fund and expenses incurred in connection with
the issuance and registration of shares of the Fund; fees of
the Fund s custodian, transfer and shareholder servicing
agent; costs and expenses of pricing and calculating the daily
net asset value of the shares of the Fund and of maintaining
the books of account required by the 1940 Act; expenditures in
connection with meetings of shareholders and Trustees, other
than those called solely to accommodate the Adviser; salaries
of officers and fees and expenses of Trustees or members of
any advisory board or committee who are not affiliated with or
interested persons of the Fund or the Adviser; salaries of
personnel involved in placing orders for the execution of the
p o r tfolio transactions of the Fund or in maintaining
registration of shares of the Fund under state securities
laws; insurance premiums on property or personnel of the Fund
which inure to its benefit; the cost of preparing and printing
reports, proxy statements and prospectuses of the Trust or
other communications for distribution to its shareholders;
legal, auditing, and accounting fees; trade association dues;
fees and expenses or registering and maintaining registration
of shares of the Fund for sale under applicable federal and
state securities laws; and all other charges and costs
associated with the Fund s operations, plus any extraordinary
and non-recurring expenses, except as otherwise prescribed
herein. To the extent the Adviser incurs any costs or
performs any services which are an obligation of the Fund as
set forth herein and to the extent such costs or services have
b e en reasonably rendered, (a) the Fund shall promptly
reimburse the Adviser for such costs and expenses, and (b) the
Adviser shall be entitled to recover from the Fund the actual
costs incurred by the Adviser in rendering such services.
PAGE
<PAGE>
8. Management Fees. (a) In exchange for the
rendering of advice and services pursuant hereto, the Fund
shall pay to the Adviser, and the Adviser shall accept as full
compensation for all investment management services furnished
or provided to the Fund and as full reimbursement for all
expenses assumed by the Adviser, a management fee computed at
the annual rate of .45% of the average daily net assets of the
Fund.
(b) The management fee shall be accrued daily by
the Fund and paid to the Adviser at the end of each calendar
month.
(c) In the case of termination of this Agreement
during any month, the management fee for that month shall be
calculated on the basis of the number of business days during
which it is in effect for that month.
(d) To the extent that the gross operating costs
and expenses of the Fund (excluding any interest, taxes,
brokerage commissions, distribution expenses and, to the
e x t ent permitted, any extraordinary expenses, such as
litigation and non-recurring expenses) exceed the allowable
expense limitations of the state in which shares of the Fund
are registered for sale having the most stringent expenses
reimbursement provisions, the Adviser shall reimburse the Fund
for the amount of such excess.
(e) T h e management fee payable by the Fund
hereunder shall be reduced to the extent that an affiliate of
the Adviser has actually received cash payments of tender
offer solicitation fees (less certain costs and expenses
incurred in connection therewith) as referred to in Paragraph
6 hereof.
9. Prohibition on Purchase of Shares. The Adviser
agrees that neither it nor any of its officers or employees
shall take any short position in the shares of beneficial
interest of the Fund. This prohibition shall not prevent the
purchase of such shares by any of the officers and directors
or bona fide employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the 1940 Act.
10. Compliance with Applicable Law. Nothing contained
herein shall be deemed to require the Fund to take any action
contrary to (a) the Agreement and Declaration of Trust of the
Trust, (b) the By-laws of the Trust, or (c) any applicable
statute or regulation. Nothing contained herein shall be
d e e m ed to relieve or deprive the Trustees of their
PAGE
<PAGE>
responsibility for and control of the conduct of the affairs
of the Fund.
11. Liability. (a) In the absence of willful
m i s feasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of
the Adviser, the Adviser shall not be subject to liability to
the Fund or to any shareholder of the Fund for any act or
omission in the course of or in connection with rendering
services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Adviser
agrees to reimburse the Fund for any and all costs, expenses,
and counsel and Trustees fees reasonably incurred by the Fund
in connection with (i) preparation, printing and distribution
of proxy statements, (ii) amendments to its Registration
Statement, (iii) the holding of meetings of shareholders or
Trustees, (iv) the conduct of factual investigations, (v) any
l e gal or administrative proceedings (including any
a p p l ications for exemptions or determinations by the
Securities and Exchange Commission) which the Fund incurs as a
result of action or inaction on the part of the Adviser or any
of its shareholders where the action or inaction necessitating
such expenditures is (A) directly or indirectly related to any
transactions or proposed transaction in the shares or control
of the Adviser or its affiliates (or litigation related to any
transactions or proposed transaction involving such shares or
control) which shall have been undertaken without the prior
express approval of the Trustees, or (B) within the sole
control of the Adviser or any of its affiliates or any of
t h eir respective officers, directors, employees or
shareholders. The Adviser shall not be obligated pursuant to
the provisions of this Subparagraph 10(b) to reimburse the
Fund for any expenditures related to the institution of an
administrative proceeding or related to civil litigation by
the Fund or by a shareholder of the Trust seeking to recover
all or a portion of the proceeds derived by any shareholder of
the Adviser or any of its affiliates from the sale of shares
of the Adviser or similar matters. So long as this Agreement
remains in effect, the Adviser shall pay to the Fund the
amount due for expenses subject to this Subparagraph 10(b)
within thirty (30) days after a bill or statement has been
received by the Fund therefor. This provision shall not be
deemed to be a waiver of any claim which the Fund may have or
may assert against the Adviser or others for costs, expenses,
or damages heretofore incurred by the Trust or for costs,
expenses, or damages the fund may hereafter incur which are
not reimbursable to it hereunder.
(c) N o provision of this Agreement shall be
construed to protect any Trustee of the Trust or officer of
PAGE
<PAGE>
the Fund, or any director or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940
Act.
(d) The Adviser understands that the obligations of
this Agreement are not personally binding upon any shareholder
of the Fund, but bind only the Trust s property. The Adviser
represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming shareholder
liability for acts or obligations of the Trust.
12. Term of Agreement. This Agreement shall become
effective on the date hereof and shall continue in effect for
t w o years from such date unless sooner terminated as
hereinafter provided, and shall continue in effect from year
to year thereafter so long as such continuation is approved at
least annually by (i) the Trustees of the Trust or by the vote
of a majority of the outstanding voting securities of the
Fund, and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or interested
persons of any such party, with such vote being cast in person
at a meeting called for the purpose of voting on such
approval.
13. Termination. This Agreement may be terminated at
any time without payment of any penalty (a) by the Trustees of
the Trust or by vote of a majority of the outstanding voting
securities of the Fund, upon delivery of sixty (60) days
written notice to the Adviser, or (b) by the Adviser upon
sixty (60) days written notice to the Fund. This Agreement
shall terminate automatically in the event of any transfer or
assignment hereof, as defined in the 1940 Act.
14. No Waiver. The waiver by any party of any breach
of or default under any provision or portion of this Agreement
shall not operate as or be construed to be a waiver of any
subsequent breach or default.
15. Severability. The provisions of this Agreement
shall be considered severable and if for any reason any
provision of this Agreement which is not essential to the
effectuation of the basic purpose of this Agreement is deemed
to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect any
other provision of this Agreement which is valid.
16. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be an original,
but all of which together shall constitute one and the same
agreement.
PAGE
<PAGE>
17. Entire Agreement. This Agreement represents the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all
p r ior understandings or agreements between the parties
pertaining to the subject matter hereof, whether oral or
written. This Agreement may only be modified or amended by
mutual written agreement of the parties hereto and, as
required, upon approval of a majority of the outstanding
voting securities of the Fund.
18. Definitions. For purposes of application and
operation of the provisions of this Agreement, the term
majority of the outstanding voting securities shall have the
meaning as set forth in the 1940 Act.
19. Use of Name. In consideration of the execution of
this Agreement, the Adviser hereby grants to the Trust the
right to use the name Conseco as part of its name and the
names of series thereof. The Trust agrees that in the event
this Agreement is terminated, it shall immediately take such
steps as are necessary to amend its name to remove the
reference to Conseco.
20. Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested by their duly
authorized officers on the day and year first above written.
CONSECO FUND GROUP,
on behalf of Fixed Income
Fund
ATTEST:
By:
[Title]
CONSECO CAPITAL MANAGEMENT,
INC.
ATTEST:
By:
PAGE
<PAGE>
[Title]
PAGE
<PAGE>
Exhibit 2:
Financial Statements of
Conseco Capital Management, Inc.<PAGE>
CONSECO CAPITAL MANAGEMENT, INC.
(a wholly-owned subsidiary of Conseco, Inc.)
Balance Sheet
December 31, 1996 and 1995
PAGE
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Conseco Capital Management, Inc.
(a wholly-owned subsidiary of Conseco, Inc.)
We have audited the accompanying balance sheet of Conseco
Capital Management, Inc. as of December 31, 1996 and 1995.
This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on
this balance sheet based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the balance sheet is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet. An audit also
i n c ludes assessing the accounting principles used and
s i g nificant estimates made by management, as well as
evaluating the overall balance sheet presentation. We believe
that our audits of the balance sheet provide a reasonable
basis for our opinion.
In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position of
Conseco Capital Management, Inc. as of December 31, 1996 and
1 9 95, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
L.L.P.
Indianapolis, Indiana
February 24, 1997
PAGE
<PAGE>
<TABLE>
<CAPTION>
CONSECO CAPITAL MANAGEMENT, INC.
(a wholly-owned subsidiary of Conseco, Inc.)
BALANCE SHEET
December 31,
1996 1995
ASSETS
<S> <C>
<C>
Cash and cash equivalents $ 393,215
$ 189,562
Accounts receivable 846,197
774,228
Receivable from affiliated companies 556,272
314,853
Prepaid expenses 18,909
52,979
Investment in initial shares of and amount
advanced to affiliated mutual funds
236,354 -
Equipment, net of accumulated depreciation of
$524,427 in 1996 and $382,349 in 1995 381,208
661,503
Total assets $
2,432,155$1,993,125
LIABILITIES
Accounts payable and accrued expenses $ 787,084
$545,093
Payable to affiliated companies 442,028
1,176,862
Total liabilities 1,229,112
1,721,955
STOCKHOLDER'S EQUITY
Common stock, par value $1 per share; authorized
1,000 shares; issued and outstanding 100 shares
100 100
Paid in capital 226,900
226,900
Retained earnings 976,043
44,170
PAGE
<PAGE>
Total stockholder's equity 1,203,043
271,170
Total liabilities and stockholder's equity
$2,432,155$1,993,125
</TABLE>
The accompanying notes are an integral part of the balance
sheet.
PAGE
<PAGE>
CONSECO CAPITAL MANAGEMENT, INC.
NOTES TO BALANCE SHEET
GENERAL
Conseco Capital Management, Inc. (the "Company"), an
investment advisor organized in 1981, is a wholly-owned
subsidiary of Conseco, Inc. ("Conseco"). Conseco is a
specialized financial services holding company whose
subsidiaries develop, market, issue and administer annuity
and life insurance products. The Company provides investment
advisory and portfolio management services to Conseco, its
affiliated companies and non-affiliated companies. Investment
advisory fees are recognized in the period services are
performed. Approximately 74 percent of such fees are from
affiliated companies. It has been the Company s practice to
dividend cash in excess of current working capital needs to
Conseco. The Company paid dividends of $11,211,639 and
$16,812,609 to Conseco in 1996 and 1995, respectively.
The balance sheet has been prepared in accordance with
generally accepted accounting principles and, as such,
includes amounts based on informed estimates and judgements of
management with consideration given to materiality. Actual
amounts could differ from those estimates.
CASH EQUIVALENTS
Cash equivalents consist of commercial paper with
maturities of less than three months. The carrying amount of
cash equivalents approximates their fair value.
RECEIVABLE FROM AFFILIATED COMPANIES
Receivable from affiliated companies is primarily
comprised of amounts due for investment advisory and portfolio
management services provided to Conseco and its subsidiaries.
INVESTMENT IN INITIAL SHARES OF AND AMOUNT ADVANCED TO
AFFILIATED MUTUAL FUNDS
On December 18, 1996, the Company provided the initial
capital to three affiliated mutual funds by purchasing 10,005
shares from such funds for $100,050. The Company carries this
investment at fair value. Proceeds from redemptions of these
shares prior to December 18, 2001, are subject to a reduction
up to the value of the shares redeemed or $28 per share, with
such reduction declining ratably to zero over the next five
years.
PAGE
<PAGE>
The Company also advanced $136,304 to the mutual funds
for organization costs, which is to be repaid in equal
installments over the next 5 years without interest.
PAGE
<PAGE>
EQUIPMENT
Equipment is carried at cost, net of accumulated
depreciation. Depreciation expense is computed using the
straight-line method over the estimated useful life of 5
years.
PAYABLE TO AFFILIATED COMPANIES
The Company has management and service agreements with
subsidiaries of Conseco. Payable to affiliated companies is
primarily comprised of amounts due for these services and
investment advisory fees received in advance from affiliated
companies.
COMMITMENTS AND CONTINGENCIES
The Company and its affiliated mutual funds have entered
into agreements to limit the expenses of the funds to a
specified level of net assets. As such, the Company is
obligated to reimburse the funds for expenses in excess of the
agreed-upon limits.
INCOME TAXES
The Company is included in Conseco's consolidated income
tax returns. The Company calculates its taxes as if it were a
separate filing company and pays such amounts to Conseco in
accordance with a tax sharing agreement.
PAGE
<PAGE>
Exhibit 3:
Distribution and Service Plans
Pursuant to Rule 12b-1<PAGE>
Exhibit 3A
Class A
Plan of Distribution and Service
Pursuant to Rule 12b-1
CONSECO FUND GROUP
Equity Fund
March ___, 1997
WHEREAS, Conseco Fund Group, a Massachusetts business
trust (the Trust ), engages in business as an open-end
management investment company and is registered as such with
the Securities and Exchange Commission;
WHEREAS, the Trust has engaged Conseco Equity Sales, Inc.
(the Distributor ) as distributor of the shares of the Trust
p u r s u a nt to an Underwriting Agreement dated as of
______________ ___, 1997;
WHEREAS, the Trust is authorized to issue shares in
separate series (the Series ); the Trustees, to date, have
created three Series of shares one of which series is the
Equity Fund (the Fund ); and the Trustees may create
additional Series in the future as the Trustees deem necessary
and appropriate;
WHEREAS, the Trust is authorized to issue shares of each
Series in one or more classes, and to date, the Trustees have
created two classes: Class A Shares and Class Y Shares ;
W H EREAS, the Trust desires to adopt a Plan of
Distribution and Service pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the Act ) on behalf of the
Fund and the Trustees of the Trust have determined that there
is a reasonable likelihood that adoption of this Plan will
benefit the Fund and its shareholders; and
WHEREAS, expenditures under the Plan of Distribution
and Service are primarily intended to result in the sale of
Class A Shares of the Fund within the meaning of paragraph
(a)(2) of Rule 12b-1 under the Act.
NOW, THEREFORE, the Trust hereby adopts, on behalf of the
Fund, and the Distributor hereby agrees to the terms of, this
Plan of Distribution and Service (the Plan ) in accordance
with Rule 12b-1, on the following terms and conditions:
1. (a) T h e T rust is authorized to compensate the
Distributor for services performed and expenses
PAGE
<PAGE>
incurred by the Distributor in connection with the
distribution of Class A Shares of the Fund and the
servicing of accounts holding such Shares of the
Fund.
(b) The Fund shall pay to the Distributor, at the end of
each month, an amount equal to the average daily net
assets of the Fund multiplied by that portion of
0.50% which the number of days in the month bears to
365. Such payment represents reimbursement for (i)
e x penses incurred by the Distributor for the
promotion and distribution of Class A Shares of the
Fund ( Distribution Fee ) and (ii) fees paid to
Authorized Dealers (defined below).
(c) Such compensation shall be calculated and accrued
daily and paid monthly or at such other intervals as
the Board of Trustees may determine.
(d) The Distributor shall:
(i) (1) retain that portion of the Distribution Fee
necessary to compensate it for costs associated
with the distribution of Class A Shares of the
Fund; and (2) disburse that portion of the
Distribution Fee to Authorized Dealers
necessary to reimburse expenses of Authorized
Dealers incurred in the promotion and
distribution of Class A Shares of the Fund; and
(ii) pay any Service Fee it receives under the Plan
for which a particular underwriter, dealer,
broker, bank or selling entity having a Selling
Group Agreement in effect (the Authorized
Dealers ) is the dealer of record (which may
include the Distributor) to such Authorized
Dealers to compensate such Authorized Dealers
for providing personal services to shareholders
relating to their investment and/or maintaining
shareholder accounts.
(e) Expenses for which the Distributor, or an Authorized
D e aler, may receive Distribution Fee payments
include, but are not limited to, the printing of
prospectuses, statements of additional information
and reports used for sales purposes, expenses of
p r e p aration of sales literature and related
expenses, advertisements, other distribution-related
expenses (including personnel of the Distributor),
c e rtain overhead expenses attributable to the
distribution of Class A Shares of the Fund such as
communications, salaries, training, supplies,
PAGE
<PAGE>
photocopying and similar types of expenses and fees
paid to Authorized Dealers.
(f) Services for which Authorized Dealers may receive
Service Fee payments include, but are not limited
to, any or all of the following: maintaining account
r e cords for shareholders who beneficially own
S h a r es; answering inquiries relating to the
shareholders accounts, the policies of the Trust
and the performance of their investment; providing
assistance and handling transmission of funds in
connection with purchase, redemption and exchange
orders for Shares; providing assistance in
c o n n ection with changing account setups and
e n rolling in various optional Trust services;
p r o d ucing and disseminating shareholder
communications or servicing materials; the ordinary
or capital expenses, such as equipment, rent,
f i xtures, salaries, bonuses, reporting and
recordkeeping and third party consultancy or similar
expenses, relating to any activity for which payment
is authorized by the Board of Trustees; and the
financing of any other activity for which payment is
authorized by the Board of Trustees.
(g) In no event shall the sum of the Distribution Fee
and Service Fee exceed the Distributor s actual
expenses incurred during the period for which such
Fees will be paid. Notwithstanding the foregoing,
the sum of the Distribution Fee and Service Fee may
exceed actual expenses incurred by the Distributor,
provided, that such excess represents payment to the
Distributor for unreimbursed expenses incurred under
this Plan not more than three years prior to the
date upon which the Fund will make payment of
D i s t r ibution Fees and Service Fees to the
Distributor. Reimbursement of expenses shall be
calculated on a first-in, first-out basis.
2. This Plan shall not take effect until the Plan, together
with any related agreement(s), has been approved by votes
of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
interested persons of the Trust (as defined in the Act)
and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to
the Plan (the Rule 12b-1 Trustees ) cast in person at a
meeting called for the purpose of voting on the Plan and
such related agreement(s).
3. This Plan shall remain in effect until March ___, 1998,
and shall continue in effect thereafter so long as such
PAGE
<PAGE>
continuance is specifically approved at least annually in
the manner provided for approval of this Plan in
paragraph 2.
4. The Distributor shall provide to the Trustees of the
Trust and the Trustees shall review, at least quarterly,
a written report of distribution and service related
activities, Distribution Fees, Service Fees, and the
purposes for which such activities were performed and
expenses incurred.
5. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund.
6. This Plan may not be amended to increase materially the
amount of compensation payable by the Trust with respect
to Class A Shares of the Fund under paragraph 1 hereof
unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund. No material
amendment to the Plan shall be made unless approved in
the manner provided in paragraph 2 hereof.
7. W h ile this Plan is in effect, the selection and
nomination of the Trustees who are not interested persons
(as defined in the Act) of the Trust shall be committed
to the discretion of the Trustees who are not such
interested persons.
8. The Trust shall preserve copies of this Plan and any
related agreements and all reports made pursuant to
paragraph 4 hereof, for a period of not less than six
years from the date of the Plan, any such agreement, or
any such report, as the case may be, the first two years
in an easily accessible place.
9. Any agreement related to this Plan shall be in writing
a n d shall provide that (a) the agreement may be
terminated at any time upon sixty (60) days written
notice, without the payment of any penalty, by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a
majority of the Class A outstanding voting securities of
the Fund, (b) the agreement shall automatically terminate
in the event of its assignment (as defined in the Act),
and (c) the agreement shall continue in effect for a
period of more than one year from the date of its
execution or adoption only so long as such continuance is
specifically approved at least annually by a majority of
Trustees of the Trust and a majority of the Rule 12b-1
PAGE
<PAGE>
Trustees by votes cast in person at a meeting called for
the purpose of voting on such agreement.
IN WITNESS WHEREOF, the Trust and Distributor have
executed this Plan of Distribution and Service as of the day
and year first above written.
CONSECO FUND GROUP
By:
CONSECO EQUITY SALES, INC.
By:
PAGE
<PAGE>
Exhibit 3B
Class A
Plan of Distribution and Service
Pursuant to Rule 12b-1
CONSECO FUND GROUP
Asset Allocation Fund
March ___, 1997
WHEREAS, Conseco Fund Group, a Massachusetts business
trust (the Trust ), engages in business as an open-end
management investment company and is registered as such with
the Securities and Exchange Commission;
WHEREAS, the Trust has engaged Conseco Equity Sales, Inc.
(the Distributor ) as distributor of the shares of the Trust
p u r s u a nt to an Underwriting Agreement dated as of
______________ ___, 1997;
WHEREAS, the Trust is authorized to issue shares in
separate series (the Series ); the Trustees, to date, have
created three Series of shares one of which series is the
Asset Allocation Fund (the Fund ); and the Trustees may
create additional Series in the future as the Trustees deem
necessary and appropriate;
WHEREAS, the Trust is authorized to issue shares of each
Series in one or more classes, and to date, the Trustees have
created two classes: Class A Shares and Class Y Shares ;
W H EREAS, the Trust desires to adopt a Plan of
Distribution and Service pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the Act ) on behalf of the
Fund and the Trustees of the Trust have determined that there
is a reasonable likelihood that adoption of this Plan will
benefit the Fund and its shareholders; and
WHEREAS, expenditures under the Plan of Distribution and
Service are primarily intended to result in the sale of Class
A Shares of the Fund within the meaning of paragraph (a)(2) of
Rule 12b-1 under the Act.
NOW, THEREFORE, the Trust hereby adopts, on behalf of the
Fund, and the Distributor hereby agrees to the terms of, this
Plan of Distribution and Service (the Plan ) in accordance
with Rule 12b-1, on the following terms and conditions:
1. (a) T h e T rust is authorized to compensate the
Distributor for services performed and expenses
incurred by the Distributor in connection with the
distribution of Class A Shares of the Fund and the<PAGE>
servicing of accounts holding such Shares of the
Fund.
(b) The Fund shall pay to the Distributor, at the end of
each month, an amount equal to the average daily net
assets of the Fund multiplied by that portion of
0.50% which the number of days in the month bears to
365. Such payment represents reimbursement for (i)
e x penses incurred by the Distributor for the
promotion and distribution of Class A Shares of the
Fund ( Distribution Fee ) and (ii) fees paid to
Authorized Dealers (defined below).
(c) Such compensation shall be calculated and accrued
daily and paid monthly or at such other intervals as
the Board of Trustees may determine.
(d) The Distributor shall:
(i) (1) retain that portion of the Distribution Fee
necessary to compensate it for costs associated
with the distribution of Class A Shares of the
Fund; and (2) disburse that portion of the
Distribution Fee to Authorized Dealers
necessary to reimburse expenses of Authorized
Dealers incurred in the promotion and
distribution of Class A Shares of the Fund; and
(ii) pay any Service Fee it receives under the Plan
for which a particular underwriter, dealer,
broker, bank or selling entity having a Selling
Group Agreement in effect (the Authorized
Dealers ) is the dealer of record (which may
include the Distributor) to such Authorized
Dealers to compensate such Authorized Dealers
for providing personal services to shareholders
relating to their investment and/or maintaining
shareholder accounts.
(e) Expenses for which the Distributor, or an Authorized
D e aler, may receive Distribution Fee payments
include, but are not limited to, the printing of
prospectuses, statements of additional information
and reports used for sales purposes, expenses of
p r e p aration of sales literature and related
expenses, advertisements, other distribution-related
expenses (including personnel of the Distributor),
c e rtain overhead expenses attributable to the
distribution of Class A Shares of the Fund such as
communications, salaries, training, supplies,
photocopying and similar types of expenses and fees
paid to Authorized Dealers.
PAGE
<PAGE>
(f) Services for which Authorized Dealers may receive
Service Fee payments include, but are not limited
to, any or all of the following: maintaining account
r e cords for shareholders who beneficially own
S h a r es; answering inquiries relating to the
shareholders accounts, the policies of the Trust
and the performance of their investment; providing
assistance and handling transmission of funds in
connection with purchase, redemption and exchange
orders for Shares; providing assistance in
c o n n ection with changing account setups and
e n rolling in various optional Trust services;
p r o d ucing and disseminating shareholder
communications or servicing materials; the ordinary
or capital expenses, such as equipment, rent,
f i xtures, salaries, bonuses, reporting and
recordkeeping and third party consultancy or similar
expenses, relating to any activity for which payment
is authorized by the Board of Trustees; and the
financing of any other activity for which payment is
authorized by the Board of Trustees.
(g) In no event shall the sum of the Distribution Fee
and Service Fee exceed the Distributor s actual
expenses incurred during the period for which such
Fees will be paid. Notwithstanding the foregoing,
the sum of the Distribution Fee and Service Fee may
exceed actual expenses incurred by the Distributor,
provided, that such excess represents payment to the
Distributor for unreimbursed expenses incurred under
this Plan not more than three years prior to the
date upon which the Fund will make payment of
D i s t r ibution Fees and Service Fees to the
Distributor. Reimbursement of expenses shall be
calculated on a first-in, first-out basis.
2. This Plan shall not take effect until the Plan, together
with any related agreement(s), has been approved by votes
of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
interested persons of the Trust (as defined in the Act)
and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to
the Plan (the Rule 12b-1 Trustees ) cast in person at a
meeting called for the purpose of voting on the Plan and
such related agreement(s).
3. This Plan shall remain in effect until March ___, 1998,
and shall continue in effect thereafter so long as such
continuance is specifically approved at least annually in
the manner provided for approval of this Plan in
paragraph 2.
PAGE
<PAGE>
4. The Distributor shall provide to the Trustees of the
Trust and the Trustees shall review, at least quarterly,
a written report of distribution and service related
activities, Distribution Fees, Service Fees, and the
purposes for which such activities were performed and
expenses incurred.
5. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund.
6. This Plan may not be amended to increase materially the
amount of compensation payable by the Trust with respect
to Class A Shares of the Fund under paragraph 1 hereof
unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund. No material
amendment to the Plan shall be made unless approved in
the manner provided in paragraph 2 hereof.
7. W h ile this Plan is in effect, the selection and
nomination of the Trustees who are not interested persons
(as defined in the Act) of the Trust shall be committed
to the discretion of the Trustees who are not such
interested persons.
8. The Trust shall preserve copies of this Plan and any
related agreements and all reports made pursuant to
paragraph 4 hereof, for a period of not less than six
years from the date of the Plan, any such agreement, or
any such report, as the case may be, the first two years
in an easily accessible place.
9. Any agreement related to this Plan shall be in writing
a n d shall provide that (a) the agreement may be
terminated at any time upon sixty (60) days written
notice, without the payment of any penalty, by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a
majority of the Class A outstanding voting securities of
the Fund, (b) the agreement shall automatically terminate
in the event of its assignment (as defined in the Act),
and (c) the agreement shall continue in effect for a
period of more than one year from the date of its
execution or adoption only so long as such continuance is
specifically approved at least annually by a majority of
Trustees of the Trust and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for
the purpose of voting on such agreement.
PAGE
<PAGE>
IN WITNESS WHEREOF, the Trust and Distributor have
executed this Plan of Distribution and Service as of the day
and year first above written.
CONSECO FUND GROUP
By:
CONSECO EQUITY SALES, INC.
By:
PAGE
<PAGE>
Exhibit 3C
Class A
Plan of Distribution and Service
Pursuant to Rule 12b-1
CONSECO FUND GROUP
Fixed Income Fund
March __, 1997
WHEREAS, Conseco Fund Group, a Massachusetts business
trust (the Trust ), engages in business as an open-end
management investment company and is registered as such with
the Securities and Exchange Commission;
WHEREAS, the Trust has engaged Conseco Equity Sales, Inc.
(the Distributor ) as distributor of the shares of the Trust
pursuant to an Underwriting Agreement dated as of ___________
___, 1997;
WHEREAS, the Trust is authorized to issue shares in
separate series (the Series ); the Trustees, to date, have
created three Series of shares one of which series is the
Fixed Income Fund (the Fund ); and the Trustees may create
additional Series in the future as the Trustees deem necessary
and appropriate;
WHEREAS, the Trust is authorized to issue shares of each
Series in one or more classes, and to date, the Trustees have
created two classes: Class A Shares and Class Y Shares ;
W H EREAS, the Trust desires to adopt a Plan of
Distribution and Service pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the Act ) on behalf of the
Fund and the Trustees of the Trust have determined that there
is a reasonable likelihood that adoption of this Plan will
benefit the Fund and its shareholders; and
WHEREAS, expenditures under the Plan of Distribution and
Service are primarily intended to result in the sale of Class
A Shares of the Fund within the meaning of paragraph (a)(2) of
Rule 12b-1 under the Act.
NOW, THEREFORE, the Trust hereby adopts, on behalf of the
Fund, and the Distributor hereby agrees to the terms of, this
Plan of Distribution and Service (the Plan ) in accordance
with Rule 12b-1, on the following terms and conditions:
1. (a) T h e T rust is authorized to compensate the
Distributor for services performed and expenses
incurred by the Distributor in connection with the
distribution of Class A Shares of the Fund and the<PAGE>
servicing of accounts holding such Shares of the
Fund.
(b) The Fund shall pay to the Distributor, at the end of
each month, an amount equal to the average daily net
assets of the Fund multiplied by that portion of
0.65% which the number of days in the month bears to
365. Such payment represents reimbursement for (i)
e x penses incurred by the Distributor for the
promotion and distribution of Class A Shares of the
Fund ( Distribution Fee ) and (ii) fees paid to
Authorized Dealers (defined below).
(c) Such compensation shall be calculated and accrued
daily and paid monthly or at such other intervals as
the Board of Trustees may determine.
(d) The Distributor shall:
(i) (1) retain that portion of the Distribution Fee
necessary to compensate it for costs associated
with the distribution of Class A Shares of the
Fund; and (2) disburse that portion of the
Distribution Fee to Authorized Dealers
necessary to reimburse expenses of Authorized
Dealers incurred in the promotion and
distribution of Class A Shares of the Fund; and
(ii) pay any Service Fee it receives under the Plan
for which a particular underwriter, dealer,
broker, bank or selling entity having a Selling
Group Agreement in effect (the Authorized
Dealers ) is the dealer of record (which may
include the Distributor) to such Authorized
Dealers to compensate such Authorized Dealers
for providing personal services to shareholders
relating to their investment and/or maintaining
shareholder accounts.
(e) Expenses for which the Distributor, or an Authorized
D e aler, may receive Distribution Fee payments
include, but are not limited to, the printing of
prospectuses, statements of additional information
and reports used for sales purposes, expenses of
p r e p aration of sales literature and related
expenses, advertisements, other distribution-related
expenses (including personnel of the Distributor),
c e rtain overhead expenses attributable to the
distribution of Class A Shares of the Fund such as
communications, salaries, training, supplies,
photocopying and similar types of expenses and fees
paid to Authorized Dealers.
PAGE
<PAGE>
(f) Services for which Authorized Dealers may receive
Service Fee payments include, but are not limited
to, any or all of the following: maintaining account
r e cords for shareholders who beneficially own
S h a r es; answering inquiries relating to the
shareholders accounts, the policies of the Trust
and the performance of their investment; providing
assistance and handling transmission of funds in
connection with purchase, redemption and exchange
orders for Shares; providing assistance in
c o n n ection with changing account setups and
e n rolling in various optional Trust services;
p r o d ucing and disseminating shareholder
communications or servicing materials; the ordinary
or capital expenses, such as equipment, rent,
f i xtures, salaries, bonuses, reporting and
recordkeeping and third party consultancy or similar
expenses, relating to any activity for which payment
is authorized by the Board of Trustees; and the
financing of any other activity for which payment is
authorized by the Board of Trustees.
(g) In no event shall the sum of the Distribution Fee
and Service Fee exceed the Distributor s actual
expenses incurred during the period for which such
Fees will be paid. Notwithstanding the foregoing,
the sum of the Distribution Fee and Service Fee may
exceed actual expenses incurred by the Distributor,
provided, that such excess represents payment to the
Distributor for unreimbursed expenses incurred under
this Plan not more than three years prior to the
date upon which the Fund will make payment of
D i s t r ibution Fees and Service Fees to the
Distributor. Reimbursement of expenses shall be
calculated on a first-in, first-out basis.
2. This Plan shall not take effect until the Plan, together
with any related agreement(s), has been approved by votes
of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
interested persons of the Trust (as defined in the Act)
and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to
the Plan (the Rule 12b-1 Trustees ) cast in person at a
meeting called for the purpose of voting on the Plan and
such related agreement(s).
3. This Plan shall remain in effect until March ___, 1998,
and shall continue in effect thereafter so long as such
continuance is specifically approved at least annually in
the manner provided for approval of this Plan in
paragraph 2.
PAGE
<PAGE>
4. The Distributor shall provide to the Trustees of the
Trust and the Trustees shall review, at least quarterly,
a written report of distribution and service related
activities, Distribution Fees, Service Fees, and the
purposes for which such activities were performed and
expenses incurred.
5. This Plan may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund.
6. This Plan may not be amended to increase materially the
amount of compensation payable by the Trust with respect
to Class A Shares of the Fund under paragraph 1 hereof
unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the Class A
outstanding voting securities of the Fund. No material
amendment to the Plan shall be made unless approved in
the manner provided in paragraph 2 hereof.
7. W h ile this Plan is in effect, the selection and
nomination of the Trustees who are not interested persons
(as defined in the Act) of the Trust shall be committed
to the discretion of the Trustees who are not such
interested persons.
8. The Trust shall preserve copies of this Plan and any
related agreements and all reports made pursuant to
paragraph 4 hereof, for a period of not less than six
years from the date of the Plan, any such agreement, or
any such report, as the case may be, the first two years
in an easily accessible place.
9. Any agreement related to this Plan shall be in writing
a n d shall provide that (a) the agreement may be
terminated at any time upon sixty (60) days written
notice, without the payment of any penalty, by vote of a
majority of the Rule 12b-1 Trustees, or by vote of a
majority of the Class A outstanding voting securities of
the Fund, (b) the agreement shall automatically terminate
in the event of its assignment (as defined in the Act),
and (c) the agreement shall continue in effect for a
period of more than one year from the date of its
execution or adoption only so long as such continuance is
specifically approved at least annually by a majority of
Trustees of the Trust and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for
the purpose of voting on such agreement.
PAGE
<PAGE>
IN WITNESS WHEREOF, the Trust and Distributor have
executed this Plan of Distribution and Service as of the day
and year first above written.
CONSECO FUND GROUP
By:
CONSECO EQUITY SALES, INC.
By:
PAGE
<PAGE>
