As Filed With The Securities And Exchange Commission on April 13, 2000
File Nos. 333-13185
811-7839
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ________
Post-Effective Amendment No. 12
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 13
CONSECO FUND GROUP
(Exact Name of Registrant as Specified in Charter)
11825 North Pennsylvania Street
Carmel, Indiana 46032
(Address of Principal Executive Offices) (Zip Code)
(317) 817-6300
(Registrant's Telephone Number, including Area Code)
WILLIAM P. KOVACS, Esq.
Conseco Fund Group
11825 North Pennsylvania Street
Carmel, Indiana 46032
(Name and Address of Agent for Service of Process)
Copies to:
Donald W. Smith, Esq.
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Second Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
[ X ] Immediately upon filing pursuant to Rule 485(b)
[ ] On __________________ pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to Rule 485(a)(1)
[ ] On __________________ pursuant to Rule 485(a)(1)
[ ] 75 days after filing pursuant to Rule 485(a)(2)
[ ] On _________________ pursuant to Rule 485(a)(2)
<PAGE>
CONSECO FUND GROUP
Conseco 20 Fund
Conseco Equity Fund
Conseco Balanced Fund
Conseco Convertible Securities Fund
Conseco High Yield Fund
Conseco Fixed Income Fund
Contents of Registration Statement
This Registration Statement consists of the following papers and documents:
o Cover Sheet
Contents of Registration Statement:
o Part A - Prospectus, Class A , B, C and Y
o Part B - Statement of Additional Information, Class A, B, C and Y
o Part C - Other Information
o Signature Pages
o Exhibits
<PAGE>
PART A - PROSEPCTUS, CLASS A, B, C AND Y
<PAGE>
April 13, 2000
Prospectus
Class A, B, C and Y Shares
As with any mutual fund, the
Securities and Exchange Commission (SEC)
has not approved or disapproved of these
securities or determined whether this
prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
THE CONSECO FUND GROUP'S APPROACH TO
MANAGING YOUR MUTUAL FUND INVESTMENT
THE FUNDS
Conseco 20 Fund
Conseco Equity Fund
Conseco Balanced Fund
Conseco Convertible Securities Fund
Conseco High Yield Fund
Conseco Fixed Income Fund
PRIMARY RISK CONSIDERATIONS
FEES AND EXPENSES
MANAGEMENT OF THE FUNDS
Adviser
Advisory Fees
Portfolio Managers of the Conseco Fund Group
Administrative Services
Determining Share Price
MANAGING YOUR CONSECO FUND GROUP ACCOUNT
Essential Information
Choosing the Right Shares for Your Needs
Share Class Sales Charges
Three Convenient Ways to Open Your Conseco Fund Group Account
Important Information about Buying Conseco Fund Group Shares
Important Information about Selling Conseco Fund Group Shares
Special Shareholder Services
Dividends and Distributions
Tax Considerations
Distribution and Service Plans
FINANCIAL HIGHLIGHTS
<PAGE>
The Conseco Fund Group's Approach to
Managing Your Mutual Fund Investment
We created the Conseco Fund Group as an economical way for investors to benefit
from the insights of professional financial research. No matter what securities
a particular fund emphasizes -- stocks and other equity securities, or bonds and
other fixed-income securities -- all the funds of the Conseco Fund Group share
one vital trait: Fundamental investment research plays the central role in their
decision-making.
Conseco Capital Management, Inc. ("CCM"), the funds' Adviser, manages
investments for the Conseco Fund Group and other affiliated mutual funds, as
well as foundations, endowments, corporations, governments, unions and high net
worth individuals. As of Dec. 31, 1999, CCM managed more than $42.2 billion.
CCM's analysts examine the total financial resources of the issuer of any
security we might consider buying. They seek to learn if the issuer, whether a
business or a government entity, has the resources to support its spending plans
and meet its obligations in good economic times and bad.
In considering securities, like stocks or bonds, issued by a business, our
analysts take the "big picture" into account. They inquire into the state of the
industry the business is competing in, whether it is growing or declining. They
look at the business's position in the industry and whether or not its market
share is growing. They consider the quality of the goods or services it provides
and its ability to innovate. They get to know its management.
This intensive fundamental research guides our funds in buying and selling
securities. Because of the Adviser's active management style, our funds
generally have a higher portfolio turnover rate than other funds, which means
that our funds may have higher taxable distributions and increased trading costs
that may affect performance.
All of the funds have the ability to change their investment objectives without
shareholder approval, though they do not currently intend to do so.
<PAGE>
SIDEBAR In Plain English: Defining terms
By law, every mutual fund must state its investment objective -- the goal of its
investment strategy. The list below defines some of the terms used in our
investment objectives:
(a) Investing consistent with the preservation of capital means the safety of
the money invested in the fund is a primary consideration. The Adviser will
not place the money in stocks or bonds that it feels have a likelihood of
loss compared to other investments it might consider, even though they also
have a strong likelihood of outstanding gains. That equation carries too
much risk.
(b) Prudent investment risk means that the Adviser will seek investments that
it believes offer a good prospect of gain compared to the possibility of
loss. The upside may not be as great in these cases as in more speculative
situations, but the possibility of loss is correspondingly less.
(c) Total investment return equals the interest paid on a bond investment -- or
the dividends, if any, paid on a stock investment -- plus any increase (or
minus any decrease) in its price during the period that an investor owns
the security.
(d) Capital appreciation is any increase in the price of an investment during
the time an investor owns it. From 1929 to the present, stocks have enjoyed
greater capital appreciation than bonds overall and over most, but not all,
intervals of five years or more.
(e) Income has a very specific meaning when applied to investing. It is the
dividends earned from an investment in stocks or the interest earned from
an investment in bonds. Bond issuers must stipulate the amount of interest
they will pay and when they will pay it. Most stocks don't state the amount
of dividends they'll pay out, and companies only pay dividends after
they've paid the bond interest they owe. Moreover, the amount of interest
earned on a bond investment is usually more than the amount of dividends
paid out in a comparable investment in stocks.
SIDEBAR Matching Expectations and Risks
As you review the investment objectives of the Conseco Fund Group mutual funds
and others, you should bear in mind that a single mutual fund can't have it all.
Pursuing high total investment return or high investment income normally means
investing in riskier stocks and bonds. Investing in safer securities normally
means sacrificing a portion of the upside potential.
<PAGE>
The Funds
CONSECO 20 FUND
The Conseco 20 Fund focuses on the stocks that the Adviser believes offer the
strongest growth potential.
INVESTMENT OBJECTIVE
The fund seeks capital appreciation.
ADVISER'S STRATEGY
Normally, the fund will invest at least 65% of its assets in common stocks of
companies that the Adviser believes have above-average growth prospects.
The fund is nondiversified -- it is not limited by the percentage of assets it
may invest in any one issuer. It will normally concentrate its investments in a
core position of approximately 20 to 30 common stocks. The fund has the
flexibility to invest in companies of any size.
The Adviser looks for strong growth potential in companies:
o Whose earnings appear likely to continue to rise
o That demonstrate the ability to grow their earnings at a consistently
faster rate than their peers
o Whose stocks appear to the Adviser to be priced below their true value
In selecting equity securities, the Adviser considers:
o High return on invested capital, a measure of how efficiently the company
is using the money it has raised from stock and long-term borrowings
o Sound financial policies and a strong balance sheet, with low debt relative
to shareholders' equity
o Competitive advantages, including innovative products and services
o Effective research, product development and marketing
o Stable, capable management
The fund may also invest in any or all of the following:
o Preferred stock (which generally does not have voting rights but does have
a stated dividend payment)
o Convertible securities (bonds, debentures, notes or preferred stock that
can be converted into common stock)
o Warrants (contracts allowing purchase of a specific amount of common stock
at a specific price)
o Bonds and other fixed-income securities (when the Adviser believes they are
more attractive than stocks on a long-term basis)
For defensive purposes, the fund may temporarily depart from its investment
objective and invest without limitation in cash and short-term debt securities.
This could help the fund avoid losses but may mean lost opportunities.
<PAGE>
PRIMARY RISKS
Concentration risk
Market risk
Small company risk
Liquidity and valuation risk
Foreign risk
See Primary Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's risks and
performance. The chart shows you how the performance of the fund's Class A
shares has varied from year to year. The table compares the fund's performance
over time to that of broad measures of market performance. When you consider
this information, please remember that the fund's past performance is not
necessarily an indication of how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- --------------- -----------
28.00% 70.40%
- --------------- -----------
1998 1999
- --------------- -----------
Best Quarter 4Q99 35.25%
Worst Quarter 3Q98 (17.13%)
*Class A total return is shown without the applicable sales load. If the sales
load was included, total return would have been lower.
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 1/1/98) 60.60% 43.38%
Class B*
(inception 2/18/98) 61.08% 36.92%
Class C*
(inception 3/10/98) 67.85% 38.24%
Class Y*
(inception 4/6/98) 71.36% 38.17%
Standard & Poor's
500 Index
(since 1/1/98) 21.04% 24.74%
Standard & Poor's
Midcap 400 Index
(since 1/1/98) 14.72% 16.89%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
<PAGE>
CONSECO EQUITY FUND
The Conseco Equity Fund offers an opportunity to participate in the growth of a
variety of corporations by investing in common stocks.
INVESTMENT OBJECTIVE
The fund seeks to provide a high total return, consistent with preservation of
capital and a prudent level of risk.
ADVISER'S STRATEGY
The fund primarily invests in common stocks and other U.S. and foreign
securities, including
o Convertible securities that may be exchanged for common stock at a
prestated price
o Warrants that entitle the owner to purchase a set amount of common stock at
a prestated price
Normally, the fund will be widely diversified by industry and company. It will
focus on small- and medium-size companies. They may be start-ups or
better-established firms in the early phases of their growth. While they have
the potential for attractive long-term returns, their stock may involve greater
risk and more volatility than larger companies with a stronger competitive
advantage. The Adviser's extensive research efforts can play a greater role in
selecting these stocks than large-company stocks.
The Adviser looks for securities that will provide the two elements of total
return: price appreciation and income from dividends. In selecting stocks, the
Adviser considers these fundamentals:
o Growth trends of the company and its industry
o The ratio of earnings per share to the stock's price per share and
potential earnings growth
o Significant purchases or sales of the stock by a company's managers and
other insiders
o How closely actual earnings have matched analysts' forecasts
o Recent changes in earnings
o The stock's historical price movement
For defensive purposes, the fund may temporarily depart from its investment
objective and invest without limitation in money-market instruments. This could
help the fund avoid losses but may mean lost opportunities.
<PAGE>
PRIMARY RISKS
Market risk
Liquidity and valuation risk
Small company risk
See Primary Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's risks and
performance. The chart shows you how the performance of the fund's Class A
shares has varied from year to year. The table compares the fund's performance
over time to that of broad measures of market performance. When you consider
this information, please remember that the fund's past performance is not
necessarily an indication of how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- -------------- ----------- -----------
22.90% 16.11% 56.21%
- -------------- ----------- -----------
1997 1998 1999
- -------------- ----------- -----------
Best Quarter 4Q99 38.72%
Worst Quarter 3Q98 (20.52%)
*Class A total return is shown without the applicable sales load. If the sales
load was included, total return would have been lower.
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 1/2/97) 47.23% 28.08%
Class B*
(inception 1/28/98) 47.85% 30.51%
Class C*
(inception 2/19/98) 54.33% 29.88%
Class Y*
(inception 1/2/97) 57.13% 31.33%
Standard & Poor's
500 Index
(since 1/2/97) 21.04% 27.55%
Standard & Poor's
Midcap 400 Index
(since 1/2/97) 14.72% 21.80%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
<PAGE>
CONSECO BALANCED FUND
The Conseco Balanced Fund offers investors both the higher growth potential of
stocks and the higher income potential of bonds.
INVESTMENT OBJECTIVE
The fund seeks high total investment return, consistent with the preservation of
capital and prudent investment risk.
ADVISER'S STRATEGY
Normally, the fund invests approximately 50%-65% of its assets in stocks and
other equity securities. It invests the remainder in bonds and other
fixed-income securities, as well as cash or cash equivalents (which are
investments, such as bank certificates of deposit and money-market funds, that
the fund can readily sell for cash at their face value).
This balance may change:
o The Adviser may invest more than 65% of the fund's assets in stocks if it
considers conditions in the stock market to be more favorable than those in
the bond market.
o If the Adviser considers conditions in the bond market to be more favorable
than those in the stock market, it may invest more than 50% of the fund's
assets in fixed-income securities.
THE EQUITY PORTION OF THE PORTFOLIO
The fund may invest in equity securities of domestic and foreign issuers. These
may include:
o Common and preferred stock (common stock ordinarily has no stated dividend
payment but gives the owner the right to vote on corporate policy;
preferred stock generally has a stated dividend payment but no voting
rights)
o Convertible securities that can be exchanged for common stock once the
stock has reached a prestated price
o Warrants that entitle the owner to purchase a set amount of common stock at
a prestated price
The Adviser intends to diversify the equity portion of the fund's portfolio
widely by size of company and industry.
The Adviser looks for securities that will provide the two elements of total
return: price appreciation and income from dividends.
In selecting equity securities, such as stocks, the Adviser considers these
fundamentals:
o Growth trends of the company and its industry
o The ratio of earnings per share to the stock's price per share and
potential earnings growth
o Significant purchases or sales of the stock by a company's managers and
other insiders
o How closely actual company earnings have matched analysts' forecasts
o Recent changes in company earnings
o The stock's historical price movement
<PAGE>
THE FIXED INCOME PORTION OF THE PORTFOLIO
Normally, the fund will maintain at least 25% of its assets in a wide range of
domestic and foreign fixed-income securities, such as bonds, including
securities not based on the U.S. dollar. The majority of foreign investments
will be in Yankee bonds (bonds payable in U.S. dollars that are issued in the
United States by foreign banks and corporations). The Adviser will invest
primarily in bonds with 7- to 30-year maturities.
The fund may also invest up to 25% of its total assets in below-investment-grade
securities (those rated BB+/Ba1 or lower by Moody's/Standard & Poor's), which
are not believed to involve undue risk to income or principal. In general,
however, these types of securities are issued by companies without long track
records of sales and earnings, or by those companies with questionable credit
histories. The lowest credit-rating categories in which the fund will invest are
CCC/Caa (by Moody's/Standard & Poor's).
For defensive purposes, the fund may temporarily depart from its investment
objective and invest without limitation in money-market instruments. This could
help the fund avoid losses but may mean lost opportunities.
PRIMARY RISKS
Market risk
Credit risk
Interest rate risk
Foreign risk
Leverage risk
See Primary Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's risks and
performance. The chart shows you how the performance of the fund's Class A
shares has varied from year to year. The table compares the fund's performance
over time to that of broad measures of market performance. When you consider
this information, please remember that the fund's past performance is not
necessarily an indication of how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- -------------- ----------- -----------
17.19% 12.45% 29.44%
- -------------- ----------- -----------
1997 1998 1999
- -------------- ----------- -----------
Best Quarter 4Q99 19.67%
Worst Quarter 3Q98 (11.71%)
*Class A total return is shown without the applicable sales load. If the sales
load was included, total return would have been lower.
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 1/2/97) 22.00% 17.15%
Class B*
(inception 2/10/98) 22.35% 14.94%
Class C*
(inception 2/13/98) 27.52% 17.08%
Class Y*
(inception 1/2/97) 30.07% 20.07%
Lehman Bros.
Aggregate
Bond Index
(since 1/2/97) (0.82%) 5.73%
Standard & Poor's
Midcap 400 Index
(since 1/2/97) 14.72% 21.80%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
CONSECO CONVERTIBLE SECURITIES FUND
The Conseco Convertible Securities Fund enables investors to pursue the benefits
of income and capital appreciation by investing in bonds and other securities
that are convertible into common stock.
INVESTMENT OBJECTIVE
The fund seeks high total return through a combination of current income and
capital appreciation by investing primarily in convertible securities.
ADVISER'S STRATEGY
Normally, the Adviser invests at least 65% of the fund's assets in convertible
securities (bonds, debentures, notes or preferred stock) that an owner has the
option to exchange for common stock at a prestated price. Convertible securities
are often of lower quality than other types of investments. At any given time,
over 50% of the fund's assets may be invested in below-investment-grade (those
rated BB+/Ba1 or lower by Moody's/Standard & Poor's) securities.
Adhering to strict discipline on when to buy and sell securities, the Adviser
seeks high total return by:
o Purchasing securities it believes are priced below their true value
o Selling securities it believes are priced at or above their true value
<PAGE>
To select securities, the Adviser evaluates security issuers and the securities
themselves through independent fundamental analysis.
Besides convertible securities, the fund may invest in:
o Common stock (which has no stated dividend payment and gives the
shareholder the right to vote on corporate policy) and other equity
securities
o Convertible securities with conversion features that do not depend on the
market price of the issuer's common stock
o Stocks and bonds of foreign issuers, including issuers in emerging markets
For defensive purposes, the fund may temporarily depart from its investment
objective and invest without limitation in preferred stocks and investment-grade
debt securities. This could help the fund avoid losses, but may mean lost
opportunities.
SIDEBAR Two investments in one
Convertible securities are bonds, debentures, notes or preferred stocks that an
owner can exchange for common stock at a prearranged price. This exchange
feature gives "convertibles" the characteristics of both a bond and a stock.
When stock prices are rising, convertible securities prices tend to rise, too.
Yet when the opposite holds true, convertible prices tend to fall less than
stock prices. Why? Because convertibles have a fixed-income component --
interest payments on convertible bonds and preferred dividends on convertible
preferred stock -- that keeps paying income so long as the issuing company
remains financially strong.
That fixed-income component can hold a convertible back as well as prop it up,
of course. If the market fears that the issuing company's ability to meet its
obligations is declining, the price of its convertible securities generally will
suffer, no matter what is happening in the stock market.
PRIMARY RISKS
Market risk
Interest rate risk
Credit risk
Foreign risk, including developing market risk
Restricted securities risk
Leverage risk
See Primary Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
<PAGE>
SIDEBAR HOW BONDS RATE
<TABLE>
<S> <C> <C>
Safer TREASURY: Bonds issued directly by the Treasury are Lower Interest Rate
investment grade and carry only the credit risk of the
U.S. government.
OTHER U.S. AGENCIES: Bonds issued by U.S.
government-backed entities.
INVESTMENT GRADE: Bonds of domestic and foreign
issuers that have generally adequate finances to cover
their debts and strong credit records.
BELOW INVESTMENT GRADE: Bonds of issuers that are less
able to cover their debts than issuers of Higher Interest Rate
Riskier investment-grade securities.
</TABLE>
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's performance. The
chart shows how the performance of the fund's Class A shares varied from year to
year. The table compares the fund's performance over time to that of a broad
measure of market performance. When you consider this information, please
remember that the fund's past performance is not necessarily an indication of
how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- --------------- -----------
11.04% 40.12%
- --------------- -----------
1998+ 1999
- --------------- -----------
Best Quarter 4Q99 18.24%
Worst Quarter 3Q99 1.56%
* Class A total return is shown without the applicable sales load. If the
sales load was included, total return would have been lower.
+ For period from inception (Sept. 28, 1998) through Dec. 31, 1998 (not
annualized).
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 9/28/98) 32.07% 33.26%
Class B*
(inception 9/28/98) 32.43% 33.40%
Class C*
(inception 9/28/98) 38.12% 37.68%
Class Y*
(inception 9/28/98) 40.91% 40.02%
Merrill Lynch Broad
Convertible Index
(since 9/28/98) 44.32% 42.28%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
<PAGE>
CONSECO HIGH YIELD FUND
The Conseco High Yield Fund offers investors the potential to receive a higher
level of income than they could normally earn from investment-grade debt
securities. This fund should be considered only by investors who can tolerate a
greater degree of share price volatility.
INVESTMENT OBJECTIVE
The fund seeks to provide a high level of current income with a secondary
objective of capital appreciation.
ADVISER'S STRATEGY
Normally, the Adviser invests at least 65% of the fund's assets in
below-investment-grade bonds (those rated BB+/Ba1 or lower by Moody's/Standard &
Poor's).
Adhering to strict discipline on when to buy and sell securities, the Adviser
seeks to achieve the fund's objectives by:
o Purchasing securities it believes are priced below their true value
o Selling securities it believes are priced at or above their true value
To select securities, the Adviser evaluates security issuers and the securities
themselves through independent fundamental analysis.
The fund may invest in:
o Corporate debt securities and preferred stock (stock that has a stated
dividend payment)
o Zero-coupon bonds and other deferred-interest securities that do not pay
periodic interest. Such securities typically sell at a deep discount to the
price printed on the bond's face. At maturity, investors receive the
purchase price and the accumulated interest.
o Mortgage-backed debt securities (investments that pay bondholders from the
principal and interest received from residential mortgages)
o Asset-backed debt securities (investments that pay bondholders from the
principal and interest of the debt owed to banks, credit card companies and
other lenders)
o Convertible securities (bonds, debentures, notes or preferred stock), that
the owners can exchange for common stock at a prestated price
o Restricted securities (securities not registered with the Securities and
Exchange Commission; though they are usually hard to sell -- we primarily
buy restricted securities that in our opinion are easy to sell)
o Taxable municipal securities issued by state and local governments
(interest on municipal bonds is often exempt from federal income tax; the
fund invests in bonds that are typically not tax exempt)
The fund may also invest in:
o Cash or cash equivalents, such as certificates of deposit and money-market
funds
o Money-market instruments, such as bankers' acceptances, commercial paper
and repurchase agreements, which are easy to sell on the open market and
are considered safe investments
o Securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities, such as the Federal Home Loan Bank and the Student Loan
Marketing Association
<PAGE>
In addition, the fund may invest in:
o Common stock (which has no stated dividend payment but, unlike preferred
stock, gives the shareholder the right to vote on corporate policy) and
other equity securities
o Stocks and bonds of foreign issuers, including issuers in emerging markets
For defensive purposes or pending investment, the fund may temporarily depart
from its objective and hold an unlimited amount in cash or in money-market
instruments. This could help the fund avoid losses, but may mean lost
opportunities.
PRIMARY RISKS
Credit risk
Interest rate risk
Market risk
Prepayment risk
Restricted securities risk
Foreign risk, including developing market risk
See Primary Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
SIDEBAR HOW BONDS RATE
<TABLE>
<S> <C> <C>
Safer TREASURY: Bonds issued directly by the Treasury are Lower Interest Rate
investment grade and carry only the credit risk of the
U.S. government.
OTHER U.S. AGENCIES: Bonds issued by U.S.
government-backed entities.
INVESTMENT GRADE: Bonds of domestic and foreign
issuers that have generally adequate finances to cover
their debts and strong credit records.
BELOW INVESTMENT GRADE: Bonds of issuers that are less
able to cover their debts than issuers of Higher Interest Rate
Riskier investment-grade securities.
</TABLE>
<PAGE>
SIDEBAR: MAKING THE (INVESTMENT) GRADE
A number of independent rating services assess a bond's creditworthiness and its
issuer's financial strength according to objective statistical measures. Two of
the most widely known are Moody's Investors Service and Standard & Poor's Corp.
The chart below shows how their investment-grade and below-investment-grade
ratings stack up:
MOODY'S STANDARD & POOR'S
- ----------------------------------- -------------------- ----------------------
AAA AAA
Investment grade AA
Aa A
A BBB
Baa
- ----------------------------------- -------------------- ----------------------
BA BB
Below investment grade B
B CCC
Caa CC
Ca C
C
- ----------------------------------- -------------------- ----------------------
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's risks and
performance. The chart shows you how the performance of the fund's Class A
shares has varied from year to year. The table compares the fund's performance
over time to that of a broad measure of market performance. When you consider
this information, please remember that the fund's past performance is not
necessarily an indication of how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- --------------- -----------
6.56% 9.03%
- --------------- -----------
1998 1999
- --------------- -----------
*Class A total return is shown without the applicable sales load. If the sales
load were included, total return would have been lower.
Best Quarter 1Q98 8.17%
Worst Quarter 3Q98 (5.56%)
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 1/1/98) 2.76% 4.64%
Class B*
(inception 2/19/98) 3.14% 2.22%
Class C*
(inception 2/19/98) 7.51% 4.33%
Class Y*
(inception 3/2/98) 9.64% 5.93%
Merrill Lynch High
Yield Index
(since 1/1/98) 1.57% 2.61%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
<PAGE>
CONSECO FIXED INCOME FUND
The Conseco Fixed Income Fund offers investors a strong complement to
traditional investment vehicles like CDs or money market funds. The fund
provides a way to earn income from a portfolio of bonds and other fixed-income
securities. Unlike traditional savings accounts, the principal value of an
investment in the fund will fluctuate.
The fund is not insured by the Federal Deposit Insurance Corporation.
INVESTMENT OBJECTIVE
The fund seeks to provide the highest level of income as is consistent with the
preservation of the capital investment.
ADVISER'S STRATEGY
The fund invests primarily in investment-grade debt securities.
The Adviser actively manages the portfolio to generate income, reduce risk and
preserve or enhance total return.
Adhering to strict guidelines on when to buy and sell securities, the Adviser
seeks to achieve the fund's objective by:
o Purchasing securities it believes are priced below their true value
o Selling securities it believes are priced at or above their true value
To select securities, the Adviser evaluates security issuers and the securities
themselves through independent fundamental analysis.
The fund may invest in debt securities issued by:
o Public and private U.S. companies
o Foreign companies (the fund makes these investments primarily in the form
of Yankee bonds -- bonds payable in U.S. dollars that are issued in the
United States by foreign banks and corporations)
o The U.S. government and its agencies, such as the Federal Home Loan Bank
and the Student Loan Marketing
Association
o State and local governments issuing taxable municipal securities (interest
on municipal bonds is often exempt from federal income tax; the fund
typically invests in bonds that are not tax exempt)
o Foreign governments, their agencies and instrumentalities
The fund may also invest in:
o Mortgage-backed debt securities (investments that pay bondholders from the
principal and interest received from residential mortgages)
o Asset-backed debt securities (bonds or similar investments that pay
bondholders from the principal and interest on debt owed to banks, credit
card companies and other lenders)
o Restricted securities (securities not registered with the Securities and
Exchange Commission; though they are usually hard to sell -- we primarily
buy restricted securities that in our opinion are easy to sell)
<PAGE>
In addition, the fund may invest up to 15% of its assets in:
o Common and preferred stock (common stock has no stated dividend payment but
gives the shareholder the right to vote on corporate policy; preferred
stock generally has no voting rights but does have a stated dividend
payment)
o Convertible securities (bonds, debentures, notes or preferred stock) that
an owner has the option to exchange for common stock at a prestated price
o Debt securities (bonds and similar investments) carrying warrants to
purchase equity securities (contracts allowing purchase of a specific
amount of common stock at a prestated price)
Up to 10% of fund assets may be invested in below-investment-grade securities
(those rated BB+/Ba1 or lower by Moody's/Standard & Poor's), commonly known as
high-yield or "junk" bonds, which tend to fluctuate in price to a greater extent
than investment-grade debt securities.
While the fund may purchase debt securities of any maturity (the date when
issuers must repay the bond's principal), we anticipate that the average life of
the portfolio (the maturities of all bonds in the portfolio averaged together)
will range between 7 and 15 years. This average may, however, be shorter or
longer depending on market conditions.
PRIMARY RISKS
Credit risk
Interest rate risk
Market risk
Prepayment risk
Restricted securities risk
Municipal market risk
Foreign risk
See Principal Risk Considerations at page 00 for a detailed discussion of the
fund's risks.
SIDEBAR HOW BONDS RATE
<TABLE>
<S> <C> <C>
Safer TREASURY: Bonds issued directly by the U.S. Treasury Lower Interest Rate
are investment grade and carry only the credit risk of
the U.S. government.
OTHER U.S. AGENCIES: Bonds issued by U.S.
government-sponsored entities.
INVESTMENT GRADE: Bonds of domestic and foreign
issuers that generally have adequate finances to cover
their debts and strong credit records.
BELOW INVESTMENT GRADE: Bonds of issuers that are less
able to cover their debts than issuers of Higher Interest Rate
Riskier investment-grade securities.
</TABLE>
<PAGE>
SIDEBAR: MAKING THE (INVESTMENT) GRADE
A number of independent rating services assess a bond's creditworthiness and its
issuer's financial strength according to objective statistical measures. Two of
the most widely known are Moody's Investors Service and Standard & Poor's Corp.
The chart below shows how their investment-grade and below-investment-grade
ratings stack up:
---------------------- --------------------
MOODY'S STANDARD & POOR'S
- ----------------------------------- ---------------------- --------------------
AAA AAA
Investment grade AA
Aa A
A BBB
Baa
- ----------------------------------- ---------------------- --------------------
BA BB
Below investment grade B
B CCC
Caa CC
Ca C
C
- ----------------------------------- ---------------------- --------------------
HOW HAS THE FUND PERFORMED?
The chart and table below give an indication of the fund's risk and performance.
The chart shows you how the performance of the fund's Class A shares has varied
from year to year. The table compares the fund's performance over time to that
of a broad measure of market performance. When you consider this information,
please remember that the fund's past performance is not necessarily an
indication of how it will perform in the future.
YEAR-BY-YEAR TOTAL RETURN
(as of 12/31/99) -- Class A*
- -------------- ------------ -----------
8.66% 7.57% (0.27%)
- -------------- ------------ -----------
1997 1998 1999
- -------------- ------------ -----------
*Class A total return is shown without the applicable sales load. If the sales
load were included, total return would have been lower.
Best Quarter 2Q97 3.21%
Worst Quarter 2Q99 (1.32%)
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
(as of 12/31/99)
One year Since inception
Class A*
(inception 1/2/97) (5.26%) 3.46%
Class B*
(inception 3/20/98) (5.46%) (0.42%)
Class C*
(inception 3/5/98) (1.47%) 2.63%
Class Y*
(inception 1/2/97) 0.38% 5.89%
Lehman Bros.
Aggregate
Bond Index
(since 1/2/97) (0.82%) 5.73%
* Class A share performance reflects the deduction of the maximum sales load.
Class B and C share performance reflects the deduction of each class's
respective maximum contingent-deferred sales load. Class Y shares are sold
without a sales load.
Primary Risk Considerations
Any mutual fund investment is subject to risk and may decline in value. YOU
COULD LOSE PART OR EVEN ALL OF THE MONEY YOU INVEST. The extent to which any
Conseco Fund Group mutual fund faces the risks listed below depends on:
o Its investment objective
o Its ability to achieve its objective
o The markets in which it invests
o The investments it makes in those markets
o General economic conditions
Concentration Risk
If a fund has most of its investments in a few securities or a single economic
sector, its performance will be more susceptible to factors adversely affecting
companies or other issuers in that sector than would a more diversified
portfolio of securities.
Credit Risk
The issuer of a security, or one of the parties to a contract, may default or
otherwise be unable to honor a financial obligation. Securities rated below
investment grade are especially susceptible to this risk.
<PAGE>
Foreign Risk
Investment gains in foreign securities may be subject to higher taxes and
foreign currencies may lose value relative to the U.S. dollar. That would reduce
the value of both the gains and the investment itself for American investors.
Changes in foreign countries' economic policies and their relations with the
United States may also pose risks.
Developing Market Risk
The general risks of foreign investing are greater in developing markets. In
addition, investors in developing markets face a greater likelihood of political
and economic instability, the imposition or tightening of exchange controls or
other limitations on repatriation of foreign capital. They may also have to cope
with changes in local governmental attitudes towards private investment,
possibly leading to nationalization or confiscation of their assets.
Interest Rate Risk
Changing interest rates may adversely affect the value of an investment. An
increase in interest rates typically causes the value of bonds and other
fixed-income securities to fall, while a decline in interest rates may produce
an increase in market value. Because of this risk, a fund that invests in
fixed-income securities is subject to risk even if all the fixed-income
securities in that fund's portfolio are paid in full at maturity. Changes in
interest rates will affect the value of longer-term fixed-income securities more
than shorter-term securities.
Leverage Risk
Borrowing, or some derivative investments, such as forward commitment
transactions, may multiply smaller market movements into large changes in value.
Liquidity and Valuation Risks
Securities that were liquid when purchased by a fund may become temporarily hard
to value and difficult or impossible to sell, especially in declining markets.
<PAGE>
Market Risk
The market value of a fund's investments will fluctuate as the stock and bond
markets fluctuate. Market risk may affect a single issuer, industry or sector of
the economy or may affect the market as a whole.
Municipal Market Risk
Factors unique to the municipal bond market may negatively affect the value of
the fund's investment in municipal bonds. These include political or legislative
changes, uncertainties related to the tax status of the securities and the
rights of investors in the securities. The fund may invest in a group of
municipal obligations that are related in such a way that an economic, business
or political development affecting one would also affect the others.
Prepayment Risk
Issuers may prepay fixed-rate bonds when interest rates fall, forcing the fund
to reinvest in obligations with lower interest rates than the original bonds.
Restricted Securities Risk
A buyer for restricted securities may be difficult to come by and their selling
price will be less than originally anticipated because they may only be sold in
privately negotiated transactions.
Small Company Risk
Investments in smaller companies may be more volatile than investments in larger
companies. Smaller companies generally experience higher growth rates and higher
failure rates than do larger companies. The trading volume of smaller-company
stocks is normally lower than that of larger-company stocks. Short-term changes
in the market for small-company stocks generally have a disproportionate effect
on their price, tending to make them rise more in response to buying demand and
fall more in response to selling pressure.
Euro Conversion Risk
The funds could also be adversely affected by the conversion of European
currencies into the Euro beginning Jan. 1, 1999. This conversion will not be
complete until 2002, and its full implementation may be delayed. Difficulties
with the conversion and potential delays may significantly impact European
capital markets and could increase volatility in world capital markets.
<PAGE>
It is impossible to know whether the problems associated with Euro conversion,
which could disrupt operations of investments if uncorrected, have been
adequately addressed until the dates in question arrive.
Please note that there are other circumstances not described here which could
adversely affect your investment and potentially prevent a fund from achieving
its objectives.
Fees and Expenses
The tables below describe the fees and expenses that you may pay if you buy and
hold shares of the funds. These expenses are deducted from the funds' assets.
The figures in the Annual Operating Expense tables are based on last year's
expenses. Actual expenses this year may be higher or lower.
Shareholder Fees
(fees paid directly from your investment)
CONSECO 20 FUND
Shareholder Fees
------------ ----------- ------------ -----------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM UP-FRONT SALES 5.75% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- ------------------------- ------------ ----------- ------------ -----------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these
shares within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<PAGE>
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 0.90% 0.90% 0.90% 0.90%
FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.50% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.30% 0.30% 0.30% 0.30%
- ----
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.70% 2.20% 2.20% 1.20%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.02%) (0.02%) (0.02%) (0.02%)
- ----
REIMBURSEMENT
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.68% 2.18% 2.18% 1.18%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
</TABLE>
+ The Adviser and Administrator have contractually agreed to waive a
portion of their fees and/or pay a portion of the fund's expenses
through 4/30/01 to ensure that total annual operating expenses do not
exceed 1.70% for Class A; 2.20% for Class B and C; and 1.20% for Class
Y. This arrangement does not cover interest, taxes, brokerage
commissions or extraordinary expenses. They may recover any money
waived under the contract provisions, to the extent that actual fees
and expenses are less than the expense limitation, for a period of
three years after the date of the waiver.
CONSECO EQUITY FUND
Shareholder Fees
------------ ----------- -------------- -----------
CLASS A CLASS B CLASS C CLASS Y
- ------------------------- ------------ ----------- -------------- -----------
MAXIMUM UP-FRONT SALES 5.75% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- -------------- -----------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- -------------------------- ------------ ----------- -------------- -----------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these
shares within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<PAGE>
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 0.90% 0.90% 0.90% 0.90%
FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.50% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.26% 0.26% 0.26% 0.26%
- ----
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.66% 2.16% 2.16% 1.16%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.16%) (0.16%) (0.16%) (0.16%)
- ----
REIMBURSEMENT+
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.50% 2.00% 2.00% 1.00%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
</TABLE>
+ The Adviser and Administrator have contractually agreed to waive a portion
of their fees and/or pay a portion of the fund's expenses through 4/30/01 to
ensure that total annual operating expenses do not exceed the Net Expenses
listed in the Annual Operating Expenses table. This arrangement does not
cover interest, taxes, brokerage commissions or extraordinary expenses. They
may recover any money waived under the contract provisions, to the extent
that actual fees and expenses are less than the expense limitation, for a
period of three years after the date of the waiver.
<PAGE>
CONSECO BALANCED FUND
Shareholder Fees
------------ ----------- ------------ -----------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM UP-FRONT SALES 5.75% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- -------------------------- ------------ ----------- ------------ -----------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these
shares within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 0.90% 0.90% 0.90% 0.90%
FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.50% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.56% 0.56% 0.56% 0.56%
- ----
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.96% 2.46% 2.46% 1.46%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.46%) (0.46%) (0.46%) (0.46%)
- ----
REIMBURSEMENT+
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.50% 2.00% 2.00% 1.00%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
</TABLE>
+ The Adviser and Administrator have contractually agreed to waive a portion
of their fees and/or pay a portion of the fund's expenses through 4/30/01 to
ensure that total annual operating expenses do not exceed the Net Expenses
listed in the Annual Operating Expenses table. This arrangement does not
cover interest, taxes, brokerage commissions or extraordinary expenses. They
may recover any money waived under the contract provisions, to the extent
that actual fees and expenses are less than the expense limitation, for a
period of three years after the date of the waiver.
<PAGE>
CONSECO CONVERTIBLE SECURITIES FUND
Shareholder Fees
------------ ----------- ------------ -----------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM UP-FRONT SALES 5.75% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- -------------------------- ------------ ----------- ------------ -----------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these
shares within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<PAGE>
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 1.05% 1.05% 1.05% 1.05%
FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.50% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.40% 0.40% 0.40% 0.40%
- ----
- ------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.95% 2.45% 2.45% 1.45%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.40%) (0.40%) (0.40%) (0.40%)
- ----
REIMBURSEMENT+
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.55% 2.05% 2.05% 1.05%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
</TABLE>
+ The Adviser and Administrator have contractually agreed to waive a portion
of their fees and/or pay a portion of the fund's expenses through 4/30/01 to
ensure that total annual operating expenses do not exceed the Net Expenses
listed in the Annual Operating Expenses table. This arrangement does not
cover interest, taxes, brokerage commissions or extraordinary expenses. They
may recover any money waived under the contract provisions, to the extent
that actual fees and expenses are less than the expense limitation, for a
period of three years after the date of the waiver.
<PAGE>
CONSECO HIGH YIELD FUND
Shareholder Fees
------------ ----------- ------------ -----------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM UP-FRONT SALES 5.75% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- ------------ -----------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- -------------------------- ------------ ----------- ------------ -----------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these
shares within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 0.90% 0.90% 0.90% 0.90%
FEES
- ------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.50% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.26% 0.26% 0.26% 0.26%
- ----
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.66% 2.16% 2.16% 1.16%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.26%) (0.26%) (0.26%) (0.26%)
- ----
REIMBURSEMENT+
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.40% 1.90% 1.90% 0.90%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
<FN>
+ The Adviser and Administrator have contractually agreed to waive a portion
of their fees and/or pay a portion of the fund's expenses through 4/30/01 to
ensure that total annual operating expenses do not exceed the Net Expenses
listed in the Annual Operating Expenses table. This arrangement does not
cover interest, taxes, brokerage commissions or extraordinary expenses. They
may recover any money waived under the contract provisions, to the extent
that actual fees and expenses are less than the expense limitation, for a
period of three years after the date of the waiver.
</FN>
</TABLE>
<PAGE>
CONSECO FIXED INCOME FUND
Shareholder Fees
------------ ----------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------- ------------ ----------- -------------- ------------
MAXIMUM UP-FRONT SALES 5.00% None None None
CHARGE ON PURCHASES
- -------------------------- ------------ ----------- -------------- ------------
MAXIMUM DEFERRED None* 5.00%** 1.00%*** None
SALES CHARGE
- -------------------------- ------------ ----------- -------------- ------------
The funds do not charge any fees for reinvesting dividends, redeeming or
exchanging fund shares.
* If you buy $500,000 or more of Class A shares and sell any of these shares
within 180 days from the date of purchase, you may pay a 1.00%
contingent-deferred sales charge at the time of redemption.
** The maximum 5.00% contingent-deferred sales charge applies to sale of Class
B shares during the first year after purchase. The charge generally
declines annually, reaching zero after six years.
*** The 1.00% contingent-deferred sales charge applies only if an investor
sells Class C shares within the first year after purchase.
<TABLE>
<CAPTION>
Annual Operating Expenses
--------------- ------------- -------------- ------------
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------- --------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
MANAGEMENT AND ADMINISTRATIVE 0.65% 0.65% 0.65% 0.65%
FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS DISTRIBUTION 0.65% 1.00% 1.00% None
- ----
(12B-1) FEES
- -------------------------------- --------------- ------------- -------------- ------------
PLUS OTHER EXPENSES 0.34% 0.34% 0.34% 0.34%
- ----
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS TOTAL ANNUAL FUND 1.64% 1.99% 1.99% 0.99%
- ------
OPERATING EXPENSES
- -------------------------------- --------------- ------------- -------------- ------------
LESS FEE WAIVER AND/OR EXPENSE (0.39%) (0.39%) (0.39%) (0.39%)
- ----
REIMBURSEMENT+
- -------------------------------- --------------- ------------- -------------- ------------
EQUALS NET EXPENSES 1.25% 1.60% 1.60% 0.60%
- ------
- -------------------------------- --------------- ------------- -------------- ------------
</TABLE>
+ The Adviser and Administrator have contractually agreed to waive a portion
of their fees and/or pay a portion of the fund's expenses through 4/30/01 to
ensure that total annual operating expenses do not exceed the Net Expenses
listed in the Annual Operating Expenses table. This arrangement does not
cover interest, taxes, brokerage commissions or extraordinary expenses. They
may recover any money waived under the contract provisions, to the extent
that actual fees and expenses are less than the expense limitation, for a
period of three years after the date of the waiver.
<PAGE>
EXPENSE EXAMPLE
These examples will help you compare the cost of investing in the Conseco Fund
Group to the cost of investing in other mutual funds. The examples assume that
you invest $10,000 in a fund for the time periods indicated and then sell all
your shares at the end of each period. The examples also assume that your
investment has a 5.00% return each year and that the fund's operating expenses
remain the same. Although your actual costs and the return on your investment
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
CLASS A SHARES
1 Year 3 Years* 5 Years* 10 Years*
<S> <C> <C> <C> <C> <C>
Conseco 20 Fund $216 $552 $912 $1,918
Conseco Equity Fund $208 $557 $930 $1,977
Conseco Balanced Fund $208 $619 $1,057 $2,272
Conseco Convertible
Securities Fund $213 $622 $1,057 $2,266
Conseco High Yield Fund $198 $547 $921 $1,969
Conseco Fixed
Income Fund $175 $521 $891 $1,929
</TABLE>
* The examples for 3, 5 and 10 years do not take into account the expense
waiver/reimbursement described above. Under the reimbursement arrangement,
your cost for the 3, 5 and 10 year periods would be lower.
<TABLE>
<CAPTION>
CLASS B SHARES
1 Year 3 Years* 5 Years* 10 Years*
<S> <C> <C> <C> <C> <C>
Conseco 20 Fund $718 $977 $1,262 $2,313
Conseco Equity Fund $700 $951 $1,229 $2,261
Conseco Balanced Fund $700 $1,013 $1,353 $2,546
Conseco Convertible
Securities Fund $705 $1,016 $1,353 $2,540
Conseco High Yield Fund $690 $942 $1,219 $2,253
Conseco Fixed
Income Fund $660 $878 $1,121 $2,120
</TABLE>
* The examples for 3, 5 and 10 years do not take into account the expense
waiver/reimbursement described above. Under the reimbursement arrangement,
your cost for the 3, 5 and 10 year periods would be lower.
<PAGE>
<TABLE>
<CAPTION>
CLASS C SHARES
1 Year 3 Years* 5 Years* 10 Years*
<S> <C> <C> <C> <C> <C>
Conseco 20 Fund $318 $677 $1,162 $2,497
Conseco Equity Fund $300 $651 $1,129 $2,446
Conseco Balanced Fund $300 $713 $1,253 $2,726
Conseco Convertible
Securities Fund $305 $716 $1,253 $2,721
Conseco High Yield Fund $290 $642 $1,119 $2,438
Conseco Fixed
Income Fund $260 $578 $1,021 $2,251
</TABLE>
* The examples for 3, 5 and 10 years do not take into account the expense
waiver/reimbursement described above. Under the reimbursement arrangement,
your cost for the 3, 5 and 10 year periods would be lower.
<TABLE>
<CAPTION>
CLASS Y SHARES
1 Year 3 Years* 5 Years* 10 Years*
<S> <C> <C> <C> <C> <C>
Conseco 20 Fund $118 $372 $645 $1,426
Conseco Equity Fund $100 $346 $611 $1,368
Conseco Balanced Fund $100 $409 $740 $1,677
Conseco Convertible
Securities Fund $105 $412 $741 $1,671
Conseco High Yield Fund $90 $336 $602 $1,360
Conseco Fixed
Income Fund $60 $271 $499 $1,154
</TABLE>
* The examples for 3, 5 and 10 years do not take into account the expense
waiver/reimbursement described above. Under the reimbursement arrangement,
your cost for the 3, 5 and 10 year periods would be lower.
MANAGEMENT OF THE FUNDS
ADVISER
Conseco Capital Management, Inc. ("CCM") is located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032. CCM is a wholly owned subsidiary of Conseco,
Inc., a publicly owned financial services company that provides specialized
annuity, and life and health insurance products. CCM manages investments for
Conseco, Conseco-affiliated insurance companies, the Conseco Fund Group family
of mutual funds and other Conseco mutual funds, as well as for foundations,
endowments, corporations, government entities, unions and high net worth
individuals. As of Dec. 31, 1999, CCM managed more than $42.2 billion.
<PAGE>
ADVISORY FEES
For the fiscal year ended 12/31/99, the advisory fee paid to the Adviser by each
fund was as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------- ------------------------------------------------
FUND NAME ADVISORY FEES PAID
- -------------------------------------------------- ------------------------------------------------
(EXPRESSED AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS)
- -------------------------------------------------- ------------------------------------------------
<S> <C> <C>
CONSECO 20 FUND 0.68%
- -------------------------------------------------- ------------------------------------------------
CONSECO EQUITY FUND 0.54%
- -------------------------------------------------- ------------------------------------------------
CONSECO BALANCED FUND 0.24%
- -------------------------------------------------- ------------------------------------------------
CONSECO CONVERTIBLE SECURITIES FUND 0.45%
- -------------------------------------------------- ------------------------------------------------
CONSECO HIGH YIELD FUND 0.44%
- -------------------------------------------------- ------------------------------------------------
CONSECO FIXED INCOME FUND 0.06%
- -------------------------------------------------- ------------------------------------------------
</TABLE>
PORTFOLIO MANAGERS OF THE CONSECO FUND GROUP
<TABLE>
<CAPTION>
- ---------------------------- ----------- ----------------------------------------------------- --------------------
With CCM
since
Fund Manager Professional Experience Funds
- ---------------------------- ----------- ----------------------------------------------------- --------------------
<S> <C> <C> <C>
Peter C. Andersen, CFA, 1997 o Manages below-investment-grade o CONSECO
Vice President, fixed-income portfolios for institutional HIGH YIELD
Portfolio Analytics, client accounts
CONSECO CAPITAL o Portfolio manager of other affiliated
MANAGEMENT, INC. investment companies
Prior to joining the Adviser, Mr. Andersen was a
portfolio manager for Colonial Management
Associates, where he managed over $650
million in high-yield, tax-free mutual
funds.
<PAGE>
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Andrew S. Chow, CFA, FLMI, 1991 o Responsible for trading mortgage-backed o Conseco
Vice President, securities, exchange and over-the-counter Convertible
CONSECO CAPITAL derivatives and convertible securities Securities
MANAGEMENT, INC. o Portfolio manager for institutional
fixed-income client accounts
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Gregory J. Hahn, CFA, 1989 o Responsible for portfolio analysis and o Conseco
management of the institutional client accounts Balanced
Chief Fixed Income and analytical support for taxable portfolios (fixed-income
Investment Officer, Senior o Responsible for SEC registered investment portion)
Vice President, products o Conseco
Portfolio Analytics, o Portfolio manager of other affiliated and Fixed Income
CONSECO CAPITAL unaffiliated investment companies
MANAGEMENT, INC.
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Thomas J. Pence, CFA, 1992 o Manages the equity portion of the Balanced o Conseco
Chief Equity Investment Fund's portfolio Balanced
Officer, Senior Vice o Manages CCM's equity portfolios and has (equity
President, oversight of the equity investment process portion)
Portfolio Analytics, o Portfolio manager of other affiliated o Conseco
CONSECO CAPITAL investment companies Equity
MANAGEMENT, INC. o Conseco
20
<PAGE>
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Todd C. Thompson, CFA, 2000 o Responsible for portfolio management of o Conseco Fixed
Second Vice President, the primary investment-grade composites and Income
Portfolio Manager, the tax-exempt client portfolios that comprise
CONSECO CAPITAL them
MANAGEMENT, INC.
Prior to joining the Adviser, Mr. Thompson was an
Assistant Investment Officer at the Public
Employees Retirement System of Ohio, responsible
for management of a $20 billion fixed-income
portfolio.
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Nicholas B. Truitt, Second 1997 o Assists in research and portfolio o Conseco
Vice President, management for all CCM equity portfolios Equity
Senior Securities Analyst,
CONSECO CAPITAL Prior to joining the Adviser, Mr. Truitt was an
MANAGEMENT, INC. equity analyst at T. Rowe Price, assisting in
small-cap growth research and portfolio management
for the New Horizons Fund and the New America
Growth Fund.
- ---------------------------- ----------- ----------------------------------------------------- --------------------
Erik J. Voss, CFA, 1996 o Assists the research and portfolio o Conseco 20
Vice President, management efforts for all of the Adviser's
Senior Securities Analyst, equity portfolios
CONSECO CAPITAL
MANAGEMENT, INC. Prior to joining the Adviser, Mr. Voss was an
equity analyst for Gardner Lewis Asset Management
for more than three years.
- ---------------------------- ----------- ----------------------------------------------------- --------------------
</TABLE>
<PAGE>
ADMINISTRATIVE SERVICES
Conseco Services, LLC provides administrative services to the funds, including:
o Supervising bookkeeping and recordkeeping to ensure that shareholder
information is accurate and up-to-date
o Supervising the preparation and filing of documents as required by state
and federal regulatory agencies
o Management and oversight of all third-party service
providers
AS COMPENSATION FOR THESE SERVICES, CONSECO SERVICES, LLC RECEIVES
ADMINISTRATIVE FEES OF 0.20% ANNUALLY OF EACH FUND'S AVERAGE DAILY NET ASSETS.
DETERMINING SHARE PRICE
A fund's share price equals the total market value of its assets minus its
liabilities, called net asset value (NAV), divided by the total number of shares
outstanding. Because the value of each fund's securities changes every business
day, the fund's share price usually changes as well.
Each fund calculates its NAV per share on each business day that the New York
Stock Exchange is open. This occurs at the close of regular trading, normally 4
PM, Eastern time. The NAV is generally based on the market price of the
securities held in a fund.
Under the direction of the Board of Trustees, the funds may use a practice
known as fair value pricing in the following circumstances:
o Securities and assets for which market quotations that are not readily
available
o Events occurring after an exchange closes that are likely to affect the
value of a security
o Fund management strongly believes a security's market price does not
reflect the security's true value
MANAGING YOUR CONSECO FUND GROUP ACCOUNT
ESSENTIAL INFORMATION
CONTACTING CONSECO FUND GROUP
By phone 800-986-3384, 24 hours a day
By mail Conseco Fund Group
Attn: Administrative Offices
11815 N. Pennsylvania St., K1B
Carmel, IN 46032
<PAGE>
OUR BUSINESS HOURS
We're open when the New York Stock Exchange is open so you can buy or sell
shares in your fund account any weekday except: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
MINIMUM FUND INVESTMENT*
per fund
To open an account $ 250
Each additional investment 50
To open an automated investment plan 50
To open a retirement account 0
through salary reduction
Initiate a Dollar Cost Averaging 5,000
(DCA) Plan through Firstar
Money Market Fund account
Transfer assets from DCA Plan to fund 250
each
month
* Minimums apply to Class A, Class B and Class C shares.
WE CANNOT ACCEPT THIRD-PARTY CHECKS.
These requirements may be changed or waived at any time at the discretion of the
fund's officers.
KEEPING TRACK
We'll send you written confirmation of each transaction in your account. These
confirmations also serve as your proof of ownership since we do not issue
certificates.
<PAGE>
CHOOSING THE RIGHT SHARES FOR YOUR NEEDS
Investors may choose from four classes of shares in each of our mutual funds.
The classes differ in the way they deal with sales charges and fund expenses.
Four important considerations in choosing a share class are the amount you plan
to invest, your investment objectives, the fund's expenses and charges, and how
long you intend to keep the money invested. As always, we recommend that you
discuss your investment goals and choices with your registered financial
professional.
Class A shares
o Carry a maximum up-front sales charge of 5.75% of your investment -- 5.00%
maximum for the Conseco Fixed Income Fund -- depending on the size of your
investment.
o Have lower operating expenses than Class B or Class C shares. This means an
investment in Class A shares will have higher annual returns than a
comparable investment in Class B or C shares.
o 12b-1 for the Conseco Fixed Income Fund = 0.65%
12b-1 for all other funds = 0.50%
SIDEBAR About 12b-1
12b-1 fees, paid by the Distributor, may be used to cover a fund's sales,
marketing and promotional expenses. Because they are paid out of the Fund on an
ongoing basis, they increase the cost of your investment the longer you hold it
and may end up costing you more than other types of sales charges.
Class B shares
o Have no up-front sales charge, but you pay surrender charges (called
contingent-deferred sales charges ("CDSC")) on shares you sell. These
charges start at 5.00% of the amount of the purchase or sale, whichever is
less, when you redeem shares within one year of your purchase. They
gradually decline each year until reaching zero in the seventh year after
your purchase.
o Convert to an equal dollar value of Class A shares, with lower ongoing
operating expenses, eight years after purchase.
o 12b-1 = 1.00%
<PAGE>
Class C shares
o Have no up-front sales charge, but you pay a CDSC of 1.00% of the amount of
the purchase or sale, whichever is less, when you redeem shares within one
year of your purchase. Class C shares never convert to Class A shares.
o 12b-1 = 1.00%
Class Y shares
o Are only available to individuals whose Conseco Fund Group investments
exceed $500,000 or to eligible institutional investors:
- Tax-qualified retirement plans with at least $10 million to invest or
250 eligible employees
- Banks and insurance companies investing for their own accounts
- Other investment companies not affiliated with our Investment Adviser
- The Investment Adviser's tax-qualified retirement plans or qualified
financial intermediaries who have a contract with Conseco Equity
Sales, Inc. ("Distributor").
- Endowments, foundations and other charitable organizations
- Wrap-fee accounts or asset allocation programs in which the
shareholder pays an asset-based service fee
We cover the complete details of each share class in the sections following.
<PAGE>
SHARE CLASS SALES CHARGES
Class A Shares
The price of Class A shares equals a fund's current share price, or net asset
value, plus a sales charge that varies according to the amount you invest, as
shown in the chart below.
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
If your purchase is . . . your initial sales charge your annual sales charge the one-time Dealer
as a % of the share price as a % of the total you allowance as a % of
is . . . invested is . . . purchase price is . . .
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
<S> <C> <C> <C> <C>
less than $50,000 (for all 5.75 6.10 5.00
funds except Conseco Fixed
Income Fund)
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
less than $50,000 (for 5.00 5.56 4.50
Conseco Fixed Income Fund
only)
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
$50,000 to $99,999 4.50 4.71 3.75
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
$100,00 to $249,999 3.50 3.63 2.75
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
$250,000 to $499,999 2.50 2.56 2.00
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
$500,000 and over none none 1.00
- ------------------------------- ---------------------------- -------------------------------- ------------------------------
</TABLE>
If you buy $500,000 or more of Class A shares and sell any of these shares
within 180 days from the date of purchase, you may pay a 1.00% contingent
deferred sales charge at the time of redemption.
You may be able to reduce the sales charge on your purchase of Class A shares:
o We will add the value of any existing Conseco Fund Group investments, plus
the value of any investment you've made in the Firstar Money Market Fund,
to the amount of your investment to determine the sales charge. (You may
invest in the Firstar Money Market Fund, currently managed by Firstar
Investment Research and Management Company, LLC, through a separate
prospectus. You can obtain one by calling 800-986-3384.)
o You may add funds held for your benefit in trust by fiduciaries with the
funds to be considered in calculating sales charges on your purchase. These
funds include qualified retirement plans at work.
o If you agree by letter of intent to invest a definite amount in Conseco
Fund Group Class A shares over the 13 months following your first purchase,
we will calculate the sales charge as if you purchased all the shares at
one time. You could reduce sales charges still further by including your
existing Conseco Fund Group investments in the calculation.
<PAGE>
Consult your registered financial professional, or the Conseco Fund Group
Statement of Additional Information, for further details on our Class A share
cost reduction programs.
o You may reinstate your Conseco Fund Group mutual fund investment anytime
within 180 calendar days after you sell your shares. That means you may
reinvest the amount you received from the sale of your shares without any
up-front sales charge. You may exercise this reinvestment privilege only
once per Conseco Fund Group fund investment and it may be subject to other
restrictions.
Class B Shares
Class B Shares have no up-front sales charges. Your entire amount invested
purchases Conseco Fund Group shares. Instead, you pay:
o Higher annual expenses on your investment
o A CDSC on any shares you sell within six years of your purchase
We base the sales charge on the price of the shares at the time you bought them
or their price at the time you sell, whichever is lower. The amount of the CDSC
declines the longer you own your shares:
-------------------------------------------------------------------
If you sell shares during .... you pay this % on the total
amount of the sale:
-------------------------------------------------------------------
the first year after purchase 5.00
-------------------------------------------------------------------
the second year after purchase 4.00
-------------------------------------------------------------------
the third year after purchase 3.00
-------------------------------------------------------------------
the fourth year after purchase 3.00
-------------------------------------------------------------------
the fifth year after purchase 2.00
-------------------------------------------------------------------
the sixth year after purchase 1.00
-------------------------------------------------------------------
the seventh year after purchase 0.00
-------------------------------------------------------------------
<PAGE>
In the eighth year after your purchase your Class B shares convert to Class A
shares of equal value. This means the shares will have lower ongoing annual
expenses.
Please note:
1. Class B share purchases may not exceed $500,000.
2. In calculating the contingent-deferred sales charge, we consider any shares
purchased during a month as purchased on the first day of the month.
3. Any shares you purchase by reinvesting the dividends and capital gains
distributions from your Class B shares do not carry a contingent-deferred
sales charge.
4. When you place an order to sell Class B shares, we automatically sell the
shares that have no contingent-deferred sales charge first.
5. You may reinstate your Conseco Fund Group mutual fund investment anytime
within 180 calendar days after you sell your shares. That means we will
reimburse up to the full amount of any contingent-deferred sales charge you
paid, depending on how much you reinvest. You may exercise this
reinvestment privilege only once per Conseco Fund Group investment and it
may be subject to other restrictions.
Class C Shares
Class C Shares have no up-front sales charges. The entire amount you invest
purchases Conseco Fund Group shares. Instead, you pay:
o Higher annual expenses on your investment
o A contingent-deferred sales charge of 1.00% on any shares you sell within
ONE YEAR of your purchase
<PAGE>
We base the sales charge on the price of the shares at the time you bought them
or their price at the time you sell, whichever is lower. The amount of the
contingent-deferred sales charge declines the longer you own your shares.
Class C shares have higher annual operating expenses. Unlike Class B shares,
they never convert to any other class of shares with lower expenses.
Similarities with Class B shares
o We base the sales charge on the price of the shares at the time you bought
them or their price at the time you sell, whichever is lower. See 2, 3, 4
and 5 in Class B above for other similarities.
-------------------------------------------------------------------
If you sell shares during .... you pay this % on the total
amount of the sale:
-------------------------------------------------------------------
the first year after purchase 1.00
-------------------------------------------------------------------
the second year after purchase 0.00
-------------------------------------------------------------------
O Class C shares pay annual 12b-1 distribution and shareholder servicing fees
of 1.00%.
Class Y Shares
Class Y shares have no up-front or CDSC, nor do they pay annual 12b-1
distribution or shareholder servicing fees.
<PAGE>
THREE CONVENIENT WAYS TO OPEN YOUR CONSECO FUND GROUP ACCOUNT
Through your financial professional
You can buy shares in any Conseco Fund Group fund through any authorized
broker/dealer, financial planner, or a financial institution, such as a bank, or
financial services firm. These organizations and individuals may maintain their
own procedures for buying and selling shares, and may charge fees. Your
financial professional will have the details.
By mail
Send your completed application, and a separate check payable to the Conseco
Fund Group to:
Conseco Fund Group
c/o Firstar Mutual Fund Services, LLC
PO Box 701
Milwaukee, WI 53201-0701
or for overnight mail
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St., 3rd floor
Milwaukee, WI 53201-0701
414-765-4124
By bank wire
Send your completed application to the address listed above and wire your
investment to:
ABA#075000022
Credit to:
Firstar Mutual Fund Services, LLC
Account #112-952-137
Further credit to:
o The name of the fund you're investing in
o Your account name
o The fund's number, which you'll find on the account application
NEW ACCOUNTS MUST ALSO SEND A COMPLETED APPLICATION FORM TO ONE OF THE MAILING
ADDRESSES LISTED ABOVE.
<PAGE>
IMPORTANT INFORMATION ABOUT BUYING CONSECO FUND GROUP SHARES
o Please indicate which class of shares you are buying -- Class A, B, C or Y
-- when you place your order.
o If you're adding to your existing account, indicate your fund account
number on your check.
o We accept no third-party checks.
o Shares are purchased at the next share price calculated after we receive
your order.
o If you buy shares through your financial professional, it is the
professional's responsibility to forward your purchase order before the
close of business on the New York Stock Exchange, normally 4 PM, Eastern
time. Investors should check with their financial professionals to see
whether they have an earlier daily deadline for forwarding purchase orders.
o Payment for shares purchased through a financial institution such as a bank
or an authorized broker/dealer is due on the settlement date, normally
three days after we have received your order. (If you or your financial
professional is making payment via federal funds wire, be sure to get a
confirmation number, which you will need to ensure timely credit.)
o We can only accept checks in U.S. dollars drawn on U.S. funds for the
purchase of shares.
o We may charge a $25 fee on purchase checks that do not clear.
o To ensure that all checks have cleared, we do not allow investors to sell
shares purchased by check until the shares have been in their account 12
days.
o We reserve the right to cancel any purchase order, specifically, a purchase
order for which we have not received payment within three business days.
o The fund currently does not charge for wire transfers it receives for share
purchases, although your bank may.
IMPORTANT INFORMATION ABOUT SELLING CONSECO FUND GROUP SHARES
You may transmit a request to sell shares by phoning us directly, through your
financial professional or by mail. We will mail the check for the proceeds of
the sale of your shares, minus any applicable contingent-deferred sales charge,
to the address listed on your account application.
<PAGE>
IF YOU SELL SHARES BY PHONE
o Neither the funds nor their transfer agent, Firstar Mutual Fund Services,
LLC, is responsible for verifying whether a telephoned sales order is
genuine. We do, however, protect you with these safeguards:
- We record telephone orders.
- We require callers to provide specific identifying information.
- We send written confirmation of your order within five days.
o You cannot place orders by phone if you have rejected the telephone
privilege in your account application.
IF YOU SELL SHARES THROUGH YOUR FINANCIAL PROFESSIONAL
o Intermediaries may maintain their own procedures for buying and selling
shares. Your financial professional will have the details.
o Intermediaries may charge fees for processing your sales request, even
though we do not.
IF YOU SELL SHARES BY MAIL
Address your request to
Conseco Fund Group
c/o Firstar Mutual Fund Services, LLC
PO Box 701
Milwaukee, WI 53201-0701
<PAGE>
or for overnight mail
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St., 3rd floor
Milwaukee, WI 53201-0701
414-765-4124
IF YOU SELL SHARES BY WIRE
A $12 fee will be charged for all outbound wire transfers.
We may require a signature guarantee for sales of Conseco Fund Group shares
totaling $50,000 or more. You may obtain your signature guarantee from most
financial institutions, such as banks, broker/dealers, credit unions and savings
associations -- but not from a notary public.
INFORMATION REQUIRED ON ALL SALES REQUESTS
o Include your account number, your account's name and your Social Security
or taxpayer identification number with your sales request.
o State either the number of shares you wish to sell or the amount you wish
to receive from the sale.
CALCULATING THE PROCEEDS FROM YOUR SALE
o Shares are sold at the next share price calculated after we receive your
request, either from you directly or through your registered financial
professional.
o If you submit your sales request through a registered financial
professional, it is the financial professional's responsibility to transmit
your request prior to the close of the New York Stock Exchange in order to
receive that day's share price.
<PAGE>
RECEIVING THE PROCEEDS FROM YOUR SALE
o You should receive a check for the net proceeds of your sale within seven
business days. We may, however, delay payment 12 days or longer if the
check you used to purchase the shares you're selling has not cleared.
o Under extraordinary circumstances, as specified by law, we may temporarily
suspend payment.
EXPEDITED PROCESSING
You may have proceeds of $50 or more wired directly or sent through electronic
funds transfer to an account in the U.S. bank of your choice. Normally, we will
transmit these expedited proceeds on the next business day following the sale of
your shares. We charge a $12 wire transfer fee.
SPECIAL SHAREHOLDER SERVICES
We offer an array of special services free of charge to make investing in
Conseco Fund Group mutual funds easy and convenient.
AUTOMATED INVESTING
The Conseco Fund Group has designed two programs to implement disciplined
investing strategies:
o Pre-authorized investment plan. Lets you set up debits from your checking
account for $50 or more every month to purchase shares for your fund
account. You may even qualify for a waiver of the $50 minimum on purchases
made through payroll deduction or qualified retirement plans. Call
800-986-3384 for details.
o Dollar-cost-averaging program. Lets you transfer a set amount of money
regularly between the interest-bearing Firstar Money Market Fund and any
Conseco Fund Group mutual fund. By investing this way, you buy more shares
when mutual fund share prices are down and fewer when share prices go up.
This strategy can help lower the average price you pay for your shares. To
participate, you need to invest at least $5,000 in the money-market fund
and transfer a minimum of $250 every month to a Conseco Fund Group fund.
Dollar cost averaging cannot assure you of a profit or protect you against loss.
And because the plan requires that you invest consistently without regard to
share prices, you should carefully consider whether you would be willing to
continue purchasing shares in all market conditions.
<PAGE>
ELECTRONIC BUYING AND SELLING
You can buy or sell your Conseco Fund Group investments electronically whenever
you like by taking advantage of our Automated Clearing House option.
ACH lets you transfer money directly between your bank and fund accounts to buy
or sell as little as $50 or as much as $50,000 worth of Conseco Fund Group
shares. (The minimum is $250 if you are making a new investment and not adding
to an existing one.)
To sign up for ACH simply fill out Part 8 on your account application.
SYSTEMATIC WITHDRAWALS
You can arrange to sell shares monthly or quarterly. We'll send the proceeds to
you or to any party you designate. Just fill out Part 9, "Systematic
Withdrawal/Exchange Plan," on your account application. We normally process
systematic withdrawals on the 25th day of each month and mail out checks within
five business days of the following month.
To qualify for systematic withdrawals, you must:
o Reinvest your distributions
o Begin with an account value of $5,000 or more
o Withdraw at least $50 monthly or quarterly starting when you first invest
<PAGE>
FREE EXCHANGES
Conseco Fund Group lets you exchange shares in one fund for the same class of
shares in any other fund, including the Firstar Money Market Fund, free of
charge. There may, however, be tax consequences resulting from these exchanges.
See Tax Considerations. Normally we will execute the entire transaction in a
single business day.
The following conditions apply:
o The value of the shares you are exchanging must meet the minimum purchase
requirement of the fund you're exchanging them for.
o If you exchange Firstar Money Market shares for Class A shares in any
Conseco Fund Group fund, we will assess the applicable sales charge.
o If you sell Class B shares you acquired through an exchange, we will
calculate any contingent-deferred sales charge from the date you originally
purchased the shares that you exchanged.
o If you sell Class C shares you acquired through an exchange and you sell
them within a year of the exchange, we will calculate any
contingent-deferred sales charge from the date you originally purchased the
shares that you exchanged.
o We may apply a contingent-deferred sales charge on Firstar Money Market
Fund shares that you sell, if you acquired them through an exchange of
Class B or C shares from another fund.
o You may exchange Firstar Money Market Fund shares that you acquired through
an exchange back into your original share class at no additional charge. If
you then sell those shares, we will calculate your contingent-deferred
sales charge from the date you purchased the original shares, not from the
date you exchanged the Firstar Money Market Fund shares.
Short-term or excessive trading into and out of the funds may harm performance
by disrupting investment management strategies and increasing expenses.
Accordingly, the funds may reject any purchase orders, including exchanges, from
investors who, in Conseco Fund Group's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive. To determine
whether investors engage in short-term or excessive trading, we consider the
trading history of all the Conseco Fund Group accounts they own and control.
<PAGE>
Dividends and Distributions
At least 90% of each fund's net investment income is distributed to shareholders
as dividends. Net investment income consists of all dividends and interest
received -- less expenses (including fees payable to the Adviser and its
affiliates). You begin earning dividends on fund shares the day after the
Conseco Fund Group receives your purchase payment.
Each fund declares and pays dividends from net investment income according to
the schedule below. The Board of Trustees may elect to change dividend
distribution intervals.
SCHEDULE OF DIVIDEND PAYMENTS
FUND DECLARED AND PAID
Conseco 20 Fund Annually
Conseco Equity Fund Annually
Conseco Balanced Fund Quarterly
Conseco Convertible Securities Fund Monthly
Conseco High Yield Fund Monthly
Conseco Fixed Income Fund Monthly
Any capital gains are generally declared annually and distributed to
shareholders after the close of a fund's fiscal year. These include net capital
gains (the excess of net long-term capital gain over net short-term capital
loss), net short-term capital gains, and net realized gains from foreign
currency transactions.
Dividends and other distributions paid on each class of shares are calculated at
the same time and in the same manner. Because specific expenses may apply to one
class of shares and not another, dividend amounts will differ.
CHOOSE HOW TO USE YOUR DISTRIBUTIONS
Conseco Fund Group lets you receive your distributions in cash or use them to
buy more shares. Simply choose on your application the option that meets your
needs. Retirement accounts reinvest all fund distributions except under unusual
circumstances. Call 800-986-3384 for further information.
<PAGE>
HERE ARE YOUR OPTIONS
- ---------------------------------------------- --------------------------------
YOU MAY REINVEST IN ADDITIONAL FUND SHARES: AND RECEIVE IN CASH:
- ---------------------------------------------- --------------------------------
o all income dividends and distributions
- ---------------------------------------------- --------------------------------
o only income dividends o other distributions in cash
- ---------------------------------------------- --------------------------------
o only distributions o income dividends in cash
- ---------------------------------------------- --------------------------------
We mail all cash
dividends and
distributions by
check to you, or
transfer them via
electronic funds
transfer (EFT) to
your bank account if
you have selected
the Wire/Electronic
Transfer Options in
Part 7 of your
application.
- ---------------------------------------------- --------------------------------
TAX CONSIDERATIONS
The shareholders of each fund ordinarily pay taxes on the fund's dividends and
distributions. You will owe taxes whether you receive distributions and
dividends in cash or whether you reinvest them. The amount of taxes you owe will
depend on many factors. The most important are:
o Your income tax bracket
o How long a fund has owned the securities that it sells
o How long you've owned any shares in the fund that you might sell
o Whether you owe alternative minimum tax
Because each investor's tax circumstances are unique and because tax laws are
subject to change, we recommend that you consult your tax advisor about your
investment.
The amount of tax you owe each year on your fund investment will depend on the
amount of dividends and capital gain distributions that the fund pays out.
Normally, the taxes will be due in the year dividends and distributions are
paid. (The exception is when a fund declares a dividend in December of one year,
and pays the dividend in January of the next year. In this case, you pay taxes
on the distributions as if we had paid them in December.)
<PAGE>
Dividends and distributions usually create the following tax liability:
- ---------------------------------------------- --------------------------------
TRANSACTION TAX STATUS
- ---------------------------------------------- --------------------------------
Dividend payout Ordinary income
- ---------------------------------------------- --------------------------------
Short-term capital gain distribution Ordinary income
- ---------------------------------------------- --------------------------------
Long-term capital gain distribution Capital gain
- ---------------------------------------------- --------------------------------
TAXES ON SALES OR EXCHANGES
The chart features possible tax implications arising from the sale or exchange
of fund shares.
- ------------------------------------------------------- -----------------------
TRANSACTION TAX IMPLICATION
- ------------------------------------------------------- -----------------------
Selling shares for more than purchase price Yes
- ------------------------------------------------------- -----------------------
Selling shares for less than purchase price Yes
- ------------------------------------------------------- -----------------------
Exchanging shares of same class from one Conseco Fund Yes
Group fund to another
- ------------------------------------------------------- -----------------------
Class B shares convert to Class A shares No
- ------------------------------------------------------- -----------------------
After Dec. 31 of each year, we will mail you a notice telling you:
o How much your investment in the fund has earned in dividends and
distributions during the year
o Whether they are taxable as ordinary income, a short-term capital gain or a
long-term capital gain
BACKUP WITHHOLDING
You must give us your Social Security or other taxpayer ID number on your fund
application. If we do not have your number on record, or if the IRS has informed
us that you are subject to backup withholding, we must withhold 31% of all money
that you earn from your investment. Consult your tax advisor for details.
<PAGE>
DISTRIBUTION AND SERVICE PLANS
The funds have adopted Distribution and Service Plans (12b-1 Plan) for Class A,
B and C shares to compensate the Distributor for its distribution and marketing
services, and for servicing shareholder accounts. The following chart provides
the fees paid for each share class. The distribution and service fees are paid
out of the assets of each share class on an ongoing basis and will increase the
cost of your investment.
<TABLE>
<CAPTION>
- ------------------------------------------------------- -----------------------------------------------------
CLASS A SHARES CLASS B AND CLASS C SHARES
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
For all the funds, except Conseco Fixed Income Fund, Fees paid to the
fees paid to the Distributor may not exceed Distributor may not exceed
0.50% annually of the average daily net assets. 1.00% annually of each fund's
average daily net assets.
For the Conseco Fixed Income Fund, fees paid to the
Distributor may not exceed 0.65% annually of the
average daily net assets attributable to Class A
shares.
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
The Distributor may make payments to brokers, dealers and other financial
intermediaries for providing shareholder services and for promotional and
sales-related costs. The payments for shareholder servicing may not exceed an
annual rate of 0.25% of the average daily net asset value.
PAYMENTS TO BROKERS/DEALERS/FINANCIAL INTERMEDIARIES
<TABLE>
<CAPTION>
- ------------------------------------- ------------------------------------ -----------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ------------------------------------- ------------------------------------ -----------------------------------
<S> <C> <C>
The selling broker/dealer may Since these shares have no Since these shares have no sales
retain the sales charge you pay on up-front sales charges, the charge, the Distributor pays
these shares. Distributor pays the seller 4.00% the seller 1.00% of the
of the purchase amount. purchase amount.
- ------------------------------------- ------------------------------------------------------------------------
We use part of the proceeds from the
contingent-deferred sales charge and the
12b-1 fee to defray these payments.
- ------------------------------------- ------------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table summarizes each fund's financial performance for
the past five years (or, if shorter, the period of the fund's operations).
Certain information reflects financial results for a single share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in each fund (assuming reinvestment of all dividends and
distributions). PRICEWATERHOUSECOOPERS LLP has audited this information, along
with the funds' financial statements. We have included their report in the
funds' annual report, which is available upon request.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco Conseco
Fixed Income Fund High Yield Fund Convertible Securities Fund
----------------------- ----------------------- ---------------------------
Period from
September 28,
1998(f)
Year Ended through
Year Ended December 31, Year Ended December 31, December 31, December 31,
Class A Shares 1999 1998 1997 1999 1998 1999 1998
----------------------- ----------------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value per share, beginning of period........... $10.21 $10.13 $10.00 $10.00 $10.00 $11.00 $10.00
Income from investment operations (a):
Net investment income (loss)........................... 0.63 0.55 0.66 1.00 0.76 0.46 0.10
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments............ (0.65) 0.20 0.18 (0.13) (0.10) 3.89 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations........ (0.02) 0.75 0.84 0.87 0.66 4.35 1.10
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income................... (0.56) (0.55) (0.58) (0.87) (0.66) (0.27) (0.10)
Distribution of net capital gains...................... (0.03) (0.12) (0.13) -- -- (0.15) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions................................... (0.59) (0.67) (0.71) (0.87) (0.66) (0.42) (0.10)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period.............. $ 9.60 $10.21 $10.13 $10.00 $10.00 $14.93 $11.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................. (0.27%) 7.57% 8.66% 9.03% 6.56% 40.12% 11.04%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period....... $30,681 $30,684 $ 153 $42,591 $28,199 $22,927 $27,611
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement...... 1.64% 1.94% 13.67% 1.66% 2.12% 1.95% 2.12%
After fee waiver and/or expense reimbursement....... 1.25% 1.25% 1.25% 1.40% 1.40% 1.55% 1.55%
Ratio of net investment income (loss) to average
net assets (b)(e):
Before fee waiver and/or expense reimbursement......... 5.30% 4.59% (6.91%) 8.67% 7.04% 1.71% 3.23%
After fee waiver and/or expense reimbursement.......... 5.69% 5.28% 5.51% 8.93% 7.76% 2.11% 3.80%
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.25% for the
Conseco Fixed Income, 1.40% for the Conseco High Yield, 1.55% for the
Conseco Convertible Securities, 1.50% for the Conseco Balanced and Conseco
Equity and 1.75% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
CONSECO FUND GROUP
1999 Annual Report
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco Conseco
Balanced Fund Equity Fund 20 Fund
------------------------ ------------------------- ------------------------
Year Ended December 31, Year Ended December 31, Year Ended December 31,
Class A Shares 1999 1998 1997 1999 1998 1997 1999 1998
--------- -------- ------- --------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value per share, beginning of period........ $11.69 $10.73 $10.00 $12.55 $11.07 $10.00 $12.80 $10.00
Income from investment operations (a):
Net investment income (loss)........................ 0.22 0.30 0.28 (0.14) -- (0.04) (0.18) (0.02)
Net realized gains (losses) and change in
unrealized appreciation (depreciation)
on investments.................................... 3.18 1.03 1.43 7.18 1.79 2.33 9.19 2.82
- ------------------------------------------------------------------------- ----------------------------------------------------------
Total income (loss) from investment operations..... 3.40 1.33 1.71 7.04 1.79 2.29 9.01 2.80
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income................ (0.23) (0.24) (0.27) -- (0.01) -- -- --
Distribution of net capital gains................... (1.35) (0.13) (0.71) (3.32) (0.30) (1.22) (1.13) --
- ------------------------------------------------------------------------- ----------------------------------------------------------
Total distributions................................ (1.58) (0.37) (0.98) (3.32) (0.31) (1.22) (1.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period........... $13.51 $11.69 $10.73 $16.27 $12.55 $11.07 $20.68 $12.80
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d).............................. 29.44% 12.45% 17.19% 56.21% 16.11% 22.90% 70.40% 28.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period.... $31,932 $26,064 $ 1,076 $29,480 $26,203 $ 4,877 $53,463 $33,845
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement... 1.96% 2.26% 12.44% 1.66% 2.10% 4.85% 1.70% 2.15%
After fee waiver and/or expense reimbursement.... 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.68% 1.75%
Ratio of net investment income (loss) to average
net assets (b)(e):
Before fee waiver and/or expense reimbursement... 1.41% 1.90% (8.44%) (0.99%) (0.60%) (3.70%) (1.04%) (0.62%)
After fee waiver and/or expense reimbursement.... 1.87% 2.66% 2.50% (0.83%) --% (0.35%) (1.02%) (0.22%)
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.25% for the
Conseco Fixed Income, 1.40% for the Conseco High Yield, 1.55% for the
Conseco Convertible Securities, 1.50% for the Conseco Balanced and Conseco
Equity and 1.75% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Fixed Income Fund High Yield Fund
-------------------------------- ----------------------------------
Period from Period from
Year Ended March 20, 1998(f) Year Ended February 19, 1998(f)
December 31, through December 31, through
Class B Shares 1999 December 31, 1998 1999 December 31, 1998
-------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net asset value per share, beginning of period............. $10.19 $10.24 $9.97 $10.44
Income from investment operations (a):
Net investment income (loss)............................. 0.41 0.36 0.55 0.60
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. (0.46) 0.14 0.28 (0.48)
- ---------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... (0.05) 0.50 0.83 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.52) (0.45) (0.83) (0.59)
Distribution of net capital gains........................ (0.03) (0.10) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions..................................... (0.55) (0.55) (0.83) (0.59)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $ 9.59 $10.19 $9.97 $ 9.97
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... (0.49%) 4.97% 8.57% 1.12%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $ 5,230 $ 2,619 $47,433 $11,271
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.99% 2.77% 2.16% 2.75%
After fee waiver and/or expense reimbursement......... 1.60% 1.60% 1.90% 1.90%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 4.95% 3.66% 8.17% 6.42%
After fee waiver and/or expense reimbursement......... 5.34% 4.83% 8.43% 7.27%
</TABLE>
<TABLE>
<CAPTION>
Conseco
Convertible Securities Fund
-------------------------------------
Period from
Year Ended September 28, 1998(f)
December 31, through
Class B Shares 1999 December 31, 1998
------------- ----------------------
<S> <C> <C>
Net asset value per share, beginning of period............. $11.00 $10.00
Income from investment operations (a):
Net investment income (loss)............................. 0.06 0.08
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 4.21 1.00
- ---------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 4.27 1.08
- ---------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.24) (0.08)
Distribution of net capital gains........................ (0.15) --
- --------------------------------------------------------------------------------------------------
Total distributions..................................... (0.39) (0.08)
- ---------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $14.88 $11.00
- ---------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 39.40% 10.89%
- ---------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $13,690 $ 1
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 2.45% 154.76%
After fee waiver and/or expense reimbursement......... 2.05% 2.05%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.21% (149.69%)
After fee waiver and/or expense reimbursement......... 1.61% 3.02%
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.60% for the
Conseco Fixed Income, 1.90% for the Conseco High Yield, 2.05% for the
Conseco Convertible Securities, 2.00% for the Conseco Balanced and Conseco
Equity and 2.25% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
CONSECO FUND GROUP
1999 Annual Report
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Balanced Fund Equity Fund
--------------------------------- ----------------------------------
Period from Period from
Year Ended February 10, 1998(f ) Year Ended January 28, 1998(f)
December 31, through December 31, through
Class B Shares 1999 December 31, 1998 1999 December 31, 1998
------------ ------------------- ------------ ----------------------
<S> <C> <C> <C> <C>
Net asset value per share, beginning of period............. $11.61 $11.20 $12.47 $11.09
Income from investment operations (a):
Net investment income (loss)............................. 0.12 0.19 (0.14) (0.06)
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 3.18 0.57 7.07 1.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 3.30 0.76 6.93 1.69
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.18) (0.22) -- (0.01)
Distribution of net capital gains........................ (1.35) (0.13) (3.27) (0.30)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions..................................... (1.53) (0.35) (3.27) (0.31)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $13.38 $11.61 $16.13 $12.47
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 28.79% 6.83% 55.63% 15.20%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $ 2,854 $ 1,301 $ 3,489 $ 1,634
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 2.46% 3.93% 2.16% 4.85%
After fee waiver and/or expense reimbursement......... 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 0.91% 0.16% (1.49%) (3.45%)
After fee waiver and/or expense reimbursement......... 1.37% 2.09% (1.33%) (0.60%)
</TABLE>
<TABLE>
<CAPTION>
Conseco
20 Fund
-------------------------------------
Period from
Year Ended February 18, 1998(f)
December 31, through
Class B Shares 1999 December 31, 1998
-------------------------------------
<S> <C> <C>
Net asset value per share, beginning of period............. $12.71 $11.21
Income from investment operations (a):
Net investment income (loss)............................. (0.10) (0.07)
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 8.94 1.57
- --------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 8.84 1.50
- --------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... -- --
Distribution of net capital gains........................ (1.15) --
- --------------------------------------------------------------------------------------------------
Total distributions..................................... (1.15) --
- --------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $20.40 $12.71
- --------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 69.56% 13.38%
- --------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $71,233 $ 7,270
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 2.20% 2.73%
After fee waiver and/or expense reimbursement......... 2.18% 2.25%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ (1.54%) (1.26%)
After fee waiver and/or expense reimbursement......... (1.52%) (0.78%)
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.60% for the
Conseco Fixed Income, 1.90% for the Conseco High Yield, 2.05% for the
Conseco Convertible Securities, 2.00% for the Conseco Balanced and Conseco
Equity and 2.25% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Fixed Income Fund High Yield Fund
-------------------------------- ----------------------------------
Period from Period from
Year Ended March 5, 1998(f) Year Ended February 19, 1998(f)
December 31, through December 31, through
Class C Shares 1999 December 31, 1998 1999 December 31, 1998
-------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net asset value per share, beginning of period............. $10.23 $10.13 $9.95 $10.44
Income from investment operations (a):
Net investment income (loss)............................. 0.41 0.38 0.50 0.59
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. (0.45) 0.26 0.33 (0.50)
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... (0.04) 0.64 0.83 0.09
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.53) (0.44) (0.83) (0.58)
Distribution of net capital gains........................ (0.03) (0.10) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions..................................... (0.56) (0.54) (0.83) (0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $ 9.63 $10.23 $9.95 $ 9.95
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... (0.47%) 6.44% 8.60% 0.88%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $2,655 $ 539 $18,541 $3,685
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.99% 5.91% 2.16% 3.03%
After fee waiver and/or expense reimbursement......... 1.60% 1.60% 1.90% 1.90%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 4.95% 0.67% 8.17% 6.09%
After fee waiver and/or expense reimbursement......... 5.34% 4.98% 8.43% 7.22%
</TABLE>
<TABLE>
<CAPTION>
Conseco
Convertible Securities Fund
---------------------------------------
Period from
Year Ended September 28, 1998(f)
December 31, through
Class C Shares 1999 December 31, 1998
---------------------------------------
<S> <C> <C>
Net asset value per share, beginning of period............. $11.00 $10.00
Income from investment operations (a):
Net investment income (loss)............................. 0.06 0.08
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 4.23 1.00
- ---------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 4.29 1.08
- ---------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.23) (0.08)
Distribution of net capital gains........................ (0.15) --
- ---------------------------------------------------------------------------------------------------
Total distributions..................................... (0.38) (0.08)
- ---------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $14.91 $11.00
- ---------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 39.52% 10.89%
- ---------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $4,107 $ 1
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 2.45% 154.76%
After fee waiver and/or expense reimbursement......... 2.05% 2.05%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.21% (149.69%)
After fee waiver and/or expense reimbursement......... 1.61% 3.02%
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.60% for the
Conseco Fixed Income, 1.90% for the Conseco High Yield, 2.05% for the
Conseco Convertible Securities, 2.00% for the Conseco Balanced and Conseco
Equity and 2.25% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
CONSECO FUND GROUP
1999 Annual Report
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Balanced Fund Equity Fund
-------------------------------- ----------------------------------
Period from Period from
Year Ended February 13, 1998(f) Year Ended March 10, 1998(f)
December 31, through December 31, through
Class C Shares 1999 December 31, 1998 1999 December 31, 1998
------------- ------------------- -------------- --------------------
<S> <C> <C> <C> <C>
Net asset value per share, beginning of period......... $11.66 $11.31 $12.54 $11.98
Income from investment operations (a):
Net investment income (loss)......................... 0.13 0.20 (0.07) (0.06)
Net realized gains and change in unrealized
appreciation on investments......................... 3.20 0.48 7.02 0.93
- --------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations............. 3.33 0.68 6.95 0.87
- --------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income................. (0.18) (0.20) -- (0.01)
Distribution of net capital gains.................... (1.35) (0.13) (3.37) (0.30)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions................................. (1.53) (0.33) (3.37) (0.31)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period............ $13.46 $11.66 $16.12 $12.54
- --------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)............................... 28.81% 6.10% 55.89% 7.21%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period..... $ 2,264 $ 1,197 $ 2,972 $ 616
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement.... 2.46% 3.40% 2.16% 8.51%
After fee waiver and/or expense reimbursement..... 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement.... 0.91% 0.68% (1.49%) (7.19%)
After fee waiver and/or expense reimbursement..... 1.37% 2.08% (1.33%) (0.68%)
</TABLE>
<TABLE>
<CAPTION>
Conseco
20 Fund
---------------------------------------
Period from
Year Ended September 28, 1998(f)
December 31, through
Class C Shares 1999 December 31, 1998
---------------------------------------
<S> <C> <C>
Net asset value per share, beginning of period............. $12.75 $11.82
Income from investment operations (a):
Net investment income (loss)............................. (0.09) (0.07)
Net realized gains and change in unrealized
appreciation on investments............................. 8.96 1.00
- ---------------------------------------------------------------------------------------------------
Total income from investment operations................. 8.87 0.93
- ---------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... -- --
Distribution of net capital gains........................ (1.16) --
- ---------------------------------------------------------------------------------------------------
Total distributions..................................... (1.16) --
- ---------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $20.46 $12.75
- ---------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 69.54% 7.87%
- ---------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $37,093 $ 2,982
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 2.20% 2.72%
After fee waiver and/or expense reimbursement......... 2.18% 2.25%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ (1.54%) (1.28%)
After fee waiver and/or expense reimbursement......... (1.52%) (0.81%)
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period ended December 31, 1998 and 1997.
(b) The Adviser, Administrator and Distributor have contractually agreed to
waive their fees and/or reimburse Fund expenses to the extent that the ratio
of expenses to average net assets exceeds on an annual basis 1.60% for the
Conseco Fixed Income, 1.90% for the Conseco High Yield, 2.05% for the
Conseco Convertible Securities, 2.00% for the Conseco Balanced and Conseco
Equity and 2.25% for the Conseco 20 Funds. These contractual limits may be
discontinued by the Adviser, Administrator and Distributor at any time after
April 30, 2000.
(c) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Fixed Income Fund High Yield Fund
---------------------------- -------------------------------------
Period from
March 2, 1998(f)
Year Ended through
Year Ended December 31, December 31, December 31,
Class Y Shares 1999 1998 1997 1999 1998
---------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value per share, beginning of period............. $10.25 $10.15 $10.00 $10.02 $10.49
Income from investment operations (a):
Net investment income (loss)............................. 0.58 0.65 0.68 0.45 0.62
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. (0.54) 0.17 0.21 0.48 (0.48)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 0.04 0.82 0.89 0.93 0.14
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.62) (0.60) (0.61) (0.92) (0.61)
Distribution of net capital gains........................ (0.03) (0.12) (0.13) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions..................................... (0.65) (0.72) (0.74) (0.92) (0.61)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $ 9.64 $10.25 $10.15 $10.03 $10.02
- ----------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d).................................. 0.38% 8.32% 9.18% 9.64% 1.36%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $27,044 $14,403 $21,876 $24,021 $ 1,237
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 0.99% 1.46% 1.44% 1.16% 3.24%
After fee waiver and/or expense reimbursement......... 0.60% 0.60% 0.60% 0.90% 0.90%
Ratio of net investment income to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 5.95% 5.40% 5.44% 9.17% 5.32%
After fee waiver and/or expense reimbursement......... 6.34% 6.26% 6.28% 9.43% 7.66%
</TABLE>
<TABLE>
<CAPTION>
Conseco
Convertible Securities Fund
------------------------------------
Period from
September 28, 1998(f)
Year Ended through
December 31, December 31,
Class Y Shares 1999 1998
------------------------------------
<S> <C> <C>
Net asset value per share, beginning of period............... $11.00 $10.00
Income from investment operations (a):
Net investment income (loss)............................... 0.04 0.11
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments................ 4.38 1.00
- -------------------------------------------------------------------------------------------------
Total income (loss) from investment operations............ 4.42 1.11
- -------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income....................... (0.33) (0.11)
Distribution of net capital gains.......................... (0.15) --
- -------------------------------------------------------------------------------------------------
Total distributions....................................... (0.48) (0.11)
- -------------------------------------------------------------------------------------------------
Net asset value per share, end of period.................. $14.94 $11.00
- -------------------------------------------------------------------------------------------------
Total return (b)(c)(d).................................... 40.91% 11.17%
- -------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period........... $30,357 $ 1
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement.......... 1.45% 149.31%
After fee waiver and/or expense reimbursement........... 1.05% 1.05%
Ratio of net investment income to average net assets (b)(e):
Before fee waiver and/or expense reimbursement.......... 2.21% (144.39%)
After fee waiver and/or expense reimbursement........... 2.61% 3.87%
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period December 31, 1998 and 1997.
(b) The Adviser and Administrator have contractually agreed to waive their fees
and/or reimburse Fund expenses to the extent that the ratio of expenses to
average net assets exceeds on an annual basis 0.60% for the Conseco Fixed
Income, 0.90% for the Conseco High Yield, 1.05% for the Conseco Convertible
Securities, 1.00% for the Conseco Balanced and Conseco Equity and 1.25% for
the Conseco 20 Funds. These contractual limits may be discontinued by the
Adviser and Administrator at any time after April 30, 2000.
(c) Total return figures do not include sales load; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
CONSECO FUND GROUP
1999 Annual Report
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Balanced Fund Equity Fund
-------------------------------- -------------------------------
Year Ended December 31, Year Ended December 31,
Class Y Shares 1999 1998 1997 1999 1998 1997
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value per share, beginning of period............. $11.75 $10.78 $10.00 $12.67 $11.13 $10.00
Income from investment operations (a):
Net investment income (loss)............................. 0.24 0.32 0.19 (0.03) 0.05 --
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 3.24 1.06 1.58 7.24 1.83 2.35
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 3.48 1.38 1.77 7.21 1.88 2.35
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... (0.29) (0.28) (0.28) -- (0.04) --
Distribution of net capital gains........................ (1.35) (0.13) (0.71) (3.41) (0.30) (1.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions..................................... (1.64) (0.41) (0.99) (3.41) (0.34) (1.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $13.59 $11.75 $10.78 $16.47 $12.67 $11.13
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 30.07% 12.90% 17.87% 57.13% 16.82% 23.50%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $ 9,186 $ 4,138 $12,037 $110,008 $60,816 $60,334
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.46% 2.19% 2.14% 1.16% 1.42% 1.24%
After fee waiver and/or expense reimbursement......... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.91% 1.48% 1.62% (0.49%) (0.02%) (0.21%)
After fee waiver and/or expense reimbursement......... 2.37% 2.67% 2.76% (0.33%) 0.40% 0.03%
</TABLE>
<TABLE>
<CAPTION>
Conseco
20 Fund
-------------------------------------
Period from
April 6, 1998(f)
Year Ended through
December 31, December 31,
Class Y Shares 1999 1998
-------------------------------------
<S> <C> <C>
Net asset value per share, beginning of period............. $12.68 $12.33
Income from investment operations (a):
Net investment income (loss)............................. (0.01) 0.04
Net realized gains (losses) and change in unrealized
appreciation (depreciation) on investments.............. 9.04 0.31
- --------------------------------------------------------------------------------------------------
Total income (loss) from investment operations.......... 9.03 0.35
- --------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income..................... -- --
Distribution of net capital gains........................ (1.22) --
- --------------------------------------------------------------------------------------------------
Total distributions..................................... (1.22) --
- --------------------------------------------------------------------------------------------------
Net asset value per share, end of period................ $20.49 $12.68
- --------------------------------------------------------------------------------------------------
Total return (b)(c)(d)................................... 71.36% 2.84%
- --------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets (dollars in thousands), end of period......... $55,806 $ 172
Ratio of expenses to average net assets (b)(e):
Before fee waiver and/or expense reimbursement........ 1.20% 3.77%
After fee waiver and/or expense reimbursement......... 1.18% 1.25%
Ratio of net investment income (loss) to average net
assets (b)(e):
Before fee waiver and/or expense reimbursement........ (0.54%) (1.90%)
After fee waiver and/or expense reimbursement......... (0.52%) 0.62%
<FN>
(a) Per share amounts presented are based on an average of monthly shares
outstanding for the period December 31, 1998 and 1997 .
(b) The Adviser and Administrator have contractually agreed to waive their fees
and/or reimburse Fund expenses to the extent that the ratio of expenses to
average net assets exceeds on an annual basis 0.60% for the Conseco Fixed
Income, 0.90% for the Conseco High Yield, 1.05% for the Conseco Convertible
Securities, 1.00% for the Conseco Balanced and Conseco Equity and 1.25% for
the Conseco 20 Funds. These contractual limits may be discontinued by the
Adviser and Administrator at any time after April 30, 2000.
(c) Total return figures do not include sales load; results would be lower if
sales charges were included.
(d) Not annualized.
(e) Annualized.
(f) Commencement of operations.
</FN>
</TABLE>
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conseco Conseco
Fixed Income Fund High Yield Fund
---------------------------- -----------------------------
Year Ended December 31, Year Ended December 31,
Supplemental data for all classes: 1999 1998 1997 1999 1998
---------------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
Net assets (dollars in thousands), end of period........... $65,610 $48,245 $22,029 $132,588 $44,392
Portfolio turnover rate.................................... 361% 421% 368% 312% 432%
</TABLE>
<TABLE>
<CAPTION>
Conseco
Convertible Securities Fund
-------------------------------------
Period from
Year Ended September 28, 1998(a)
Supplemental data for all classes: December 31, through
1999 December 31, 1998
-------------------------------------
<S> <C> <C>
Net assets (dollars in thousands), end of period...... $71,081 $27,614
Portfolio turnover rate............................... 115% 13%
</TABLE>
<TABLE>
<CAPTION>
Conseco Conseco
Balanced Fund Equity Fund
---------------------------------- -----------------------------
Year Ended December 31, Year Ended December 31,
1999 1998 1997 1999 1998 1997
---------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net assets (dollars in thousands), end of period...... $46,236 $32,700 $13,113 $145,950 $89,270 $65,211
Portfolio turnover rate............................... 321% 341% 507% 364% 350% 199%
</TABLE>
<TABLE>
<CAPTION>
Conseco
20 Fund
-------------------------------
Year Ended December 31,
1999 1998
-------------------------------
<S> <C> <C>
Net assets (dollars in thousands), end of period...... $217,595 $44,269
Portfolio turnover rate............................... 280% 412%
</TABLE>
(a) Commencement of operations.
<PAGE>
For More Information
More information on the Conseco Fund Group is available free upon request:
SHAREHOLDER REPORTS
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the funds' performance during their most recent fiscal
year.
STATEMENT OF ADDITIONAL INFORMATION
The SAI is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally considered part of) this prospectus.
The SAI provides more details about each fund and its policies.
To obtain a shareholder report, SAI or other information:
By telephone
Call 800-986-3384
By mail
Conseco Fund Group
Attn: Administrative Offices
11815 N. Pennsylvania Street, K1B
Carmel, IN 46032
On the Internet
Text-only versions of the prospectuses and other documents pertaining to the
funds can be viewed online or downloaded from:
SEC
http://www.sec.gov
Conseco Fund Group
http://www.consecofunds.com
Information about the funds (including the SAI) can also be reviewed and copied
at the SEC's public reference room in Washington, DC (phone 800-SEC-0330). Or,
you can obtain copies of this information by sending a request, along with a
duplicating fee, to the SEC's Public Reference Section, Washington, DC
20549-6009.
Registration Number: 811-07839
<PAGE>
PART B - STATEMENT OF ADDITIONAL INFORMATION, CLASS A, B, C AND Y
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CONSECO FUND GROUP
CONSECO 20 FUND CONSECO CONVERTIBLE SECURITIES FUND
CONSECO EQUITY FUND CONSECO HIGH YIELD FUND
CONSECO BALANCED FUND CONSECO FIXED INCOME FUND
CLASS A, B, C AND Y SHARES
APRIL 13, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
contains additional information about the Conseco Fund Group (the "Trust") and
the six series of the Trust: Conseco 20 Fund, Conseco Equity Fund, Conseco
Balanced Fund, Conseco Convertible Securities Fund, Conseco High Yield Fund, and
the Conseco Fixed Income Fund (each a "Fund" and collectively the "Funds"). It
should be read in conjunction with the Funds' Class A, B, C and Y Share
prospectus (the "Prospectus"), dated April 13, 2000. You may obtain a copy by
contacting the Trust's Administrative Office, 11815 N. Pennsylvania Street,
Carmel, Indiana 46032 or by phoning 800-986-3384.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION.......................................................... 3
INVESTMENT RESTRICTIONS...................................................... 3
INVESTMENT STRATEGIES........................................................ 7
TEMPORARY DEFENSIVE POSTIONS................................................. 11
PORTFOLIO TURNOVER........................................................... 11
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES.......................... 12
INVESTMENT PERFORMANCE....................................................... 35
SECURITIES TRANSACTIONS...................................................... 39
MANAGEMENT................................................................... 41
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.......................... 47
FUND EXPENSES................................................................ 52
DISTRIBUTION ARRANGEMENTS.................................................... 52
PURCHASE, REDEMPTION AND PRICING OF SHARES................................... 57
CODE OF ETHICS............................................................... 60
INFORMATION ON CAPITALIZATION AND OTHER MATTERS.............................. 63
TAXES........................................................................ 64
FINANCIAL STATEMENTS......................................................... 70
APPENDIX A SECURITIES RATINGS................................................ 71
<PAGE>
GENERAL INFORMATION
The Trust was organized as a Massachusetts business trust on September 24, 1996.
The Trust is an open-end management investment company registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940 (the "1940 Act"). The Trust is a "series" type of mutual fund which issues
six separate series of shares, each of which represents a separate portfolio of
investments. Each Fund offers four classes of shares: Classes A, B, C and Y.
Each class may have different expenses, which may affect performance. Conseco
Capital Management, Inc. (the "Adviser") serves as the Trust's investment
adviser.
There is no assurance that any of the Funds will achieve its investment
objective. The various Funds may be used independently or in combination.
INVESTMENT RESTRICTIONS
The Trust has adopted the following policies relating to the investment of
assets of the Funds, and their activities. These are fundamental policies and
may not be changed without the approval of the holders of a "majority" of the
outstanding shares of the affected Fund. Under the 1940 Act, the vote of such a
"majority" means the vote of the holders of the lesser of (i) 67 percent of the
shares or interests represented at a meeting at which more than 50 percent of
the outstanding shares or interests are represented or (ii) more than 50 percent
of the outstanding shares or interests. A change in policy affecting only one
Fund may be effected with the approval of the holders of a majority of the
outstanding shares of the Fund. Except for the limitation on borrowing, any
investment policy or limitation that involves a maximum percentage of securities
or assets will not be considered to be violated unless the percentage limitation
is exceeded immediately after, and because of, a transaction by a Fund.
CONSECO 20, CONSECO CONVERTIBLE SECURITIES AND THE CONSECO HIGH YIELD FUNDS
The Conseco 20, Conseco Convertible Securities and the Conseco High Yield Funds
may not (except as noted):
1. Purchase or sell commodities or commodity contracts except that a Fund
may purchase or sell options, futures contracts, and options on futures
contracts and may engage in interest rate and foreign currency
transactions;
2. Borrow money, except that a Fund may: (a) borrow from banks, and (b)
enter into reverse repurchase agreements, provided that (a) and (b) in
combination do not exceed 33-1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than
borrowings); and except that a Fund may borrow from any person up to 5%
of its total assets (not including the amount borrowed) for temporary
purposes (but not for leverage or the purchase of investments);
3. Underwrite securities of other issuers except to the extent that a Fund
may be deemed an underwriter under the Securities Act of 1933 (the
"1933 Act") in connection with the purchase or sale of portfolio
securities;
4. With respect to 75% of the Conseco High Yield and the Conseco
Convertible Securities Fund's total assets, purchase the securities of
any issuer if (a) more than 5% of Fund's total assets would be invested
in the securities of that issuer or (b) the Fund would own more than
10% of the outstanding voting securities of that issuer; this
restriction does not apply to U.S. Government securities (as defined in
the Prospectus);
5. Purchase any security if thereafter 25% or more of the total assets of
the Fund would be invested in securities of issuers having their
principal business activities in the same industry; this restriction
does not apply to U.S. Government securities (as defined in the
Prospectus);
<PAGE>
6. Purchase or sell real estate, except that a Fund may purchase
securities which are issued by companies which invest in real estate or
which are secured by real estate or interests therein;
7. Make loans of its assets if, as a result, more than 33-1/3% of the
Fund's total assets would be lent to other parties except through (a)
entering into repurchase agreements and (b) purchasing debt
instruments; or
8. Issue any senior security, except as permitted under the 1940 Act.
CONSECO EQUITY, CONSECO BALANCED AND CONSECO FIXED INCOME FUNDS
The Conseco Equity, Conseco Balanced and Conseco Fixed Income Funds may not
(except as noted):
1. Purchase securities on margin, except that Funds engaged in
transactions in options, futures, and options on futures may make
margin deposits in connection with those transactions, and except that
effecting short sales against the box will not be deemed to constitute
a purchase of securities on margin;
2. Purchase or sell commodities or commodity contracts (which, for the
purpose of this restriction, shall not include foreign currency futures
or forward currency contracts), except: (a) any Fund may engage in
interest rate futures contracts, stock index futures, futures contracts
based on other financial instruments, and options on such futures
contracts; and (b) Conseco Balanced Fund may engage in futures
contracts on gold;
3. Borrow money or pledge, mortgage, or assign assets, except that a Fund
may: (a) borrow from banks, but only if immediately after each
borrowing and continuing thereafter it will have an asset coverage of
at least 300 percent; (b) enter into reverse repurchase agreements,
options, futures, options on futures contracts, foreign currency
futures contracts and forward currency contracts as described in the
Prospectus and in this SAI. (The deposit of assets in escrow in
connection with the writing of covered put and call options and the
purchase of securities on a when-issued or delayed delivery basis and
collateral arrangements with respect to initial or variation margin
deposits for future contracts, and options on futures contracts and
foreign currency futures and forward currency contracts will not be
deemed to be pledges of a Fund's assets);
4. Underwrite securities of other issuers;
5. With respect to 75% of a Fund's total assets, invest more than 5% of
the value of its assets in the securities of any one issuer if
thereafter the Fund in question would have more than 5% of its assets
in the securities of any issuer or would own more than 10% of the
outstanding voting securities of such issuer; this restriction does not
apply to U.S. Government securities (as defined in the Prospectus);
6. Invest in securities of a company for the purpose of exercising control
or management;
7. Write, purchase or sell puts, calls or any combination thereof, except
that the Funds may write listed covered or secured calls and puts and
enter into closing purchase transactions with respect to such calls and
puts if, after writing any such call or put, not more than 25% of the
assets of the Fund are subject to covered or secured calls and puts,
and except that the Funds may purchase calls and puts with a value of
up to 5% of each such Fund's net assets;
<PAGE>
8. Participate on a joint or a joint and several basis in any trading
account in securities;
9. Invest in the securities of issuers in any one industry if thereafter
more than 25% of the assets of the Fund in question would be invested
in securities of issuers in that industry; investing in cash items,
U.S. Government securities (as defined in the Prospectus), or
repurchase agreements as to these securities, shall not be considered
investments in an industry;
10. Purchase or sell real estate, except that it may purchase marketable
securities which are issued by companies which invest in real estate or
interests therein;
11. Make loans of its assets, except the Funds may enter into repurchase
agreements and lend portfolio securities in an amount not to exceed 15%
of the value of a Fund's total assets. Any loans of portfolio
securities will be made according to guidelines established by the SEC
and the Board of Trustees; or
12. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except as permitted herein and in Investment Restriction
Nos. 1, 2 and 3. Obligations under interest rate swaps will not be
treated as senior securities for purposes of this restriction so long
as they are covered in accordance with applicable regulatory
requirements. Other good faith hedging transactions and similar
investment strategies will also not be treated as senior securities for
purposes of this restriction so long as they are covered in accordance
with applicable regulatory requirements and are structured consistent
with current SEC interpretations.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following restrictions are designated as non-fundamental with respect to the
Conseco 20, Conseco Convertible Securities and the Conseco High Yield Funds and
may be changed by the Board without shareholder approval.
The CONSECO 20, CONSECO CONVERTIBLE SECURITIES AND CONSECO HIGH YIELD FUNDS may
not (except as noted):
1. Sell securities short in an amount exceeding 15% of its assets, except
that a Fund may, without limit, make short sales against the box.
Transactions in options, futures, options on futures and other
derivative instruments shall not constitute selling securities short;
2. Purchase securities on margin, except that a Fund may obtain such
short-term credits as are necessary for the clearance of securities
transactions and except that margin deposits in connection with
transactions in options, futures, options on futures and other
derivative instruments shall not constitute a purchase of securities on
margin; or
3. Make loans of its assets, except that a Fund may enter into repurchase
agreements and purchase debt instruments as set forth in its
fundamental policy on lending and may lend portfolio securities in an
amount not to exceed 33 1/3% of the value of the Fund's total assets.
The following restrictions are designated as nonfundamental with respect to the
Conseco Equity and Conseco Fixed Income Funds and may be changed by the Trust's
Board of Trustees ("Board") without shareholder approval.
<PAGE>
The CONSECO EQUITY AND CONSECO FIXED INCOME FUNDS may not (except as noted):
1. With respect to in excess of 15% of a Fund's assets, sell securities
short, except that each Fund may, without limit, make short sales
against the box.
2. Purchase any below investment grade security if as a result more than
35% of the Fund's assets would be invested in below investment grade
securities.
The following restrictions are designated as non-fundamental with respect to the
Conseco Balanced Fund and may be changed by the Board without shareholder
approval.
The CONSECO BALANCED FUND may not:
1. With respect to in excess of 15% of the Fund's assets, sell securities
short, except that the Fund may, without limit, make short sales
against the box.
2. Purchase any below investment grade security if as a result more than
35% of the Fund's assets would be invested in below investment grade
securities.
3. Invest less than 25% of the Fund's assets in debt securities.
INVESTMENT STRATEGIES
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO 20 FUND may:
o Invest in preferred stocks, convertible securities, and warrants, and
in debt obligations when the Adviser believes that they are more
attractive than stocks on a long-term basis. The debt obligations in
which it invests will be primarily investment grade debt securities,
U.S. Government securities, or short-term debt securities. However, the
Fund may invest up to 5% of its total assets in below investment grade
securities.
o Invest up to 25% of its total assets in equity and debt securities of
foreign issuers. The Fund presently intends to invest in foreign
securities only through depositary receipts. See "Foreign Securities"
below for more information.
o Use a variety of investment techniques and strategies, including but
not limited to: writing listed "covered" call and "secured" put
options, including options on stock indices, and purchasing options;
purchasing and selling, for hedging purposes, stock index, interest
rate, and other futures contracts, and purchasing options on such
futures contracts; entering into foreign currency futures contracts,
forward contracts and options on foreign currencies; borrowing from
banks to purchase securities; purchasing securities of other investment
companies; entering into repurchase agreements and reverse repurchase
agreements; investing in when-issued or delayed delivery securities;
and selling securities short. See "Description of Securities and
Investment Techniques" below for further information.
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO EQUITY FUND
may:
o Use a variety of investment techniques and strategies including but not
limited to: writing listed "covered" call and "secured" put options,
including options on stock indices, and purchasing options; purchasing
and selling, for hedging purposes, stock index, interest rate, and
other futures contracts, and purchasing options on such futures
contracts; purchasing warrants and preferred and convertible preferred
stocks; borrowing from banks to purchase securities; purchasing foreign
securities in the form of American Depository Receipts ("ADRs");
purchasing securities of other investment companies; entering into
repurchase agreements and reverse repurchase agreements; purchasing
restricted securities; investing in when-issued or delayed delivery
securities; and selling securities short. See "Description of
Securities and Investment Techniques" below further information.
<PAGE>
o Invest up to 5% of its assets in below investment grade securities. The
Fund will not invest in rated fixed income securities which are rated
below CCC/Caa. See "Appendix A" to this SAI for further discussion
regarding securities ratings. For information about the risks
associated with below investment grade securities, see "Description of
Securities and Investment Techniques" below.
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO BALANCED FUND
may:
o Invest in U.S. Government securities, intermediate and long-term debt
securities and equity securities of domestic and foreign issuers,
including common and preferred stocks, convertible debt securities, and
warrants. As a non-fundamental policy, the Fund maintains at least 25%
of the value of its assets in debt securities.
o Invest up to 10% of its total assets in the equity securities of
companies exploring, mining, developing, producing, or distributing
gold or other precious metals, if the Adviser believes that
inflationary or monetary conditions warrant a significant investment in
companies involved in precious metals.
o Invest in high yield, high risk below investment grade securities which
are not believed to involve undue risk to income or principal. The
Conseco Balanced Fund does not intend to invest more than 25% of its
total assets (measured at the time of investment) in below investment
grade securities. The lowest rating categories in which the Fund will
invest are CCC/Caa. Securities in those categories are considered to be
of poor standing and are predominantly speculative. For information
about the risks associated with below investment grade securities, see
"Description of Securities and Investment Techniques" below. The Fund
may also invest in investment grade debt securities.
o Invest in zero coupon securities and payment-in-kind securities.
o Invest in equity and debt securities of foreign issuers, including
non-U.S. dollar-denominated securities, Eurodollar securities and
securities issued, assumed or guaranteed by foreign governments or
political subdivisions or instrumentalities thereof. As a
non-fundamental operating policy, the Fund will not invest more than
50% of its total assets (measured at the time of investment) in foreign
securities. See "Description of Securities and Investment Techniques"
below for further information.
o Use various investment strategies and techniques when the Adviser
determines that such use is appropriate in an effort to meet the Fund's
investment objective, including but not limited to: writing listed
"covered" call and "secured" put options, including options on stock
indices, and purchasing such options; purchasing and selling, for
hedging purposes, stock index, interest rate, gold, and other futures
contracts, and purchasing options on such futures contracts; purchasing
warrants and preferred and convertible preferred stocks; purchasing
foreign securities; entering into foreign currency futures contracts,
forward contracts and options on foreign currencies; borrowing from
banks to purchase securities; purchasing securities of other investment
companies; entering into repurchase agreements and reverse repurchase
agreements; purchasing restricted securities; investing in when-issued
or delayed delivery securities; and selling securities short. See
"Description of Securities and Investment Techniques" below for further
information.
<PAGE>
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO CONVERTIBLE
SECURITIES FUND may:
o Invest in securities rated as low as CCC/Caa. See "Description of
Securities and Investment Techniques" below. The Appendix to this SAI
describes Moody's and S&P's rating categories.
o Invest in zero coupon securities and payment-in-kind securities.
o As a non-fundamental policy, invest up to 50% of its total assets
(measured at the time of investment) in foreign securities; however,
the Fund presently does not intend to invest more than 25% of its total
assets in such securities. Investments in foreign securities may
involve risks in addition to those of U.S. investments. See "Foreign
Securities" below for further information.
o Invest in private placements, securities traded pursuant to Rule 144A
under the 1933 Act (Rule 144A permits qualified institutional buyers to
trade certain securities even though they are not registered under the
1933 Act), or securities which, though not registered at the time of
their initial sale, are issued with registration rights. Some of these
securities may be deemed by the Adviser to be liquid under guidelines
adopted by the Board.
o Use investment strategies and techniques when the Adviser determines
that such use is appropriate in an effort to meet the Fund's investment
objective. Such strategies and techniques include, but are not limited
to, writing call and put options and purchasing options; purchasing and
selling, for hedging purposes, interest rate and other futures
contracts, and purchasing and writing options on such futures
contracts; entering into foreign currency futures contracts, forward
contracts and options on foreign currencies; borrowing from banks to
purchase securities; investing in securities of other investment
companies; entering into repurchase agreements, reverse repurchase
agreements and dollar rolls; investing in when-issued or delayed
delivery securities; selling securities short, and entering into swaps
and other interest rate transactions. See "Description of Securities
and Investment Techniques" below for further information.
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO HIGH YIELD
FUND may:
o Invest in below investment grade securities which include corporate
debt securities and preferred stock, convertible securities, zero
coupon securities, other deferred interest securities, mortgage-backed
securities and asset-backed securities. The Fund may invest in
securities rated as low as C by Moody's Investors Service, Inc.
("Moody's") or D by Standard & Poor's ("S&P"), securities comparably
rated by another national statistical rating organization ("NRSRO"), or
unrated securities of equivalent quality. Such obligations are highly
speculative and may be in default or in danger of default as to
principal and interest.
o Invest in high yield municipal securities. The interest on the
municipal securities in which the Fund invests typically is not exempt
from federal income tax. The Fund's remaining assets may be held in
cash, money market instruments, or securities issued or guaranteed by
the U.S. Government, its agencies, authorities or instrumentalities, or
may be invested in common stocks and other equity securities when these
types of investments are consistent with the objectives of the Fund or
are acquired as part of a unit consisting of a combination of fixed
income securities and equity investments. Such remaining assets may
also be invested in investment grade debt securities, including
municipal securities.
<PAGE>
o Invest in zero coupon securities and payment-in-kind securities.
o Invest in equity and debt securities of foreign issuers, including
issuers based in emerging markets. As a non-fundamental policy, the
Fund may invest up to 50% of its total assets (measured at the time of
investment) in foreign securities; however, the Fund presently does not
intend to invest more than 25% of its total assets in such securities.
In addition, the Fund presently intends to invest in foreign securities
only through depositary receipts. See "Foreign Securities" below for
further information.
o Invest in private placements, securities traded pursuant to Rule 144A
under the 1933 Act (Rule 144A permits qualified institutional buyers to
trade certain securities even though they are not registered under the
1933 Act), or securities which, though not registered at the time of
their initial sale, are issued with registration rights. Some of these
securities may be deemed by the Adviser to be liquid under guidelines
adopted by the Board. As a matter of fundamental policy, the Fund will
not (1) invest more than 5% of its total assets in any one issuer,
except for U.S. Government securities or (2) invest 25% or more of its
total assets in securities of issuers having their principal business
activities in the same industry.
o Use various investment strategies and techniques when the Adviser
determines that such use is appropriate in an effort to meet the Fund's
investment objectives. Such strategies and techniques include, but are
not limited to, writing listed "covered" call and "secured" put options
and purchasing options; purchasing and selling, for hedging purposes,
interest rate and other futures contracts, and purchasing options on
such futures contracts; entering into foreign currency futures
contracts, forward foreign currency contracts ("forward contracts") and
options on foreign currencies; borrowing from banks to purchase
securities; investing in securities of other investment companies;
entering into repurchase agreements, reverse repurchase agreements and
dollar rolls; investing in when-issued or delayed delivery securities;
selling securities short; and entering into swaps and other interest
rate transactions. See "Description of Securities and Investment
Techniques" below for further information.
In addition to the investment strategies described in the Prospectus and in
"Description of Securities and Investment Techniques," the CONSECO FIXED INCOME
FUND may:
o Invest in debt securities which the Adviser believes offer higher
capital appreciation potential. Such investments would be in addition
to that portion of the Fund which may be invested in common stocks and
other types of equity securities.
o Use various investment strategies and techniques when the Adviser
determines that such use is appropriate in an effort to meet the Fund's
investment objective. Such strategies and techniques include, but are
not limited to, writing listed "covered" call and "secured" put options
and purchasing options; purchasing and selling, for hedging purposes,
interest rate and other futures contracts, and purchasing options on
such futures contracts; borrowing from banks to purchase securities;
investing in securities of other investment companies; entering into
repurchase agreements and reverse repurchase agreements; investing in
when-issued or delayed delivery securities; and selling securities
short. See "Description of Securities and Investment Techniques" below
for further information.
<PAGE>
TEMPORARY DEFENSIVE POSTIONS
When unusual market or other conditions warrant, a Fund may temporarily depart
from its investment objective. In assuming a temporary defensive position, each
Fund may make investments as follow:
Conseco 20 Fund may invest without limit in short-term debt securities, cash and
money market instruments.
Conseco Equity Fund may invest in money market instruments without limit.
Conseco Balanced Fund may invest in money market instruments without limit.
Conseco High Yield Fund may invest in money market instruments without limit.
Portfolio Turnover
The Funds do not have a predetermined rate of portfolio turnover since such
turnover will be incidental to transactions taken with a view to achieving their
respective objectives. Because of the Adviser's active management style, our
Funds generally have a higher portfolio turnover than other funds and therefore,
may have higher taxable distributions and increased trading costs which may
impact performance. The following is a list of the Funds' portfolio turnover
rates for the fiscal year ended December 31, 1998 and 1999:
<TABLE>
<CAPTION>
Years Ended
---------------------------------------------- ----------------- -----------------
<S> <C> <C>
FUND NAME: 1998 1999
---------------------------------------------- ----------------- -----------------
Conseco 20 Fund 412% 280%
---------------------------------------------- ----------------- -----------------
Conseco Equity Fund 350% 364%
---------------------------------------------- ----------------- -----------------
Conseco Balanced Fund 341% 321%
---------------------------------------------- ----------------- -----------------
Conseco Convertible Securities Fund 13%* 115%
---------------------------------------------- ----------------- -----------------
Conseco High Yield Fund 432% 312%
---------------------------------------------- ----------------- -----------------
Conseco Fixed Income Fund 421% 361%
---------------------------------------------- ----------------- -----------------
<FN>
* The Conseco Convertible Fund commenced operations on September 28, 1998. The
portfolio turnover listed is for the fiscal period beginning September 28, 1998.
</FN>
</TABLE>
Turnover rates in excess of 100% generally result in higher transaction costs
and a possible increase in realized short-term capital gains or losses.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The different types of securities and investment techniques common to one or
more Funds all have attendant risks of varying degrees. For example, with
respect to equity securities, there can be no assurance of capital appreciation
and there is a substantial risk of decline. With respect to debt securities,
there can be no assurance that the issuer of such securities will be able to
meet its obligations on interest or principal payments in a timely manner. In
addition, the value of debt instruments generally rises and falls inversely with
interest rates. The investments and investment techniques common to one or more
Funds and their risks are described in greater detail below.
<PAGE>
The investment objectives of the Funds are not fundamental. All investment
policies and practices described in this SAI are not fundamental, meaning that
the Trust's Board of Trustees ("Board") may change them without shareholder
approval.
The following discussion describes in greater detail different types of
securities and investment techniques used by the Funds, as well as the risks
associated with such securities and techniques.
SMALL AND MEDIUM CAPITALIZATION COMPANIES
The Conseco 20 Fund may invest a substantial portion of its assets in securities
issued by small- and mid-cap companies. The Conseco Equity Fund, Conseco
Balanced and Conseco Convertible Securities Funds also may invest in small- and
mid-cap companies. While these companies generally have potential for rapid
growth, investments in such companies often involve greater risks than
investments in larger, more established companies because small- and mid-cap
companies may lack the management experience, financial resources, product
diversification, and competitive strengths of companies with larger market
capitalizations. In addition, in many instances the securities of small- and
mid-cap companies are traded only over-the-counter or on a regional securities
exchange, and the frequency and volume of their trading is substantially less
than is typical of larger companies. Therefore, these securities may be subject
to greater and more abrupt price fluctuations. When making large sales, a Fund
may have to sell portfolio holdings at discounts from quoted prices or may have
to make a series of small sales over an extended period of time due to the
trading volume of small- and mid-cap company securities. As a result, an
investment in any of these Funds may be subject to greater price fluctuations
than an investment in a fund that invests primarily in larger, more established
companies. The Adviser's research efforts may also play a greater role in
selecting securities for these Funds than in a fund that invests in larger, more
established companies.
PREFERRED STOCK
Preferred stock pays dividends at a specified rate and generally has preference
over common stock in the payment of dividends and the liquidation of the
issuer's assets but is junior to the debt securities of the issuer in those same
respects. Unlike interest payments on debt securities, dividends on preferred
stock are generally payable at the discretion of the issuer's board of
directors, and shareholders may suffer a loss of value if dividends are not
paid. Preferred shareholders generally have no legal recourse against the issuer
if dividends are not paid. The market prices of preferred stocks are subject to
changes in interest rates and are more sensitive to changes in the issuer's
creditworthiness than are the prices of debt securities. Under ordinary
circumstances, preferred stock does not carry voting rights.
U.S. GOVERNMENT SECURITIES AND SECURITIES OF INTERNATIONAL ORGANIZATIONS
U.S. Government securities are issued or guaranteed by the U.S. Government
or its agencies, authorities or instrumentalities.
<PAGE>
Securities issued by international organizations, such as Inter-American
Development Bank, the Asian-American Development Bank and the International Bank
for Reconstruction and Development (the "World Bank"), are not U.S. Government
securities. These international organizations, while not U.S. Government
agencies or instrumentalities, have the ability to borrow from member countries,
including the United States.
DEBT SECURITIES
The Funds may invest in U.S. dollar-denominated corporate debt securities of
domestic issuers, and all of the Funds except the Conseco Equity Fund may invest
in debt securities of foreign issuers that may or may not be U.S.
dollar-denominated.
The investment return on a corporate debt security reflects interest earnings
and changes in the market value of the security. The market value of corporate
debt obligations may be expected to rise and fall inversely with interest rates
generally. There also exists the risk that the issuers of the securities may not
be able to meet their obligations on interest or principal payments at the time
called for by an instrument. Debt securities rated BBB or Baa, which are
considered medium-grade debt securities, generally have some speculative
characteristics. A debt security will be placed in this rating category when
interest payments and principal security appear adequate for the present, but
economic characteristics that provide longer term protection may be lacking. Any
debt security, and particularly those rated BBB or Baa (or below), may be
susceptible to changing conditions, particularly to economic downturns, which
could lead to a weakened capacity to pay interest and principal.
Corporate debt securities may pay fixed or variable rates of interest, or
interest at a rate contingent upon some other factor, such as the price of some
commodity. These securities may be convertible into preferred or common stock
(see "Convertible Securities" below), or may be bought as part of a unit
containing common stock. A debt security may be subject to redemption at the
option of the issuer at a price set in the security's governing instrument. In
selecting corporate debt securities for the Funds, the Adviser reviews and
monitors the creditworthiness of each issuer and issue. The Adviser also
analyzes interest rate trends and specific developments which it believes may
affect individual issuers.
BELOW INVESTMENT GRADE SECURITIES
IN GENERAL. The Funds may invest in below investment grade securities.
Below investment grade securities (also referred to as "high yield securities")
are securities rated BB+ or lower by S&P or Ba1 or lower by Moody's, securities
comparably rated by another NRSRO, or unrated securities of equivalent quality.
Below investment grade securities are deemed by the rating agencies to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. Below investment grade securities, while generally offering
higher yields than investment grade securities with similar maturities, involve
greater risks, including the possibility of default or bankruptcy. The special
risk considerations in connection with investments in these securities are
discussed below.
Below investment grade securities generally offer a higher yield than that
available from higher-rated issues with similar maturities, as compensation for
holding a security that is subject to greater risk. Below investment grade
securities are deemed by rating agencies to be predominately speculative with
respect to the issuer's capacity to pay interest and repay principal and may
involve major risk or exposure to adverse conditions. Lower-rated securities
involve higher risks in that they are especially subject to (1) adverse changes
in general economic conditions and in the industries in which the issuers are
engaged, (2) adverse changes in the financial condition of the issuers, (3)
price fluctuation in response to changes in interest rates and (4) limited
liquidity and secondary market support.
<PAGE>
Subsequent to purchase by a Fund (except the Conseco High Yield Fund), an issue
of debt securities may cease to be rated or its rating may be reduced, so that
the securities would no longer be eligible for purchase by that Fund. In such a
case, the Fund will engage in an orderly disposition of the downgraded
securities to the extent necessary to ensure that its holdings do not exceed the
permissible amount as set forth in the Prospectus and this SAI.
EFFECT OF INTEREST RATES AND ECONOMIC CHANGES. All interest-bearing
securities typically experience appreciation when interest rates decline and
depreciation when interest rates rise. The market values of below investment
grade securities tend to reflect individual corporate developments to a greater
extent than do higher rated securities, which react primarily to fluctuations in
the general level of interest rates. Below investment grade securities also tend
to be more sensitive to economic conditions than are higher-rated securities. As
a result, they generally involve more credit risks than securities in the
higher-rated categories. During an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of below investment grade
securities may experience financial stress which may adversely affect their
ability to service their debt obligations, meet projected business goals, and
obtain additional financing. Periods of economic uncertainty and changes would
also generally result in increased volatility in the market prices of these
securities and thus in a Fund's net asset value.
PAYMENT EXPECTATIONS. Below investment grade securities may contain
redemption, call or prepayment provisions which permit the issuer of such
securities to, at its discretion, redeem the securities. During periods of
falling interest rates, issuers of these securities are likely to redeem or
prepay the securities and refinance them with debt securities with a lower
interest rate. To the extent an issuer is able to refinance the securities, or
otherwise redeem them, a Fund may have to replace the securities with a lower
yielding security, which would result in a lower return.
CREDIT RATINGS. Credit ratings issued by credit-rating agencies are
designed to evaluate the safety of principal and interest payments of rated
securities. They do not, however, evaluate the market value risk of
lower-quality securities and, therefore, may not fully reflect the risks of an
investment. In addition, credit rating agencies may or may not make timely
changes in a rating to reflect changes in the economy or in the condition of the
issuer that affect the market value of the security. With regard to an
investment in below investment grade securities, the achievement of a Fund's
investment objective may be more dependent on the Adviser's own credit analysis
than is the case for higher rated securities. Although the Adviser considers
security ratings when making investment decisions, it does not rely solely on
the ratings assigned by the rating services. Rather, the Adviser performs
research and independently assesses the value of particular securities relative
to the market. The Adviser's analysis may include consideration of the issuer's
experience and managerial strength, changing financial condition, borrowing
requirements or debt maturity schedules, and the issuer's responsiveness to
changes in business conditions and interest rates. It also considers relative
values based on anticipated cash flow, interest or dividend coverage, asset
coverage and earnings prospects.
<PAGE>
The Adviser buys and sells debt securities principally in response to its
evaluation of an issuer's continuing ability to meet its obligations, the
availability of better investment opportunities, and its assessment of changes
in business conditions and interest rates.
LIQUIDITY AND VALUATION. Below investment grade securities may lack an
established retail secondary market, and to the extent a secondary trading
market does exist, it may be less liquid than the secondary market for higher
rated securities. The lack of a liquid secondary market may negatively impact a
Fund's ability to dispose of particular securities. The lack of a liquid
secondary market for certain securities may also make it more difficult for a
Fund to obtain accurate market quotations for purposes of valuing the Fund's
portfolio. In addition, adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the values and liquidity of
below investment grade securities, especially in a thinly traded market.
Because of the many risks involved in investing in below investment grade
securities, the success of such investments is dependent upon the credit
analysis of the Adviser. Although the market for below investment grade
securities is not new, and the market has previously weathered economic
downturns, the past performance of the market for such securities may not be an
accurate indication of its performance during future economic downturns or
periods of rising interest rates. Differing yields on debt securities of the
same maturity are a function of several factors, including the relative
financial strength of the issuers.
CONVERTIBLE SECURITIES
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest paid or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, convertible securities ordinarily provide a stable
stream of income with generally higher yields than those of common stocks of the
same or similar issuers, but lower than the yield on non-convertible debt.
Convertible securities are usually subordinated to comparable-tier
non-convertible securities but rank senior to common stock in a corporation's
capital structure.
The value of a convertible security is a function of (1) its yield in comparison
with the yields of other securities of comparable maturity and quality that do
not have a conversion privilege and (2) its worth, at market value, if converted
into the underlying common stock. Convertible securities are typically issued by
smaller capitalized companies, whose stock prices may be volatile. The price of
a convertible security often reflects such variations in the price of the
underlying common stock in a way that non-convertible debt does not. A
convertible security may be subject to redemption at the option of the issuer at
a price established in the convertible security's governing instrument, which
could have an adverse effect on a Fund's ability to achieve its investment
objective.
<PAGE>
ASSET-BACKED SECURITIES
Asset-backed securities represent fractional interests in pools of leases,
retail installment loans and revolving credit receivables, both secured and
unsecured. These assets are generally held by a trust. Payments of principal and
interest or interest only are passed through to certificate holders and may be
guaranteed up to certain amounts by letters of credit issued by a financial
institution affiliated or unaffiliated with the trustee or originator of the
trust.
Underlying automobile sales contracts or credit card receivables are subject to
prepayment, which may reduce the overall return to certificate holders.
Nevertheless, principal repayment rates tend not to vary much with interest
rates and the short-term nature of the underlying car loans or other receivables
tends to dampen the impact of any change in the prepayment level. Certificate
holders may experience delays in payment on the certificates if the full amounts
due on underlying sales contracts or receivables are not realized by the trust
because of unanticipated legal or administrative costs of enforcing the
contracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors. Other asset-backed
securities may be developed in the future.
MORTGAGE-BACKED SECURITIES
The Funds may invest in mortgage-backed securities. Mortgage-backed securities
are interests in "pools" of mortgage loans made to residential home buyers,
including mortgage loans made by savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are assembled as
securities for sale to investors by various governmental, government-related and
private organizations (see "Mortgage Pass-Through Securities," below). These
Funds may also invest in debt securities which are secured with collateral
consisting of mortgage-backed securities (see "Collateralized Mortgage
Obligations," below), and in other types of mortgage-related securities. The
Conseco 20 Fund presently does not intend to invest more than 5% of its assets
in mortgage-backed securities.
MORTGAGE PASS-THROUGH SECURITIES. These are securities representing
interests in pools of mortgages in which periodic payments of both interest and
principal on the securities are made by "passing through" periodic payments made
by the individual borrowers on the residential mortgage loans underlying such
securities (net of fees paid to the issuer or guarantor of the securities and
possibly other costs). Early repayment of principal on mortgage pass-through
securities (arising from prepayments of principal due to sale of the underlying
property, refinancing, or foreclosure, net of fees and costs which may be
incurred) may expose a Fund to a lower rate of return upon reinvestment of
principal. Payment of principal and interest on some mortgage pass-through
securities may be guaranteed by the full faith and credit of the U.S. Government
(in the case of securities guaranteed by the Government National Mortgage
Association ("GNMA")), or guaranteed by agencies or instrumentalities of the
U.S. Government (in the case of securities guaranteed by Fannie Mae ("FNMA") or
Freddie Mac ("FHLMC")). Mortgage pass-through securities created by
non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers, and other
secondary market issuers) may be uninsured or may be supported by various forms
of insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit, which may be issued by governmental entities,
private insurers, or the mortgage poolers.
<PAGE>
GNMA CERTIFICATES. GNMA certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans on which timely payment
of interest and principal is guaranteed by the full faith and credit of the U.S.
Government. As a result, GNMA certificates are considered to have a low risk of
default, although they are subject to the same market risk as comparable debt
securities. GNMA certificates differ from typical bonds because principal is
repaid monthly over the term of the loan rather than returned in a lump sum at
maturity. Although the mortgage loans in the pool will have maturities of up to
30 years, the actual average life of the GNMA certificates typically will be
substantially less because the mortgages may be purchased at any time prior to
maturity, will be subject to normal principal amortization, and may be prepaid
prior to maturity. Reinvestment of prepayments may occur at higher or lower
rates than the original yield on the certificates.
FNMA AND FHLMC MORTGAGE-BACKED OBLIGATIONS. FNMA, a federally chartered
and privately owned corporation, issues pass-through securities representing
interests in pools of conventional mortgage loans. FNMA guarantees the timely
payment of principal and interest, but this guarantee is not backed by the full
faith and credit of the U.S. Government. FNMA also issues REMIC certificates,
which represent interests in a trust funded with FNMA certificates. REMIC
certificates are guaranteed by FNMA and not by the full faith and credit of the
U.S. Government.
FHLMC, a corporate instrumentality of the U.S. Government, issues participation
certificates which represent interests in pools of conventional mortgage loans.
FHLMC guarantees the timely payment of interest and the ultimate collection of
principal, and maintains reserves to protect holders against losses due to
default, but these securities are not backed by the full faith and credit of the
U.S. Government.
As is the case with GNMA certificates, the actual maturity of and realized yield
on particular FNMA and FHLMC pass-through securities will vary based on the
prepayment experience of the underlying pool of mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MORTGAGE-BACKED BONDS.
Mortgage-backed securities may be issued by financial institutions such as
commercial banks, savings and loan associations, mortgage banks, and securities
broker-dealers (or affiliates of such institutions established to issue these
securities) in the form of either collateralized mortgage obligations ("CMOs")
or mortgage-backed bonds. CMOs are obligations fully collateralized directly or
indirectly by a pool of mortgages on which payments of principal and interest
are dedicated to payment of principal and interest on the CMOs. Payments are
passed through to the holders on the same schedule as they are received,
although not necessarily on a pro rata basis. Mortgage-backed bonds are general
obligations of the issuer fully collateralized directly or indirectly by a pool
of mortgages. The mortgages serve as collateral for the issuer's payment
obligations on the bonds but interest and principal payments on the mortgages
are not passed through either directly (as with GNMA certificates and FNMA and
FHLMC pass-through securities) or on a modified basis (as with CMOs).
Accordingly, a change in the rate of prepayments on the pool of mortgages could
change the effective maturity of a CMO but not that of a mortgage-backed bond
(although, like many bonds, mortgage-backed bonds may be callable by the issuer
prior to maturity). Although the mortgage-related securities securing these
obligations may be subject to a government guarantee or third-party support, the
obligation itself is not so guaranteed. Therefore, if the collateral securing
the obligation is insufficient to make payment on the obligation, a Fund could
sustain a loss. If new types of mortgage-related securities are developed and
offered to investors, investments in such securities will be considered.
<PAGE>
STRIPPED MORTGAGE-BACKED SECURITIES. The Conseco High Yield Fund may
invest in stripped mortgage-backed securities, which are derivative securities
usually structured with two classes that receive different proportions of the
interest and principal distributions from an underlying pool of mortgage assets.
The Fund may purchase securities representing only the interest payment portion
of the underlying mortgage pools (commonly referred to as "IOs") or only the
principal portion of the underlying mortgage pools (commonly referred to as
"POs"). Stripped mortgage-backed securities are more sensitive to changes in
prepayment and interest rates and the market for such securities is less liquid
than is the case for traditional debt securities and mortgage-backed securities.
The yield on IOs is extremely sensitive to the rate of principal payments
(including prepayments) on the underlying mortgage assets, and a rapid rate of
repayment may have a material adverse effect on such securities' yield to
maturity. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, the Fund will fail to recoup fully its initial
investment in these securities, even if they are rated high quality. Most IOs
and POs are regarded as illiquid and will be included in the Fund's limit on
illiquid securities.
RISKS OF MORTGAGE-BACKED SECURITIES. Mortgage pass-through securities,
such as GNMA certificates or FNMA and FHLMC mortgage-backed obligations, or
modified pass-through securities, such as CMOs issued by various financial
institutions and IOs and POs, are subject to early repayment of principal
arising from prepayments of principal on the underlying mortgage loans (due to
the sale of the underlying property, the refinancing of the loan, or
foreclosure). Prepayment rates vary widely and may be affected by changes in
market interest rates and other economic trends and factors. In periods of
falling interest rates, the rate of prepayment tends to increase, thereby
shortening the actual average life of the mortgage-backed security. Conversely,
when interest rates are rising, the rate of prepayment tends to decrease,
thereby lengthening the actual average life of the mortgage-backed security.
Accordingly, it is not possible to accurately predict the average life of a
particular pool. Reinvestment of prepayments may occur at higher or lower rates
than the original yield on the securities. Therefore, the actual maturity and
realized yield on pass-through or modified pass-through mortgage-backed
securities will vary based upon the prepayment experience of the underlying pool
of mortgages.
ZERO COUPON BONDS
The Conseco 20, Conseco Balanced, Conseco Convertible Securities, and Conseco
High Yield Funds may invest in zero coupon securities. Zero coupon bonds are
debt obligations which make no fixed interest payments but instead are issued at
a significant discount from face value. Like other debt securities, the market
price can reflect a premium or discount, in addition to the original issue
discount, reflecting the market's judgment as to the issuer's creditworthiness,
the interest rate or other similar factors. The original issue discount
approximates the total amount of interest the bonds will accrue and compound
over the period until maturity (or the first interest payment date) at a rate of
interest reflecting the market rate at the time of issuance. Because zero coupon
bonds do not make periodic interest payments, their prices can be very volatile
when market interest rates change.
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The original issue discount on zero coupon bonds must be included in a Fund's
income ratably as it accrues. Accordingly, to qualify for tax treatment as a
regulated investment company and to avoid a certain excise tax, a Fund may be
required to distribute as a dividend an amount that is greater than the total
amount of cash it actually receives. These distributions must be made from the
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. Such sales could occur at a time which would be disadvantageous to a
Fund and when the Fund would not otherwise choose to dispose of the assets.
PAY-IN-KIND BONDS
The Conseco Balanced, Conseco Convertible Securities and Conseco High Yield
Funds may invest in pay-in-kind bonds. These bonds pay "interest" through the
issuance of additional bonds, thereby adding debt to the issuer's balance sheet.
The market prices of these securities are likely to respond to changes in
interest rates to a greater degree than the prices of securities paying interest
currently. Pay-in-kind bonds carry additional risk in that, unlike bonds that
pay interest throughout the period to maturity, a Fund will realize no cash
until the cash payment date and the Fund may obtain no return at all on its
investment if the issuer defaults.
The holder of a pay-in-kind bond must accrue income with respect to these
securities prior to the receipt of cash payments thereon. To avoid liability for
federal income and excise taxes, a Fund most likely will be required to
distribute income accrued with respect to these securities, even though the Fund
has not received that income in cash, and may be required to dispose of
portfolio securities under disadvantageous circumstances in order to generate
cash to satisfy these distribution requirements.
TRUST ORIGINATED PREFERRED SECURITIES
The Conseco Convertible Securities and Conseco High Yield Funds may invest in
trust originated preferred securities, a relatively new type of security issued
by financial institutions such as banks and insurance companies and other
issuers. Trust originated preferred securities represent interests in a trust
formed by the issuer. The trust sells preferred shares and invests the proceeds
in notes issued by the same entity. These notes may be subordinated and
unsecured. Distributions on the trust originated preferred securities match the
interest payments on the notes; if no interest is paid on the notes, the trust
will not make current payments on its preferred securities. Issuers of the notes
currently enjoy favorable tax treatment. If the tax characterization of these
securities were to change adversely, they could be redeemed by the issuers,
which could result in a loss to a Fund. In addition, some trust originated
preferred securities are available only to qualified institutional buyers under
Rule 144A.
LOAN PARTICIPATIONS AND ASSIGNMENTS
The Conseco Convertible Securities and Conseco High Yield Funds may invest in
loan participations or assignments. In purchasing a loan participation or
assignment, a Fund acquires some or all of the interest of a bank or other
lending institution in a loan to a corporate borrower. Both the lending bank and
the borrower may be deemed to be "issuers" of a loan participation. Many such
loans are secured and most impose restrictive covenants which must be met by the
borrower and which are generally more stringent than the covenants available in
publicly traded debt securities. However, interests in some loans may not be
secured, and a Fund will be exposed to a risk of loss if the borrower defaults.
There is no assurance that the collateral can be liquidated in particular cases,
or that its liquidation value will be equal to the value of the debt. Loan
participations may also be purchased by a Fund when the borrowing company is
already in default. Borrowers that are in bankruptcy may pay only a small
portion of the amount owed, if they are able to pay at all. Where a Fund
purchases a loan through an assignment, there is a possibility that the Fund
will, in the event the borrower is unable to pay the loan, become the owner of
the collateral. This involves certain risks to the Fund as a property owner.
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In purchasing a loan participation, a Fund may have less protection under the
federal securities laws than it has in purchasing traditional types of
securities. Loans are often administered by a lead bank, which acts as agent for
the lenders in dealing with the borrower. In asserting rights against the
borrower, a Fund may be dependent on the willingness of the lead bank to assert
these rights, or upon a vote of all the lenders to authorize the action. Assets
held by the lead bank for the benefit of the Fund may be subject to claims of
the lead bank's creditors. A Fund's ability to assert its rights against the
borrower will also depend on the particular terms of the loan agreement among
the parties. Many of the interests in loans purchased by a Fund will be illiquid
and therefore subject to the Fund's limit on illiquid investments.
EURODOLLAR AND YANKEEDOLLAR OBLIGATIONS
Eurodollar obligations are U.S. dollar obligations issued outside the United
States by domestic or foreign entities, while Yankeedollar obligations are U.S.
dollar obligations issued inside the United States by foreign entities. There is
generally less publicly available information about foreign issuers and there
may be less governmental regulation and supervision of foreign stock exchanges,
brokers and listed companies. Foreign issuers may use different accounting and
financial standards, and the addition of foreign governmental restrictions may
affect adversely the payment of principal and interest on foreign investments.
In addition, not all foreign branches of United States banks are supervised or
examined by regulatory authorities as are United States banks, and such branches
may not be subject to reserve requirements.
COLLATERALIZED BOND OBLIGATIONS
A collateralized bond obligation ("CBO") is a type of asset-backed security.
Specifically, a CBO is an investment grade bond which is backed by a diversified
pool of high risk, high yield fixed income securities. The pool of high yield
securities is separated into "tiers" representing different degrees of credit
quality. The top tier of CBOs is backed by the pooled securities with the
highest degree of credit quality and pays the lowest interest rate. Lower-tier
CBOs represent lower degrees of credit quality and pay higher interest rates to
compensate for the attendant risk. The bottom tier typically receives the
residual interest payments (i.e. money that is left over after the higher tiers
have been paid) rather than a fixed interest rate. The return on the bottom tier
of CBOs is especially sensitive to the rate of defaults in the collateral pool.
FOREIGN SECURITIES
These securities may be U.S. dollar denominated or non-U.S. dollar denominated.
Foreign securities include securities issued, assumed or guaranteed by foreign
governments or political subdivisions or instrumentalities thereof.
Investments in foreign securities may offer unique potential benefits such as
substantial growth in industries not yet developed in the particular country.
Such investments also permit a Fund to invest in foreign countries with economic
policies or business cycles different from those of the United States, or to
reduce fluctuations in portfolio value by taking advantage of foreign securities
markets that may not move in a manner parallel to U.S. markets.
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Investments in securities of foreign issuers involve certain risks not
ordinarily associated with investments in securities of domestic issuers. Such
risks include fluctuations in foreign exchange rates, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions on foreign investments or repatriation of capital. In addition,
with respect to certain countries, there is the possibility of nationalization
or expropriation of assets; confiscatory taxation; political, social or
financial instability; and war or other diplomatic developments that could
adversely affect investments in those countries. Since a Fund may invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will affect the value of securities
held by the Fund and the unrealized appreciation or depreciation of investments
so far as U.S. investors are concerned. A Fund generally will incur costs in
connection with conversion between various currencies.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to accounting,
auditing, and financial reporting standards and requirements comparable to or as
uniform as those to which U.S. companies are subject. Foreign securities
markets, while growing in volume, have, for the most part, substantially less
volume than U.S. markets. Securities of many foreign companies are less liquid
and their prices more volatile than securities of comparable U.S. companies.
Transaction costs, custodial fees and management costs in non-U.S. securities
markets are generally higher than in U.S. securities markets. There is generally
less government supervision and regulation of exchanges, brokers, and issuers
than there is in the United States. A Fund might have greater difficulty taking
appropriate legal action with respect to foreign investments in non-U.S. courts
than with respect to domestic issuers in U.S. courts. In addition, transactions
in foreign securities may involve longer time from the trade date until
settlement than domestic securities transactions and involve the risk of
possible losses through the holding of securities by custodians and securities
depositories in foreign countries.
All of the foregoing risks may be intensified in emerging markets.
Dividend and interest income from foreign securities may be subject to
withholding taxes by the country in which the issuer is located and may not be
recoverable by a Fund or its investors in all cases.
ADRs are certificates issued by a U.S. bank or trust company representing an
interest in securities of a foreign issuer deposited in a foreign subsidiary or
branch or a correspondent of that bank. Generally, ADRs are designed for use in
U.S. securities markets and may offer U.S. investors more liquidity than the
underlying securities. The Funds may invest in unsponsored ADRs. The issuers of
unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of such ADRs. European Depositary Receipts
("EDRs") are certificates issued by a European bank or trust company evidencing
its ownership of the underlying foreign securities. EDRs are designed for use in
European securities markets.
<PAGE>
RESTRICTED SECURITIES, RULE 144A SECURITIES AND ILLIQUID SECURITIES
The Funds may invest in restricted securities, such as private placements, and
in Rule 144A securities. Once acquired, restricted securities may be sold by a
Fund only in privately negotiated transactions or in a public offering with
respect to which a registration statement is in effect under the 1933 Act. If
sold in a privately negotiated transaction, a Fund may have difficulty finding a
buyer and may be required to sell at a price that is less than it had
anticipated. Where registration is required, a Fund may be obligated to pay all
or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted securities
are generally considered illiquid.
Rule 144A securities, although not registered, may be resold to qualified
institutional buyers in accordance with Rule 144A under the 1933 Act. The
Adviser, acting pursuant to guidelines established by the Board, may determine
that some Rule 144A securities are liquid.
A Fund may not invest in any security if, as a result, more than 15% of the
Fund's net assets would be invested in illiquid securities, which are securities
that cannot be expected to be sold within seven days at approximately the price
at which they are valued.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
New issues of certain debt securities are often offered on a when-issued or
delayed delivery basis; that is, the payment obligation and the interest rate
are fixed at the time the buyer enters into the commitment, but delivery and
payment for the securities normally take place after the customary settlement
time. The settlement dates of these transactions may be a month or more after
entering into the transaction. A Fund bears the risk that, on the settlement
date, the market value of the securities may be lower than the purchase price. A
sale of a when-issued security also involves the risk that the other party will
be unable to settle the transaction. Dollar rolls are a type of forward
commitment transaction. At the time a Fund makes a commitment to purchase
securities on a when-issued or delayed delivery basis, it will record the
transaction and reflect the value of such securities each day in determining the
Fund's net asset value. However, a Fund will not accrue any income on these
securities prior to delivery. There are no fees or other expenses associated
with these types of transactions other than normal transaction costs. To the
extent a Fund engages in when-issued and delayed delivery transactions, it will
do so for the purpose of acquiring instruments consistent with its investment
objective and policies and not for the purpose of investment leverage or to
speculate on interest rate changes. When effecting when-issued and delayed
delivery transactions, cash or liquid securities in an amount sufficient to make
payment for the obligations to be purchased will be segregated at the trade date
and maintained until the transaction has been settled. A Fund may dispose of
these securities before the issuance thereof. However, absent extraordinary
circumstances not presently foreseen, it is each Fund's policy not to divest
itself of its right to acquire these securities prior to the settlement date
thereof.
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VARIABLE AND FLOATING RATE SECURITIES
Variable rate securities provide for automatic establishment of a new interest
rate at fixed intervals (i.e., daily, monthly, semi-annually, etc.). Floating
rate securities provide for automatic adjustment of the interest rate whenever
some specified interest rate index changes. The interest rate on variable or
floating rate securities is ordinarily determined by reference to, or is a
percentage of, a bank's prime rate, the 90-day U.S. Treasury bill rate, the rate
of return on commercial paper or bank certificates of deposit, an index of
short-term interest rates, or some other objective measure.
Variable or floating rate securities frequently include a demand feature
entitling the holder to sell the securities to the issuer at par value. In many
cases, the demand feature can be exercised at any time on seven days' notice; in
other cases, the demand feature is exercisable at any time on 30 days' notice or
on similar notice at intervals of not more than one year.
BANKING AND SAVINGS INDUSTRY OBLIGATIONS
Such obligations include certificates of deposit, time deposits, bankers'
acceptances, and other short-term debt obligations issued by commercial banks
and savings and loan associations ("S&Ls"). Certificates of deposit are receipts
from a bank or an S&L for funds deposited for a specified period of time at a
specified rate of return. Time deposits in banks or S&Ls are generally similar
to certificates of deposit, but are uncertificated. Bankers' acceptances are
time drafts drawn on commercial banks by borrowers, usually in connection with
international commercial transactions. The Funds may each invest in obligations
of foreign branches of domestic commercial banks and foreign banks; provided,
however, that the Conseco Equity and Conseco Fixed Income Funds may invest in
these types of instruments so long as they are U.S. dollar denominated. See
"Foreign Securities" in the Prospectus for information regarding risks
associated with investments in foreign securities.
The Funds will not invest in obligations issued by a commercial bank or S&L
unless:
1. The bank or S&L has total assets of at least $1 billion, or the equivalent
in other currencies, and the institution has outstanding securities rated A
or better by Moody's or S&P, or, if the institution has no outstanding
securities rated by Moody's or S&P, it has, in the determination of the
Adviser, similar creditworthiness to institutions having outstanding
securities so rated;
2. In the case of a U.S. bank or S&L, its deposits are federally insured; and
3. In the case of a foreign bank, the security is, in the determination of the
Adviser, of an investment quality comparable with other debt securities
which may be purchased by the Fund. These limitations do not prohibit
investments in securities issued by foreign branches of U.S. banks,
provided such U.S. banks meet the foregoing requirements.
<PAGE>
COMMERCIAL PAPER
Commercial paper refers to promissory notes representing an unsecured debt of a
corporation or finance company with a fixed maturity of no more than 270 days. A
variable amount master demand note (which is a type of commercial paper)
represents a direct borrowing arrangement involving periodically fluctuating
rates of interest under a letter agreement between a commercial paper issuer and
an institutional lender pursuant to which the lender may determine to invest
varying amounts.
STANDARD AND POOR'S DEPOSITORY RECEIPT (SPDRS)
The Funds may purchase securities that represent ownership in long-term unit
investment trust that holds a portfolio of common stocks designed to track the
performance of the S&P 500 Index. A SPDR entitles a holder to receive
proportionate quarterly cash distributions corresponding to the dividends that
accrue to the S&P 500 stocks in the underlying portfolio, less trust expenses.
REPURCHASE AGREEMENTS
Repurchase agreements permit a Fund to maintain liquidity and earn income over
periods of time as short as overnight. In these transactions, a Fund purchases
securities (the "underlying securities") from a broker or bank, which agrees to
repurchase the underlying securities on a certain date or on demand and at a
fixed price calculated to produce a previously agreed upon return. If the broker
or bank were to default on its repurchase obligation and the underlying
securities were sold for a lesser amount, the Fund would realize a loss.
However, to minimize this risk, the Funds will enter into repurchase agreements
only with financial institutions which are deemed to be of good financial
standing and which have been approved by the Board. No more than 15% of a Fund's
assets may be subject to repurchase agreements maturing in more than seven days.
A repurchase transaction will be subject to guidelines approved by the Board.
These guidelines require monitoring the creditworthiness of counterparties to
repurchase transactions, obtaining collateral at least equal in value to the
repurchase obligation, and marking the collateral to market on a daily basis.
Repurchase agreements maturing in more than seven days may be considered
illiquid and may be subject to each Fund's limitation on investment in illiquid
securities.
REVERSE REPURCHASE AGREEMENTS AND MORTGAGE DOLLAR ROLLS
A reverse repurchase agreement involves the temporary sale of a security by a
Fund and its agreement to repurchase the instrument at a specified time at a
higher price. Such agreements are short-term in nature. During the period before
repurchase, the Fund continues to receive principal and interest payments on the
securities.
In a mortgage dollar roll, a Fund sells a fixed income security for delivery in
the current month and simultaneously contracts to repurchase a substantially
similar security (same type, coupon and maturity) on a specified future date.
During the roll period, the Fund would forego principal and interest paid on
such securities. The Fund would be compensated by the difference between the
current sales price and the forward price for the future purchase, as well as by
any interest earned on the proceeds of the initial sale.
In accordance with regulatory requirements, a Fund will segregate cash or liquid
securities whenever it enters into reverse repurchase agreements or mortgage
dollar rolls. Such transactions may be considered to be borrowings for purposes
of the Funds' fundamental policies concerning borrowings.
<PAGE>
WARRANTS
The holder of a warrant has the right to purchase a given number of shares of a
security of a particular issuer at a specified price until expiration of the
warrant. Such investments provide greater potential for profit than a direct
purchase of the same amount of the securities. Prices of warrants do not
necessarily move in tandem with the prices of the underlying securities, and
warrants are considered speculative investments. They pay no dividends and
confer no rights other than a purchase option. If a warrant is not exercised by
the date of its expiration, a Fund would lose its entire investment in such
warrant.
INTEREST RATE TRANSACTIONS
Each of these Funds may seek to protect the value of its investments from
interest rate fluctuations by entering into various hedging transactions, such
as interest rate swaps and the purchase or sale of interest rate caps, floors
and collars. A Fund expects to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio. A Fund may also enter into these transactions to protect against an
increase in the price of securities a Fund anticipates purchasing at a later
date. Each Fund intends to use these transactions as a hedge and not as
speculative investments.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments. The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments on a notional principal amount
from the party selling such interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate floor. An interest
rate collar combines elements of buying a cap and selling a floor.
A Fund may enter into interest rate swaps, caps, floors, and collars on either
an asset-based or liability-based basis depending on whether it is hedging its
assets or its liabilities, and will only enter into such transactions on a net
basis, i.e., the two payment streams are netted out, with a Fund receiving or
paying, as the case may be, only the net amount of the two payments. The amount
of the excess, if any, of a Fund's obligations over its entitlements with
respect to each interest rate swap, cap, floor, or collar will be accrued on a
daily basis and an amount of cash or liquid securities having an aggregate value
at least equal to the accrued excess will be maintained in a segregated account
by the custodian.
A Fund will not enter into any interest rate transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is rated in
the highest rating category of at least one NRSRO at the time of entering into
such transaction. If there is a default by the other party to such transaction,
a Fund will have contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
agents. As a result, the swap market has become well established and provides a
degree of liquidity. Caps, floors and collars are more recent innovations which
tend to be less liquid than swaps.
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STEP DOWN PREFERRED SECURITIES
Step down perpetual preferred securities are issued by a real estate investment
trust ("REIT") making a mortgage loan to a single borrower. The dividend rate
paid by these securities is initially relatively high, but declines yearly. The
securities are subject to call if the REIT suffers an unfavorable tax event, and
to tender by the issuer's equity holder in the tenth year; both events could be
on terms unfavorable to the holder of the preferred securities. The value of
these securities will be affected by changes in the value of the underlying
mortgage loan. The REIT is not diversified, and the value of the mortgaged
property may not cover its obligations. Step down perpetual preferred securities
are considered restricted securities under the 1933 Act.
FUTURES CONTRACTS
Each of these Funds may purchase and sell futures contracts solely for the
purpose of hedging against the effect that changes in general market conditions,
interest rates, and conditions affecting particular industries may have on the
values of securities held by a Fund or which a Fund intends to purchase, and not
for purposes of speculation. For information about foreign currency futures
contracts, see "Foreign Currency Transactions" below.
GENERAL DESCRIPTION OF FUTURES CONTRACTS. A futures contract provides
for the future sale by one party and purchase by another party of a specified
amount of a particular financial instrument (debt security) or commodity for a
specified price at a designated date, time, and place. Although futures
contracts by their terms require actual future delivery of and payment for the
underlying financial instruments, such contracts are usually closed out before
the delivery date. Closing out an open futures contract position is effected by
entering into an offsetting sale or purchase, respectively, for the same
aggregate amount of the same financial instrument on the same delivery date.
Where a Fund has sold a futures contract, if the offsetting price is more than
the original futures contract purchase price, the Fund realizes a gain; if it is
less, the Fund realizes a loss.
INTEREST RATE FUTURES CONTRACTS. An interest rate futures contract is
an obligation traded on an exchange or board of trade that requires the
purchaser to accept delivery, and the seller to make delivery, of a specified
quantity of the underlying financial instrument, such as U.S. Treasury bills and
bonds, in a stated delivery month at a price fixed in the contract.
The Funds may purchase and sell interest rate futures as a hedge against changes
in interest rates that would adversely impact the value of debt instruments and
other interest rate sensitive securities being held or to be purchased by a
Fund. A Fund might employ a hedging strategy whereby it would purchase an
interest rate futures contract when it intends to invest in long-term debt
securities but wishes to defer their purchase until it can orderly invest in
such securities or because short-term yields are higher than long-term yields.
Such a purchase would enable the Fund to earn the income on a short-term
security while at the same time minimizing the effect of all or part of an
increase in the market price of the long-term debt security which the Fund
intends to purchase in the future. A rise in the price of the long-term debt
security prior to its purchase either would be offset by an increase in the
value of the futures contract purchased by the Fund or avoided by taking
delivery of the debt securities under the futures contract.
<PAGE>
A Fund would sell an interest rate futures contract to continue to receive the
income from a long-term debt security, while endeavoring to avoid part or all of
the decline in market value of that security which would accompany an increase
in interest rates. If interest rates rise, a decline in the value of the debt
security held by the Fund would be substantially offset by the ability of the
Fund to repurchase at a lower price the interest rate futures contract
previously sold. While the Fund could sell the long-term debt security and
invest in a short-term security, this would ordinarily cause the Fund to give up
income on its investment since long-term rates normally exceed short-term rates.
STOCK INDEX FUTURES CONTRACTS (CONSECO 20, CONSECO EQUITY, CONSECO
BALANCED, AND CONSECO CONVERTIBLE SECURITIES FUNDS). A stock index (for example,
the Standard & Poor's 500 Composite Stock Price Index or the New York Stock
Exchange Composite Index) assigns relative values to the common stocks included
in the index and fluctuates with changes in the market values of such stocks. A
stock index futures contract is a bilateral agreement to accept or make payment,
depending on whether a contract is purchased or sold, of an amount of cash equal
to a specified dollar amount multiplied by the difference between the stock
index value at the close of the last trading day of the contract and the price
at which the futures contract was originally purchased or sold.
To the extent that changes in the value of a Fund correspond to changes in a
given stock index, the sale of futures contracts on that index ("short hedge")
would substantially reduce the risk to the Fund of a market decline and, by so
doing, provide an alternative to a liquidation of securities positions, which
may be difficult to accomplish in a rapid and orderly fashion. Stock index
futures contracts might also be sold:
I. When a sale of Fund securities at that time would appear to be
disadvantageous in the long-term because such liquidation would:
A. Forego possible appreciation,
B. Create a situation in which the securities would be difficult
to repurchase, or
C. Create substantial brokerage commissions;
II. When a liquidation of part of the investment portfolio has commenced or
is contemplated, but there is, in the Adviser's determination, a
substantial risk of a major price decline before liquidation can be
completed; or
III. To close out stock index futures purchase transactions.
<PAGE>
Where the Adviser anticipates a significant market or market sector advance, the
purchase of a stock index futures contract ("long hedge") affords a hedge
against the possibility of not participating in such advance at a time when a
Fund is not fully invested. Such purchases would serve as a temporary substitute
for the purchase of individual stocks, which may then be purchased in an orderly
fashion. As purchases of stock are made, an amount of index futures contracts
which is comparable to the amount of stock purchased would be terminated by
offsetting closing sales transactions. Stock index futures might also be
purchased:
1. If the Fund is attempting to purchase equity positions in issues which
it may have or is having difficulty purchasing at prices considered by
the Adviser to be fair value based upon the price of the stock at the
time it qualified for inclusion in the investment portfolio, or
2. To close out stock index futures sales transactions.
GOLD FUTURES CONTRACTS. Conseco Balanced Fund may enter into futures
contracts on gold. A gold futures contract is a standardized contract which is
traded on a regulated commodity futures exchange and which provides for the
future delivery of a specified amount of gold at a specified date, time, and
price. When the Fund purchases a gold contract, it becomes obligated to take
delivery and pay for the gold from the seller in accordance with the terms of
the contract. When the Fund sells a gold futures contract, it becomes obligated
to make delivery of the gold to the purchaser in accordance with the terms of
the contract. The Fund will enter into gold futures contracts only for the
purpose of hedging its holdings or intended holdings of gold stocks. The Fund
will not engage in these contracts for speculation or for achieving leverage.
The hedging activities may include purchases of futures contracts as an offset
against the effect of anticipated increases in the price of gold or sales of
futures contracts as an offset against the effect of anticipated declines in the
price of gold.
OPTIONS ON FUTURES CONTRACTS. Each of the Funds may purchase options on
futures contracts. Conseco Convertible Securities Fund may also write options on
such contracts. When a Fund purchases a futures option, it acquires the right,
in return for the premium paid, to assume a long position (in the case of a
call) or short position (in the case of a put) in a futures contract at a
specified exercise price prior to the expiration of the option. Upon exercise of
a call option, the purchaser acquires a long position in the futures contract
and the writer of the option is assigned the opposite short position. In the
case of a put option, the converse is true. In most cases, however, a Fund would
close out its position before expiration by an offsetting purchase or sale.
The Funds may enter into options on futures contracts only in connection with
hedging strategies. Generally, these strategies would be employed under the same
market conditions in which a Fund would use put and call options on debt
securities, as described in "Options on Securities" below.
RISKS ASSOCIATED WITH FUTURES AND FUTURES OPTIONS. There are several
risks associated with the use of futures and futures options for hedging
purposes. While hedging transactions may protect a Fund against adverse
movements in the general level of interest rates and economic conditions, such
transactions could also preclude the Fund from the opportunity to benefit from
favorable movements in the underlying securities. There can be no guarantee that
the anticipated correlation between price movements in the hedging vehicle and
in the portfolio securities being hedged will occur. An incorrect correlation
could result in a loss on both the hedged securities and the hedging vehicle so
that the Fund's return might have been better if hedging had not been attempted.
The degree of imperfection of correlation depends on circumstances such as
variations in speculative market demand for futures and futures options,
including technical influences in futures and futures options trading, and
differences between the financial instruments being hedged and the instruments
underlying the standard contracts available for trading in such respects as
interest rate levels, maturities, and creditworthiness of issuers. A decision as
to whether, when, and how to hedge involves the exercise of skill and judgment
and even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest rate trends.
<PAGE>
There can be no assurance that a liquid market will exist at a time when a Fund
seeks to close out a futures contract or a futures option position. Most futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single day. Once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For example,
futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. In addition, certain of these instruments are relatively new
and without a significant trading history. Lack of a liquid market for any
reason may prevent a Fund from liquidating an unfavorable position and the Fund
would remain obligated to meet margin requirements and continue to incur losses
until the position is closed.
To the extent that a Fund enters into futures contracts, options on futures
contracts and options on foreign currencies traded on a CFTC-regulated exchange,
in each case that is not for bona fide hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into.
OPTIONS ON SECURITIES AND SECURITIES INDICES
The Funds may purchase put and call options on securities, and (except for the
Conseco Fixed Income and Conseco High Yield Funds) put and call options on stock
indices, at such times as the Adviser deems appropriate and consistent with a
Fund's investment objective. The Conseco Convertible Securities Fund also may
write call and put options, and each of the other Funds may write listed
"covered" call and "secured" put options. Each Fund may enter into closing
transactions in order to terminate its obligations either as a writer or a
purchaser of an option prior to the expiration of the option.
PURCHASING OPTIONS ON SECURITIES. An option on a security is a contract
that gives the purchaser of the option, in return for the premium paid, the
right to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the seller
("writer") of the option at a designated price during the term of the option. A
Fund may purchase put options on securities to protect holdings in an underlying
or related security against a substantial decline in market value. Securities
are considered related if their price movements generally correlate to one
another. For example, the purchase of put options on debt securities held by a
Fund would enable a Fund to protect, at least partially, an unrealized gain in
an appreciated security without actually selling the security. In addition, the
Fund would continue to receive interest income on such security.
<PAGE>
A Fund may purchase call options on securities to protect against substantial
increases in prices of securities which the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. A Fund may sell put
or call options it has previously purchased, which could result in a net gain or
loss depending on whether the amount realized on the sale is more or less than
the premium and transactional costs paid on the option which is sold.
WRITING CALL AND PUT OPTIONS. In order to earn additional income on its
portfolio securities or to protect partially against declines in the value of
such securities, each Fund may write call options. The exercise price of a call
option may be below, equal to, or above the current market value of the
underlying security at the time the option is written. During the option period,
a call option writer may be assigned an exercise notice requiring the writer to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time in which the writer effects a closing purchase transaction. Closing
purchase transactions will ordinarily be effected to realize a profit on an
outstanding call option, to prevent an underlying security from being called, to
permit the sale of the underlying security, or to enable a Fund to write another
call option on the underlying security with either a different exercise price or
expiration date or both.
In order to earn additional income or to protect partially against increases in
the value of securities to be purchased, the Funds may write put options. During
the option period, the writer of a put option may be assigned an exercise notice
requiring the writer to purchase the underlying security at the exercise price.
The Funds (except Conseco Convertible Securities Fund) may write a call or put
option only if the call option is "covered" or the put option is "secured" by
the Fund. Under a covered call option, the Fund is obligated, as the writer of
the option, to own the underlying securities subject to the option or hold a
call at an equal or lower exercise price, for the same exercise period, and on
the same securities as the written call. Under a secured put option, a Fund must
maintain, in a segregated account with the Trust's custodian, cash or liquid
securities with a value sufficient to meet its obligation as writer of the
option. A put may also be secured if the Fund holds a put on the same underlying
security at an equal or greater exercise price. Prior to exercise or expiration,
an option may be closed out by an offsetting purchase or sale of an option by
the same Fund. The Conseco Convertible Securities Fund may write call and put
options that are not "covered" or "secured."
OPTIONS ON SECURITIES INDICES. Call and put options on securities
indices would be purchased or written by a Fund for the same purposes as the
purchase or sale of options on securities. Options on securities indices are
similar to options on securities, except that the exercise of securities index
options requires cash payment and does not involve the actual purchase or sale
of securities. In addition, securities index options are designed to reflect
price fluctuations in a group of securities or segment of the securities market
rather than price fluctuations in a single security. The purchase of such
options may not enable a Fund to hedge effectively against stock market risk if
they are not highly correlated with the value of its securities. Moreover, the
ability to hedge effectively depends upon the ability to predict movements in
the stock market, which cannot be done accurately in all cases.
<PAGE>
RISKS OF OPTIONS TRANSACTIONS. The purchase and writing of options
involves certain risks. During the option period, the covered call writer has,
in return for the premium on the option, given up the opportunity to profit from
a price increase in the underlying securities above the exercise price, and, as
long as its obligation as a writer continues, has retained the risk of loss if
the price of the underlying security declines. The writer of an option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver or purchase the underlying
securities at the exercise price. If a put or call option purchased by a Fund is
not sold when it has remaining value, and if the market price of the underlying
security, in the case of a put, remains equal to or greater than the exercise
price or, in the case of a call, remains less than or equal to the exercise
price, the Fund will lose its entire investment in the option. Also, where a put
or call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security.
There can be no assurance that a liquid market will exist when a Fund seeks to
close out an option position. If a Fund cannot effect a closing transaction, it
will not be able to sell the underlying security or securities in a segregated
account while the previously written option remains outstanding, even though it
might otherwise be advantageous to do so. Possible reasons for the absence of a
liquid secondary market on a national securities exchange could include:
insufficient trading interest, restrictions imposed by national securities
exchanges, trading halts or suspensions with respect to options or their
underlying securities, inadequacy of the facilities of national securities
exchanges or The Options Clearing Corporation due to a high trading volume or
other events, and a decision by one or more national securities exchanges to
discontinue the trading of options or to impose restrictions on certain types of
orders.
There also can be no assurance that a Fund would be able to liquidate an
over-the-counter ("OTC") option at any time prior to expiration. In contrast to
exchange-traded options where the clearing organization affiliated with the
particular exchange on which the option is listed in effect guarantees
completion of every exchange-traded option, OTC options are contracts between a
Fund and a counter-party, with no clearing organization guarantee. Thus, when a
Fund purchases an OTC option, it generally will be able to close out the option
prior to its expiration only by entering into a closing transaction with the
dealer from whom the Fund originally purchased the option.
Since option premiums paid or received by a Fund are small in relation to the
market value of underlying investments, buying and selling put and call options
offer large amounts of leverage. Thus, trading in options could result in a
Fund's net asset value being more sensitive to changes in the value of the
underlying securities.
<PAGE>
FOREIGN CURRENCY TRANSACTIONS (ALL FUNDS EXCEPT CONSECO EQUITY AND CONSECO FIXED
INCOME FUNDS)
A foreign currency futures contract is a standardized contract for the future
delivery of a specified amount of a foreign currency, at a future date at a
price set at the time of the contract. A forward currency contract is an
obligation to purchase or sell a currency against another currency at a future
date at a price agreed upon by the parties. A Fund may either accept or make
delivery of the currency at the maturity of the contract or, prior to maturity,
enter into a closing transaction involving the purchase or sale of an offsetting
contract. A Fund will purchase and sell such contracts for hedging purposes and
not as an investment. A Fund will engage in foreign currency futures contracts
and forward currency transactions in anticipation of or to protect itself
against fluctuations in currency exchange rates.
Except for the Conseco Convertible Securities Fund, a Fund will not (1) commit
more than 15 percent of its total assets computed at market value at the time of
commitment to foreign currency futures or forward currency contracts, or (2)
enter into a foreign currency contract with a term of greater than one year. The
Conseco Convertible Securities Fund will not commit more than 15 percent of its
total assets computed at market value at the time of commitment to foreign
currency futures or forward currency contracts, but it may enter into a foreign
currency contract with a term of greater than one year.
Forward currency contracts are not traded on regulated commodities exchanges.
When a Fund enters into a forward currency contract, it incurs the risk of
default by the counter-party to the transaction.
There can be no assurance that a liquid market will exist when a Fund seeks to
close out a foreign currency futures or forward currency position. While these
contracts tend to minimize the risk of loss due to a decline in the value of the
hedged currency, at the same time, they tend to limit any potential gain which
might result should the value of such currency increase.
Although each Fund values its assets daily in U.S. dollars, it does not intend
physically to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. A Fund will do so from time to time, thereby incurring the costs of
currency conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange if the Fund desires to resell that
currency to the dealer.
OPTIONS ON FOREIGN CURRENCIES (CONSECO 20, CONSECO BALANCED, CONSECO CONVERTIBLE
SECURITIES, AND CONSECO HIGH YIELD FUNDS)
Each of these Funds may invest in call and put options on foreign currencies. A
Fund may purchase call and put options on foreign currencies as a hedge against
changes in the value of the U.S. dollar (or another currency) in relation to a
foreign currency in which portfolio securities of the Fund may be denominated. A
call option on a foreign currency gives the purchaser the right to buy, and a
put option the right to sell, a certain amount of foreign currency at a
specified price during a fixed period of time. A Fund may enter into closing
sale transactions with respect to such options, exercise them, or permit them to
expire.
<PAGE>
A Fund may employ hedging strategies with options on currencies before the Fund
purchases a foreign security denominated in the hedged currency, during the
period the Fund holds a foreign security, or between the day a foreign security
is purchased or sold and the date on which payment therefor is made or received.
Hedging against a change in the value of a foreign currency in the foregoing
manner does not eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Furthermore, such
hedging transactions reduce or preclude the opportunity for gain if the value of
the hedged currency increases relative to the U.S. dollar. The Funds will
purchase options on foreign currencies only for hedging purposes and will not
speculate in options on foreign currencies. The Funds may invest in options on
foreign currency which are either listed on a domestic securities exchange or
traded on a recognized foreign exchange.
An option position on a foreign currency may be closed out only on an exchange
which provides a secondary market for an option of the same series. Although the
Funds will purchase only exchange-traded options, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option, or
at any particular time. In the event no liquid secondary market exists, it might
not be possible to effect closing transactions in particular options. If a Fund
cannot close out an exchange-traded option which it holds, it would have to
exercise its option in order to realize any profit and would incur transactional
costs on the purchase or sale of the underlying assets.
SEGREGATION AND COVER FOR OPTIONS, FUTURES AND OTHER FINANCIAL INSTRUMENTS
The use of the financial instruments discussed above, i.e., interest rate
transactions (including swaps, caps, floors and collars), futures contracts,
options on future contacts, options on securities and securities indices, and
forward contracts (collectively, "Financial Instruments"), may be subject to
applicable regulations of the SEC, the several exchanges upon which they are
traded, and/or the Commodity Futures Trading Commission ("CFTC").
Each Fund is required to maintain assets as "cover," maintain segregated
accounts or make margin payments when it takes positions in Financial
Instruments involving obligations to third parties (i.e., Financial Instruments
other than purchased options). No Fund will enter into such transactions unless
it owns either (1) an offsetting ("covered") position in securities, currencies
or other options, futures contracts or forward contracts, or (2) cash and liquid
assets with a value, marked-to-market daily, sufficient to cover its potential
obligations to the extent not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and will, if
the guidelines so require, set aside cash or liquid assets in a segregated
account with its custodian in the prescribed amount as determined daily.
SECURITIES LENDING
The Funds may lend securities to broker-dealers or other institutional investors
pursuant to agreements requiring that the loans be continuously secured by any
combination of cash, U.S. Government securities, and approved bank letters of
credit that at all times equal at least 100% of the market value of the loaned
securities. The Conseco 20, Conseco Convertible Securities, and Conseco High
Yield Funds will not make such loans if, as a result, the aggregate amount of
<PAGE>
all outstanding securities loans would exceed 33 1/3% of the Fund's total
assets. As a fundamental policy of the Conseco Equity, Conseco Balanced, and the
Conseco Fixed Income Funds, such loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans would exceed 15% of each
Fund's total assets. A Fund continues to receive interest on the securities
loaned and simultaneously earns either interest on the investment of the cash
collateral or fee income if the loan is otherwise collateralized. Should the
borrower of the securities fail financially, there is a risk of delay in
recovery of the securities loaned or loss of rights in the collateral. However,
the Funds seek to minimize this risk by making loans only to borrowers which are
deemed by the Adviser to be of good financial standing and that have been
approved by the Board.
BORROWING
A Fund may borrow money from a bank, but only if immediately after each such
borrowing and continuing thereafter the Fund would have asset coverage of 300
percent. Leveraging by means of borrowing will exaggerate the effect of any
increase or decrease in the value of portfolio securities on a Fund's net asset
value. Leverage also creates interest expenses; if those expenses exceed the
return on the transactions that the borrowings facilitate, a Fund will be in a
worse position than if it had not borrowed. The use of borrowing tends to result
in a faster than average movement, up or down, in the net asset value of a
Fund's shares. A Fund also may be required to maintain minimum average balances
in connection with such borrowing or to pay a commitment or other fee to
maintain a line of credit; either of these requirements would increase the cost
of borrowing over the stated interest rate. The use of derivatives in connection
with leverage may create the potential for significant losses. The Funds may
pledge assets in connection with permitted borrowings. Each Fund may borrow an
amount up to 33 1/3 % of its assets.
INVESTMENT IN SECURITIES OF OTHER INVESTMENT COMPANIES
Securities of other investment companies have the potential to appreciate as do
any other securities, but tend to present less risk because their value is based
on a diversified portfolio of investments. The 1940 Act expressly permits mutual
funds to invest in other investment companies within prescribed limitations. An
investment company generally may invest in other investment companies if at the
time of such investment (1) it does not own more than 3 percent of the voting
securities of any one investment company, (2) it does not invest more than 5
percent of its assets in any single investment company, and (3) its investment
in all investment companies does not exceed 10 percent of assets.
Some of the countries in which a Fund may invest may not permit direct
investment by outside investors. Investments in such countries may only be
permitted through foreign government approved or authorized investment vehicles,
which may include other investment companies. In addition, it may be less
expensive and more expedient for the Fund to invest in a foreign investment
company in a country which permits direct foreign investment.
Investment companies in which the Funds may invest charge advisory and
administrative fees and may also assess a sales load and/or distribution fees.
Therefore, investors in a Fund that invests in other investment companies would
indirectly bear costs associated with those investments as well as the costs
associated with investing in the Fund. The percentage limitations described
above significantly limit the costs a Fund may incur in connection with such
investments.
<PAGE>
SHORT SALES
The Funds may effect short sales. A short sale is a transaction in which a Fund
sells a security in anticipation that the market price of the security will
decline. A Fund may effect short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns or anticipates
acquiring, or in similar securities, and (ii) to maintain flexibility in its
holdings. In a short sale "against the box," at the time of sale the Fund owns
the security it has sold short or has the immediate and unconditional right to
acquire at no additional cost the identical security. Under applicable
guidelines of the SEC staff, if a Fund engages in a short sale (other than a
short sale against-the-box), it must put an appropriate amount of cash or liquid
securities in a segregated account (not with the broker).
The effect of short selling on a Fund is similar to the effect of leverage.
Short selling may exaggerate changes in a Fund's NAV. Short selling may also
produce higher than normal portfolio turnover, which may result in increased
transaction costs to a Fund.
INVESTMENT PERFORMANCE
STANDARDIZED YIELD QUOTATIONS. Each class of the Funds may advertise investment
performance figures, including yield. Each class' yield will be based upon a
stated 30-day period and will be computed by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:
YIELD = 2 [((A-B)/CD)+1)^6-1]
Where:
A = the dividends and interest earned during the period.
B = the expenses accrued for the period (net of reimbursements, if any).
C = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = the maximum offering price (which is the net asset value plus, for Class A
shares only, the maximum initial sales charge) per share on the last day of the
period.
Average Yield Based on the 30-Day Period
<TABLE>
<CAPTION>
Ended December 31, 1999
- -------------------------------------------------------------------------------------------------------------------------------
FUND CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y SHARES
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Conseco High Yield Fund 8.54% 8.67% 8.74% 9.55%
- -------------------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income Fund 6.24% 6.29% 6.18% 7.26%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. Each class of the Funds may
advertise its total return and its cumulative total return. The total return
will be based upon a stated period and will be computed by finding the average
annual compounded rate of return over the stated period that would equate an
initial amount invested to the ending redeemable value of the investment
(assuming reinvestment of all distributions), according to the following
formula:
P (1+T)^n=ERV
Where:
P = a hypothetical initial payment of $1,000.
T = the average annual total return.
n = the number of years.
ERV = the ending redeemable value at the end of the stated period of a
hypothetical $1,000 payment made at the beginning of the stated period.
The total return for Class B and Class C shares of each Fund will assume the
maximum applicable contingent deferred sales charge is deducted at the times, in
the amounts, and under the terms disclosed in the Fund's Prospectus. The
cumulative total return will be based upon a stated period and will be computed
by dividing the ending redeemable value (i.e., after deduction of any applicable
sales charges) of a hypothetical investment by the value of the initial
investment (assuming reinvestment of all distributions).
Each investment performance figure will be carried to the nearest hundredth of
one percent.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Returns
Periods Ended December 31,1999
- -------------------------------------------------------------------------------------------------------------------
FUND ONE YEAR PERIOD FROM INCEPTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conseco 20
Class A (01/01/98) 60.60% 43.38%
Class B (02/18/98) 61.08% 36.92%
Class C (03/10/98) 67.85% 38.24%
Class Y (04/06/98) 71.36% 38.17%
- -------------------------------------------------------------------------------------------------------------------
Conseco Equity
Class A (01/02/97) 47.23% 28.08%
Class B (01/28/98) 47.85% 30.51%
Class C (02/19/98) 54.33% 29.88%
Class Y (01/02/97) 57.13% 31.33%
- -------------------------------------------------------------------------------------------------------------------
Conseco Balanced
Class A (01/02/97) 22.00% 17.15%
Class B (02/10/98) 22.35% 14.94%
Class C (02/13/98) 27.52% 17.08%
Class Y (01/02/97) 30.07% 20.07%
- -------------------------------------------------------------------------------------------------------------------
Conseco Convertible Securities
Class A (09/28/98) 32.07% 33.26%
Class B (09/28/98) 32.43% 33.40%
Class C (09/28/98) 38.12% 37.68%
Class Y (09/28/98) 40.91% 40.02%
- -------------------------------------------------------------------------------------------------------------------
Conseco High Yield
Class A (01/01/98) 2.76% 4.64%
Class B (02/19/98) 3.14% 2.22%
Class C (02/19/98) 7.51% 4.33%
Class Y (03/02/98) 9.64% 5.93%
- -------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income
Class A (01/02/97) (5.26%) 3.46%
Class B (03/20/98) (5.46%) (0.42%)
Class C (03/05/98) (1.47%) 2.63%
Class Y (01/02/97) 0.38% 5.89%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED PERFORMANCE. In addition, in order to more completely represent
a Fund's performance or more accurately compare such performance to other
measures of investment return, a Fund also may include in advertisements, sales
literature and shareholder reports other total return performance data
("Non-Standardized Return"). Non-Standardized Return may be quoted for the same
or different periods as those for which Standardized Return is required to be
quoted; it may consist of an aggregate or average annual percentage rate of
return, actual year-by-year rates or any combination thereof. Non-Standardized
Return for Class A, B and C shares may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges,
if any, into account may be higher than data including the effect of such
charges. All non-standardized performance will be advertised only if the
standard performance data for the same period, as well as for the required
periods, is also presented.
<PAGE>
GENERAL INFORMATION. From time to time, the Funds may advertise their
performance compared to similar funds or types of investments using certain
unmanaged indices, reporting services and publications. Descriptions of some of
the indices which may be used are listed below.
The Standard & Poor's 500 Composite Stock Price Index is a well diversified list
of 500 companies representing the U.S. stock market.
The Standard & Poor's MidCap 400 Index consists of 400 domestic stocks of
companies whose market capitalizations range from $201 million to $14.4 billion,
with a median market capitalization of $2.1 billion.
The NASDAQ Composite OTC Price Index is a market value-weighted and unmanaged
index showing the changes in the aggregate market value of approximately 5,510
stocks listed on the NASDAQ Stock Market.
The Lehman Government Bond Index is a measure of the market value of all public
obligations of the U.S. Treasury; all publicly issued debt of all agencies of
the U.S. Government and all quasi-federal corporations; and all corporate debt
guaranteed by the U.S. Government. Mortgage-backed securities and foreign
targeted issues are not included in the Lehman Government Bond Index.
The Lehman Government/Corporate Bond Index is a measure of the market value of
approximately 5,900 bonds with a face value currently in excess of $3.5
trillion. To be included in the Lehman Government/Corporate Index, an issue must
have amounts outstanding in excess of $100 million, have at least one year to
maturity and be rated "BBB/Baa" or higher ("investment grade") by an NRSRO.
The Lehman Brothers Aggregate Bond Index is an index consisting of the
securities listed in Lehman Brothers Government/Corporate Bond Index, the Lehman
Brothers Mortgage-Backed Securities Index, and the Lehman Brothers Asset-Backed
Securities Index. The Government/Corporate Bond Index is described above. The
Mortgage-Backed Securities Index consists of 15 and 30-year fixed rate
securities backed by mortgage pools of GNMA, FHLMC and FNMA (excluding buydowns,
manufactured homes and graduated equity mortgages). The Asset-Backed Securities
Index consists of credit card, auto and home equity loans (excluding
subordinated tranches) with an average life of one year.
The Merrill Lynch Convertible Securities Index is a market capitalization
weighted index of over 450 non-mandatory domestic corporate convertible
securities, representing approximately 95% of the total outstanding market value
of U.S. convertible securities. To be included in the index, bonds and preferred
stocks must be convertible only to common stock and have a market value or
original par value of at least $500 million.
The Boston Convertible Securities Index is a market capitalization weighted
index of over 250 convertible bonds and preferred stocks rated B- or above. To
be included in the index, convertible bonds must have an original par value of
at least $50 million and preferred stocks must have a minimum of 500,000 shares
outstanding. The index also includes U.S. dollar-denominated Eurobonds that have
been issued by U.S. domiciled companies, are rated B- or above, and have an
original par value of at least $100 million.
<PAGE>
The Merrill Lynch High Yield Master Index consists of publicly placed
nonconvertible, coupon-bearing US domestic debt and carries a term to maturity
of at least one year. Par amounts outstanding are not less than $10 million at
the start and at the close of the performance measurement period. Issues must be
rated by Standard & Poor's or by Moody's Investors Service as less than
investment grade (i.e., BBB or Baa) but not in default (i.e., DDD1 or less). The
index excludes floating rate debt, equipment trust certificates and Title 11
securities.
Each index includes income and distributions but does not reflect fees,
brokerage commissions or other expenses of investing.
In addition, from time to time in reports and promotions (1) a Fund's
performance may be compared to other groups of mutual funds tracked by: (a)
Lipper Analytical Services and Morningstar, Inc., widely used independent
research firms which rank mutual funds by overall performance, investment
objectives, and assets; or (b) other financial or business publications, such as
Business Week, Money Magazine, Forbes and Barron's which provide similar
information; (2) the Consumer Price Index (measure for inflation) may be used to
assess the real rate of return from an investment in a Fund; (3) other
statistics such as GNP and net import and export figures derived from
governmental publications, e.g., The Survey of Current Business or statistics
derived by other independent parties, e.g., the Investment Company Institute,
may be used to illustrate investment attributes of a Fund or the general
economic, business, investment, or financial environment in which a Fund
operates; (4) various financial, economic and market statistics developed by
brokers, dealers and other persons may be used to illustrate aspects of a Fund's
performance; and (5) the sectors or industries in which a Fund invests may be
compared to relevant indices or surveys (e.g., S&P Industry Surveys) in order to
evaluate the Fund's historical performance or current or potential value with
respect to the particular industry or sector.
SECURITIES TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities for these
Funds, broker-dealer selection, and negotiation of brokerage commission rates.
The Adviser's primary consideration in effecting a securities transaction will
be execution at the most favorable price. A substantial majority of a Fund's
portfolio transactions in fixed income securities will be transacted with
primary market makers acting as principal on a net basis, with no brokerage
commissions being paid by a Fund. In certain instances, the Adviser may make
purchases of underwritten issues at prices which include underwriting fees.
In selecting a broker-dealer to execute a particular transaction, the Adviser
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
the order and the difficulty of execution; and the size of contribution of the
broker-dealer to the investment performance of a Fund on a continuing basis.
Broker-dealers may be selected who provide brokerage and/or research services to
these Funds and/or other accounts over which the Adviser exercises investment
discretion. Such services may include furnishing advice concerning the value of
securities (including providing quotations as to securities), the advisability
of investing in, purchasing or selling securities, and the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto, such as clearance,
settlement and custody, or required in connection therewith.
<PAGE>
Subject to the Conduct Rules of the NASD and to obtaining best prices and
executions, the Adviser may select brokers who provide research or other
services or who sell shares of the Funds to effect portfolio transactions. The
Adviser may also select an affiliated broker to execute transactions for the
Funds, provided that the commissions, fees or other remuneration paid to such
affiliated broker are reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
The Adviser shall not be deemed to have acted unlawfully, or to have breached
any duty created by a Fund's Investment Advisory Agreement or otherwise, solely
by reason of its having caused the Fund to pay a broker-dealer that provides
brokerage and research services an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The Adviser
allocates orders placed by it on behalf of these Funds in such amounts and
proportions as the Adviser shall determine and the Adviser will report on said
allocations regularly to a Fund indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
The receipt of research from broker-dealers may be useful to the Adviser in
rendering investment management services to these Funds and/or the Adviser's
other clients; conversely, information provided by broker-dealers who have
executed transaction orders on behalf of other clients may be useful to the
Adviser in carrying out its obligations to these Funds. The receipt of such
research will not be substituted for the independent research of the Adviser. It
does enable the Adviser to reduce costs to less than those which would have been
required to develop comparable information through its own staff. The use of
broker-dealers who supply research may result in the payment of higher
commissions than those available from other broker-dealers who provide only the
execution of portfolio transactions.
<PAGE>
For the fiscal years ended December 31, 1997, 1998 and 1999, the following
brokerage commissions were paid by the Funds:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Fund 1997 1998 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco 20* N/A $255,305 $446,822
- -----------------------------------------------------------------------------------------------
Conseco Equity $215,359 $624,839 $680,067
- -----------------------------------------------------------------------------------------------
Conseco Balanced $ 37,658 $107,448 $143,520
- -----------------------------------------------------------------------------------------------
Conseco Convertible Securities N/A $ 8,567+ $2,891
- -----------------------------------------------------------------------------------------------
Conseco High Yield* N/A $0 $0
- -----------------------------------------------------------------------------------------------
Conseco Fixed Income $0 $0 $0
- -----------------------------------------------------------------------------------------------
<FN>
* The Conseco High Yield and Conseco 20 Funds commenced operations on January 1,
1998.
+ The Conseco Convertible Securities Fund commenced operations on September 28,
1998. The amount listed is for the fiscal period beginning September 28, 1998.
</FN>
</TABLE>
During the fiscal year ended December 31, 1997, December 31, 1998 and December
31, 1999, no Fund paid commissions to any affiliated brokers.
During the fiscal year ended December 31, 1999, the Fixed Income, Balanced and
Convertible Securities Funds acquired the securities of its "regular brokers or
dealers" (as defined in the 1940 Act) ("Regular B/Ds") as follows: TK.
Additionally, at December 31, 1999, the following Funds held the securities of
its Regular B/Ds with an aggregate value as follows:
- ------------------------------------------------------------------------------
CONSECO BALANCED:
- ------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. $345,313
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CONSECO FIXED INCOME:
- ------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. $836,398
- ------------------------------------------------------------------------------
Paine Webber Group, Inc. $207,111
- ------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. $ 97,814
- ------------------------------------------------------------------------------
Orders on behalf of these Funds may be bunched with orders on behalf of other
clients of the Adviser. It is the Adviser's policy that, to the extent
practicable, all clients with similar investment objectives and guidelines be
treated fairly and equitably in the allocation of securities trades.
The Board periodically reviews the Adviser's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Trust.
<PAGE>
MANAGEMENT
THE ADVISER
The Adviser provides investment advice and, in general, supervises the Trust's
management and investment program, furnishes office space, prepares reports for
the Funds, and pays all compensation of officers and Trustees of the Trust who
are affiliated persons of the Adviser. Each Fund pays all other expenses
incurred in the operation of the Fund, including fees and expenses of
unaffiliated Trustees of the Trust.
The Adviser is a wholly owned subsidiary of Conseco, Inc. ("Conseco"), a
publicly-owned financial services company, the principal operations of which are
in development, marketing and administration of specialized annuity, life and
health insurance products. Conseco's offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. The Adviser manages and serves as
sub-adviser to other registered investment companies and manages the invested
assets of Conseco, which owns or manages several life insurance subsidiaries,
and provides investment and servicing functions to the Conseco companies and
affiliates. The Adviser also manages foundations, endowments, public and
corporate pension plans, and private client accounts. As of December 31, 1999,
the Adviser managed in excess of $42.2 billion in assets.
The Investment Advisory Agreements, dated March 28, 1997, between the Adviser
and the Conseco Equity Fund, Conseco Balanced Fund and Conseco Fixed Income
Fund, and the Investment Advisory Agreement dated December 31, 1997 between the
Adviser and the Conseco High Yield Fund, Conseco Convertible Securities Fund and
Conseco 20 Fund (the agreement was approved with respect to the Conseco
Convertible Securities Fund on May 14, 1997), provide that the Adviser shall not
be liable for any error in judgment or mistake of law or for any loss suffered
by a Fund in connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendations of the Adviser. The
Agreements provide that the Adviser is not protected against any liability to a
Fund or its security holders for which the Adviser shall otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by the Agreements or the violation of
any applicable law.
Under the terms of the Investment Advisory Agreements, the Adviser has
contracted to receive an investment advisory fee equal to an annual rate of
0.70% of the average daily net asset value of the Conseco 20 Fund, Conseco
Equity Fund, Conseco Balanced Fund, and Conseco High Yield Fund, 0.85% of the
average daily net asset value of the Conseco Convertible Securities Fund and
0.45% of the average daily net asset value of the Conseco Fixed Income Fund.
Pursuant to a contractual arrangement with the Trust, the Adviser, along with
the Funds' Administrator and Distributor, has agreed to waive fees and/or
reimburse expenses through April 30, 2001, so that annual operating expenses of
the Funds are limited to the following net expenses:
<PAGE>
<TABLE>
<CAPTION>
NET EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
Fund Class A Shares Class B and C Shares Class Y Shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco 20 1.75% 2.25% 1.25%
- ------------------------------------------------------------------------------------------------------------------------------
Conseco Equity 1.50% 2.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Conseco Balanced 1.50% 2.05% 1.05%
- ------------------------------------------------------------------------------------------------------------------------------
Conseco Convertible Securities 1.55% 2.05% 1.05%
- ------------------------------------------------------------------------------------------------------------------------------
Conseco High Yield 1.40% 1.90% 0.90%
- ------------------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income 1.25% 1.60% 0.60%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Adviser will waive fees and/or reimburse expenses on a monthly basis and the
Adviser will pay each Fund by reducing its fee. Any waivers or reimbursements
will have the effect of lowering the overall expense ratio for each Fund and
increasing its overall return to investors at the time any such amounts were
waived/and or reimbursed. Any such waiver or reimbursement is subject to later
adjustment to allow the Adviser to recoup amounts waived or reimbursed,
including initial organization costs of each Fund, provided, however, that the
Adviser shall only be entitled to recoup such amounts for a period of three
years from the date such amount was waived or reimbursed.
This contractual arrangement does not cover interest, taxes, brokerage
commissions, and extraordinary expenses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------- ----------------------------------------
Advisory Fees Accrued Amount Reimbursed/Waived
Fiscal Year Ended Fiscal Year Ended
Fund December 31 December 31
- ---------------------------------------------------------------------------- ----------------------------------------
1997 1998 1999 1997 1998 1999
- ---------------------------------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conseco 20 N/A* $166,646 $607,285 N/A* $ 98,505 $ 19,896
- ---------------------------------------------------------------------------- ----------------------------------------
Conseco Equity $286,410 $534,249 $704,523 $66,061 $375,909 $159,608
- ---------------------------------------------------------------------------- ----------------------------------------
Conseco Balanced $ 63,605 $166,164 $264,478 $49,074 $166,164 $174,411
- ---------------------------------------------------------------------------- ----------------------------------------
Conseco Convertible Securities N/A+ $ 55,482 $345,093 N/A+ $ 38,398 $163,455
- ---------------------------------------------------------------------------- ----------------------------------------
Conseco High Yield N/A* $145,966 $709,581 N/A* $145,966 $265,495
- ---------------------------------------------------------------------------- ----------------------------------------
Conseco Fixed Income $ 58,632 $146,274 $301,525 $38,405 $146,274 $257,489
- ---------------------------------------------------------------------------- ----------------------------------------
<FN>
* The Conseco High Yield and Conseco 20 Funds commenced operations on January 1,
1998.
+ The Convertible Securities Fund commenced operations on September 28, 1998.
</FN>
</TABLE>
Each Fund may receive credits from its custodian based on cash held by the Fund
at the custodian. These credits may be used to reduce the custody fees payable
by the Fund. In that case, the Adviser's (and, other affiliates') agreement to
waive fees or reimburse expenses will be applied only after the Fund's custody
fees have been reduced or eliminated by the use of such credits.
<PAGE>
OTHER SERVICE PROVIDERS
THE ADMINISTRATOR. Conseco Services, LLC (the "Administrator") is a wholly owned
subsidiary of Conseco, and receives compensation from the Trust pursuant to an
Administration Agreement dated January 2, 1997 and amended December 31, 1997.
The Administration Agreement was approved with respect to the Conseco
Convertible Securities Fund on May 14, 1998. Under that agreement, the
Administrator supervises the overall administration of the Funds. These
administrative services include supervising the preparation and filing of all
documents required for compliance by the Funds with applicable laws and
regulations, supervising the maintenance of books and records, and other general
and administrative responsibilities
For providing these services, the Administrator receives a fee from each of the
Funds of .20% per annum of its average daily net assets. Pursuant to the
Administration Agreement, the Administrator reserves the right to employ one or
more sub-administrators to perform administrative services for the Funds.
Firstar Mutual Fund Services, LLC performs certain administrative services for
each of the Funds, pursuant to agreements with the Administrator. See "The
Adviser" above regarding the Administrator's contractual arrangement to waive
its fees and/or reimburse Fund expenses.
For the fiscal year ended December 31, 1999, the following administration fees
were accrued:
<PAGE>
---------------------------------------------------------------------
Fund Fees Paid
---------------------------------------------------------------------
Conseco 20 $ 173,510
---------------------------------------------------------------------
Conseco Equity $ 201,251
---------------------------------------------------------------------
Conseco Balanced $ 75,566
---------------------------------------------------------------------
Conseco Convertible Securities $ 81,105
---------------------------------------------------------------------
Conseco High Yield $ 202,699
---------------------------------------------------------------------
Conseco Fixed Income $ 133,934
---------------------------------------------------------------------
CUSTODIAN. The Bank of New York, 90 Washington Street, 22nd Floor, New York, New
York 10826, serves as custodian of the assets of each Fund.
TRANSFER AGENCY SERVICES. Firstar Mutual Fund Services, LLC is the transfer
agent for each Fund.
CODE OF ETHICS. The Fund, Adviser and Principal Underwriter have adopted a Code
of Ethics of (hereinafter "Code") pursuant to Rule 17j-1 promulgated by the
Securities and Exchange Commission pursuant to Section 17(j) of the Investment
Company Act of 1940 (the "Investment Company Act") and under the Insider Trading
and Securities Fraud Enforcement Act of 1988 (the "Insider Trading Act"). Under
the Code, neither director, officer nor advisory person of the Adviser shall
purchase or sell, directly or indirectly, any security in which he has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
and which security to his knowledge at the time of such purchase and sale (1) is
being considered for purchase or sale by the Adviser on behalf of any client, or
(2) is being purchased or sold by the Adviser on behalf of any client. The Code
also requires prior clearance, submission of duplicate confirmations on all
transactions, submission of duplicate monthly statements on all beneficially
owned accounts by access persons. The Code is on file with and is available from
the Securities and Exchange Commission.
INDEPENDENT ACCOUNTANTS/AUDITORS. PricewaterhouseCoopers LLP, 2900 One American
Square, Box 82002, Indianapolis, Indiana 46282-0002 serves as the Trust's
independent accountant.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees of the Trust decide upon matters of general policy for the Trust.
In addition, the Trustees review the actions of the Adviser, as set forth in
"Management." The Trust's officers supervise the daily business operations of
the Trust. The Trustees and officers of the Trust, their affiliations, if any,
with the Adviser and their principal occupations are set forth below.
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH TRUST DURING PAST 5 YEARS
--------------- ---------- -------------------
<S> <C> <C>
William P. Daves, Jr. (74) Chairman of the Board, Consultant to insurance and healthcare
5723 Trail Meadow Trustee industries. Director, President and Chief
Dallas, TX 75230 Executive Officer, FFG Insurance Co. Chairman of
the Board and Trustee of other mutual funds
managed by the Adviser.
Maxwell E. Bublitz* (44) President and Trustee Chartered Financial Analyst. President and
11825 N. Pennsylvania St. Director, Adviser. Previously,
Carmel, IN 46032 Senior Vice President, Adviser. President and
Trustee of other mutual funds managed by the
Adviser.
Gregory J. Hahn* (39) Vice President for Chartered Financial Analyst. Senior Vice
11825 N. Pennsylvania St. Investments and Trustee President, Adviser. Portfolio Manager of the
Carmel, IN 46032 fixed income portion of Balanced and Fixed Income
Funds. Trustee and portfolio manager of other
mutual funds managed by the Adviser.
Harold W. Hartley (76) Trustee Retired. Chartered Financial Analyst. Previously,
502 Canal Cove Court Executive Vice President, Tenneco Financial
Ft. Myers Beach, Fl 33931 Services, Inc. Trustee of other mutual funds
managed by the Adviser. Director, Ennis Business
Forms, Inc.
Dr. R. Jan LeCroy (68) Trustee Retired. President, Dallas Citizens Council.
841 Liberty Trustee of other mutual funds managed by the
Dallas, TX 75204 Adviser. Director, Southwest Securities Group,
Inc.
Dr. Jess H. Parrish (72) Trustee Former President, Midland College. Higher
2805 Sentinel Education Consultant. Trustee of other mutual
Midland, TX 79701 funds managed by the Adviser.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH TRUST DURING PAST 5 YEARS
--------------- ---------- -------------------
<S> <C> <C>
William P. Kovacs (54) Vice President and Vice President, Senior Counsel, Secretary, Chief
11825 N. Pennsylvania St. Secretary Compliance Officer and Director of Adviser. Vice
Carmel, IN 46032 President, Senior Counsel, Secretary and
Director, Conseco Equity Sales, Inc. Vice
President and Secretary of other mutual funds
managed by the Adviser. Previously, Associate
Counsel, Vice President and Assistant Secretary,
Kemper Financial Services, Inc. (1989-1996);
previous to Of Counsel, Rudnick & Wolfe
(1997-1998); previous to Of Counsel, Shefsky &
Froelich (1998).
James S. Adams (40) Treasurer Senior Vice President, Bankers National, Great
11815 N. Pennsylvania St. American Reserve. Senior Vice President,
Carmel, IN 46032 Treasurer, and Director, Conseco Equity Sales,
Inc. Senior Vice President and Treasurer, Conseco
Services, LLC. Treasurer of other mutual funds
managed by the Adviser.
William T. Devanney, Jr. (44) Vice President Senior Vice President, Corporate Taxes,
11815 N. Pennsylvania St. Corporate Taxes Bankers National and Great American
Carmel, IN 46032 Reserve. Senior Vice President,
Corporate Taxes, Conseco Equity Sales,
Inc. and Conseco Services LLC. Vice
President of other mutual funds
managed by the Adviser.
David N. Walthall (54) Trustee Principal, Walthall Asset Management. Former
1 Galleria Tower, Suite 1050 President, Chief Executive Officer and Director
13355 Noel Road of Lyrick Corporation. Formerly, President and
Dallas, TX 75240 CEO, Heritage Media Corporation. Formerly,
Director, Eagle National Bank. Trustee of other
mutual funds managed by the Adviser.
<FN>
- ------------------
* The Trustee so indicated is an "interested person," as defined in the 1940
Act, of the Trust due to the positions indicated with the Adviser and its
affiliates.
</FN>
</TABLE>
<PAGE>
The following table shows the compensation of each disinterested Trustee for the
fiscal year ending December 31, 1999 for affiliated investment companies within
the Fund Complex. In addition to Conseco Fund Group, the Fund Complex, as of
December 31, 1999, consists of: Conseco Series Trust and Conseco Strategic
Income Fund.
<TABLE>
<CAPTION>
COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
Aggregate Total Compensation from Investment
Compensation Companies in the Trust Complex Paid to
Name of Person, Position from the Trust Trustees
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
William P. Daves, Jr. $9,000 $27,000
(14 other investment company)
- ------------------------------------------------------------------------------------------------------------------------
Harold W. Hartley $9,000 $27,000
(14 other investment company)
- ------------------------------------------------------------------------------------------------------------------------
Dr. R. Jan LeCroy $9,000 $27,000
(14 other investment company)
- ------------------------------------------------------------------------------------------------------------------------
Dr. Jesse H. Parrish $8,000 $24,000
(14 other investment company)
- ------------------------------------------------------------------------------------------------------------------------
David N. Walthall $9,000 $27,000
(14 other investment company)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 2000, the following shareholders owned of record, or were known
by a Fund to own beneficially, five percent or more of the outstanding shares of
each class of shares of each Fund.
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
Conseco 20 Fund MLPF & S 57.87%
Class A 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Health Insurance Company 12.08%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco 20 Fund MLPF & S 83.18%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco 20 Fund MLPF & S 78.34%
Class C 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
Conseco 20 Fund MLPF & S 46.71%
Class Y 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Gerlach & CO. 37.07%
3800 Citibank Ctr. B1-7
Tampa, FL 33610-9122
Conseco Save - 401K 11.40%
1700 W. 82nd Street, Ste. 125
Bloomington, MI 55431-1404
Conseco Equity Fund MLPF & S 24.24%
Class A 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Senior Health Insurance Co. 16.74%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Life Insurance Co. 14.02%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Peconic Capital Fund, LP 8.53%
P.O. Box 302
Mount Kisco, NY 10549-0302
Bankers Life & Casualty 8.41%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Annuity Assurance Co. 5.61%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Equity Fund MLPF & S 71.55%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Equity Fund MLPF & S 87.82%
Class C 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
Conseco Equity Fund Conseco Save - 401K 79.32%
Class Y 1700 W. 82nd Street, Ste. 125
Bloomington, MI 55431-1404
Gerlach & CO. 8.72%
3800 Citibank Ctr. B1-7
Tampa, FL 33610-9122
Conseco Balanced Fund Conseco Variable Insurance Co. 54.82%
Class A 11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Senior Health Insurance Co. 12.65%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Life Insurance Co. 10.54%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Bankers Life & Casualty 6.33%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Balanced Fund MLPF & S 77.12%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Balanced Fund MLPF & S 91.62%
Class C 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Balanced Fund Conseco Save - 401K 83.34%
Class Y 1700 W. 82nd Street, Ste. 125
Bloomington, MI 55431-1404
Indiana Teamsters Pension 6.06%
1233 Shelby Street
Indianapolis, IN 46203-19423
Conseco Convertible Securities Bankers Life & Casualty 50.04%
Fund 11815 N. Pennsylvania Street
Class A Carmel, IN 46032-4555
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
MLPF & S 41.97%
4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Convertible Securities Fund MLPF & S 78.84%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Convertible Securities MLPF & S 71.86%
Fund 4800 Deer Lake Dr. E, Fl. 2
Class C Jacksonville, FL 32246-6484
Conseco Convertible Securities Gerlach & CO. 72.11%
Fund 3800 Citibank Ctr. B1-7
Class Y Tampa, FL 33610-9122
MLPF & S 18.71%
4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco High Yield Fund MLPF & S 73.69%
Class A 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco High Yield Fund MLPF & S 79.73%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco High Yield Fund MLPF & S 80.65%
Class C 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco High Yield Fund Gerlach & CO. 54.61%
Class Y 3800 Citibank Ctr. B1-7
Tampa, FL 33610-9122
MLPF & S 26.02%
4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Luann Derrickson 8.19%
7489 N. Illinois Street
Indianapolis, IN 46260-3618
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
Conseco Fixed Income Fund Conseco Health Insurance Co. 46.28%
Class A 11815 N. Pennsylvania Street
Carmel, IN 46032-4555
MLPF & S 17.45%
4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Senior Health Insurance Co. 9.91%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Life Insurance Co. 8.26%
11815 N. Pennsylvania Street
Carmel, IN 46032-4555
Conseco Fixed Income Fund MLPF & S 85.05%
Class B 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Conseco Fixed Income Fund MLPF & S 90.22%
Class C 4800 Deer Lake Dr. E, Fl. 2
Jacksonville, FL 32246-6484
Southwest Securities Inc. 6.17%
FBO Jerry & Lyn Beck,
P.O. Box 509002
Dallas, TX 75250-9002
Conseco Fixed Income Fund Conseco Save - 401K 43.22%
Class Y 1700 W. 82nd Street, Ste. 125
Bloomington, MI 55431-1404
Baker University Endowment 13.70%
8th and GRV
Baldwin City, KS 66006-0000
Washington National Group Insurance Plan 11.86%
P.O. Box 1911
Carmel, IN 46032-1911
Charles Schwab & Co, Inc. 10.08%
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fund Name Name and Address Percent Owned
- --------- ---------------- -------------
<S> <C> <C>
Strafe & Co. 8.96%
P.O. Box 160
Westerville, OH 43086-0160
</TABLE>
The Trustees and officers of the Trust, as a group, own less than 1% of each
Fund's outstanding shares. A shareholder owning of record or beneficially more
than 25% of a Fund's outstanding shares may be considered a controlling person.
That shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
FUND EXPENSES
Each Fund pays its own expenses including, without limitation: (i)
organizational and offering expenses of the Fund and expenses incurred in
connection with the issuance of shares of the Fund; (ii) fees of its custodian
and transfer agent; (iii) expenditures in connection with meetings of
shareholders and Trustees; (iv) compensation and expenses of Trustees who are
not interested persons of the Trust; (v) the costs of any liability,
uncollectible items of deposit and other insurance or fidelity bond; (vi) the
cost of preparing, printing, and distributing prospectuses and statements of
additional information, any supplements thereto, proxy statements, and reports
for existing shareholders; (vii) legal, auditing, and accounting fees; (viii)
trade association dues; (ix) filing fees and expenses of registering and
maintaining registration of shares of the Fund under applicable federal and
state securities laws; (x) brokerage commissions; (xi) taxes and governmental
fees; and (xii) extraordinary and non-recurring expenses.
DISTRIBUTION ARRANGEMENTS
Conseco Equity Sales, Inc. (the "Distributor") serves as the principal
underwriter for each Fund pursuant to an Underwriting Agreement, dated January
2, 1997 as amended December 31, 1997. The Underwriting Agreement was approved
with respect to the Conseco Convertible Securities Fund on May 14, 1998. The
Distributor is a registered broker-dealer and member of the National Association
of Securities Dealers, Inc. ("NASD"). Shares of each Fund will be continuously
offered and will be sold by brokers, dealers or other financial intermediaries
who have executed selling agreements with the Distributor. Subject to the
compensation arrangement discussed below, the Distributor bears all the expenses
of providing services pursuant to the Underwriting Agreement, including the
payment of the expenses relating to the distribution of Prospectuses for sales
purposes and any advertising or sales literature. The Underwriting Agreement
continues in effect for two years from initial approval and for successive
one-year periods thereafter, provided that each such continuance is specifically
approved (i) by the vote of a majority of the Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of a Fund and (ii) by a
majority of the Trustees who are not "interested persons" of the Trust (as that
term is defined in the 1940 Act). The Distributor is not obligated to sell any
specific amount of shares of any Fund.
<PAGE>
Following is information about the compensation received by the Distributor with
respect to each Fund for the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND AND CLASS COMPENSATION AMOUNT RETAINED BY AMOUNT REALLOWED BY
RECEIVED BY DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco Equity
Class A $ 37,114 $ 3,566 $ 33,547
- -------------------------------------------------------------------------------------------------------------------
Conseco Balanced
Class A $ 20,746 $ 2,338 $ 18,407
- -------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income
Class A $ 4,196 $ 452 $ 3,743
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Following is information about the compensation received by the Distributor with
respect to each Fund for the fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND AND CLASS COMPENSATION AMOUNT RETAINED BY AMOUNT REALLOWED BY
RECEIVED BY DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco 20
Class A $160,829 $ 23,116 $ 137,713
Class B 338,900 0 338,900
Class C 28,359 0 28,359
- -------------------------------------------------------------------------------------------------------------------
Conseco Equity
Class A $ 21,660 $ 2,785 $ 18,875
Class B 68,290 0 68,290
Class C 7,275 0 7,275
- -------------------------------------------------------------------------------------------------------------------
Conseco Balanced
Class A $ 24,595 $ 3,544 $ 21,051
Class B 67,034 0 67,034
Class C 9,685 0 9,685
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND AND CLASS COMPENSATION AMOUNT RETAINED BY AMOUNT REALLOWED BY
RECEIVED BY DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco Convertible
Securities*
Class A 0 0 0
Class B 0 0 0
Class C 57 0 57
- -------------------------------------------------------------------------------------------------------------------
Conseco High Yield
Class A $ 199,926 $ 29,862 $ 170,064
Class B 678,167 0 678,167
Class C 59,575 0 59,575
- -------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income
Class A $ 37,877 $ 4,140 $ 33,747
Class B 160,726 0 160,726
Class C 0 0 0
- -------------------------------------------------------------------------------------------------------------------
<FN>
*The Conseco Convertible Securities Fund commenced operations on September 28,
1998. The information with respect to that Fund is shown for the period
beginning September 28, 1998.
</FN>
</TABLE>
Following is information about the compensation received by the Distributor with
respect to each Fund for the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND AND CLASS COMPENSATION AMOUNT RETAINED BY AMOUNT REALLOWED BY
RECEIVED BY DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco 20
Class A $ 2,656,532 $ 137,238 $ 2,519,294
Class B 44,346 0 44,346
Class C 8,061 0 8,061
- -------------------------------------------------------------------------------------------------------------------
Conseco Equity
Class A $ 147,692 $ 8,353 $ 139,339
Class B 2,595 0 2,595
Class C 226 0 226
- -------------------------------------------------------------------------------------------------------------------
Conseco Balanced
Class A $ 55,790 $ 2,795 $ 52,995
Class B (3,173) 0 (3,173)
Class C 346 0 346
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND AND CLASS COMPENSATION AMOUNT RETAINED BY AMOUNT REALLOWED BY
RECEIVED BY DISTRIBUTOR DISTRIBUTOR
DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conseco Convertible
Securities*
Class A $ 559,537 $ 19,668 $ 539,869
Class B 5,417 0 5,417
Class C 518 0 518
- -------------------------------------------------------------------------------------------------------------------
Conseco High Yield
Class A $ 1,176,202 $ 82,897 $ 1,093,305
Class B 32,756 0 32,756
Class C 6,974 0 6,974
- -------------------------------------------------------------------------------------------------------------------
Conseco Fixed Income
Class A $ 146,879 $ 8,222 $ 138,657
Class B 4,349 0 4,349
Class C 2,686 0 2,686
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
For sales of Class Y shares, the Distributor may provide promotional incentives
including cash compensation to certain broker, dealers, or financial
intermediaries whose representatives have sold or are expected to sell
significant amount so shares of one or more of the Funds. Other programs may
provide, subject to certain conditions, additional compensation to brokers,
dealer, or financial intermediaries based on a combination of aggregate shares
sold and increases of assets under management. The Distributor or its affiliates
out of their own assets will make all of the above payments. These programs will
not chance the price an investor will pay for shares or the amount that a Fund
will receive from such sales.
The Distributor's principal address is 11815 N. Pennsylvania Street, Carmel,
Indiana 46032.
DISTRIBUTION AND SERVICE PLAN
The Trust has adopted distribution and service plans dated March 28, 1997 with
respect to the Class A shares of the Conseco Equity Fund, Conseco Balanced Fund
and Conseco Fixed Income Fund, and dated December 31, 1997 with respect to each
other class of Fund shares (and approved with respect to the Conseco Convertible
Securities Fund on May 14, 1998) (the "Plans"), in accordance with the
requirements of Rule 12b-1 under the 1940 Act and the requirements of the
applicable rules of the NASD regarding asset-based sales charges.
Pursuant to the Plans, each Fund may compensate the Distributor for its
expenditures in financing any activity primarily intended to result in the sale
of each such class of Fund shares and for maintenance and personal service
provided to existing shareholders of that class. The Plans authorize payments to
the Distributor up to 0.50% annually of each Fund's (except for the Conseco
Fixed Income Fund's) average daily net assets attributable to its Class A
shares. The Conseco Fixed Income Fund's Plan authorizes payments to the
Distributor up to 0.65% annually of that Fund's average daily net assets
attributable to its Class A shares. The Plans authorize payments to the
Distributor up to 1.00% annually of each Fund's average daily net assets
attributable to its Class B shares. The Plans authorize payments to the
Distributor up to 1.00% annually of each Fund's average daily net assets
attributable to its Class C shares. See "Management - The Adviser" above
regarding the Distributor's contractual arrangement waive its fees and/or
reimburse Fund expenses.
<PAGE>
For the fiscal year ended December 31, 1997, the 12b-1 fees attributable to
Class A shares of the Conseco Equity Fund, Conseco Balanced Fund and the Conseco
Fixed Income Fund were $9,508, $2,149 and $1,984, respectively.
For the fiscal year ended December 31, 1998, the 12b-1 fees attributable to each
class of shares is as follows:
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
FUND CLASS A CLASS B CLASS C
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Conseco 20 $ 99,488 $ 26,070 $ 12,542
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Equity 85,658 6,090 1,706
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Balanced 78,752 3,716 6,355
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Convertible 32,632 3 3
Securities*
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco High Yield 79,032 36,435 10,411
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Fixed Income 111,004 6,784 1,484
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<FN>
* The Convertible Securities Fund commenced operations on September 28, 1998.
</FN>
</TABLE>
For the fiscal year ended December 31, 1999, the 12b-1 fees attributable to each
class of shares is as follows:
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
FUND CLASS A CLASS B CLASS C
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Conseco 20 $ 223,672 $ 236,539 $ 109,721
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Equity 147,839 23,231 10,291
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Balanced 137,765 19,007 16,193
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Convertible 166,552 33,543 9,653
Securities
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco High Yield 239,297 312,522 109,389
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Conseco Fixed Income 228,252 41,465 21,398
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE>
The Plans further provide for periodic payments by the Distributor to brokers,
dealers and other financial intermediaries for providing shareholder services
and for promotional and other sales related costs. The portion of payments by
Class A, Class B or Class C of a Fund for shareholder servicing may not exceed
an annual rate of 0.25% of the average daily net asset value of Fund shares of
that class owned by clients of such broker, dealer OR financial intermediary.
In accordance with the terms of the Plans, the Distributor provides to each
Fund, for review by the Trustees, a quarterly written report of the amounts
expended under the Plan and the purpose for which such expenditures were made.
In the Trustees' quarterly review of the Plans, they will review the level of
compensation the Plans provide in considering the continued appropriateness of
the Plans.
The Plans were adopted by a majority vote of the Trustees of the Trust,
including at least a majority of Trustees who are not, and were not at the time
they voted, interested persons of the Trust and do not and did not have any
direct or indirect financial interest in the operation of the Plans, cast in
person at a meeting called for the purpose of voting on the Plans. The Trustees
believe that there is a reasonable likelihood that the Plans will benefit each
Fund and its current and future shareholders. Among the anticipated benefits are
higher levels of sales and lower levels of redemptions of Class A, Class B and
Class C shares of each Fund, economies of scale, reduced expense ratios and
greater portfolio diversification.
Under their terms, the Plans remain in effect from year to year provided such
continuance is approved annually by vote of the Trustees in the manner described
above. The Plans may not be amended to increase materially the amount to be
spent under the Plans without approval of the shareholders of the affected Fund,
and material amendments to the Plans must also be approved by the Trustees in a
manner described above. The Plans may be terminated at any time, without payment
of any penalty, by vote of the majority of the Trustees who are not interested
persons of the Trust and have no direct or indirect financial interest in the
operations of the Plans, or by a vote of a majority of the outstanding voting
securities of the Fund affected thereby. The Plans will automatically terminate
in the event of their assignment.
PURCHASE, REDEMPTION AND PRICING OF SHARES
SHARE PRICES AND NET ASSET VALUE
Each Fund's shares are bought or sold at a price that is the Fund's net asset
value (NAV) per share. The NAV per share is determined for each class of shares
for each Fund as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern Time) on each business day by dividing the value of
the Fund's net assets attributable to a class (the class's pro rata share of the
value of the Fund's assets minus the class's pro rata share of the value of the
Fund's liabilities) by the number of shares of that class outstanding.
For each of the Funds the assets of the Fund are valued as follows: Securities
that are traded on stock exchanges are valued at the last sale price as of the
close of business on the day the securities are being valued or, lacking any
sales, at the mean between the closing bid and asked prices. Securities traded
in the over-the-counter market are valued at the mean between the bid and asked
prices or yield equivalent as obtained from one or more dealers that make
markets in the securities. Fund securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and it is expected that for debt
securities this ordinarily will be the over-the-counter market. Securities and
<PAGE>
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. Debt securities with maturities of sixty
(60) days or less are valued at amortized cost.
CLASS Y SHARES
Your initial purchase amount should be at least $500,000. However, the minimum
may be waived at the discretion of the Fund's officers. The Fund and Distributor
reserve the right to reject any order for the purchase of shares in whole or in
part. The Trust reserves the right to cancel any purchase order for which
payment has not been received by the third business day following placement of
the order.
REDUCTIONS AND WAIVERS OF SALES CHARGES
REDUCTION OF CLASS A SALES CHARGE
RIGHTS OF ACCUMULATION. Each Fund offers to all qualifying investors rights of
accumulation under which investors are permitted to purchase shares of any Fund
at the price applicable to the total of (a) the dollar amount then being
purchased plus (b) an amount equal to the then current net asset value of the
purchaser's holdings of shares of the Funds, or shares of the money market fund
currently managed by Firstar Money Market (derived from the exchange of Fund
shares on which an initial sales charge was paid). Acceptance of the purchase
order is subject to confirmation of qualification. The rights of accumulation
may be amended or terminated at any time as to subsequent purchases.
LETTER OF INTENT. Any shareholder may qualify for a reduced sales charge on
purchases of shares made within a 13-month period pursuant to a Letter of Intent
(LOI). Class A shares acquired through the reinvestment of distributions do not
constitute purchases for purposes of the LOI. A Class A shareholder may include,
as an accumulation credit towards the completion of such LOI, the value of all
shares of all Funds of the Trust owned by the shareholder. Such value is
determined based on the net asset value on the date of the LOI. During the term
of an LOI, Firstar Mutual Fund Services, LLC ("FSMS"), the Trust's transfer
agent, will hold shares in escrow to secure payment of the higher sales charge
applicable for shares actually purchased if the indicated amount on the LOI is
not purchased. Dividends and capital gains will be paid on all escrowed shares
and these shares will be released when the amount indicated on the LOI has been
purchased. A LOI does not obligate the investor to buy or the Fund to sell the
indicated amount of the LOI. If a Class A shareholder exceeds the specified
amount of the LOI and reaches an amount which would qualify for a further
quantity discount, a retroactive price adjustment will be made at the time of
the expiration of the LOI. The resulting difference in offering price will
purchase additional Class A shares for the shareholder's account at the
applicable offering price. If the specified amount of the LOI is not purchased,
the shareholder shall remit to FSMS an amount equal to the difference between
the sales charge paid and the sales charge that would have been paid had the
aggregate purchases been made at a single time. If the Class A shareholder does
not within 20 days after a written request by FSMS pay such difference in sales
charge, FSMS will redeem an appropriate number of escrowed shares in order to
realize such difference. Additional information about the terms of the LOI are
available from your broker, dealer or other financial intermediary or from FSMS
at (800) 986-3384.
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan ("SWP") is designed
to provide a convenient method of receiving fixed payments at regular intervals
from Class A, Class B and Class C shares of a Fund deposited by the applicant
under this SWP. The applicant must deposit or purchase for deposit shares of the
Fund having a total value of not less than $5,000. Periodic checks of $50 or
more will be sent to the applicant, or any person designated by him, monthly or
quarterly.
Any income dividends or capital gain distributions on shares under the SWP will
be credited to the SWP account on the payment date in full and fractional shares
at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares deposited in
a SWP account. Redemptions are taxable transactions to shareholders. To the
extent that such redemptions for periodic withdrawals exceed dividend income
reinvested in the SWP account, such redemptions will reduce and may ultimately
exhaust the number of shares deposited in the SWP account. In addition, the
amounts received by a shareholder cannot be considered as an actual yield or
income on his or her investment because part of such payments may be a return of
his or her capital.
The SWP may be terminated at any time (1) by written notice to the Fund or from
the Fund to the shareholder; (2) upon receipt by the Fund of appropriate
evidence of the shareholder's death; or (3) when all shares under the SWP have
been redeemed. The fees of the Fund for maintaining SWPs are paid by the Fund.
WAIVER OF CLASS A INITIAL SALES CHARGE
No sales charge is imposed on sales of Class A shares to certain
investors. However, in order for the following sales charge waivers to be
effective, the Transfer Agent must be notified of the waiver when the purchase
order is placed. The Transfer Agent may require evidence of your qualification
for the waiver. No sales charge is imposed on the following investments:
o by current or retired officers, directors or employees (and their
immediate family, including: parents, grandparents, spouse, children,
grandchildren, siblings, father-in-law, mother-in-law,
sister/brother-in-law, daughter/son-in-law, niece, nephew, and same sex
domestic partners) of the Trust, Conseco and its affiliates and the
Transfer Agent;
o by any participant in (i) a tax qualified retirement plan provided that
the initial amount invested by the plan totals $500,000 or more, the
plan has 50 or more employees eligible to participate at the time of
purchase, or the plan certifies that it will have projected annual
contributions of $200,000 or more; or (ii) by one of a group of tax
qualified employee benefit plans that purchase through an omnibus
account relationship with the Funds maintained by a single service
provider, provided that such plans make an aggregated initial
investment of $500,000 or more;
<PAGE>
o by an omnibus account established by a sponsor for tax-qualified
employee benefit plans where the sponsor provides recordkeeping
services for the plans, and has entered into an agreement with the
Distributor in connection with such account;
o by brokers, dealers, and other financial intermediaries that have a
selling agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees;
o by employees and registered representatives (and their immediate
family, including: parents, grandparents, spouse, children,
grandchildren, siblings, father-in-law, mother-in-law,
sister/brother-in-law, daughter/son-in-law, niece, nephew, and same sex
domestic partners) of brokers, dealers, and other financial
intermediaries described above; the purchaser must certify to the
Distributor at the time of the purchase that the purchase is for the
purchaser's own account (or for the benefit of such individual as
listed above);
o by any charitable organization, state, county, city, or any
instrumentality, department, authority or agency thereof which has
determined that Class A is a legally permissible investment and which
is prohibited by applicable investment law from paying a sales charge
or commission in connection with the purchase of shares of any
registered management investment company;
o by one or more members of a group of at least 100 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the
spouses and minor children of such persons, pursuant to a marketing
program between the Distributor and such group;
o (i) through an investment adviser who makes such purchases through a
broker, dealer, or other financial intermediary (each of which may
impose transaction fees on the purchase), or (ii) by an investment
adviser for its own account or for a bona fide advisory account over
which the investment adviser has investment discretion;
o through a broker, dealer or other financial intermediary which
maintains a net asset value purchase program that enables the Funds to
realize certain economies of scale;
o through bank trust departments or trust companies on behalf of bona
fide trust or fiduciary accounts by notifying the Distributor in
advance of purchase; a bona fide advisory, trust or fiduciary account
is one which is charged an asset-based fee and whose purpose is other
than purchase of Fund shares at net asset value;
o by purchasers in connection with investments related to a bona fide
medical savings account; or
o by an account established under a wrap fee or asset allocation program
where the accountholder pays the sponsor an asset-based fee.
<PAGE>
Additionally, no sales charge is imposed on shares that are (a) issued
in plans of reorganization, such as mergers, asset acquisitions and exchange
offers, to which a Fund is a party, (b) purchased by the reinvestment of loan
repayments by participants in retirement plans, (c) purchased by the
reinvestment of dividends or other distributions from a Fund, or (d) purchased
and paid for with the proceeds of shares redeemed in the prior 60 days from a
mutual fund on which an initial sales charge or contingent deferred sales charge
was paid (other than a fund managed by the Adviser or any of its affiliates that
is subject to the exchange privilege described below); the purchaser must
certify to the Distributor at the time of purchase that the purchaser is a prior
load investor.
WAIVERS OF CONTINGENT DEFERRED SALES CHARGE FOR CLASS A, CLASS B AND CLASS C
To obtain a waiver of the contingent deferred sales charge, you must
notify the Transfer Agent, who may require evidence of your qualification. The
contingent deferred sales charge will not apply to:
o any partial or complete redemption in connection with a distribution
without federal tax income penalty under a tax-qualified retirement
plan, upon separation from service and attaining age 55;
o any partial or complete redemption in connection with a qualifying loan
or hardship withdrawal from a tax-qualified retirement plan, eligible
457 plan, or 403(b)(7) plan;
o any complete redemption in connection with a distribution from a
tax-qualified retirement plan, eligible 457 plan, or 403(b)(7) plan in
connection with termination of employment or termination of the
employer's plan;
o redemptions from an omnibus account established by a sponsor for
tax-qualified employee benefit plans where the sponsor provides
recordkeeping services for the plans, and has entered into an agreement
with the Distributor in connection with such account;
o any redemption resulting from a tax-free return of an excess
contribution from a tax-qualified retirement plan, IRA, savings
incentive match plan for employees ("SIMPLE" plan), eligible 457 plan,
or 403(b)(7) plan;
o mandated minimum distributions from a tax-qualified retirement plan,
IRA, SIMPLE plan, eligible 457 plan, or 403(b) plan;
o substantially equal periodic payments as defined in Section 72(t) of
the Code;
o any partial or complete redemption following death or disability of a
shareholder (including one who owns the shares as joint tenant with his
spouse), provided the redemption is requested within one year of the
death or initial determination of disability (as defined in Section
72(m) of the Code);
o redemptions under a Fund's Systematic Withdrawal Plan;
o redemptions in connection with distributions from a Roth IRA or Roth
Conversion IRA that are qualified distributions under the Code;
<PAGE>
o redemptions in connection with distributions from an Education IRA that
are used for qualified higher education expenses under the Code or
which are required by the Code to be distributed;
o redemptions in connection with investments related to a bona fide
medical savings account; and
o redemptions from an account established under a wrap fee or asset
allocation program where the accountholder pays the sponsor an
asset-based fee.
REDEMPTIONS IN KIND
Each Fund is obligated to redeem shares for any shareholder for cash during any
90-day period up to $250,000 or 1% of the net assets of the Fund, whichever is
less. Any redemptions beyond this amount also will be in cash unless the Board
determines that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Fund will pay all or a portion of
the remainder of the redemptions in portfolio instruments, valued in the same
way as the Fund determines net asset value. The portfolio instruments will be
selected in a manner that the Board deems fair and equitable. A redemption in
kind is not as liquid as a cash redemption. If a redemption is made in kind, a
shareholder receiving portfolio instruments could incur certain transaction
costs.
SUSPENSION OF REDEMPTIONS
A Fund may not suspend a shareholder's right of redemption, or postpone payment
for a redemption for more than seven days, unless the NYSE is closed for other
than customary weekends or holidays; trading on the NYSE is restricted; for any
period during which an emergency exists as a result of which (1) disposition by
a Fund of securities owned by it is not reasonably practicable, or (2) it is not
reasonably practicable for a Fund to fairly determine the value of its assets;
or for such other periods as the SEC may permit for the protection of investors.
RETIREMENT PLANS AND MEDICAL SAVINGS ACCOUNTS
Each class of shares are available for purchase by qualified retirement plans of
both corporations and self-employed individuals. The Trust has available
prototype IRA plans (for both individuals and employers), Simplified Employee
Pension ("SEP") plans, and savings incentive match plans for employees ("SIMPLE"
plans) as well as Section 403(b)(7) Tax-Sheltered Retirement Plans which are
designed for employees of public educational institutions and certain
non-profit, tax-exempt organizations.
CODE OF ETHICS
Under CCM's personal securities trading policy (the "Policy"), CCM employees
must preclear personal transactions in securities not exempt under the Policy.
In addition, CCM employees must report their personal securities transactions
and holdings, which are reviewed for compliance with the Policy. CCM access
persons, including portfolio managers and investment personnel, who comply with
the Policy's preclearance and disclosure procedures, and the requirements of the
Policy, may be permitted to purchase, sell or hold securities which also may be
or are held in fund(s) they manager or for which they otherwise provide
investment advice.
<PAGE>
information on capitalization and other matters
All shares of beneficial interest of the Trust are entitled to one vote, and
votes are generally on an aggregate basis. However, on matters where the
interests of the Funds (or classes of a Fund) differ (such as approval of an
investment advisory agreement or a change in fundamental investment policies),
the voting is on a Fund-by-Fund (or class-by-class) basis. The Trust does not
hold routine annual shareholders' meetings. The shares of each Fund issued are
fully paid and non-assessable, have no preference or similar rights, and are
freely transferable. In addition, each issued and outstanding share in a class
of a Fund is entitled to participate equally in dividends and distributions
declared by that class.
The Trustees themselves have the power to alter the number and terms of office
of the Trustees, and they may at any time lengthen their own terms or make their
terms of unlimited duration (subject to certain removal procedures) and appoint
their own successors, provided that always at least a majority of the Trustees
have been elected by the shareholders of the Trust. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees. The Trust
is not required to hold annual meetings of shareholders for action by
shareholders' vote except as may be required by the 1940 Act or the Declaration
of Trust. The Declaration of Trust provides that shareholders can remove
Trustees by a vote of two-thirds of the vote of the outstanding shares. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the holders of 10% of the Trust's shares. In
addition, 10 or more shareholders meeting certain conditions and holding the
lesser of $25,000 worth or 1% of the Trust's shares may advise the Trustees in
writing that they wish to communicate with other shareholders for the purpose of
requesting a meeting to remove a Trustee. The Trustees will then either give
those shareholders access to the shareholder list or, if requested by those
shareholders, mail at the shareholders' expense the shareholders' communication
to all other shareholders.
Each issued and outstanding share of each class of a Fund is entitled to
participate equally in dividends and other distributions of the respective class
of the Fund and, upon liquidation or dissolution, in the net assets of that
class remaining after satisfaction of outstanding liabilities. The shares of
each Fund have no preference, preemptive or similar rights, and are freely
transferable. The exchange privilege for each class and the conversion rights of
Class B shares are described in the Prospectus.
Under Rule 18f-2 under the 1940 Act, as to any investment company which has two
or more series (such as the Funds) outstanding and as to any matter required to
be submitted to shareholder vote, such matter is not deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding voting securities of each series affected by the matter. Such
separate voting requirements do not apply to the election of Trustees, the
ratification of the contract with the principal underwriter or the ratification
of the selection of accountants. The rule contains special provisions for cases
in which an advisory contract is approved by one or more, but not all, series. A
change in investment policy may go into effect as to one or more series whose
holders so approve the change even though the required vote is not obtained as
<PAGE>
to the holders of other affected series. Under Rule 18f-3 under the 1940 Act,
each class of a Fund shall have a different arrangement for shareholder services
or the distribution of securities or both and shall pay all of the expenses of
that arrangement, shall have exclusive voting rights on any matters submitted to
shareholders that relate solely to a particular class' arrangement, and shall
have separate voting rights on any matters submitted to shareholders in which
the interests of one class differ from the interests of any other class.
Under Massachusetts law, shareholders of the Trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Trust. The Declaration of Trust, however, contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or its Trustees. The Declaration of Trust
provides for indemnification and reimbursement of expenses out of Trust property
for any shareholder held personally liable for its obligations. The Declaration
of Trust also provides that the Trust shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Trust
and satisfy any judgment thereon. Thus, while Massachusetts law permits a
shareholder of the Trust to be held personally liable as a partner under certain
circumstances, the risk of a shareholder's incurring financial loss on account
of shareholder liability is highly unlikely and is limited to the relatively
remote circumstances in which the Trust would be unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
TAXES
GENERAL
To qualify or continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended ("Code"),
each Fund -- which is treated as a separate corporation for these purposes --
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. For each Fund, these requirements include the following: (1) the
Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); and (2) at the close of each quarter of the Fund's taxable year,
(i) at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. Government securities, securities of other RICs and other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities, and (ii) not more
than 25% of the value of its total assets may be invested in securities (other
than U.S. Government securities or the securities of other RICs) of any one
issuer.
<PAGE>
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares.
Distributions, if any, in excess of a Fund's current or accumulated earnings and
profits, as computed for federal income tax purposes, will constitute a return
of capital, which first will reduce a shareholder's tax basis in the Fund's
shares and then (after such basis is reduced to zero) generally will give rise
to capital gains. Under the Taxpayer Relief Act of 1997 ("Tax Act"), different
maximum tax rates apply to a non-corporate taxpayer's net capital gain (the
excess of net long-term capital gain over net short-term capital loss) depending
on the taxpayer's holding period and marginal rate of federal income tax --
generally, 28% for gain recognized on capital assets held for more than one year
but not more than 18 months and 20% (10% for taxpayers in the 15% marginal tax
bracket) for gain recognized on capital assets held for more than 18 months.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the amount of cash they would have received had they elected to receive
the distributions in cash, divided by the number of shares received.
At the time of an investor's purchase of shares of a Fund, a portion of the
purchase price is often attributable to unrealized appreciation in the Fund's
portfolio or undistributed taxable income. Consequently, subsequent
distributions from that appreciation (when realized) or income may be taxable to
the investor even if the net asset value of the investor's shares is, as a
result of the distributions, reduced below the investor's cost for the shares
and the distributions in reality represent a return of a portion of the purchase
price.
Each Fund will be subject to a nondeductible 4% federal excise tax ("Excise
Tax") on certain amounts not distributed (and not treated as having been
distributed) on a timely basis in accordance with annual minimum distribution
requirements. Each Fund intends under normal circumstances to avoid liability
for such tax by satisfying those distribution requirements.
INCOME FROM FOREIGN SECURITIES
Dividends and interest received by a Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. Pursuant to that election, the Fund would treat its foreign
taxes as dividends paid to its shareholders, and each shareholder would be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of the Fund's foreign taxes, and (2) either deduct the taxes
deemed paid by him in computing his taxable income or, alternatively, use the
foregoing information in calculating the foreign tax credit against his federal
income tax. The Fund will report to its shareholders shortly after each taxable
year their respective shares of the Fund's foreign taxes and income from sources
within foreign countries and U.S. possessions if it makes this election.
Individuals who have no more than $300 ($600 for married persons filing jointly)
of creditable foreign taxes included on Forms 1099 and all of whose foreign
source income is "qualified passive income" may elect each year to be exempt
from the extremely complicated foreign tax credit limitation and will be able to
claim a foreign tax credit without having to file the detailed Form 1116 that
otherwise is required.
<PAGE>
Each Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (i.e., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly,
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly, or constructively, at least 10% of that
voting power) as to which a Fund is a U.S. shareholder -- that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive or (2) an average of at least 50% of its assets produce, or are held for
the production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a part of any "excess distribution" received by
it on the stock of a PFIC or of any gain on the Fund's disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund, would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain -- which
likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not distributed thereto by the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Each Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the PFIC's stock
over the adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also will be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included in income for prior
taxable years. The adjusted basis in each PFIC's stock with respect to which
this election is made will be adjusted to reflect the amounts of income included
and deductions taken under the election.
Foreign exchange gains and losses realized by a Fund in connection with certain
transactions involving foreign currency-denominated debt securities, certain
foreign currency futures and options, foreign currency positions and payables or
receivables (e.g., dividends or interest receivable) denominated in a foreign
currency are subject to section 988 of the Code, which generally causes those
gains and losses to be treated as ordinary income and losses and may affect the
amount, timing and character of distributions to shareholders. Any gains from
the disposition of foreign currencies could, under future Treasury regulations,
produce income that is not "qualifying income" under the Income Requirement.
<PAGE>
INVESTMENTS IN DEBT SECURITIES
If a Fund invests in zero coupon securities, payment-in-kind securities and/or
certain deferred interest securities (and, in general, any other securities with
original issue discount or with market discount if an election is made to
include market discount in income currently), it must accrue income on those
investments prior to the receipt of cash payments or interest thereon. However,
each Fund must distribute to its shareholders, at least annually, all or
substantially all of its investment company taxable income, including such
accrued discount and other non-cash income, to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax. Therefore, a Fund may have
to dispose of its portfolio securities under disadvantageous circumstances to
generate cash, or may have to leverage itself by borrowing the cash, to make the
necessary distributions.
Investment in debt obligations that are at risk of or in default presents
special tax issues for any Fund that holds such obligations. Tax rules are not
entirely clear about issues such as when a Fund may cease to accrue interest,
original issue discount or market discount, when and to what extent deductions
may be taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by any Fund that holds such obligations in
order to seek to reduce the risk of distributing insufficient income to qualify
for treatment as a RIC and of becoming subject to federal income tax or the
Excise Tax.
HEDGING STRATEGIES
The use of hedging strategies, such as writing (selling) and purchasing options
and futures contracts and entering into forward contracts, involves complex
rules that will determine for income tax purposes the amount, character and
timing of recognition of the gains and losses a Fund realizes in connection
therewith. Gains from options, futures and forward contracts derived by a Fund
with respect to its business of investing in securities or foreign currencies --
and as noted above, gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations) -- will qualify as
permissible income under the Income Requirement.
Certain futures and foreign currency contracts in which the Funds may invest
will be "section 1256 contracts." Section 1256 contracts held by a Fund at the
end of each taxable year, other than section 1256 contracts that are part of a
"mixed straddle" with respect to which a Fund has made an election not to have
the following rules apply, must be marked-to-market (that is, treated as sold
for their fair market value) for federal income tax purposes, with the result
that unrealized gains or losses will be treated as though they were realized.
Sixty percent of any net gain or loss recognized on these deemed sales, and 60%
of any net realized gain or loss from any actual sales of section 1256
contracts, will be treated as long-term capital gain or loss, and the balance
will be treated as short-term capital gain or loss. These rules may operate to
increase the amount that a Fund must distribute to satisfy the Distribution
Requirement, which will be taxable to the shareholders as ordinary income, and
to increase the net capital gain recognized by the Fund, without in either case
increasing the case available to the Fund. A Fund may elect to exclude certain
transactions from the operation of section 1256, although doing so may have the
effect of increasing the relative proportion of net short-term capital gain
(taxable as ordinary income) and/or increasing the amount of dividends that must
be distributed to meet the Distribution Requirement and avoid imposition of the
Excise Tax. Section 1256 contracts also may be marked-to-market for purposes of
the Excise Tax.
<PAGE>
Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which the Funds may invest. Section 1092
defines a "straddle" as offsetting positions with respect to personal property;
for these purposes, options and futures contracts are personal property. Section
1092 generally provides that any loss from the disposition of a position in a
straddle may be deducted only to the extent the loss exceeds the unrealized gain
on the offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position is sold
at a loss and a new offsetting position is acquired within a prescribed period,
and "short sale" rules applicable to straddles. If a Fund makes certain
elections, the amount, character and timing of recognition of gains and losses
from the affected straddle positions would be determined under rules that vary
according to the elections made. Because only a few of the regulations
implementing the straddle rules have been promulgated, the tax consequences to
the Funds of straddle transactions are not entirely clear.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, futures or forward contract, or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
futures or forward contract entered into by a Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale. The foregoing will not apply, however, to any
transaction during any taxable year that otherwise would be treated as a
constructive sale if the transaction is closed within 30 days after the end of
that year and the Fund holds the appreciated financial position unhedged for 60
days after that closing (i.e., at no time during that 60-day period is the
Fund's risk of loss regarding that position reduced by reason of certain
specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale, or granting an option to buy substantially identical
stock or securities).
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates) subject to tax under that law.
The discussion does not address special tax rules applicable to certain classes
of investors, such as tax-exempt entities, insurance companies and financial
institutions. Dividends, capital gain distributions and ownership of or gains
realized on the redemption (including an exchange) of the shares of a Fund may
also be subject to state and local taxes. Shareholders should consult their own
tax advisers as to the federal, state or local tax consequences of ownership of
shares of, and receipt of distributions from, the Funds in their particular
circumstances.
<PAGE>
FINANCIAL STATEMENTS
Audited financial statements for the Conseco 20 Fund, Conseco Equity Fund,
Conseco Balanced Fund, Conseco Convertible Securities Fund, Conseco High Yield
Fund, and Conseco Fixed Income Fund and the for the fiscal year ended December
31, 1999 are incorporated by reference from the Trust's annual report to
shareholders.
<PAGE>
APPENDIX A SECURITIES RATINGS
DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
Aaa - Bonds which are rated Aaa by Moody's Investors Service, Inc. ("Moody's")
are judged to be the best quality and carry the smallest degree of investment
risk. Interest payments are protected by a large or by an exceptionally stable
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
period of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds. Such issues can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
STANDARD & POOR'S CORPORATE BOND RATINGS:
AAA - This is the highest rating assigned by Standard & Poor's ("S&P") to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
<PAGE>
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB/B/CCC/CC - Bonds rated BB, B, CCC, and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation.+ BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.
CI - The rating CI is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from AA to B may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
PREFERRED STOCK RATINGS:
Both Moody's and S&P use the same designations for corporate bonds as they do
for preferred stock, except that in the case of Moody's preferred stock ratings,
the initial letter rating is not capitalized. While the descriptions are
tailored for preferred stocks and relative quality, distinctions are comparable
to those described above for corporate bonds.
<PAGE>
CONSECO FUND GROUP
Conseco 20 Fund
Conseco Equity Fund
Conseco Balanced Fund
Conseco Convertible Securities Fund
Conseco High Yield Fund
Conseco Fixed Income Fund
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Agreement and Declaration of Trust. Incorporated by reference
to Registrant's registration statement, SEC File No.
333-13185, filed on October 1, 1996.
(b) By-laws. Incorporated by reference to Registrant's
registration statement, SEC File No. 333-13185, filed on
October 1, 1996.
(c)(1) Agreement and Declaration of Trust of Conseco Fund Group,
Articles V, VI, VII, VIII, and X. Incorporated by reference to
Registrant's registration statement, SEC File No. 333-13185,
filed on October 1, 1996.
(2) By-laws of Conseco Fund Group, Articles II, V, and VII.
Incorporated by reference to Registrant's registration
statement, SEC File No. 333-13185, filed on October 1, 1996.
(d)(1) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Equity Fund. Incorporated by reference to Post-Effective
Amendment No. 1 to the registration statement, SEC File No.
333-13185, filed July 30, 1997.
(2) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Asset Allocation Fund. Incorporated by reference to
Post-Effective Amendment No. 1 to the registration statement,
SEC File No. 333-13185, filed July 30, 1997.
(3) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Fixed Income Fund. Incorporated by reference to Post-Effective
Amendment No. 1 to the registration statement, SEC File No.
333-13185, filed July 30, 1997.
(4) Investment Advisory Agreement between Conseco Fund Group, on
behalf of the Conseco 20 Fund, the Conseco High Yield Fund,
the Conseco International Fund and the Conseco Convertible
Securities Fund, and Conseco Capital Management, Inc.
Incorporated by reference to Post-Effective Amendment No. 6 to
the registration statement, SEC File No. 333-13185, filed
April 29, 1998.
(5) Schedule A to the Investment Advisory Agreement between
Conseco Fund Group, on behalf of the Conseco 20 Fund, the
Conseco High Yield Fund, the Conseco International Fund and
the Conseco Convertible Securities Fund, and Conseco Capital
Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
<PAGE>
(e)(1) Amended and Restated Principal Underwriting Agreement between
Conseco Fund Group and Conseco Equity Sales, Inc. Incorporated
by reference to Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-13185, filed April
29, 1998.
(2) Schedule A to the Amended and Restated Principal Underwriting
Agreement. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(f) Bonus, profit sharing or pension plans - None.
(g)(1) Custody Agreement between Conseco Fund Group and The Bank of
New York. Incorporated by reference to Post-Effective
Amendment No. 4 to the registration statement, SEC File No.
333-13185, filed December 29, 1997.
(2) Custody Agreement between Conseco Fund Group and State Street
Bank and Trust Company with respect to the Conseco
International Fund. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(h)(1) Amended and Restated Administration Agreement between Conseco
Fund Group and Conseco Services, LLC. Incorporated by
reference to Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-13185, filed April
29, 1998.
(2) Schedule A to the Amended and Restated Administration
Agreement. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(3) Sub-Administration Agreement between Conseco Services, LLC and
The Bank of New York. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(4) Sub-Administration Agreement between Conseco Services, LLC and
AMR Investment Services, Inc. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(5) Fund Administration Servicing Agreement between Conseco
Services, LLC and Firstar Mutual Fund Services, LLC. Filed
herewith.
(6) Fund Accounting Agreement between Conseco Services, LLC and
The Bank of New York. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(7) Fund Accounting Servicing Agreement between Conseco Services,
LLC and Firstar Mutual Fund Services, LLC. Filed herewith.
(8) Transfer Agency Agreement between Conseco Fund Group and State
Street Bank and Trust Company. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(9) Transfer Agent Servicing Agreement between Conseco Fund Group
and Firstar Mutual Fund Services, LLC. Filed herewith
(10) Agreement Among AMR Investment Services Trust, AMR Investment
Services, Inc., and Conseco Fund Group and Conseco Capital
Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 6 to the registration statement, SEC File No.
333-13185, filed April 29, 1998.
<PAGE>
(i) Opinion and Consent of Counsel as to the Legality of the
Securities being Registered. Filed Herewith.
(j) Consent of Independent Accountants. Filed Herewith.
(k) Financial statements omitted from prospectus - None.
(l) Letter of investment intent - None.
(m)(1) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Equity Fund. Incorporated by
reference to Post-Effective Amendment No. 1 to the
registration statement, SEC File No. 333-13185, filed July 30,
1997.
(2) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Asset Allocation Fund.
Incorporated by reference to Post-Effective Amendment No. 1 to
the registration statement, SEC File No. 333-13185, filed July
30, 1997.
(3) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Fixed Income Fund.
Incorporated by reference to Post-Effective Amendment No. 1 to
the registration statement, SEC File No. 333-13185, filed July
30, 1997.
(4) Plan of Distribution and Service pursuant to Rule 12b-1.
Incorporated by reference to Post-Effective Amendment No. 6 to
the registration statement, SEC File No. 333-13185, filed
April 29, 1998.
(5) Schedule A to the Plan of Distribution and Service pursuant to
Rule 12b-1. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(6) Selling Group Agreement. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(n) Financial Data Schedule. Filed Herewith.
(o)(1) Amended and Restated Multiple Class Plan Pursuant to Rule
18f-3. Incorporated by reference to Post-Effective Amendment
No. 8 to the registration statement, SEC File No. 333-13185,
filed July 15, 1998.
(2) Schedule A to the Amended and Restated Multiple Class Plan
Pursuant to Rule 18f-3. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(3) Third Amended and Restated Multiple Class Plan Pursuant to
Rule 18f-3. Filed herewith.
(p) Code of Ethics. Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
<PAGE>
ITEM 25. INDEMNIFICATION.
Reference is made to Articles II and V of the Agreement and Declaration
of Trust, which are incorporated by reference to the Registrant's registration
statement, SEC File No. 333-13185, filed previously on October 1, 1996.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Conseco Capital Management, Inc. (the "Adviser") is an Indiana
corporation which offers investment advisory services. The Adviser is a
wholly-owned subsidiary of Conseco, Inc., also an Indiana corporation, a
publicly owned financial services company. Both the Adviser's and Conseco,
Inc.'s offices are located at 11825 N. Pennsylvania Street, Carmel, Indiana
46032.
Rollin M. Dick, Director, Executive Vice President and Chief Financial
Officer of Conseco, Inc., Carmel, Indiana. Mr. Dick is an officer and/or
director of various affiliates of the Adviser. He is a director of Brightpoint,
Inc., Indianapolis, Indiana and General Acceptance Corporation, Bloomington,
Indiana. Additionally, Mr. Dick is a director of approximately ten non-public
companies, which are believed to be not affiliated with Conseco, Inc.
Maxwell E. Bublitz, President and Director; Senior Vice President of
Conseco, Inc.; President and Trustee of Conseco Series Trust; President and
Trustee of Conseco Strategic Income Fund
Gregory J. Hahn, Chief Investment Officer, Fixed Income; Trustee of
Conseco Strategic Income Fund.
Thomas A. Meyers, Senior Vice President, Director of Marketing.
Thomas J. Pence, Chief Investment Officer, Equity.
William P. Kovacs, Senior Counsel and Secretary; Chief Compliance
Officer and Director; Vice President and Secretary of Conseco Series Trust; Vice
President and Secretary of Conseco Strategic Income Fund; Vice President and
Secretary of Conseco Equity Sales, Inc.; Vice President and Secretary of Conseco
Financial Services, Inc.
Information as to the officers and directors of the Adviser is included
in its current Form ADV filed with the SEC and is incorporated by reference
herein.
ITEM 27. PRINCIPAL UNDERWRITERS.
Conseco Equity Sales, Inc. serves as the Registrant's principal
underwriter.
<PAGE>
The following information is furnished with respect to the officers and
directors of Conseco Equity Sales, Inc. The principal business address of each
person listed is 11815 N. Pennsylvania Street, Carmel, Indiana 46032.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Principal Underwriter with Registrant
------------------ -------------------------- ---------------------
<S> <C> <C>
L. Gregory Gloeckner President None
William P. Kovacs Vice President, Senior Counsel, Vice President and Secretary
Secretary, and Director
James S. Adams Senior Vice President, Treasurer, Treasurer, Principal Financial and
and Director Accounting Officer
William T. Devanney, Jr. Senior Vice President, Corporate Vice President, Corporate Taxes
Taxes
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
For the Conseco Fixed Income Fund, Conseco High Yield Fund, Conseco
Convertible Securities Fund, Conseco Balanced Fund, Conseco Equity Fund and
Conseco 20 Fund: The accounts, books and other documents required to be
maintained by the Registrant pursuant to Section 31(a) of the Investment Company
Act of 1940 and the rules promulgated thereunder are in the possession of the
Adviser or the Funds' custodian, The Bank of New York, 90 Washington Street,
22nd Floor, New York, New York 10826.
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Conseco Fund Group, certifies
that it meets all of the requirements for effectiveness of this Post-Effective
Amendment No. 12 to the Registration Statement under rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 12
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Carmel and State of Indiana on the 13th day of April, 2000.
CONSECO FUND GROUP
By: /s/ Maxwell E. Bublitz
-----------------------------
Maxwell E. Bublitz
President (Principal Executive Officer)
and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 12 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ MAXWELL E. BUBLITZ* President April 13, 2000
- ------------------------------- (Principal Executive Officer) and Trustee
Maxwell E. Bublitz
/S/ WILLIAM P. DAVES, JR.* Chairman of the Board and April 13, 2000
- ------------------------------- Trustee
William P. Daves, Jr.
/S/ GREGORY J. HAHN* Trustee April 13, 2000
- -------------------------------
Gregory J. Hahn
/S/ HAROLD W. HARTLEY* Trustee April 13, 2000
- -------------------------------
Harold W. Hartley
/S/ DR. R. JAN LECROY* Trustee April 13, 2000
- -------------------------------
Dr. R. Jan LeCroy
/S/ Dr. JESS H. PARRISH* Trustee April 13, 2000
- -------------------------------
Dr. Jess H. Parrish
/S/ JAMES S. ADAMS Treasurer April 13, 2000
- -------------------------------
James S. Adams
/S/ DAVID N. WALTHALL* Trustee April 13, 2000
- -------------------------------
David N. Walthall
* /S/ William P. Kovacs
--------------------------
William P. Kovacs
Attorney-in-fact
</TABLE>
<PAGE>
CONSECO FUND GROUP
Conseco 20 Fund
Conseco Equity Fund
Conseco Balanced Fund
Conseco Convertible Securities Fund
Conseco High Yield Fund
Conseco Fixed Income Fund
EXHIBIT INDEX
(a) Agreement and Declaration of Trust. Incorporated by reference
to Registrant's registration statement, SEC File No.
333-13185, filed on October 1, 1996.
(b) By-laws. Incorporated by reference to Registrant's
registration statement, SEC File No. 333-13185, filed on
October 1, 1996.
(c)(1) Agreement and Declaration of Trust of Conseco Fund Group,
Articles V, VI, VII, VIII, and X. Incorporated by reference to
Registrant's registration statement, SEC File No. 333-13185,
filed on October 1, 1996.
(2) By-laws of Conseco Fund Group, Articles II, V, and VII.
Incorporated by reference to Registrant's registration
statement, SEC File No. 333-13185, filed on October 1, 1996.
(d)(1) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Equity Fund. Incorporated by reference to Post-Effective
Amendment No. 1 to the registration statement, SEC File No.
333-13185, filed July 30, 1997.
(2) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Asset Allocation Fund. Incorporated by reference to
Post-Effective Amendment No. 1 to the registration statement,
SEC File No. 333-13185, filed July 30, 1997.
(3) Investment Advisory Agreement between Conseco Fund Group and
Conseco Capital Management, Inc. with respect to the Conseco
Fixed Income Fund. Incorporated by reference to Post-Effective
Amendment No. 1 to the registration statement, SEC File No.
333-13185, filed July 30, 1997.
(4) Investment Advisory Agreement between Conseco Fund Group, on
behalf of the Conseco 20 Fund, the Conseco High Yield Fund,
the Conseco International Fund and the Conseco Convertible
Securities Fund, and Conseco Capital Management, Inc.
Incorporated by reference to Post-Effective Amendment No. 6 to
the registration statement, SEC File No. 333-13185, filed
April 29, 1998.
(5) Schedule A to the Investment Advisory Agreement between
Conseco Fund Group, on behalf of the Conseco 20 Fund, the
Conseco High Yield Fund, the Conseco International Fund and
the Conseco Convertible Securities Fund, and Conseco Capital
Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
<PAGE>
(e)(1) Amended and Restated Principal Underwriting Agreement between
Conseco Fund Group and Conseco Equity Sales, Inc. Incorporated
by reference to Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-13185, filed April
29, 1998.
(2) Schedule A to the Amended and Restated Principal Underwriting
Agreement. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(f) Bonus, profit sharing or pension plans - None.
(g)(1) Custody Agreement between Conseco Fund Group and The Bank of
New York. Incorporated by reference to Post-Effective
Amendment No. 4 to the registration statement, SEC File No.
333-13185, filed December 29, 1997.
(2) Custody Agreement between Conseco Fund Group and State Street
Bank and Trust Company with respect to the Conseco
International Fund. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(h)(1) Amended and Restated Administration Agreement between Conseco
Fund Group and Conseco Services, LLC. Incorporated by
reference to Post-Effective Amendment No. 6 to the
registration statement, SEC File No. 333-13185, filed April
29, 1998.
(2) Schedule A to the Amended and Restated Administration
Agreement. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(3) Sub-Administration Agreement between Conseco Services, LLC and
The Bank of New York. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(4) Sub-Administration Agreement between Conseco Services, LLC and
AMR Investment Services, Inc. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(5) Fund Administration Servicing Agreement between Conseco
Services, LLC and Firstar Mutual Fund Services, LLC. Filed
herewith.
(6) Fund Accounting Agreement between Conseco Services, LLC and
The Bank of New York. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(7) Fund Accounting Servicing Agreement between Conseco Services,
LLC and Firstar Mutual Fund Services, LLC. Filed herewith.
(8) Transfer Agency Agreement between Conseco Fund Group and State
Street Bank and Trust Company. Incorporated by reference to
Post-Effective Amendment No. 4 to the registration statement,
SEC File No. 333-13185, filed December 29, 1997.
(9) Transfer Agent Servicing Agreement between Conseco Fund Group
and Firstar Mutual Fund Services, LLC. Filed herewith
(10) Agreement Among AMR Investment Services Trust, AMR Investment
Services, Inc., and Conseco Fund Group and Conseco Capital
Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 6 to the registration statement, SEC File No.
333-13185, filed April 29, 1998.
<PAGE>
(i) Opinion and Consent of Counsel as to the Legality of the
Securities being Registered. Filed Herewith.
(j) Consent of Independent Accountants. Filed Herewith.
(k) Financial statements omitted from prospectus - None.
(l) Letter of investment intent - None.
(m)(1) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Equity Fund. Incorporated by
reference to Post-Effective Amendment No. 1 to the
registration statement, SEC File No. 333-13185, filed July 30,
1997.
(2) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Asset Allocation Fund.
Incorporated by reference to Post-Effective Amendment No. 1 to
the registration statement, SEC File No. 333-13185, filed July
30, 1997.
(3) Class A Plan of Distribution and Service pursuant to Rule
12b-1 with Respect to the Conseco Fixed Income Fund.
Incorporated by reference to Post-Effective Amendment No. 1 to
the registration statement, SEC File No. 333-13185, filed July
30, 1997.
(4) Plan of Distribution and Service pursuant to Rule 12b-1.
Incorporated by reference to Post-Effective Amendment No. 6 to
the registration statement, SEC File No. 333-13185, filed
April 29, 1998.
(5) Schedule A to the Plan of Distribution and Service pursuant to
Rule 12b-1. Incorporated by reference to Post-Effective
Amendment No. 8 to the registration statement, SEC File No.
333-13185, filed July 15, 1998.
(6) Selling Group Agreement. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(n) Financial Data Schedule. Filed Herewith.
(o)(1) Amended and Restated Multiple Class Plan Pursuant to Rule
18f-3. Incorporated by reference to Post-Effective Amendment
No. 8 to the registration statement, SEC File No. 333-13185,
filed July 15, 1998.
(2) Schedule A to the Amended and Restated Multiple Class Plan
Pursuant to Rule 18f-3. Incorporated by reference to
Post-Effective Amendment No. 8 to the registration statement,
SEC File No. 333-13185, filed July 15, 1998.
(3) Third Amended and Restated Multiple Class Plan Pursuant to
Rule 18f-3. Filed herewith.
(p) Code of Ethics. Filed herewith.
<PAGE>
EXHIBIT H(5)
FUND ADMINISTRATION SERVICING AGREEMENT
<PAGE>
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of August 2, 1999, by and
between Conseco Services, LLC., a limited liability corporation organized under
the laws of the State of Indiana (hereinafter referred to as "CONSECO") and
Firstar Mutual Fund Services, LLC, a limited liability corporation organized
under the laws of the State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, CONSECO is in the business of providing, among other things,
services to the Conseco Fund Group, a series of open-end investment management
companies registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), (hereinafter referred to as the "Trust");
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things,
mutual fund administration services to investment companies; and
WHEREAS, CONSECO desires to retain FMFS to provide mutual fund
administration services to each of the portfolios of the Trust, (each a "Fund")
listed on Exhibit A attached hereto, as it may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
CONSECO and FMFS agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
CONSECO hereby appoints FMFS as Administrator of the Trust on the terms
and conditions set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and duties set
forth in this Agreement in consideration of the compensation provided
for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Compliance
1. Regulatory Compliance
a. Monitor and document compliance with 1940 Act
requirements, including asset diversification tests.
<PAGE>
b. Monitor and document Fund's compliance with the
policies and investment limitations of the Trust as
set forth in its Prospectus and Statement of
Additional Information.
c. Maintain awareness of applicable regulatory and
operational service issues and recommend dispositions.
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings
relating to the registration of the securities of the
Trust so as to enable the Trust to make a continuous
offering of its shares in all states.
b. Monitor status and maintain registrations in each
state.
c. Provide information regarding material developments in
state securities regulation.
3. IRS Compliance
a. Monitor the Trust's status as a regulated investment
company under Subchapter M, including without
limitation, review of the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Calculate required distributions (including excise tax
distributions).
B. Financial Reporting
1. Provide financial data required by Fund's Prospectus and
Statement of Additional Information;
2. Supervise the Trust's Custodian and Trust's Fund Accountant in
the maintenance of the Trust's general ledger and in the
preparation of the Fund's financial statements, including
oversight of expense accruals and payments, of the
determination of net asset value of the Trust's net assets and
of the Trust's shares, and of the declaration and payment of
dividends and other distributions to shareholders;
3. Monitor the expense accruals and notify Trust management of
any proposed adjustments. 4. Prepare periodic financial
statements, which will include without limitation the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
<PAGE>
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses
C. Tax Reporting
1. Monitor IRS requirements for regular and excise tax purposes
2. Monitor wash sale losses
3. Calculate eligible dividend income for corporate shareholders
3. COMPENSATION
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
CONSECO agrees to pay all fees and reimbursable expenses within thirty
(30) business days following the receipt of the billing notice.
4. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss
arising out of or relating to FMFS's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties
under this Agreement, the Trust shall indemnify and hold harmless FMFS
from and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which FMFS may
sustain or incur or which may be asserted against FMFS by any person
arising out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities arising out of or relating
to FMFS's refusal or failure to comply with the terms of this Agreement
or from bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance with
the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to FMFS by any duly authorized officer of the
Trust, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust.
<PAGE>
FMFS shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Trust may sustain or
incur or which may be asserted against the Trust by any person arising
out of any action taken or omitted to be taken by FMFS as a result of
FMFS's refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FMFS's control. FMFS will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FMFS. FMFS
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency use
of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Trust shall be entitled
to inspect FMFS's premises and operating capabilities at any time
during regular business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to
reprocess and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim, which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will so
notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in
no case confess any claim or make any compromise in any case in which
the indemnitor will be asked to indemnify the indemnitee except with
the indemnitor's prior written consent.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its Trustees, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
prior, present, or potential shareholders of the Trust (and clients of
said shareholders), and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may
not be withheld where FMFS may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by
the Trust.
<PAGE>
6. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent, which may be FMFS, shall furnish to FMFS the
data necessary to perform the services described herein at times and in
such form as mutually agreed upon if FMFS is also acting in another
capacity for the Trust, nothing herein shall be deemed to relieve FMFS
of any of its obligations in such capacity.
<PAGE>
7. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and will
continue in effect for a period of three years. During the initial
three year term of this Agreement, if the Trust terminates any services
with FMFS, the Trust agrees to compensate Firstar an amount equal to
the fees remaining under the initial three year Agreement. Thereafter,
this agreement shall continue and remain in effect from year to year.
Subsequent to the initial three year term, this Agreement may be
terminated by either party upon giving ninety (90) days prior written
notice to the other party or such shorter period as is mutually agreed
upon by the parties. However, this Agreement may be amended at any time
by mutual written consent of the parties.
8. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FMFS shall be sent to:
Ms. Sue Weber
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to CONSECO and the Trust shall be sent to:
Mr. Gregory J. Hahn
Conseco Services, LLC
11815 N. Pennsylvania Street
Carmel, Indiana 46032
9. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS
to act as agent for the other party to this Agreement, or to conduct
business in the name of, or for the account of the other party to this
Agreement.
10. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its Trustees, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
prior, present, or potential shareholders of the Trust (and clients of
said shareholders), and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may
not be withheld where FMFS may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by
the Trust.
<PAGE>
11. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the
Trust by written notice to FMFS, FMFS will promptly, upon such
termination and at the expense of the Trust, transfer to such successor
all relevant books, records, correspondence, and other data established
or maintained by FMFS under this Agreement in a form reasonably
acceptable to the Trust (if such form differs from the form in which
FMFS has maintained, the Trust shall pay any expenses associated with
transferring the data to such form), and will cooperate in the transfer
of such duties and responsibilities, including provision for assistance
from FMFS's personnel in the establishment of books, records, and other
data by such successor.
12. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
13. RECORDS
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to CONSECO but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. FMFS
agrees that all such records prepared or maintained by FMFS relating to
the services to be performed by FMFS hereunder are the property of the
Trust and will be preserved, maintained, and made available in
accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Trust on and in accordance with its
request.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.
CONSECO SERVICES, LLC FIRSTAR MUTUAL FUND SERVICES, LLC
By: Thomas J. Kilian By: Robert Kern
Attest: Denise Phillips Attest: Sue Weber
<PAGE>
FUND ADMINISTRATION AND COMPLIANCE
ANNUAL FEE SCHEDULE
EXHIBIT A
<TABLE>
<CAPTION>
NAME OF SERIES DATE ADDED
-------------- ----------
<S> <C>
Conseco Fixed Income Fund (Class A, B, C & Y Shares) 8/2/99
Conseco High Yield Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Balanced Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Equity Fund (Class A, B, C & Y Shares) 8/2/99
Conseco 20 Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Convertible Securities Fund (Class A, B, C & Y Shares) 8/2/99
</TABLE>
Annual fee based upon assets per fund portfolio:
4 basis points on the first $200 million of fund assets
3 basis points on the next $500 million of fund assets
2 basis points on the balance of fund assets
Subject to a $15,000 minimum annual fee per fund.
Extraordinary services quoted separately.
Plus out-of-pocket expense reimbursements, including but not limited to:
Postage
Programming (as mutually agreed by both parties)
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of Trustees meetings
Auditing and legal expenses
Fees and out-of-pocket expense reimbursements are billed to CONSECO monthly
<PAGE>
EXHIBIT H(7)
FUND ACCOUNTING SERVICING AGREEMENT
<PAGE>
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of August 2, 1999, by and
between Conseco Services, LLC., a limited liability corporation organized under
the laws of the State of Indiana (hereinafter referred to as "CONSECO") and
Firstar Mutual Fund Services, LLC, a limited liability corporation organized
under the laws of the State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, CONSECO is in the business of providing, among other things,
services to the Conseco Fund Group, a series of open-end investment management
companies registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), (hereinafter referred to as the "Trust");
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things,
mutual fund accounting services to investment companies; and
WHEREAS, CONSECO desires to retain FMFS to provide accounting services
to each of the portfolios of the Trust, (each a "Fund") listed on Exhibit A
attached hereto, as it may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
CONSECO and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
CONSECO hereby appoints FMFS as Fund Accountant of the Trust on the
terms and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from the investment
manager.
(2) For each valuation date, obtain prices from a pricing
sources approved by the Board of Trustees of the Trust and apply
those prices to the portfolio positions. For those securities
where market quotations are not readily available, the Board of
Trustees of the Trust shall approve, in good faith, the method
for determining the fair value for such securities.
<PAGE>
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify
them as, short-term or long-term; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate or
dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from Trust.
(3) Account for Fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed
upon by FMFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Trust.
(3) Determine net investment income (earnings) for the
Fund as of each valuation date. Account for periodic
distributions of earnings to shareholders and maintain
undistributed net investment income balances as of each valuation
date.
(4) Maintain a general ledger and other accounts, books,
and financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to
the accounting policies and procedures set forth in the Fund's
Prospectus.
<PAGE>
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund
operations at such time as required by the nature and
characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed upon from time
to time.
(8) Prepare monthly reports, which document the adequacy
of accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support
the taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Fund's accounting
records available to the Trust, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940 Act
and regulations provided thereunder
F. FMFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of each
Portfolio with the Custodian, and provide the Advisor with the
beginning cash balance available for investment purposes;
(2) Update the cash availability throughout the day as
required by the Advisor;
(3) Transmit or mail a copy of the portfolio valuation to
the Advisor;
<PAGE>
(4) Review the impact of current day's activity on a per
share basis, review changes in market value of securities, and
review yields for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
(2) Supply various Trust, Portfolio and class statistical
data as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Trust's Board of Trustees and apply those prices to the
portfolio positions of the Fund. For those securities where market quotations
are not readily available, the Trust's Board of Trustees shall approve, in good
faith, the method for determining the fair value for such securities.
If the Trust desires to provide a price, which varies from the pricing source,
the Trust shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Trust will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees of the Trust that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Trust under this Agreement.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth in this Agreement
in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. CONSECO agrees to pay all fees and
reimbursable expenses within thirty (30) business days following the receipt of
the billing notice.
<PAGE>
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss
arising out of or relating to FMFS's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties
under this Agreement, CONSECO and the Trust shall indemnify and hold
harmless FMFS from and against any and all claims, demands, losses,
expenses, and liabilities (whether with or without basis in fact or
law) of any and every nature (including reasonable attorneys' fees)
which FMFS may sustain or incur or which may be asserted against FMFS
by any person arising out of any action taken or omitted to be taken by
it in performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities arising out of or relating
to FMFS's refusal or failure to comply with the terms of this Agreement
or from bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance with
the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to FMFS by any duly authorized officer of the
Trust, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust.
FMFS shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Trust may sustain or
incur or which may be asserted against the Trust by any person arising
out of any action taken or omitted to be taken by FMFS as a result of
FMFS's refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FMFS's control. FMFS will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FMFS. FMFS
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency use
of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Trust shall be entitled
to inspect FMFS's premises and operating capabilities at any time
during regular business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
<PAGE>
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim, which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will so
notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. Indemnitee shall in no
case confess any claim or make any compromise in any case in which the
indemnitor will be asked to indemnify the indemnitee except with the
indemnitor's prior written consent.
8. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
9. RECORDS
FMFS shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Trust but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Trust and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Trust on and in accordance with its request.
10. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent, which may be FMFS, shall furnish to FMFS the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting in another capacity for the
Trust, nothing herein shall be deemed to relieve FMFS of any of its obligations
in such capacity.
<PAGE>
11. NOTIFICATION OF ERROR
The Trust will notify FMFS of any balancing or control error caused by FMFS the
later of: within three (3) business days after receipt of any reports rendered
by FMFS to the Trust; within three (3) business days after discovery of any
error or omission not covered in the balancing or control procedure, or within
three (3) business days of receiving notice from any shareholder.
12. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Trust all records and
other information relative to the Trust and prior, present, or potential
shareholders of the Trust (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
13. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and will continue in
effect for a period of three years. During the initial three year term of this
Agreement, if the Trust terminates any services with FMFS, the Trust agrees to
compensate Firstar an amount equal to the fees remaining under the initial three
year Agreement. Thereafter, this agreement shall continue and remain in effect
from year to year. Subsequent to the initial three year term, this Agreement may
be terminated by either party upon giving ninety (90) days prior written notice
to the other party or such shorter period as is mutually agreed upon by the
parties. However, this Agreement may be amended by mutual written consent of the
parties.
14. NOTICES
Notices of any kind to be given by either party to the other party shall be in
writing and shall be duly given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Ms. Sue Weber
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to CONSECO and the Trust shall be sent to:
Mr. Gregory J. Hahn
Conseco Services, LLC
11815 N. Pennsylvania Street
Carmel, Indiana 46032
<PAGE>
15. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Trust by written
notice to FMFS, FMFS will promptly, upon such termination and at the expense of
the Trust transfer to such successor all relevant books, records, correspondence
and other data established or maintained by FMFS under this Agreement in a form
reasonably acceptable to the Trust (if such form differs from the form in which
FMFS has maintained the same, the Trust shall pay any expenses associated with
transferring the same to such form), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from FMFS's
personnel in the establishment of books, records and other data by such
successor.
16. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
CONSECO SERVICES, LLC FIRSTAR MUTUAL FUND SERVICES, LLC
By: Thomas J. Kilian By: Robert Kern
Attest: Denise Phillips Attest: Sue Weber
<PAGE>
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
NAME OF SERIES DATE ADDED
-------------- ----------
Conseco Fixed Income Fund (Class A, B, C & Y Shares) 8/2/99
Conseco High Yield Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Balanced Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Equity Fund (Class A, B, C & Y Shares) 8/2/99
Conseco 20 Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Convertible Securities Fund (Class A, B, C & Y Shares) 8/2/99
Annual fee per portfolio (4 Classes Each):
Base fee - first $40 million - $36,000 per fund
3 Basis points on the next $200 million
2 Basis points on the balance
Plus out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Fees and out-of-pocket expenses are billed to CONSECO monthly
<PAGE>
EXHIBIT H(9)
TRANSFER AGENT SERVICING AGREEMENT
<PAGE>
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of August 2, 1999, by and
between Conseco Fund Group, a Massachusetts business trust (hereinafter referred
to as the "Trust") and Firstar Mutual Fund Services, LLC, a corporation
organized under the laws of the State of Wisconsin (hereinafter referred to as
the "FMFS").
WHEREAS, the Trust is an open-end management investment company which is
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio;
WHEREAS, FMFS is a limited liability corporation and, among other
things, is in the business of administering transfer and dividend disbursing
agent functions for the benefit of its customers; and
WHEREAS, the Trust desires to retain FMFS to provide transfer and
dividend disbursing agent services to each series of the Trust listed on Exhibit
A attached hereto, (each hereinafter referred to as a "Fund") as may be amended
from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and FMFS agree as follows:
1. APPOINTMENT OF TRANSFER AGENT
The Trust hereby appoints FMFS as Transfer Agent of the Trust on the
terms and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall perform all of the customary services of a transfer agent and
dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery, where appropriate,
of payment and supporting documentation to the Trust's custodian,
and issue the appropriate number of uncertificated shares with
such uncertificated shares being held in the appropriate
shareholder account;
<PAGE>
C. Arrange for issuance of shares obtained through transfers of
funds from shareholders' accounts at financial institutions and
arrange for the exchange of shares for shares of other eligible
investment companies, when permitted by Prospectus.
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Trust's
custodian;
E. Pay monies upon receipt from the Trust's custodian, where
relevant, in accordance with the instructions of redeeming
shareholders;
F. Process transfers of shares in accordance with the shareholder's
instructions;
G. Process exchanges between funds and/or classes of shares of funds
both within the same family of funds and with the Firstar Money
Market Fund, if applicable;
H. Prepare and transmit payments for dividends and distributions
declared by the Trust with respect to the Fund, after deducting
any amount required to be withheld by any applicable laws, rules
and regulations and in accordance with shareholder instructions;
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant
to Rule 17Ad-10(e) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), a record of the total
number of shares of the Fund which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
<PAGE>
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemptions and other confirmable transactions
as agreed upon with the Trust;
O. Mail requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and
distributions paid by the Trust, all as required by applicable
Federal tax laws and regulations;
P. Provide a Blue Sky System which will enable the Trust to monitor
the total number of shares of the Fund sold in each state. In
addition, the Trust or its agent, including FMFS, shall identify
to FMFS in writing those transactions and assets to be treated as
exempt from the Blue Sky reporting for each state. The
responsibility of FMFS for the Trust's Blue Sky state
registration status is solely limited to the initial compliance
by the Trust and the reporting of such transactions to the Trust
or its agent. Nothing herein contradicts FMFS's responsibilities
for Blue Sky compliance as defined in the Fund Administration
Servicing Agreements.
Q. Answer correspondence from shareholders, securities brokers and
others relating to FMFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed upon
between FMFS and the Trust.
3. COMPENSATION
The Trust agrees to pay FMFS for the performance of the duties listed in
this agreement as set forth on Exhibit A attached hereto; the fees and
out-of-pocket expenses include, but are not limited to the following: printing,
postage, forms, stationery, record retention (if requested by the Trust),
mailing, insertion, programming (if requested by the Trust), labels, shareholder
lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Trust and FMFS.
The Trust agrees to pay all fees and reimbursable expenses within thirty
(30) business days following the receipt of the billing notice.
Notwithstanding anything to the contrary, amounts owed by the Trust to
FMFS shall only be paid out of assets and property of the particular Fund
involved.
<PAGE>
4. REPRESENTATIONS OF FMFS
FMFS represents and warrants to the Trust that:
A. It is a limited liability corporation duly organized, existing
and in good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act.
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the Securities
Act of 1933, as amended, and the Exchange Act, the 1940 Act, and
any laws, rules, and regulations of governmental authorities
having jurisdiction.
5. REPRESENTATIONS OF THE TRUST
The Trust represents and warrants to FMFS that:
A. The Trust is an open-ended non diversified investment company
under the 1940 Act;
B. The Trust is a business trust organized, existing, and in good
standing under the laws of Massachusetts;
C. The Trust is empowered under applicable laws and by its
Declaration of Trust and Bylaws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Declaration of Trust
have been taken to authorize it to enter into and perform this
Agreement;
E. The Trust will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all shares of the Trust being offered for
sale.
<PAGE>
6. COVENANTS OF THE TRUST AND FMFS
The Trust shall furnish FMFS a certified copy of the resolution of the
Board of Trustees of the Fund authorizing the appointment of FMFS and the
execution of this Agreement. The Trust shall provide to FMFS a copy of its
Declaration of Trust and Bylaws, and all amendments thereto.
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, and the rules thereunder, FMFS agrees
that all such records prepared or maintained by FMFS relating to the services to
be performed by FMFS hereunder are the property of the Trust and will be
preserved, maintained and made available in accordance with such section and
rules and will be surrendered to the Trust on and in accordance with its
request.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
FMFS shall exercise reasonable care in the performance of its duties
under this Agreement. FMFS shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with matters
to which this Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond FMFS's
control, except a loss arising out of or relating to the Agent's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties under this
Agreement, the Trust shall indemnify and hold harmless FMFS from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur or which may be asserted
against FMFS by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder, except for any and all claims,
demands, losses expenses, and liabilities arising out of or relating to FMFS's
refusal or failure to comply with the terms of this Agreement or from bad faith,
negligence or from willful misconduct on its part in performance of its duties
under this Agreement, (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction provided to FMFS by any duly
authorized officer of the Trust, such duly authorized officer to be included in
a list of authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust.
FMFS shall indemnify and hold the Trust harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Trust may sustain or incur or which may be asserted
against the Trust by any person arising out of any action taken or omitted to be
taken by FMFS as a result of FMFS's refusal or failure to comply with the terms
of this Agreement, its bad faith, negligence, or willful misconduct.
<PAGE>
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FMFS's control. FMFS will make every reasonable effort to restore any
lost or damaged data and correct any errors resulting from such a breakdown at
the expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Trust shall be entitled to
inspect FMFS's premises and operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.
FMFS is hereby expressly put on notice of the limitation of shareholder
liability as set forth in the Trust Instrument of the Trust and agrees that
obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Trust and its assets, and if the liability relates to one or
more series, the obligations hereunder shall be limited to the respective assets
of such series. FMFS further agrees that it shall not seek satisfaction of any
such obligation from the shareholder or any individual shareholder of a series
of the Trust, nor from the Trustees or any individual Trustee of the Trust.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and prior, present, or
potential shareholders (and clients of said shareholders) and not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
<PAGE>
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and will
continue in effect for a period of three years. During the initial three year
term of this Agreement, if the Trust terminates any services with FMFS, the
Trust agrees to compensate Firstar an amount equal to the fees remaining under
the initial three year Agreement. Thereafter, this agreement shall continue and
remain in effect from year to year. Subsequent to the initial three year term,
this Agreement may be terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter period as is mutually
agreed upon by the parties. However, this Agreement may be amended at any time
by mutual written consent of the parties.
10. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FMFS shall be sent to:
Ms. Sue Weber
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Trust shall be sent to:
Mr. Gregory J. Hahn
Conseco Fund Group
11815 N. Pennsylvania Street
Carmel, Indiana 46032
11. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the Trust by
written notice to FMFS, FMFS will promptly, upon such termination and at the
expense of the Trust, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the Trust (if such form differs
from the form in which FMFS has maintained, the Trust shall pay any expenses
associated with transferring the data to such form), and will cooperate in the
transfer of such duties and responsibilities, including provision for assistance
from FMFS's personnel in the establishment of books, records, and other data by
such successor.
<PAGE>
12. GOVERNING LAW
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
13. STOCK CERTIFICATES
If at any time the Trust issues stock certificates, the following
provisions will apply:
(i) In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in lieu
thereof, unless there shall first have been furnished an
appropriate bond of indemnity issued by the surety company
approved by FMFS.
(ii) Upon receipt of signed stock certificates, which shall be in
proper form for transfer, and upon cancellation or destruction
thereof, FMFS shall countersign, register and issue new
certificates for the same number of Shares and shall deliver them
pursuant to instructions received from the transferor, the rules
and regulations of the SEC, and the laws of the state of relating
to the transfer of shares of beneficial interest.
(iii) Upon receipt of the stock certificates, which shall be in proper
form for transfer, together with the shareholder's instructions
to hold such stock certificates for safekeeping, FMFS shall
reduce such Shares to uncertificated status, while retaining the
appropriate registration in the name of the shareholder upon the
transfer books.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer or one or more counterparts as of the day and year
first written above.
CONSECO FUND GROUP FIRSTAR MUTUAL FUND SERVICES, LLC
By: Gregory J. Hahn By: Robert Kern
Attest: Sarah L. Todd Attest: Sue Weber
<PAGE>
TRANSFER AGENT AND SHAREHOLDER SERVICING
ANNUAL FEE SCHEDULE
EXHIBIT A
Separate Series of Conseco Fund Group
<TABLE>
<CAPTION>
NAME OF SERIES DATE ADDED
- -------------- ----------
<S> <C>
Conseco Fixed Income Fund (Class A, B, C & Y Shares) 8/2/99
Conseco High Yield Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Balanced Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Equity Fund (Class A, B, C & Y Shares) 8/2/99
Conseco 20 Fund (Class A, B, C & Y Shares) 8/2/99
Conseco Convertible Securities Fund (Class A, B, C & Y Shares) 8/2/99
</TABLE>
Annual Fee
$15.00 per shareholder account - no-load fund
$17.00 per shareholder account - load fund
Minimum annual fee of $10,000 per class
Extraordinary services quoted separately.
Plus Out-of-Pocket Expenses, including but not limited to:
<TABLE>
<S> <C>
Telephone - toll free lines Retention of records
Postage Microfilm/fiche of records
Programming Special reports
Stationery/envelopes ACH fees
Insurance NSCC charges
Proxies All other out-of-pocket expenses
</TABLE>
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per ACH item
$5.00 per correction, reversal, return item
File Transfer - $160/month and $.01/record
Qualified Plan Fees (Billed to Investors)*
<TABLE>
<S> <C>
Annual maintenance fee per account $ 12.50 / acct. (Cap at $25.00 per SSN)
Education IRA $ 5.00 / acct. (Cap at $25.00 / per SSN)
Transfer to successor trustee $ 15.00 / trans.
Distribution to participant $ 15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $ 15.00 / trans.
Select requests $200.00 / trans
</TABLE>
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Return check fee $20.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous]
to the request)(Cap at $25.00)
Fees and out-of-pocket expenses are billed to Conseco monthly.
<PAGE>
EXHIBIT I
LEGAL OPINION
<PAGE>
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE N.W., 2ND FLOOR
WASHINGTON, D.C. 20036-1800
April 13, 2000
Conseco Fund Group
11815 North Pennsylvania Street
Carmel, Indiana 46032
Ladies and Gentlemen:
You have requested our opinion, as counsel to Conseco Fund Group ("Trust"), as
to certain matters regarding the issuance of Shares of the Trust. As used in
this letter, the term "Shares" means the Class A, Class B, Class C and Class Y
shares of beneficial interest of the Conseco 20 Fund, Conseco Equity Fund,
Conseco Balanced Fund, Conseco Convertible Securities Fund, Conseco High Yield
Fund and Conseco Fixed Income Fund, each a separate series ("Series") of the
Trust, during the time that Post-Effective Amendment No. 12 to the Trust's
Registration Statement on Form N-1A ("PEA") is effective and has not been
superseded by another post-effective amendment.
As counsel to the Trust, we have participated in various matters relating to the
Trust. We have examined copies of the Trust's Agreement and Declaration of Trust
and By-Laws, as now in effect, and the minutes of meetings of the trustees of
the Trust, and we are generally familiar with its affairs.
For certain matters of fact, we have relied upon representations of officers of
the Trust. Based on the foregoing, it is our opinion that an unlimited number of
Shares of each Series may be legally and validly issued in accordance with the
Trust's Agreement and Declaration of Trust and By-Laws and subject to compliance
with the Securities Act of 1933, the Investment Company Act of 1940 and
applicable state laws regulating the offer and sale of securities; and, when so
issued, the Shares will be legally issued, fully paid and non-assessable by the
Trust.
<PAGE>
We express no opinion as to compliance with the Securities Act of 1933,
the Investment Company Act of 1940, or applicable state securities laws in
connection with the sale of Shares.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Declaration of Trust states that that persons seeking to subject shareholders to
any personal liability whatsoever, in tort, contract or otherwise, in connection
with the Trust property or affairs of the Trust, shall look solely to the Trust
for satisfaction of their claims. It also requires that notice of such
disclaimer be given in any written instrument creating an obligation of the
Trust, but that the omission of such recital shall not operate to impose
personal liability on any of the shareholders of the Trust. The Declaration of
Trust further provides for indemnification from the assets of the Trust for all
loss and expense of any shareholder held personally liable for the obligations
of the Trust by virtue of ownership of shares of a Series. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust would be unable to meet its
obligations.
We hereby consent to the filing of this opinion in connection with
Post-Effective Amendment No. 12 to the Trust's Registration Statement on Form
N-1A. We also consent to the reference to our firm under the caption "Legal
Counsel" in the Statement of Additional Information filed as part of the
Registration Statement.
Sincerely,
KIRKPATRICK & LOCKHART LLP
By: /s/ DONALD W. SMITH
- ----------------------------
Donald W. Smith
<PAGE>
EXHIBIT J
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 12 to the
Registration Statement of Conseco Fund Group (the "Fund") on Form N-1A (File No.
333-13185) of our report dated February 23, 2000, on our audit of the financial
statements and financial highlights of the Fund, which report is included in the
Annual Report to Shareholders for the year ended December 31, 1999, which is
incorporated by reference in the Post-Effective Amendment to the Registration
Statement. We also consent to the reference to our Firm under the caption
"Independent Accountants."
/s/ PricewaterhouseCoopers
Indianapolis, Indiana
April 12, 2000
<PAGE>
EXHIBIT O(3)
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
<PAGE>
CONSECO FUND GROUP
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
MARCH 31, 2000
Conseco Fund Group, a Massachusetts business trust (the "Trust"),
engages in business as an open-end management investment company. The Trust
issues shares of beneficial interest in separate series, with shares of each
series representing interests in a separate portfolio of securities and other
assets (the Trust's series together with all other such series subsequently
established by the Trust are referred to herein individually as a "Series" and
collectively as the "Series"). The Trust has designated for each Series certain
separate classes of shares, as set forth on Schedule A hereto (each a "Class").
The Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust (as defined in the Investment Company Act of
1940, as amended ("1940 Act") ("Non-interested Trustees")), having been
furnished with and having evaluated information reasonably necessary to evaluate
this Third Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3
("Plan"), have determined in the exercise of their reasonable business judgment
that the Plan is in the best interests of each class of each Series
individually, and each Series and the Trust as a whole. Accordingly, the Trust
has hereby adopted this Plan on behalf of its Series set forth on Schedule A
hereto.
SECTION 1. CLASS DIFFERENCES.
Each Class of a Series shall represent an equal pro rata interest in
the same portfolio of investments of that Series and, except as otherwise set
forth in this Plan, shall differ solely with respect to : (i) distribution,
service and other charges and expenses as provided for in Sections 2 and 3 of
this Plan; (ii) the exclusive voting rights of each Class on matters submitted
to shareholders that relate solely to that Class; (iii) the separate voting
rights of each Class on matters submitted to shareholders in which the interests
of one Class differ from the interests of another Class, (iv) such differences
relating to eligible investors as may be set forth in the prospectuses and
statements of additional information of each Series, as the same may be amended
or supplemented from time to time (each a "Prospectus" and "SAI" and
collectively, the "Prospectus" and "SAI"); (v) the designation of each Class;
(vi) exchange privileges; and (vii) conversion features.
<PAGE>
SECTION 2. DISTRIBUTION AND SERVICE ARRANGEMENTS.
CLASS A SHARES shall be subject to an initial sales charge. The initial
sales charge shall be reduced or waived for certain eligible purchasers and for
certain large volume purchases, as set forth in the Prospectus or SAI. Class A
shares shall be charged annual distribution and service fees under a
Distribution and Service Plan adopted pursuant to Rule 12b-1 under the 1940 Act.
The amount of the initial sales charge, and the amount of fees under the
Distribution and Service Plan pertaining to the Class A shares, are set forth on
Schedule B hereto. Purchases of Class A shares in of $500,000 or more may be
subject to a contingent deferred sales charge ("CDSC") if such shares are
redeemed within 180 days.
CLASS B SHARES shall not be subject to an initial sales charge, but
shall be subject to a contingent deferred sales charge and shall be charged
annual distribution and service fees under a Distribution and Service Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount of and the
provisions related to the contingent deferred sales charge, and the amount of
fees under the Distribution and Service Plan pertaining to the Class B shares,
are set forth on Schedule B hereto.
CLASS C SHARES shall not be subject to an initial sales charge, but
shall be subject to a contingent deferred sales charge and shall be charged
annual distribution and service fees under a Distribution and Service Plan
adopted pursuant to Rule 12b-1 under the 1940 Act. The amount of and the
provisions related to the contingent deferred sales charge, and the amount of
fees under the Distribution and Service Plan pertaining to the Class C shares,
are set forth on Schedule B hereto.
CLASS S SHARES shall not be subject to an initial sales charge, but
shall be charged annual distribution and service fees under a Distribution and
Service Plan adopted pursuant to Rule 12b-1 under the 1940 Act. The amount of
fees under the Distribution and Service Plan pertaining to the Class S shares is
set forth on Schedule B hereto.
CLASS Y SHARES shall be offered without imposition of an initial sales
charge or contingent deferred sales charge and are not subject to any
distribution or service fees. Class Y shares shall be offered only to those
institutional and individual investors meeting the eligibility requirements set
forth in the Prospectus and SAI.
SECTION 3. EXPENSE ALLOCATION.
(A) CLASS EXPENSES.
Certain expenses may be attributable to a particular Class
("Class Expenses"). Class Expenses shall be allocated exclusively
to the particular Class to which they are attributable. In
addition to the distribution and service fees described in
Section 2 above, Class Expenses may include, but are not limited
to, (a) expenses associated with the addition of classes of
shares to the Trust (to the extent that the expenses were not
fully accrued prior to the issuance of the new classes of
shares); (b) expenses of administrative personnel and services
required to support the shareholders of a specific Class; (c)
litigation or other legal expenses relating to a specific Class
of shares; (d) Trustees' fees or expenses incurred as a result of
issues relating to a specific Class of shares, (e) accounting
expenses relating to a specific Class of shares; and (f) transfer
agency fees and expenses.
<PAGE>
Expenses attributable to a Series other than Class Expenses shall be
allocated to each Class based on its net asset value relative to the net asset
value of the Series.
SECTION 4. CONVERSION FEATURE.
Class B shares shall automatically convert to Class A shares after a
specified period of time after the date of purchase, based on the relative net
asset value of each such Class without imposition of any sales charge, fee or
other charge, as set forth in Schedule C. No other Class shall be subject to any
automatic conversion feature.
SECTION 5. EXCHANGE PRIVILEGE.
Shares of a Class may be exchanged only for shares of the same Class of
another Series, or for shares of a money market fund, as set forth in the
Prospectus.
SECTION 6. ADDITIONAL INFORMATION.
The Prospectus and SAI contain additional information about each Class
and the Series' multiple class structure. This Plan is subject to the terms of
the Prospectus and SAI; provided, however, that none of the terms set forth in
the Prospectus and SAI shall be inconsistent with the terms of this Plan.
SECTION 7. TERM AND TERMINATION.
(A) THE SERIES.
This Plan shall become effective with respect to each Series as set
forth on Schedule A hereto, and shall continue in effect with respect to the
Classes of each such Series until terminated in accordance with the provisions
of Section 7(b) hereof.
(B) TERMINATION.
This Plan may be terminated at any time with respect to the Trust
or any Series or Class thereof, as the case may be, by vote of a
majority of both the Trustees of the Trust and the Non-Interested
Trustees. The Plan may remain in effect with respect to the Trust
or any Series or Class thereof even if it has been terminated in
accordance with this Section 7(b) with respect to any other
Series or Class of the Trust.
<PAGE>
SECTION 8. AMENDMENTS.
Before any material amendment to this Plan affecting the Trust or any
Series or Class thereof, a majority of both the Trustees of the Trust and the
Non-Interested Trustees shall find that the amendment is in the best interests
of each Class of each Series individually and each Series and the Trust as a
whole.
<PAGE>
CONSECO FUND GROUP
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
SCHEDULE A
<TABLE>
<CAPTION>
Name of Series & Classes Date Subject to Plan
------------------------ --------------------
<S> <C>
Conseco Equity Fund December 5, 1996
Class A, Class B, Class C, (Amended and Restated as of December 31, and
Class Y 1997; and Amended and Restated as of
March 31, 2000)
Conseco Balanced Fund* December 5, 1996
Class A, Class B, Class C, (Amended and Restated as of December 31,
and Class Y 1997; and Amended and Restated as of
March 31, 2000)
Conseco Fixed Income Fund December 5, 1996
Class A, Class B, Class C, (Amended and Restated as of December 31,
and Class Y 1997; and Amended and Restated as of
March 31, 2000)
Conseco 20 Fund December 31, 1997
Class A, Class B, Class C, (Amended and Restated as of March 31,
and Class Y 2000)
Conseco High Yield Fund December 31, 1997
Class A, Class B, Class C, (Amended and Restated as of March 31,
and Class Y 2000)
Conseco Convertible Securities Fund September 28, 1998
Class A, Class B, Class C, (Amended and Restated as of March 31,
and Class Y 2000)
<FN>
*Formerly the Conseco Asset Allocation Fund
</FN>
</TABLE>
<PAGE>
CONSECO FUND GROUP
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
SCHEDULE B
1. CLASS A
INITIAL SALES CHARGE - CLASS A SHARES. The offering price of Class A shares
is net asset value plus a varying sales charge depending on the amount invested.
The maximum initial sales charge imposed on purchases of Class A shares of the
Funds (except the Conseco Fixed Income Fund) listed in Schedule A hereto is
5.75% of the offering price. The maximum initial sales charge imposed on
purchases of Class A shares of the Conseco Fixed Income Fund is 5.00% of the
offering price. The sales charge applicable to Class A shares is determined as
follows:
SALES CHARGE
CONSECO EQUITY FUND
CONSECO BALANCED FUND
CONSECO 20 FUND
CONSECO HIGH YIELD FUND
CONSECO CONVERTIBLE SECURITIES FUND
As % of Public As % of Net
Offering Price Amount Invested
-------------- ---------------
On purchases of:
$500 - 49,999 5.75% 6.10%
$50,000 - 99,999 4.50% 4.71%
$100,000 - 249,999 3.50% 3.63%
$250,000 - 499,999 2.50% 2.56%
$500,000 or more None None
SALES CHARGE
CONSECO FIXED INCOME FUND
As % of Public As % of Net
Offering Price Amount Invested
-------------- ---------------
On purchases of:
$500 - 49,999 5.00% 5.56%
$50,000 - 99,999 4.50% 4.71%
$100,000 - 249,999 3.50% 3.63%
$250,000 - 499,999 2.50% 2.56%
$500,000 or more None None
<PAGE>
WAIVER OF CLASS A INITIAL SALES CHARGE. The provisions for waiving the
Class A initial sales charge shall be those as set forth in the relevant Series'
current Prospectus and SAI.
CONTINGENT DEFERRED SALES CHARGE - CLASS A SHARES. For purchases of Class A
shares of $500,000 or more, a contingent deferred sales charge of 1.00% may be
imposed upon any subsequent redemption of Class A shares within 180 days from
the date of purchase. The contingent deferred sales charge is a percentage of
(1) the net asset value of the shares at the time of purchase or (2) the net
asset value of the shares at the time of redemption, whichever is less.
The contingent deferred sales charge will not apply to shares acquired by
the reinvestment of dividends or capital gains distributions. In addition, the
provisions for waiving the contingent deferred sales charge for Class A shares
shall be those as set forth in the relevant Series' current Prospectus and SAI.
AMOUNT OF DISTRIBUTION AND SERVICE PLAN FEES. Class A shares of each Series
(except the Conseco Fixed Income Fund) are subject to distribution and service
fees at a rate of up to 0.50% of the average daily net assets of that Class.
Class A shares of the Conseco Fixed Income Fund are subject to distribution and
service fees at an annual rate of up to 0.65% of the average daily net assets of
that Class.
2. CLASS B
CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES. A contingent deferred
sales charge is imposed upon redemptions of Class B shares within six years of
their purchase. The contingent deferred sales charge is a percentage of (1) the
net asset value of the shares at the time of purchase or (2) the net asset value
of the shares at the time of redemption, whichever is less. The contingent
deferred sales charge is determined as follows:
REDEMPTION DURING CONTINGENT DEFERRED SALES CHARGE
- ----------------- --------------------------------
1st year since purchase 5%
2nd year since purchase 4%
3rd year since purchase 3%
4th year since purchase 3%
5th year since purchase 2%
6th year since purchase 1%
7th year since purchase 0%
8th year since purchase 0%
The contingent deferred sales charge will not apply to shares acquired by
the reinvestment of dividends or capital gains distributions.
<PAGE>
In determining the applicability and rate of any contingent deferred sales
charge, Class B shares acquired through reinvestment of dividends and capital
gains distributions will be redeemed first, followed by the Class B shares held
by the shareholder for the longest period of time. The contingent deferred sales
charge, if any, upon redemption of Class B shares acquired through an exchange
will be calculated based on the original purchase date of the Class B shares
exchanged.
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE. The provisions for waiving
the contingent deferred sales charge on Class B shares shall be those as set
forth in the relevant Series' current Prospectus and SAI.
AMOUNT OF DISTRIBUTION AND SERVICE PLAN FEES. Class B shares of a Series
are subject to distribution and service fees at an annual rate of up to 1.00% of
the average daily net assets of that Class.
3. CLASS C
CONTINGENT DEFERRED SALES CHARGE - CLASS C SHARES. Class C shares held for
less than one year are subject to a contingent deferred sales charge on
redemptions in an amount equal to 1% of the lower of (1) the net asset value of
the shares at the time of purchase or (2) the net asset value of the shares at
the time of redemption. Class C shares held one year or longer are not subject
to this contingent deferred sales charge. The contingent deferred sales charge
also will not apply to shares acquired by the reinvestment of dividends or
capital gains distributions. The order in which Class C shares are redeemed will
be determined as described for Class B shares above.
The contingent deferred sales charge, if any, upon redemption of Class C
shares acquired through an exchange and held less than one year will be
calculated based on the original purchase date of the Class C shares exchanged.
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE. The provisions for waiving
the contingent deferred sales charge on Class C shares shall be those as set
forth in the relevant Series' current Prospectus and SAI.
AMOUNT OF DISTRIBUTION AND SERVICE PLAN FEES. Class C shares of a Series
are subject to distribution and service fees at an annual rate of up to 1.00% of
the average daily net assets of that Class.
<PAGE>
CONSECO FUND GROUP
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
SCHEDULE C
CONVERSION FEATURE - CLASS B SHARES. Class B shares will automatically
convert to a number of Class A shares of equal dollar value eight years after
purchase. No initial sales charge or other charge is imposed at conversion. When
Class B shares convert, a pro rata amount of Class B shares that were acquired
by the reinvestment of dividends and capital gains distributions will also
convert to Class A shares.
<PAGE>
EXHIBIT N
FINANCIAL DATA SCHEDULE
<PAGE>
EXHIBIT P
CODE OF ETHICS
<PAGE>
CODE OF ETHICS
FOR
CONSECO FUND GROUP
I. STATEMENT OF POLICY:
This Code of Ethics (hereinafter "Code") is adopted under rule
17j-1 promulgated by the Securities and Exchange Commission pursuant to
Section 17(j) of the Investment Company Act of 1940 (the "Investment
Company Act") and under the Insider Trading and Securities Fraud
Enforcement Act of 1988 (the "Insider Trading Act"). In general, the
Investment Company Act and Rule 17j-1 impose an obligation on
registered investment companies and on certain registered investment
advisers and registered broker-dealers to adopt written compliance
procedures and a Code of Ethics covering securities activities of their
directors, officers and certain employees. This Code is designed to
ensure that those individuals who have access, due to their duties and
responsibilities with Conseco Capital Management, Inc. (hereinafter the
"Adviser") to material, non-public information regarding the activities
of the Adviser, or to information about the portfolio securities and
the activities of the Adviser and its Clients, do not intentionally use
such information for their personal benefit.
The Code is intended to cover all Access Persons (as
hereinafter defined) of the Adviser. All Access Persons are subject to
and bound by the terms of this Code. It is not the intention of this
Code to prohibit personal securities transactions by Access Persons,
but rather to prescribe rules designed to prevent actual and apparent
conflicts of interest. While it is not possible to specifically define
and prescribe rules addressing all possible situations in which
conflicts may arise, this Code sets forth the Adviser's policy
regarding conduct in those situations in which conflicts are most
likely to develop.
Every Access Person should keep the following general
principles in mind in discharging his or her obligations under the
Code:
(A) No Access Person should knowingly place his or her own
interests ahead of the Adviser or its Clients; and
(B) No Access Person should use knowledge of the activities of the
Adviser or its Clients to his or her profit or advantage.
II. DEFINITIONS:
(A) "Access Person" means any director, officer or Advisory Person
of the Adviser.
(B) "Adviser" means the investment adviser, Conseco Capital
Management, Inc.
(C) "Advisory Person" means any employee of the Adviser, or any
company or natural person in a control relationship to the
Adviser, who, in connection with his regular functions or
duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by the Client, or
whose functions relate to the making of any recommendations
with respect to such purchases or sales.
(D) "Beneficial Ownership" shall be interpreted in the same manner
as it would be in determining whether a person is subject to
the provisions of Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder, except that it
applies to all securities which an Access Person has or
acquires. Beneficial ownership includes direct or indirect
pecuniary interest in securities, such as securities held by
members of a person's immediate family sharing the same
household.
(E) "Board" means the Board of Directors of the Adviser.
<PAGE>
(F) "Client" means any corporation, insurance company, individual,
pension plan, endowment, institution, investment company,
separate account, trust, business trust, or subsidiary of
Conseco, Inc. or its subsidiaries, who, for a fee, has
selected the Adviser to act on its behalf in the offering of
portfolio management, investment consulting, or other advisory
services.
(G) "Conseco" means Conseco, Inc.
(H) "Control" means the power to exercise a controlling influence
over the management of policies of a company (Section 2(a)(9)
of the Investment Company Act).
(I) "Designated Officer" means the Chief Compliance Officer or, in
his absence, the President of the Adviser.
(J) "Director" means a member of the Board of Directors of the
Adviser.
(K) "He" or "his" includes feminine gender.
(L) "Investment Company" means a company registered as such under
the Investment Company Act and for which the Adviser is the
investment adviser.
(M) "Purchase or sale of a security" includes, inter alia, the
writing of an option to purchase or sell a security and the
exercise of a stock option.
(N) "Security" includes any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest
or participation in any profit-sharing agreement,
collateral-trust certificate, investment contract, limited
partnership shares, etc. (as defined in Section 2(a)(36) of
the Investment Company Act). "Security" shall not include
shares of registered open-end investment companies, securities
issued by the United States Government, short-term debt
securities which are "government securities" (meaning any
security issued or guaranteed as to principal or interest by
the United States, or by any person acting as an
instrumentality of the United States government, per Section
2(a)(16) of the Investment Company Act), bankers acceptances,
bank certificates of deposit, commercial paper, and any other
money market instrument as designated by the Board.
(O) A security is "being considered for purchase or sale" when a
recommendation has been made and communicated, or when a
person who participates in making recommendations performs
investigative or analytical work for the purpose of making a
recommendation or when there is an outstanding order to
purchase or sell that security for a Client.
III. EXEMPTED TRANSACTIONS:
The prohibitions of Section IV of this Code shall not apply to the
following transactions:
(A) Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control;
(B) Purchases or sales which are non-volitional on the part of
either the Access Person or the Adviser;
(C) Purchases which are part of an automatic dividend reinvestment
plan;
(D) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from the issuer;
(E) Purchases or sales of securities which are not eligible for
purchase or sale by any Client (any Access Person desiring to
engage in such a transaction should obtain the prior written
approval of the Designated Officer);
<PAGE>
(F) Purchases or sales which receive prior written approval from
the Designated Officer because they are only remotely
potentially harmful to the Client because they are unlikely to
affect a highly institutional market, or because they are
clearly not related economically to the securities to be
purchased, sold or held by the Client;
(G) Purchases or sales of securities which are not then being
purchased or sold by the Adviser on behalf of any Client or
considered for purchase or sale by the Client, provided that
the Access Person has first obtained the prior written
approval of the Designated Officer;
(H) Purchases of securities which are then being sold or
considered for sale by the Adviser on behalf of the Client and
sales of securities which are then being purchased or
considered for purchase by the Adviser on behalf of the
Client. The Designated Officer must give prior written
permission and will require written explanations for all such
trades by an Access Person; and
(I) Purchases or sales of other securities of the same issuer
whose securities are being purchased or sold or considered for
purchase or sale by the Adviser on behalf of a Client. However
all equity securities of an issuer shall be deemed the same
security and all debt securities of an issuer shall be deemed
the same security.
The reporting requirements of Section V of the Code shall
remain applicable to all of the above transactions, except
that no person shall be required to make a report with respect
to the transactions listed in paragraphs (A), (B) and (C)
above.
IV. PROHIBITED TRANSACTIONS:
The following prohibitions shall apply to this Code:
A. Purchases and Sales of Securities.
No Access Person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership and which security to his knowledge at the time of
such purchase and sale:
(1) is being considered for purchase or sale by the Adviser
on behalf of any Client, or
(2) is being purchased or sold by the Adviser on behalf of
any Client.
It is the responsibility of every Access Person, prior to
effecting a purchase or sale of any security in which he has,
or acquires, any direct or indirect beneficial ownership, to
ascertain whether such security is being purchased or sold, or
is being considered for purchase or sale, by the Adviser for a
Client. In order to confirm that such security is not then
being purchased or sold or being considered for purchase or
sale on behalf of any Client, the Access Person must seek and
receive prior written clearance for the proposed trade from
the Designated Officer. The Designated Officer will first
review the Restricted Securities List. Subject to the
following paragraphs, if the security which the Access Person
wishes to trade is not on this List at the time in question,
the Designated Officer may clear the Access Person to trade
the security on that same day.
The Restricted Securities List is the list of those securities
which are either being considered for purchase or sale by the
Adviser on behalf of any Client (including securities which
are being held for trading and may be expected to be sold at
any time) and those securities being purchased or sold by the
Adviser on behalf of any Client. This List will be prepared
and updated each business day by the Adviser. The Restricted
Securities List shall contain all securities which the Adviser
on behalf of its Clients is purchasing or selling or
considering for purchase or sale. It will be the duty of the
Adviser to place on the Restricted Securities List all such
securities as promptly as possible. If there is any type or
class of securities as to which the Adviser cannot readily
<PAGE>
determine which securities it is trading or considering for
trade, such type or class of securities will be so identified
by the Adviser whether on the Restricted Securities List or
otherwise; any Access Person wishing to trade in any such
security must first seek and receive prior written clearance
for his trade from the Designated Officer. The Access Person
must submit a copy of any such clearance prior to or with his
report on such trade pursuant to Section V below.
Reliance on the above-mentioned prior written clearance by an
Access Person shall be conclusive evidence that such Person
was not aware that such security was being purchased or sold,
or considered for purchase or sale, as the case may be, except
in the case of an Access Person who because of his or her
position as trader, portfolio manager or securities analyst or
because of special access to knowledge concerning that
security had, or should have had, knowledge concerning such
purchase or sale of such consideration for purchase or sale.
In any event, no Access Person, who because of his or her
position has actual knowledge about the impending or actual
purchase or sale or consideration of a purchase or sale of a
security by the Adviser on behalf of any Client prior to the
publication of such security on the Restricted Securities
List, may purchase or sell such security until such security
is thereafter removed from the Restricted Securities List.
B. Purchases and Sales of Recommended Securities by Analysts or
Portfolio Managers.
No Access Person shall purchase or sell a security, in which
he has or acquires any direct or indirect beneficial interest,
following the preparation of a written recommendation by such
Access Person that such security be purchased or sold until
such time as it is determined that such recommendation will
not be acted upon or until such time as it is removed from the
Restricted Securities List, if longer.
Any Access Person who manages a Client's portfolio shall not
purchase or sell a security eligible for purchase by that
portfolio within seven calendar days before or after that
portfolio trades in that security; this prohibition does not
apply to a sale of such a security by such portfolio manager
within seven calendar days after a sale of such security by
that portfolio or to his purchase of such security within
seven calendar days after a purchase of such security by that
portfolio. Any profits realized on trades within the periods
proscribed in Sections IV.A. and IV.B. above must be disgorged
to the Adviser for the benefit of the affected Clients.
C. Receipt of Gifts, etc.
No Access Person or a member of his or her family shall seek
or accept gifts, favors, compensation or deals in securities
more favorable than those offered to the public from any
broker, dealer, investment adviser, financial institution or
other supplier of goods and services to the Adviser or from
any company whose securities have been purchased or sold or
considered for purchase or sale by the Adviser. The foregoing
provision shall not prohibit any benefit, direct or indirect,
in the form of compensation to the Access Person from any
entity under common control with the Adviser for bona fide
services rendered as an officer, member of the Board or
employee of such entity. This prohibition shall not apply to:
(1) lunches or dinners conducted for business purposes;
(2) cocktail parties or similar social gatherings
conducted for business purposes; or
(3) gifts of small value, usually in the nature of
reminder advertising, such as pens, calendars, etc.
<PAGE>
D. Material, Non-public Information and Insider Trading.
(1) General. No Access Person may buy or sell securities
on the basis of non-public "material information"
known by the Access Person or "tip" other persons
about such information. Any violation of these
restrictions may subject the Adviser and the Access
Person to serious criminal and civil liabilities and
sanctions, including up to $1 million in criminal
fines, up to 10 years in jail and civil penalties up
to three times the illegal profit gained or loss
avoided. In addition to governmental fines and other
sanctions, private actions brought by "professional
plaintiffs" against public companies and their
insiders have become quite common and can involve
substantial costs, both monetary and in terms of
time, even if the claim ultimately is dismissed.
Equally important, any appearance of impropriety on
the part of the Adviser or its insiders could impair
investor confidence in the Adviser and severely
damage its reputation and business relationships.
Accordingly, considerable care should be taken to
avoid even inadvertent violations. In light of these
restrictions, the Adviser has adopted a general
policy that the Adviser's personnel may not trade in
securities of Conseco, Inc. or its publicly-held
affiliates ("Conseco") or any other company while in
possession of non-public, material information. Each
Access Person should obtain approval from Conseco's
legal department prior to trading in Conseco
securities.
Each Access Person is also prohibited from directly
or indirectly disclosing material, non-public
information about any issuer to any other person,
including family members and relatives, except for
persons who have a legitimate need to know.
(2) Trading in Conseco or Client Securities. Each Access
Person and his family members who share his household
should not, under any circumstances, trade options
for, or sell "short," any securities of Conseco. No
Access Person shall buy or sell the equity securities
issued by any Client that is not affiliated with
Conseco, Inc. or the derivatives of such equity
securities without first obtaining written approval
from an appropriate representative of the Client.
(3) Material Information. The term "material
information," as used in this Statement of Policy,
means information relating to a company, its business
operations or securities, the public dissemination of
which would likely affect the market price of any of
its securities, or which would likely be considered
important by a reasonable investor in determining
whether to buy, sell or hold such securities. While
it is impossible to list all types of information
that might be deemed material under particular
circumstances, information dealing with the following
subjects is often found material: internal forecasts
or budgets; dividends; major new discoveries or
advances in research; acquisitions, including mergers
and tender offers; sales of substantial assets;
changes in debt ratings; significant writedowns of
assets or additions to reserves for bad debts or
contingent liabilities; liquidity problems;
extraordinary management developments; public
offerings; major price or marketing changes; labor
negotiations; and significant litigation or
investigations by governmental bodies. Information
about a company generally is not material if its
public dissemination would not have an impact on the
price of the company's publicly traded securities. It
should be noted that either positive or adverse
information may be material.
(4) No Use or Solicitation of Inside Information. No
Access Person shall utilize material, non-public
information about any issuer of securities in the
course of rendering investment advice or making
investment decisions on behalf of Clients. No Access
Person should solicit from any issuer of securities
any such material, non-public information. Any Access
Person inadvertently receiving non-public information
regarding securities held by any Client should notify
the Designated Officer or any Vice President of the
Adviser immediately.
<PAGE>
E. Confidentiality.
Serious problems could arise for the Adviser and any Access
Person by any unauthorized disclosure of internal information
about Conseco, Inc. or its affiliated companies including the
Adviser (the "Conseco Companies"), or a Client whether or not
for the purpose of facilitating improper trading in the
securities of a Conseco Company or a Client. It is the
Adviser's policy that no Access Person should discuss internal
Conseco Company or Client matters or developments with anyone
outside of the Conseco Companies (including family members,
relatives and friends), except as required in the performance
of his regular employment duties. Similarly, no Access Person
should discuss Conseco Company or Client affairs in public or
quasi-public areas where your conversation may be overhead
(e.g., restaurants, restrooms, elevators, etc.). This
prohibition also applies to inquiries about Conseco Companies
or Clients which may be made by the financial press,
investment analysts or others in the financial community. It
is important that all such communications on behalf of the
Conseco Companies or the Adviser be made only through
authorized individuals. If you receive any inquiries of this
nature, you should decline comment and refer the inquirer
directly to the Conseco Companies' investor relations
spokesman, James Rosensteele, at (317) 817-2893.
F. Initial Public Offerings.
No Access Person shall purchase a security, in which he by
reason of such transaction acquires any direct or indirect
beneficial interest, in an initial public offering.
G. Private Placements.
No Access Person shall purchase a security, in which he by
reason of such transaction acquires any direct or indirect
beneficial interest, in a private placement, without obtaining
the prior written approval of the Designated Officer. In
giving his approval, the Designated Officer must consider,
among other factors, whether the investment opportunity should
be reserved for a Client and whether the opportunity is being
offered to the individual by virtue of his position as an
Access Person. Any Access Person who has been authorized to so
acquire securities must disclose that investment when he plays
a part in any subsequent consideration of an investment in the
issuer by any Client. In such circumstances, such decision for
a Client to purchase securities of that issuer must be
reviewed independently by other investment personnel of the
Adviser who have no personal interest in the issuer.
H. Directorships of Publicly Traded Companies.
No Access Person may serve on the boards of directors (or
equivalent governing bodies) of publicly traded companies,
except the Board of Directors of the Adviser's parent company,
unless that Access Person first obtains in writing the prior
approval of the Designated Officer if the latter is satisfied
that the Access Person will normally be isolated from the
investment making decisions of the Adviser for its Clients.
V. REPORTING REQUIREMENTS:
A. In General.
1. Every Access Person shall direct his broker to supply
to the Designated Officer, on a timely basis,
duplicate copies of confirmations of all security
transactions in which such Access Person has, or by
reason of such transaction acquires, any direct or
indirect beneficial ownership in the security and
copies of periodic statements for all securities
accounts.
2. Every Access Person shall report to the Designated
Officer the information with respect to the
transactions in any security in which such Access
Person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership
in the security; provided, however, that an Access
Person shall not be required to make a report with
respect to transactions effected for any account over
which such Access Person does not have any direct or
indirect influence or control.
<PAGE>
3. Notwithstanding the above, an Access Person need not
duplicate information recorded pursuant to (i) Rule
204-2(a)(12) of the Investment Advisers Act of 1940,
or (ii) the confirmations and statements supplied
under paragraph V.A.1. above. The reporting under
this Code will satisfy that Rule.
4. A Director of the Adviser who is not otherwise an
Access Person need only report a transaction in a
security if such member, at the time of that
transaction, knew or, in the ordinary course of
fulfilling his official duties as a Director, should
have known that, during the 15-day period immediately
preceding or after the date of the transaction by the
Director, such security was purchased or sold by the
Adviser or was being considered for purchase or sale
by the Adviser. Any Director, who pursuant to the
preceding sentence is not required to report any
transaction in a security during the period in
question, need not make any other report or
disclosure of personal securities holdings during
such period under this Section V.
B. Report Contents.
Every report under Paragraph V.A.2. shall be made not later
than ten (10) days after the end of the calendar quarter in
which the transaction to which the report relates was
effected, and unless such information has been supplied under
paragraph V.A.1. above, shall contain the following
information:
(1) The date of the transaction, the title and the number
of shares or the principal amount of each security
involved;
(2) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or
through whom the transaction was effected.
Any such report may contain a statement that the report shall
not be construed as an admission of direct or indirect
beneficial ownership in said security.
C. Review.
The Chief Compliance Officer shall review or supervise the
review of the personal securities transactions reported
pursuant to Section V. As part of the review, each such
reported securities transaction may be compared against the
portfolio transactions of Clients to determine whether a
violation of this Code may have occurred. If the Chief
Compliance Officer believes that a violation may have
occurred, he may submit the pertinent information regarding
the transaction to, and consult with the General Counsel of
Conseco. The Chief Compliance Officer shall evaluate whether a
material violation of this Code has occurred, taking into
account all the exemptions provided under Section III. Before
making any determination that a violation has occurred, the
Chief Compliance Officer shall give the person involved an
opportunity to supply additional information regarding the
transaction in question and shall consult with counsel, if
any, for the Access Person whose transaction is in question.
<PAGE>
D. Annual Disclosure and Certification.
Every Access Person shall disclose all securities in which he
has any direct or indirect beneficial ownership in the
securities upon the commencement of his employment and
thereafter on an annual basis. Every Access Person shall
certify annually that he has read and understands this Code of
Ethics and is subject thereto and that he has reported or
disclosed all personal securities trades required to be
reported or disclosed thereunder.
VI. SANCTIONS.
If the Chief Compliance Officer determines that a material violation of
the Code or of the Insider Trading Act has occurred, he shall provide a
written report of his determination to the Board, as is appropriate
under the circumstances, for such further action and sanctions as such
Board deems appropriate, which may include, but shall not be limited
to, a letter of censure, suspension with pay, termination of employment
or disgorgement of any profits realized on transactions in violation of
this Code. If a securities transaction of a Designated Officer is under
consideration, the General Counsel of Conseco shall act in all respects
in the manner prescribed herein for the Designated Officer.
VII. MISCELLANEOUS PROVISIONS.
A. Records.
The Chief Compliance Officer shall maintain records in the
manner and to the extent set forth below, which records may be
maintained on film or computer storage medium under conditions
described in Rule 31a-2(f)(1) under the 1940 Act and shall be
available for examination by representatives of the Securities
and Exchange Commission:
(1) A copy of this Code and any other code which is, or
at any time within the past five (5) years has been
in effect, shall be preserved in an easily accessible
place;
(2) A record of any violation of this Code and of any
action taken as a result of such violation shall be
preserved in an easily accessible place for a period
of not less than five (5) years following the end of
the fiscal year in which the violation occurs;
(3) A copy of each report made by the Access Person
pursuant to this Code shall be preserved for a period
of not less than five (5) years from the end of the
fiscal year in which it is made, the first two (2)
years in an easily accessible place; and
(4) A list of all persons who are, or within the past
five (5) years have been, required to make reports
pursuant to this Code shall be maintained in an
easily accessible place.
B. Confidentiality of Reports.
All reports of securities transactions and any other
information filed with the Designated Officer or furnished to
any person pursuant to this Code shall be treated as
confidential, but are subject to review as provided herein and
by representatives of the Securities and Exchange Commission
or of the client investment company.
C. Interpretation of Provisions.
The Board may from time to time adopt such interpretation of
this Code as they deem appropriate.
D. Effect of Violation of this Code.
In adopting Rule 17j-1, the Commission specifically noted in
Investment Company Act Release No. IC-11421 (Oct. 31, 1980)
that a violation of any provision of a particular code of
ethics, such as this Code, would not be considered a per se
unlawful act prohibited by the general anti-fraud provisions
of that Rule. In adopting this Code of Ethics, it is not
intended that a violation of this Code is or should be
considered to be a violation of Rule 17j-1.
<PAGE>
Attachments:
Certification of Compliance (To be signed by all Access Persons of the
Adviser) Annual Certification of Compliance (To be signed annually)
Report of Personal Securities Transactions (To report quarterly or for
single transactions) Prior Clearance Form (To be completed prior to
each transaction)
<PAGE>
CERTIFICATION OF COMPLIANCE
CONSECO FUND GROUP
To: Chief Compliance Officer
I have read in detail and understand the Conseco Fund Group Code of
Ethics, dated January, 1995, and will comply in all respects with the
policies and procedures contained therein.
Signature: _____________________________
Print Name: ____________________________
Date: __________________________________
<PAGE>
ANNUAL CERTIFICATION OF COMPLIANCE
CONSECO FUND GROUP
To: Chief Compliance Officer
I have read and understand the Conseco Fund Group Code of Ethics, dated
January, 1995, to which I am subject. During the period from to the
date of this annual certification, I have complied in all respects with
the policy and procedures contained in the Code of Ethics, including
the annual disclosure to Conseco Fund Group of all personal securities
holdings in which I have any direct or indirect beneficial ownership.*
Signature: _____________________________
Print Name: ____________________________
Date: __________________________________
- -------------------
* In addition to the securities holdings reported on my broker-dealer
statement(s) for the preceding calendar year end, I directly or indirectly
beneficially own the following securities at such date. (If none, please so
state):
Complete Security Description: Number of Shares
(Name) (Stock) or Par
(Coupon) (Bonds)
(Maturity Date)
------------------------------ --------------------------
<PAGE>
CONSECO FUND GROUP
PRIOR CLEARANCE FORM
FOR PERSONAL SECURITIES TRANSACTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Printed Name of Access Person) Phone Ext.
The undersigned seeks clearance for the following trade(s) to be effected today,
- -------------------------------------------------------------------------------.
<TABLE>
<S> <C> <C> <C> <C>
SECURITY DESCRIPTION ORDER SIZE TYPE OF TRANSACTION BROKER-DEALER APPROXIMATE PRICE
(Issuer, (No. of Shares, (Buy, Sell, OR BANK INVOLVED OF SECURITY
Coupon, Par Value, etc.) Short, Gift, etc.) (rounded to nearest
Maturity Date, etc.) whole dollar)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------
(Signature of Access Person)
The foregoing transaction(s) has (have) been cleared for trading on this date.
--------------------------------------
(Signature of Designated Officer)
Note: A copy of this completed form (including the signatures of both
the Access Person and the Designated Officer) must be returned to, or left with,
the Designated Officer.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> CONSECO BALANCED FUND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 39,074,239
<INVESTMENTS-AT-VALUE> 44,809,334
<RECEIVABLES> 1,757,466
<ASSETS-OTHER> 115,655
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,682,455
<PAYABLE-FOR-SECURITIES> 306,965
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139,638
<TOTAL-LIABILITIES> 446,603
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,657,753
<SHARES-COMMON-STOCK> 2,364,156
<SHARES-COMMON-PRIOR> 2,229,409
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,843,004
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,735,095
<NET-ASSETS> 46,235,852
<DIVIDEND-INCOME> 148,271
<INTEREST-INCOME> 1,126,565
<OTHER-INCOME> 0
<EXPENSES-NET> (551,301)
<NET-INVESTMENT-INCOME> 723,535
<REALIZED-GAINS-CURRENT> 6,886,972
<APPREC-INCREASE-CURRENT> 3,085,847
<NET-CHANGE-FROM-OPS> 10,696,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (510,331)
<DISTRIBUTIONS-OF-GAINS> (3,025,465)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 99,536
<NUMBER-OF-SHARES-REDEEMED> (96,395)
<SHARES-REINVESTED> 131,606
<NET-CHANGE-IN-ASSETS> 13,536,079
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (755,751)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 264,478
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 725,712
<AVERAGE-NET-ASSETS> 27,580,342
<PER-SHARE-NAV-BEGIN> 11.69
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 3.18
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.51
<EXPENSE-RATIO> 1.5
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> CONSECO BALANCED FUND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 39,074,239
<INVESTMENTS-AT-VALUE> 44,809,334
<RECEIVABLES> 1,757,466
<ASSETS-OTHER> 115,655
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,682,455
<PAYABLE-FOR-SECURITIES> 306,965
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139,638
<TOTAL-LIABILITIES> 446,603
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,657,753
<SHARES-COMMON-STOCK> 213,277
<SHARES-COMMON-PRIOR> 112,115
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,843,004
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,735,095
<NET-ASSETS> 46,235,852
<DIVIDEND-INCOME> 148,271
<INTEREST-INCOME> 1,126,565
<OTHER-INCOME> 0
<EXPENSES-NET> (551,301)
<NET-INVESTMENT-INCOME> 723,535
<REALIZED-GAINS-CURRENT> 6,886,972
<APPREC-INCREASE-CURRENT> 3,085,847
<NET-CHANGE-FROM-OPS> 10,696,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (87,593)
<DISTRIBUTIONS-OF-GAINS> (266,632)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115,984
<NUMBER-OF-SHARES-REDEEMED> (20,292)
<SHARES-REINVESTED> 5,470
<NET-CHANGE-IN-ASSETS> 13,536,079
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (755,751)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 264,478
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 725,712
<AVERAGE-NET-ASSETS> 1,904,241
<PER-SHARE-NAV-BEGIN> 11.61
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 3.18
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.38
<EXPENSE-RATIO> 2
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> CONSECO BALANCED FUND CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 39,074,239
<INVESTMENTS-AT-VALUE> 44,809,334
<RECEIVABLES> 1,757,466
<ASSETS-OTHER> 115,655
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,682,455
<PAYABLE-FOR-SECURITIES> 306,965
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139,638
<TOTAL-LIABILITIES> 446,603
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,657,753
<SHARES-COMMON-STOCK> 168,160
<SHARES-COMMON-PRIOR> 102,592
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,843,004
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,735,095
<NET-ASSETS> 46,235,852
<DIVIDEND-INCOME> 148,271
<INTEREST-INCOME> 1,126,565
<OTHER-INCOME> 0
<EXPENSES-NET> (551,301)
<NET-INVESTMENT-INCOME> 723,535
<REALIZED-GAINS-CURRENT> 6,886,972
<APPREC-INCREASE-CURRENT> 3,085,847
<NET-CHANGE-FROM-OPS> 10,696,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,562)
<DISTRIBUTIONS-OF-GAINS> (205,809)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 130,938
<NUMBER-OF-SHARES-REDEEMED> (66,879)
<SHARES-REINVESTED> 1,509
<NET-CHANGE-IN-ASSETS> 13,536,079
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (755,751)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 264,478
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 725,712
<AVERAGE-NET-ASSETS> 1,620,152
<PER-SHARE-NAV-BEGIN> 11.66
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 3.20
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.46
<EXPENSE-RATIO> 2
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME> CONSECO BALANCED FUND CLASS Y
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 39,074,239
<INVESTMENTS-AT-VALUE> 44,809,334
<RECEIVABLES> 1,757,466
<ASSETS-OTHER> 115,655
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,682,455
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139,638
<TOTAL-LIABILITIES> 446,603
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,657,753
<SHARES-COMMON-STOCK> 676,034
<SHARES-COMMON-PRIOR> 352,157
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,843,004
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,735,095
<NET-ASSETS> 46,235,852
<DIVIDEND-INCOME> 148,271
<INTEREST-INCOME> 1,126,565
<OTHER-INCOME> 0
<EXPENSES-NET> (551,301)
<NET-INVESTMENT-INCOME> 723,535
<REALIZED-GAINS-CURRENT> 6,886,972
<APPREC-INCREASE-CURRENT> 3,085,847
<NET-CHANGE-FROM-OPS> 10,696,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (100,814)
<DISTRIBUTIONS-OF-GAINS> (823,600)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 369,267
<NUMBER-OF-SHARES-REDEEMED> (111,244)
<SHARES-REINVESTED> 65,854
<NET-CHANGE-IN-ASSETS> 13,536,079
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (755,751)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 264,478
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 725,712
<AVERAGE-NET-ASSETS> 6,716,740
<PER-SHARE-NAV-BEGIN> 11.75
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 3.24
<PER-SHARE-DIVIDEND> (0.29)
<PER-SHARE-DISTRIBUTIONS> (1.35)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.59
<EXPENSE-RATIO> 1
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> CONSECO EQUITY FUND CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 108,442,117
<INVESTMENTS-AT-VALUE> 140,102,458
<RECEIVABLES> 9,373,995
<ASSETS-OTHER> 90,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,566,606
<PAYABLE-FOR-SECURITIES> 2,106,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,510,912
<TOTAL-LIABILITIES> 3,616,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,449,332
<SHARES-COMMON-STOCK> 1,811,935
<SHARES-COMMON-PRIOR> 2,087,655
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,840,018
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,660,341
<NET-ASSETS> 145,949,691
<DIVIDEND-INCOME> 416,741
<INTEREST-INCOME> 257,703
<OTHER-INCOME> 0
<EXPENSES-NET> (1,188,394)
<NET-INVESTMENT-INCOME> (513,950)
<REALIZED-GAINS-CURRENT> 37,999,342
<APPREC-INCREASE-CURRENT> 15,927,962
<NET-CHANGE-FROM-OPS> 53,413,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (5,527,099)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,640,042
<NUMBER-OF-SHARES-REDEEMED> (3,006,790)
<SHARES-REINVESTED> 91,028
<NET-CHANGE-IN-ASSETS> 56,680,092
<ACCUMULATED-NII-PRIOR> 3,044
<ACCUMULATED-GAINS-PRIOR> (306,770)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 704,523
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,348,002
<AVERAGE-NET-ASSETS> 29,646,928
<PER-SHARE-NAV-BEGIN> 12.55
<PER-SHARE-NII> (0.14)
<PER-SHARE-GAIN-APPREC> 7.18
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (3.32)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.27
<EXPENSE-RATIO> 1.5
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> CONSECO EQUITY FUND CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 108,442,117
<INVESTMENTS-AT-VALUE> 140,102,458
<RECEIVABLES> 9,373,995
<ASSETS-OTHER> 90,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,566,606
<PAYABLE-FOR-SECURITIES> 2,106,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,510,912
<TOTAL-LIABILITIES> 3,616,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,449,332
<SHARES-COMMON-STOCK> 216,319
<SHARES-COMMON-PRIOR> 131,030
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,840,018
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,660,341
<NET-ASSETS> 145,949,691
<DIVIDEND-INCOME> 416,741
<INTEREST-INCOME> 257,703
<OTHER-INCOME> 0
<EXPENSES-NET> (1,188,394)
<NET-INVESTMENT-INCOME> (513,950)
<REALIZED-GAINS-CURRENT> 37,999,342
<APPREC-INCREASE-CURRENT> 15,927,962
<NET-CHANGE-FROM-OPS> 53,413,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (602,715)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 122,282
<NUMBER-OF-SHARES-REDEEMED> (46,275)
<SHARES-REINVESTED> 9,282
<NET-CHANGE-IN-ASSETS> 56,680,092
<ACCUMULATED-NII-PRIOR> 3,044
<ACCUMULATED-GAINS-PRIOR> (306,770)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 704,523
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,348,002
<AVERAGE-NET-ASSETS> 2,329,768
<PER-SHARE-NAV-BEGIN> 12.47
<PER-SHARE-NII> (0.14)
<PER-SHARE-GAIN-APPREC> 7.07
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (3.27)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.13
<EXPENSE-RATIO> 2
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> CONSECO EQUITY FUND CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 108,442,117
<INVESTMENTS-AT-VALUE> 140,102,458
<RECEIVABLES> 9,373,995
<ASSETS-OTHER> 90,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,566,606
<PAYABLE-FOR-SECURITIES> 2,106,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,510,912
<TOTAL-LIABILITIES> 3,616,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,449,332
<SHARES-COMMON-STOCK> 184,437
<SHARES-COMMON-PRIOR> 49,140
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,840,018
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,660,341
<NET-ASSETS> 145,949,691
<DIVIDEND-INCOME> 416,741
<INTEREST-INCOME> 257,703
<OTHER-INCOME> 0
<EXPENSES-NET> (1,188,394)
<NET-INVESTMENT-INCOME> (513,950)
<REALIZED-GAINS-CURRENT> 37,999,342
<APPREC-INCREASE-CURRENT> 15,927,962
<NET-CHANGE-FROM-OPS> 53,413,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (513,936)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 143,420
<NUMBER-OF-SHARES-REDEEMED> (8,979)
<SHARES-REINVESTED> 856
<NET-CHANGE-IN-ASSETS> 56,680,092
<ACCUMULATED-NII-PRIOR> 3,044
<ACCUMULATED-GAINS-PRIOR> (306,770)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 704,523
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,348,002
<AVERAGE-NET-ASSETS> 1,038,150
<PER-SHARE-NAV-BEGIN> 12.54
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 7.02
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (3.37)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.12
<EXPENSE-RATIO> 2
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 024
<NAME> CONSECO EQUITY FUND CLASS Y
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 108,442,117
<INVESTMENTS-AT-VALUE> 140,102,458
<RECEIVABLES> 9,373,995
<ASSETS-OTHER> 90,153
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 149,566,606
<PAYABLE-FOR-SECURITIES> 2,106,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,510,912
<TOTAL-LIABILITIES> 3,616,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,449,332
<SHARES-COMMON-STOCK> 6,678,394
<SHARES-COMMON-PRIOR> 4,801,089
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,840,018
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,660,341
<NET-ASSETS> 145,949,691
<DIVIDEND-INCOME> 416,741
<INTEREST-INCOME> 257,703
<OTHER-INCOME> 0
<EXPENSES-NET> (1,188,394)
<NET-INVESTMENT-INCOME> (513,950)
<REALIZED-GAINS-CURRENT> 37,999,342
<APPREC-INCREASE-CURRENT> 15,927,962
<NET-CHANGE-FROM-OPS> 53,413,354
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (19,135,544)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,084,675
<NUMBER-OF-SHARES-REDEEMED> (1,263,226)
<SHARES-REINVESTED> 1,055,856
<NET-CHANGE-IN-ASSETS> 56,680,092
<ACCUMULATED-NII-PRIOR> 3,044
<ACCUMULATED-GAINS-PRIOR> (306,770)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 704,523
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,348,002
<AVERAGE-NET-ASSETS> 67,943,970
<PER-SHARE-NAV-BEGIN> 12.67
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 7.24
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (3.41)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.47
<EXPENSE-RATIO> 1
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> CONSECO FIXED INCOME CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 66,214,882
<INVESTMENTS-AT-VALUE> 63,932,965
<RECEIVABLES> 2,333,667
<ASSETS-OTHER> 39,255
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66,305,887
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 695,915
<TOTAL-LIABILITIES> 695,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,581,484
<SHARES-COMMON-STOCK> 3,194,335
<SHARES-COMMON-PRIOR> 3,005,603
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,689,595)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,281,917)
<NET-ASSETS> 65,609,972
<DIVIDEND-INCOME> 120,385
<INTEREST-INCOME> 4,524,985
<OTHER-INCOME> 0
<EXPENSES-NET> (693,221)
<NET-INVESTMENT-INCOME> 3,952,149
<REALIZED-GAINS-CURRENT> (1,545,396)
<APPREC-INCREASE-CURRENT> (2,546,409)
<NET-CHANGE-FROM-OPS> (139,656)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,960,510)
<DISTRIBUTIONS-OF-GAINS> (94,314)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,002,369
<NUMBER-OF-SHARES-REDEEMED> (2,815,791)
<SHARES-REINVESTED> 2,154
<NET-CHANGE-IN-ASSETS> 17,364,563
<ACCUMULATED-NII-PRIOR> 39,008
<ACCUMULATED-GAINS-PRIOR> (13,172)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,525
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 950,710
<AVERAGE-NET-ASSETS> 35,094,436
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> (0.65)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.6
<EXPENSE-RATIO> 1.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> CONSECO FIXED INCOME CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 66,214,882
<INVESTMENTS-AT-VALUE> 63,932,965
<RECEIVABLES> 2,333,667
<ASSETS-OTHER> 39,255
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66,305,887
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 695,915
<TOTAL-LIABILITIES> 695,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,581,484
<SHARES-COMMON-STOCK> 545,608
<SHARES-COMMON-PRIOR> 256,890
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,689,595)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,281,917)
<NET-ASSETS> 65,609,972
<DIVIDEND-INCOME> 120,385
<INTEREST-INCOME> 4,524,985
<OTHER-INCOME> 0
<EXPENSES-NET> (693,221)
<NET-INVESTMENT-INCOME> 3,952,149
<REALIZED-GAINS-CURRENT> (1,545,396)
<APPREC-INCREASE-CURRENT> (2,546,409)
<NET-CHANGE-FROM-OPS> (139,656)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (231,198)
<DISTRIBUTIONS-OF-GAINS> (11,058)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 359,137
<NUMBER-OF-SHARES-REDEEMED> (71,662)
<SHARES-REINVESTED> 1,243
<NET-CHANGE-IN-ASSETS> 17,364,563
<ACCUMULATED-NII-PRIOR> 39,008
<ACCUMULATED-GAINS-PRIOR> (13,172)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,525
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 950,710
<AVERAGE-NET-ASSETS> 4,149,674
<PER-SHARE-NAV-BEGIN> 10.19
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> (0.46)
<PER-SHARE-DIVIDEND> (0.52)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.59
<EXPENSE-RATIO> 1.6
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> CONSECO FIXED INCOME CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 66,214,882
<INVESTMENTS-AT-VALUE> 63,932,965
<RECEIVABLES> 2,333,667
<ASSETS-OTHER> 39,255
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66,305,887
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 695,915
<TOTAL-LIABILITIES> 695,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,581,484
<SHARES-COMMON-STOCK> 275,762
<SHARES-COMMON-PRIOR> 52,700
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,689,595)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,281,917)
<NET-ASSETS> 65,609,972
<DIVIDEND-INCOME> 120,385
<INTEREST-INCOME> 4,524,985
<OTHER-INCOME> 0
<EXPENSES-NET> (693,221)
<NET-INVESTMENT-INCOME> 3,952,149
<REALIZED-GAINS-CURRENT> (1,545,396)
<APPREC-INCREASE-CURRENT> (2,546,409)
<NET-CHANGE-FROM-OPS> (139,656)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (121,935)
<DISTRIBUTIONS-OF-GAINS> (6,488)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 307,198
<NUMBER-OF-SHARES-REDEEMED> (84,911)
<SHARES-REINVESTED> 775
<NET-CHANGE-IN-ASSETS> 17,364,563
<ACCUMULATED-NII-PRIOR> 39,008
<ACCUMULATED-GAINS-PRIOR> (13,172)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,525
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 950,710
<AVERAGE-NET-ASSETS> 2,138,866
<PER-SHARE-NAV-BEGIN> 10.23
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> (0.53)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.63
<EXPENSE-RATIO> 1.6
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 034
<NAME> CONSECO FIXED INCOME CLASS Y
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 66,214,882
<INVESTMENTS-AT-VALUE> 63,932,965
<RECEIVABLES> 2,333,667
<ASSETS-OTHER> 39,255
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66,305,887
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 695,915
<TOTAL-LIABILITIES> 695,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,581,484
<SHARES-COMMON-STOCK> 2,804,575
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<NAME> CONSECO 20 CLASS A
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<NAME> CONSECO 20 CLASS B
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<TABLE> <S> <C>
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<NAME> CONSECO 20 CLASS C
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<S> <C>
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<TABLE> <S> <C>
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<NAME> CONSECO 20 CLASS Y
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<S> <C>
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<NAME> CONSECO HIGH YIELD CLASS A
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<S> <C>
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<TABLE> <S> <C>
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<NAME> CONSECO HIGH YIELD CLASS B
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<NAME> CONSECO HIGH YIELD CLASS C
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<S> <C>
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<NAME> CONSECO HIGH YIELD CLASS Y
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