CONSECO STOCKCAR STOCKS INDEX FUND
Investing in the companies that support
America's #1 spectator sport
Advisor Class Shares
Prospectus
May 12, 2000
as revised June 1, 2000
CONSECO CAPITAL MANAGEMENT, INC.
Investment Adviser
LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONTENTS
PACE LAP: THE RISK/RETURN SUMMARY
* Victory Lane
- The Conseco StockCar Stocks Index Fund's Investment Objectives
* The Groove
- The Fund's Investment Strategy
* Red and Yellow Flags
- The Risks of Investing in the Fund
- Is the Fund Right for You?
- Fund Performance
- About Fund Share Classes
- Fees and Expenses
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GARAGE PASS: INSIDE THE CONSECO STOCKCAR STOCKS INDEX FUND
* Green Flag
- How the Fund Operates
* Going Flat Out
- How the Fund Invests
- That Other 5%
* The Engine
- Index Investing
- The Conseco StockCar Stocks Index
CONSECO STOCKCAR STOCKS INDEX FUND TEAM: MANAGEMENT OF THE FUND
* The Driver
- The Fund's Investment Adviser
* The Crew
- The Fund's Administrator
A FINAL CHECK: IMPORTANT FUND DETAILS
* The Fund's Place in the Race
- Calculating the Daily Share Price
* The Purse
- How the Fund Pays Out Dividends and Distributions
- Taxes on Your Fund Investment
* Track Record
- Financial Highlights
IN THE DRIVER'S SEAT
* Managing Your Fund Shares
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CONSECO STOCKCAR STOCKS INDEX FUND
We invest in the companies that support NASCAR's Winston Cup Racing Series and
the teams that race for it.
PACE LAP: THE RISK/RETURN SUMMARY
VICTORY LANE
THE CONSECO STOCKCAR STOCKS INDEX FUND'S INVESTMENT OBJECTIVES
The fund seeks GROWTH OF CAPITAL and CURRENT INCOME by investing in the
companies of the CONSECO STOCKCAR STOCKS INDEX. The Fund aims to increase the
value of your investment in two ways: through an increase in the price of the
stocks the Fund invests in (that's known AS GROWTH OF CAPITAL) and passing along
the dividends paid by the companies that the Fund invests in (that's CURRENT
INCOME).
THE GROOVE
THE FUND'S INVESTMENT STRATEGY
The Fund invests in the companies of the Conseco StockCar Stocks Index (the
"Index").* The Index consists of 54 companies that support NASCAR's Winston Cup
Racing Series. The companies in the Index either sponsor NASCAR Winston Cup
racing teams or races, or they earn money from NASCAR Winston Cup events.
The StockCar Stocks Index is a price-sensitive, equal-weighted stock Index. The
Fund invests based on the Index. On Jan. 1, 2000, there were 54 companies in the
Index. Equal-weighted means that on Jan. 1 of each year, each company is the
same percentage of the Index. So, in January, the Fund invested 1/54 - a little
more than 1.85% - of its money in each company. The Index is also
price-sensitive. This means that the actual percentage of each company in the
Index will change during the year because stock prices go up and down. A better
performing stock will grow to be a higher percentage of the Index during the
year and an underperforming stock will be a smaller percentage. The Fund buys or
sells stocks in accordance with the current Index for that trading day.
--------
* To own all the stocks in the Conseco StockCar Stocks Index, we estimate the
Fund needs to have at least $25 million to invest. (As of Sept. 30, 1999, it
had $4.9 million.) Until the Fund reaches that investment level, we may buy
a selection of stocks -- and other securities -- chosen to track the Index
as closely as possible. During this startup investing phase, we can't
guarantee that our selection will come close to matching the Index's
performance.
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During the year, new companies that belong in the Index are added at the end of
each calendar quarter. At the end of the year, companies that no longer belong
in the Index are removed and the Fund sells the stock of such companies. Then,
the Index and the Fund are rebalance and the process repeats.
RED AND YELLOW FLAGS
THE RISKS OF INVESTING IN THE FUND
Your Basic Red Flag
Like stock cars themselves, the Fund holds the potential for superior
performance. But the Fund makes no guarantees. Investing in it is not exactly a
spin around the block. It's more like driving on a speedway. Follow the rules of
the road in the neighborhood and you should get by. Play by the rules on the
speedway and you still might crash. You could lose part or even all of the money
you invest in the Fund, just as you can with any mutual fund.
Yellow Flags: Possible Causes of Loss in Your Fund
The prices of the stocks that the Fund invests in may fall. The price of a
company's stock may fall because of problems at the company. A price decline may
also have little or no basis in fact -- the price may fall just because
investors suspect the company may have problems.
Then again, declining stock prices may have nothing to do with events at a
particular company, but may result from changing stock-market or economic
conditions, actions on the part of the U.S. government or other governments
around the world, or from a simple lack of investor confidence. In the past,
stocks and the stock market have recovered, but some of these slumps have lasted
for months and even years.
Stock prices for small- and medium-size companies tend to fluctuate more than
stock prices for large companies. Approximately 47% of the stocks in the Index
are stocks of small- and medium-size companies. Stocks in such companies have
often suffered more in stock-market slumps than large-company stocks. They
usually don't have as many resources as large companies to tide them over
through hard times. What's more, investors are usually less willing to put their
money into small- and medium-size company stocks. That may mean a small
company's stock price may fall relatively farther than a large company's stock
price before sellers can find investors willing to buy.
--------------------------------------------------------------------------------
Please note that the discussion of investment strategies and risks in this
prospectus applies to the Fund's mature phase when it has $25 million or
more invested
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We invest in the stocks in the Index. We do not research the outlook for the
companies we invest in, and we do not avoid stocks that we think won't do well.
In investing, as in stock-car racing, points you've earned at the end of the
race matter more than your standing at the end of any lap. That's the philosophy
behind index investing. It makes for a simple race plan: We invest in the
companies listed in the Index and we stay invested in them.
That describes what index investing does. And it means there's one thing it
doesn't do: An index fund doesn't do research that will help predict which
stocks will break away from the pack or which will lag behind. Over the long
haul, indexers believe that the simplicity and consistency of their approach --
investing in a group of companies and sticking with them -- will pay off. But
that means an index fund makes no effort to avoid stocks that may trail the
field.
The companies that make up the Index may change, which could affect the Fund's
performance. The NASCAR Winston Cup's sponsors and supporters may change from
year to year. These changes usually result from everyday business decisions. A
company's marketing campaign to NASCAR fans may have run its course, for
example. Changes like that can mean that well-established companies with strong
track records are leaving the Index -- and companies without such strong records
are replacing them. (Of course, it could also mean just the opposite: that
stronger companies are replacing the companies leaving the Index.) In either
case, according to our investment policy, the Fund would have to invest in the
new companies in the next calendar quarter and sell its stock in the companies
that leave the Index at the end of the calendar year. That could slow Fund
performance.
A related risk is that the popularity of the NASCAR Winston Cup Series, or the
teams that race in it, may decline among fans and sponsors. If that happens,
fewer companies or weaker companies might be listed in the Index.
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The Fund runs a greater risk of loss than a fund that invests in a wider range
of stocks. A rule of investing says that the more widely you spread your
investments, the less likely one bad investment will damage you. If you divide
your investments equally between two companies and one goes out of business, you
lose half your money. If you divide your investments equally among 100 companies
and one goes out of business, you lose only 1%.
By the same token, if you invest equally in two stocks and one doubles in price,
it increases the total value of your investment by 50%. If you invest equally in
100 stocks and one doubles in price, it would increase the total value by 1%.
The rules apply, of course, whether you invest $1,000 or $1 million. While the
stocks that make up the Index represent many industries, the Fund can invest
only in those stocks listed in the Index. Therefore, it has a higher risk of
loss than a mutual fund that can spread its investments, and its risks, more
widely.
IS THE FUND RIGHT FOR YOU?
You should consider investing in the Fund if you are looking to increase the
value of your investment over the long term. That last part is important. Over
longer periods -- five years or more -- stocks have usually done better than
other financial investments, like bonds. But stock prices change from day to
day, much more so than bonds, and sometimes by quite a lot. That fact has two
consequences:
* The value of an investment in the Fund, which itself invests almost totally
in stocks, will fall and rise in price more than an investment that is less
concentrated in stocks.
* Because that daily price variation is constant and the superior performance
of stocks builds up slowly, your risk of loss is greater if you invest in
the Fund for just a short time.
Keep in mind, too, that the Fund has not been in business long, so no
information exists on how the Fund has performed over a wide range of
stock-market conditions.
FUND PERFORMANCE
The bar chart below shows the total return on Direct Class shares of the Fund in
its first calendar year. Because the Advisor Class shares have not completed a
full calendar year, Direct Class share performance is presented here. Direct
shares are not offered in this prospectus. Advisor Class shares should have
substantially similar returns, however, because they make the same investments
as Direct Class shares and have the same total expenses.
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1999 Total Return
Direct Class Shares
------------------------
1.10%
------------------------
1999
------------------------
The Fund's return from Jan. 1, 2000 to March 31, 2000 was -5.34%.
The Fund's best quarterly return, 4.73%, came in 2Q99.
Its worst quarterly return, -8.42%, came in 3Q99.
The table below shows how the Fund's returns have measured up to the returns of
the S&P 500 Index. It gives you an idea of how the Fund's performance has varied
compared to a widely used stock-market benchmark.
SIDEBAR A Look Under the Hood
The S&P 500 Index is a widely used benchmark of U.S. stock market performance.
The stocks in the S&P 500 represent companies from every segment of American
industry. Standard & Poor's, the company that created and maintains the S&P 500
Index, has chosen the companies because of their importance to the economy and
because their stocks are owned by a large number of investors and change hands
frequently.
AVERAGE ANNUAL TOTAL RETURN*
(as of Dec. 31, 1999)
---------------------------- ----------------------- --------------------------
1 YEAR SINCE INCEPTION
OCT. 1, 1998
---------------------------- ----------------------- --------------------------
Direct Class shares 1.10% 16.70%
---------------------------- ----------------------- --------------------------
S&P 500 Index 21.04% 51.93%
---------------------------- ----------------------- --------------------------
Conseco StockCar Stocks -0.22% 15.51%
Index
---------------------------- ----------------------- --------------------------
* Advisor Class shares carry a 4% maximum sales load that is not reflected in
the Direct Class shares' average annual total return. If the Advisor Class
shares' average annual total return reflected this sales load, it would be
lower.
As you review the Fund's performance, please keep in mind that its past
performance does not necessarily indicate how it will perform in the future.
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ABOUT FUND SHARE CLASSES
The Fund offers two classes of shares: Advisor Class shares and Direct Class
shares, available through a separate prospectus. Direct shares come without
up-front or deferred sales charges and without professional investment advice.
Advisor Class shares carry an up-front sales charge, which covers the cost of
professional investment advice. You pay the sales charge when you buy the
shares. You can buy Advisor Class shares from your registered financial
professional.
For complete details, check "In the Driver's Seat: Managing Your Fund Shares."
FEES AND EXPENSES
The tables below describe the fees and expenses you may pay if you buy and hold
shares of the Fund.
ADVISOR CLASS SHAREHOLDER FEES (fees paid directly from your investment)
---------------------------- ----------------
Maximum up-front
sales charge 4.0%
---------------------------- ----------------
Maximum deferred
sales charge None
---------------------------- ----------------
The Fund will assess a fee of 0.50% of the value of the shares you sell if you
sell them less than six months after purchasing them.
ADVISOR CLASS ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
total Fund assets)
Management fees 1.05% (1)
Distribution (12b-1) fees 0.25% (2)
Other expenses 0.71%
---------------------------------------------
Total annual Fund operating expenses 2.01%
Less: Expense waivers and/or reimbursement (0.51%)
---------------------------------------------
Total net expenses 1.50% (3)
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1. Management fees include a fee of 0.65% for investment advisory services to
Conseco Capital Management, Inc., and 0.40% for administrative and other
services to Conseco Services, LLC.
2. 12b-1 fees 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.
3. The Adviser and Administrator have agreed to waive a portion of their fees
and/or pay a portion of the Fund's expenses through April 30, 2002, to
ensure that total annual operating expenses do not exceed 1.50% annually.
They may recover any money waived under the contract provisions, to the
extent that actual fees and expenses are less than the 1.50% expense
limitation, for a period of three years after the date of our waiver. For
additional information, see "Management of the Fund."
ADVISOR CLASS EXPENSE EXAMPLE
The following example should help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Advisor class shares of the
Fund for the time periods indicated and then sell all your shares at the end of
those periods. The example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
--------------- --------------- ---------------- --------------- --------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------- --------------- ---------------- --------------- --------------
Advisor Class $544 $835 $1,147 2,027
--------------- --------------- ---------------- --------------- --------------
GARAGE PASS: INSIDE THE CONSECO STOCKCAR STOCKS INDEX FUND
GREEN FLAG
HOW THE FUND OPERATES
The Fund seeks growth of capital and current income by investing in the stocks
of companies of the Conseco StockCar Stocks Index.
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The Index lists any company whose stock is available to the general public and
that fits into one of the following seven categories:
* NASCAR Winston Cup Series Sponsor: a company that sponsors the entire 34-race
NASCAR Winston Cup Series
* Lead Race Sponsor: a company that sponsors one or more races in the NASCAR
Winston Cup Series
* Primary Car Sponsor: a company that acts as the lead sponsor for one of the
roughly 45 stock cars that race in the NASCAR Winston Cup Series every year.
You can tell a car's primary sponsor by the corporate logo -- it's the one on
the hood of the car.
* Major Product Sponsor: a company that provides products, such as gasoline,
tires or beverages, to any of the NASCAR Winston Cup racing teams
* Track Owner: a company that owns all or part of any of the tracks that host
the 34 NASCAR Winston Cup Series races
* Licensee: a company that produces a product related to the NASCAR Winston Cup
Series under a licensing agreement with NASCAR
* Broadcaster: a company that broadcasts NASCAR Winston Cup races on
television, radio or via the internet under an agreement with NASCAR
The Index has no minimum earnings qualification -- it doesn't matter how much or
how little a company earns from its participation in the NASCAR Winston Cup
Series as long as it fits into one of the seven categories. The Index has a size
limit. To be listed, a company's stock must initially have a total market value
of at least $100 million.
GOING FLAT OUT
HOW THE FUND INVESTS
We aim to invest 95% of the Fund's net assets in the stocks of the companies
listed in the Index. At the beginning of each year, as noted in PACE LAP, we
invest the net assets equally in all Index stocks. From then on, the weight of
each Index stock changes with changes in its price. This means that, over the
course of the year, the Fund invests according to stock performance: It puts
more money into the Index stocks that have done better, less into those that
have trailed behind.
SIDEBAR A Look Under the Hood
Just like any other mutual fund, the Fund's assets are the stocks and other
investment securities purchased with money from its shareholders plus any gains
(or minus any losses) from these investments. The Fund's net assets equal the
purchase price of the stocks and securities, plus gains -- or minus losses --
from investment performance, minus any amounts, usually small, that the Fund
might owe to others.
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We try to come within 95% of the total return of the Index stocks. That's before
we deduct fees and expenses. We don't normally expect to match 100% of the
Index's total return, even before we take out fees and expenses, because we
can't invest all the Fund's assets in Index stocks. On one hand, we have to keep
some cash on hand to pay Fund shareholders for shares they might want to sell.
On the other, it takes time to invest all the cash we receive from the purchase
of new shares. Besides the cash on hand, the Fund has to pay commissions on the
stocks that it buys and sells. Those costs also cause its performance to deviate
from the Index's.
Under the supervision of the Board of Directors of the Fund, the Adviser is
responsible for investing the Fund's money to try to match the performance of
the Conseco StockCar Stocks Index. If the correlation between the Fund's
performance and Index's performance is not maintained, the Board may take
actions, including changing the fee structure and/or the investment policies of
the Fund, as needed, to reduce the performance deviation.
SIDEBAR A Look Under the Hood
A stock's total return equals the change in its price plus any dividends that it
pays during the period an investor owns it. If the stock gains in price the
return will be positive. But if its price falls it will have a negative return.
Since you add dividends to the calculation, a stock that pays dividends -- not
all do -- has an extra return above price change alone.
THAT OTHER 5%
The Fund can invest up to 5% in the money market, in bonds issued by the U.S.
Treasury and government agencies. This is a way of earning interest on the cash
we have on hand.
THE ENGINE
INDEX INVESTING
We mentioned this briefly before in PACE LAP, but we should emphasize it again.
It's all in our name: the Conseco StockCar Stocks Index Fund is an index fund.
Unlike actively managed stock mutual funds, we don't pick just those stocks we
think will finish well -- we invest in the stocks in the Index. We believe our
approach makes sense over the long run. Historically, stocks have gained more
value than any other financial investment, like bonds or savings accounts.
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We're not saying that index investing beats active management, the technique
used by many mutual funds. Both index investing and active management have their
place: Active management applies research to spot those stocks with breakaway
potential and to steer clear of those that may crash. This double-edged formula
has often beaten index investing in the past, but it's like stockcar racing in
one sense: There's no telling in advance which actively managed fund can
successfully pick the winners out of the pack and avoid the losers.
Then, too, actively managed mutual funds may trade stocks frequently. They may
sell stocks because they think they have gone as far as they're likely to go or
because they haven't lived up to expectations. They will jump into others with
strong performance potential according to their research. Index mutual funds
tend to buy and sell stocks less often. Remember, they're not trying to beat
the market -- they simply aim to match the performance of a certain group of
companies by owning shares in every one of them.
Whenever active investors buy or sell stock they have to pay a commission. When
they take a profit by selling a stock that has gained in price, they have to pay
tax on that profit. The tax payment comes out of their gain, just as commissions
do. Index investors pay commissions and taxes too, of course. But since they
tend to buy and sell less, they end up paying less.
So Index funds can offer investors a less expensive way of investing in a broad
market segment. That means index funds may be right for investors who favor a
particular industry or a group of related industries but who are not familiar
with individual companies. It also means index funds could work for new
investors who want to learn how mutual funds and stock markets work as a first
step in a lifelong investment program.
THE CONSECO STOCKCAR STOCKS INDEX
The American Stock Exchange ("AMEX") calculates and publishes the Index's daily
value, under the ticker symbol RCE. The Adviser tells the AMEX when a company is
qualified or disqualified for listing in the Index. Once a company has become
eligible, the Index has to list it by the next calendar quarter. (Calendar
quarters begin Jan. 1, April 1, July 1 or Oct. 1.) The Index delists a company
that becomes ineligible at the end of the year in which it became ineligible.
SIDEBAR The Word from Pit Road
To return to equal weighting at the end of each year -- where the stocks in the
Index account for 1/54 of the Fund's total investment -- we buy and sell stocks
to match the Index.
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The 54 stocks included in the Conseco StockCar Stocks Index reflect the broad
corporate support for NASCAR racing. Standard & Poor's, which tracks the
performance of the 1,500 companies that account for 87% of the total
stock-market value in the United States, has divided American business into 11
major sectors. The Index contains companies from 10 of them. The companies in
the Index also come in all sizes. As of June 11, 1999:
* 53.4% were large caps, or large-capitalization companies, whose total
stock-market value exceeded $10 billion.
* 27.6% were mid caps, companies whose stock-market value ranged between $1
billion and $10 billion.
* 19.0% were small caps with less than $1 billion in market value.
[DIAGRAM]
List the companies in the Index, their ticker symbols and the logos they use in
the Winston Cup along with the following caption:
Company Name Ticker
------------------ ------
Action Performance Companies Inc ACTN
Associates First Capital Corp AFS
Ashland Inc ASH
Bellsouth Corp BLS
BP Amoco LP BPA
Anheuser Busch Companies Inc BUD
Caterpillar Inc CAT
CBRL Group Inc CBRL
CBS Corp CBS
Clorox Co CLX
Conseco Inc CNC
Du Pont EI de Nemours DD
Deere and Co DE
Walt Disney Co DIS
Dover Downs Entertainment Inc DVD
Eastman Kodak Co EK
Exide Corp EX
Ford Motor Company F
Federal-Mogul Corp FMO
Global Crossing Ltd GBLX
General Electric Co GE
General Mills Inc GIS
General Motors Corp GM
Go.com GO
Genuine Parts Co GPC
Goodyear Tire and Rubber Co GT
Home Depot Inc HD
International Speedway Corp ISCA
Kellogg Co K
Kmart Corp KM
Coca Cola Co KO
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Kroger Co KR
MBNA Corp KRB
Lowes Companies Inc LOW
Mattel Inc MAT
McDonalds Corp MCD
Philip Morris Companies Inc MO
NationsRent Inc NRI
Quaker Oats Co OAT
Oakwood Homes Corp OH
Peco Energy Co PE
Pepsico Inc PEP
Pfizer Inc PFE
Procter and Gamble Co PG
Pennzoil Quaker State Co PZL
Racing Champions Corp RACN
RJ Reynolds Tobacco Holdings Inc RJR
Adolph Coors Co RKY
Sears Roebuck and Co S
Tosco Corp TOS
Speedway Motorsports Inc TRK
Time Warner Inc TWX
Texaco Inc TX
Exxon Mobil Corporation XOM
The 54 stocks listed above are included in the Index as of Jan. 1, 2000 and
reflect the broad support NASCAR racing enjoys among American companies.
CONSECO STOCKCAR STOCKS INDEX FUND TEAM: MANAGEMENT OF THE FUND
THE DRIVER
THE FUND'S INVESTMENT ADVISER
Conseco Capital Management, Inc. ("CCM"), located at 11815 N. Pennsylvania
Avenue, Carmel, Indiana 46032, is a wholly owned subsidiary of Conseco, Inc., a
publicly owned financial services company that provides specialized annuity,
life and health insurance products. CCM manages investments for Conseco Fund
Group and other affiliated mutual funds, as well as for foundations, endowments,
corporations, governments, unions and wealthy individuals. As of Dec. 31, 1999,
CCM managed more than $42.2 billion.
CCM annually receives a fee of 0.65% of the Fund's average daily net assets for
its services.
ADVISORY FEES
For the fiscal year ended Sept. 30, 1999, the Adviser received $11, 599 for
advisory services provided. These advisory fees were paid to StockCar Stocks
Advisors, LLC, the Fund's investment adviser from Oct. 1, 1998, when the Fund
began operations. CCM acquired the assets of StockCar Stocks Advisors, LLC on
April 28,2000 and assumed the investment management of the Fund.
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THE CREW
THE FUND'S ADMINISTRATOR
Conseco Services, LLC is the Fund's Administrator. It is responsible for:
* Reports required by the federal Securities and Exchange Commission ("SEC") and
state securities commissions
* Maintaining the Fund's books and records
* Reports for the Fund's board of directors
* Proxy statements and shareholder reports
Conseco Services receives a fee for these services at an annual rate of 0.40%
for the first $50,000,000; 0.30% for the net $25,000,000; and 0.20% in excess of
$75,000,000 of the Fund's average daily net assets.
A FINAL CHECK: IMPORTANT FUND DETAILS
THE FUND'S PLACE IN THE RACE
CALCULATING DAILY SHARE PRICE
Like most other mutual funds, the Fund's daily share price reflects the market
value of all the stocks and bonds it owns, plus cash on hand, minus any
liabilities. That daily calculation provides the Fund's total net asset value.
Divide the net asset value by the number of shares outstanding and you get the
net asset value per share. As a result, the Fund's share price is also called
its Net Asset Value, abbreviated simply as NAV.
We normally compute the Fund's NAV at the end of regular trading hours -- 4 PM
Eastern time -- every day the New York Stock Exchange ("NYSE") is open for
business. We value the stocks and bonds the Fund owns at their market price at
that time. If we cannot easily find a price quote, we estimate the price in
accordance with guidelines approved by the Fund's board of directors.
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THE PURSE
HOW THE FUND PAYS OUT DIVIDENDS AND DISTRIBUTIONS
The Fund pays out at least 90% of its net investment income to its shareholders
annually in proportion to the number of Fund shares each of them owns. Note that
Direct Class and Adviser Class shares could each receive a different amount of
net investment income because of differing initial sales charges.
SIDEBAR A Look Under the Hood
Net investment income equals all stock dividends a fund's investments earn, plus
any interest it receives on the bonds it owns, minus expenses.
The Fund pays out all capital gains, which is the profit it makes on investments
when it sells them. This payout is called a capital gain distribution. We will
automatically use the dividends and distributions earned by your investment to
purchase additional Fund shares for your account. If you prefer to have them
paid directly to you by check, please notify us in writing at the address listed
in Buying or selling shares by mail under CONTACTING THE PIT.
TAXES ON YOUR FUND INVESTMENT
The Fund's shareholders, not the Fund itself, ordinarily pay taxes on its
dividends and distributions, as is the case with most mutual funds. You will owe
the taxes whether or not you choose to receive your distributions and dividends
in cash or reinvest them. The amount you owe will depend on many factors.
The most important are:
* Your income tax bracket
* How long the Fund has owned the stock in companies that it sells
* How long you've owned any shares in the Fund that you might sell
Because each investor's tax circumstances are unique and because tax laws are
subject to change, we recommend consulting your independent tax advisor about
your tax issues.
The amount of tax you owe each year on your Fund investment will depend on the
amount of dividends and capital gain distributions the Fund pays out. Normally,
the taxes will be due in the year dividends and distributions are paid, except
for distributions declared in December and paid in January of the next year,
which are taxable as if we paid them Dec. 31.
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Dividends and capital gain distributions usually create the following tax
liability:
-------------------------------------------- ----------------------------------
TRANSACTION TAX STATUS
-------------------------------------------- ----------------------------------
Income payout Ordinary income
-------------------------------------------- ----------------------------------
Short-term capital gain distribution Ordinary income
-------------------------------------------- ----------------------------------
Long-term capital gain distribution Capital gain
-------------------------------------------- ----------------------------------
In addition, if you sell or exchange your Fund shares you may have a taxable
gain or loss, depending on the price you bought your shares for and the price
you sell them for.
-------------------------------------------- ----------------------------------
TRANSACTION TAX STATUS
-------------------------------------------- ----------------------------------
You sell shares owned for more than one year Capital gain or loss
-------------------------------------------- ----------------------------------
You sell shares owned for one year or less Gains treated as ordinary income,
losses subject to special rules
-------------------------------------------- ----------------------------------
After Dec. 31 of each year, we will mail you a notice telling you how much your
investment in the Fund has earned in dividends and distributions during the year
and the federal tax status of these earnings -- whether they are taxable as
ordinary income or as a short- or long-term gain.
Tax considerations for tax-deferred accounts, such as qualified retirement plans
or nontaxable entities, will be different.
SIDEBAR A Final Yellow Flag
You must provide your Social Security or other taxpayer ID number on your Fund
account application. If we do not have your number on record, you will be
subject to backup withholding. That means the IRS requires us to withhold 31% of
all earnings from your Fund investment. Consult your tax advisor for details.
TRACK RECORD
FINANCIAL HIGHLIGHTS
The table below provides a picture of the Fund's performance since it began
operations. The information shown reflects results for a single Fund share. The
total return represents the rate of return for an investor who reinvested all
dividends and distributions. Tait, Weller & Baker of Philadelphia, Penn. has
audited this information. Their report, along with the Fund's financial
statements, are included in the Fund's annual report dated Sept. 30, 1999, which
is available on request by calling 800-494-2755.
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Financial Highlights
-------------------------------------------------- ----------------------------
Advisor Class shares
-------------------------------------------------- ----------------------------
PER-SHARE OPERATING PERFORMANCE 8/2/99-9/30/99 1
-------------------------------------------------- ----------------------------
Net Asset Value at
beginning of period $14.40
-------------------------------------------------- ----------------------------
INVESTMENT OPERATIONS
-------------------------------------------------- ----------------------------
Net investment income 0.01
-------------------------------------------------- ----------------------------
Net realized and unrealized
(loss) on investments (0.92)
-------------------------------------------------- ----------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.91)
-------------------------------------------------- ----------------------------
-------------------------------------------------- ----------------------------
NET ASSET VALUE, END OF PERIOD
$13.49
-------------------------------------------------- ----------------------------
TOTAL RETURN (6.32)%
-------------------------------------------------- ----------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------- ----------------------------
Net assets,
End of period (in 000's) $208.00
-------------------------------------------------- ----------------------------
Ratio of expenses to average net assets 1.41% (2)
Ratio of net investment income (loss) to
average net assets 0.63% (2)
-------------------------------------------------- ----------------------------
Portfolio turnover rate 6.60%
-------------------------------------------------------------------------------
1 The Fund first sold Advisor Class shares to the public on Aug. 2, 1999.
2 Annualized.
MANAGING YOUR FUND SHARES
CONTACTING THE PIT
IMPORTANT INFORMATION ABOUT CONTACTING THE CONSECO STOCKCAR STOCKS INDEX FUND
By phone
800-494-2755, 24 hours a day
By mail
Conseco StockCar Stocks Index Fund - Advisor Class
Attn: Administrative Offices
11815 N. Pennsylvania St., K1B
Carmel, IN 46032
Buying or selling shares by mail, including overnight mail
Conseco StockCar Stocks Index Fund - Advisor Class
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
800-494-2755
18
<PAGE>
OUR BUSINESS HOURS
We're open for business and you can buy and sell shares whenever the NYSE is
open for business. That's any weekday except: New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July, Labor
Day, Thanksgiving Day and Christmas Day.
MINIMUM FUND INVESTMENTS
To open an account $250
Each new investment after the first $50
To open an automated investment plan $50
We cannot accept third-party checks.
Keeping track
We'll send you written confirmation of each transaction. These confirmations
serve as your proof of ownership since we do not issue certificates.
"NASCAR," the trademark of the National Association of Stock Car Racing, has
been licensed for use by Conseco, Inc. and its affiliates as NASCAR's official
financial services provider. The National Association of Stock Car Racing does
not sponsor, endorse, sell or promote the Conseco StockCar Stocks Index Fund or
the Conseco StockCar Stocks Index. Nor does the National Association of Stock
Car Racing make any representation regarding the advisability of investing in
the Conseco StockCar Stocks Index Fund.
START YOUR ENGINES
THREE EASY WAYS TO INVEST IN THE FUND
THROUGH YOUR FINANCIAL PROFESSIONAL
You can buy shares of the Fund through any authorized broker/dealer, financial
planner or a financial institution, such as a bank. 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.
19
<PAGE>
BY MAIL
Mail your completed application and a check payable to the Conseco StockCar
Stocks Index Fund - Advisor Class to one of the addresses listed in Buying or
selling shares by mail under CONTACTING THE PIT.
BY BANK WIRE
Mail your completed application to one of the addresses listed in Buying or
selling shares by mail under CONTACTING THE PIT. The application must be
received and processed before you wire your money. Then, wire your investment
to:
ABA# 031201467
Credit to:
Declaration Service Company
Account #201422469583
Further credit to:
* Conseco StockCar Stocks Index Fund
* Your account name
THE SET-UP
PAYING FOR YOUR FUND INVESTMENT
The price you pay for Advisor Class shares equals the Fund's current share price
plus a sales charge that varies according to the amount you invest:
--------------------------- ---------------------------- ----------------------
IF YOUR PURCHASE IS ... YOUR SALES CHARGE AS A % THE ONE-TIME DEALER
OF THE SHARE PRICE IS... ALLOWANCE AS A % OF
PURCHASE PRICE
--------------------------- ---------------------------- ----------------------
$250 to $99,999 4.00 3.50%
--------------------------- ---------------------------- ----------------------
$100,00 to $249,999 3.00 2.50%
--------------------------- ---------------------------- ----------------------
$250,000 to $499,999 2.00 1.75%
--------------------------- ---------------------------- ----------------------
$500,000 to $999,999 1.00 0.75%
--------------------------- ---------------------------- ----------------------
$1,000,000 and over none None
--------------------------- ---------------------------- ----------------------
You may be able to reduce the sales charge on the purchase of your Fund shares:
20
<PAGE>
* If you sign a letter of intent agreeing to invest a definite amount in the
Fund in the 13 months following your purchase, we will calculate the sales
charge as if you had purchased all the shares at one time.
Consult your registered financial professional or the Conseco StockCar Stocks
Index Fund's Statement of Additional Information for further details on our
share cost reduction programs.
Paying for Shareholder Services
The Fund has adopted a 12b-1 service plan to compensate Conseco Equity Sales,
Inc. for distributing Fund shares and servicing shareholder accounts. The Fund
pays ongoing fees of up to 0.25% of average daily net assets. This will increase
the cost of your investment and reduce its return.
In addition, Conseco Equity Sales may retain the sales charge you pay and may
make payments to brokers, dealers and other financial intermediaries for
providing shareholder services and for covering their sales-related costs. These
payments may not exceed an annual rate of 0.25% of average daily net asset
value.
REFUELING
IMPORTANT INFORMATION ABOUT BUYING FUND SHARES
* You pay for your shares at the next share price calculated after we
receive your order.
* You must make your initial purchase by mail or wire.
* If you buy shares through a financial professional, it is the
professional's responsibility to forward your purchase order before the
close of business on the NYSE, normally 4 PM Eastern time. You should check
to see whether your financial professional has an earlier daily deadline
for forwarding purchase orders.
* 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. You may need it to ensure timely credit.)
* We can only accept checks in U.S. dollars drawn on U.S. funds.
* We may charge a fee on purchase checks that do not clear.
* To ensure that all checks have cleared, we do not allow investors to sell
shares purchased by check until they have owned the shares at least 15
days.
* We reserve the right to cancel any purchase order.
21
<PAGE>
CHECKERED FLAG
IMPORTANT INFORMATION ABOUT SELLING FUND SHARES
If you sell by phone
* Neither the Fund nor its transfer agent is responsible for verifying
whether a telephone 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.
* You cannot place orders by phone if you have rejected the telephone
privilege on your account application.
If you sell through your financial professional
Your financial professional may
* Have separate procedures for buying and selling shares.
* Charge fees for processing your sales request, even though we do not.
If you sell by mail
Send your request to the address in Buying or selling shares by mail under
CONTACTING THE PIT.
We require a signature guarantee for sales of Fund shares totaling $10,000 or
more. You can obtain a signature guarantee from most financial institutions,
such as banks, brokers/dealers, credit unions and savings associations, but not
from a notary public.
Information required on all sale requests
* Include your account number, your account's name and your Social Security
or taxpayer identification number with your sales request.
* State either the number of shares you wish to sell or the amount you wish
to receive from the sale.
22
<PAGE>
Calculating the proceeds from your sale
* We sell your shares at the next share price calculated after we receive
your request, either from you directly or through your registered financial
professional.
* 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 to receive
that day's share price. You should check to see if your financial
professional has an earlier daily deadline for forwarding sales requests.
Receiving the proceeds from your sale
* You should receive a check for the net proceeds of your sale within seven
business days. We may, however, delay payment if the check you used to
purchase the shares you're selling has not cleared.
* We will mail the check for the proceeds of the sale of your shares to the
address listed on your account application.
* Under extraordinary circumstances specified by law we may temporarily
suspend payment.
THE VIP TREATMENT
SPECIAL SHAREHOLDER SERVICES
We offer an array of special services free of charge to make investing in the
Fund easy.
* Preauthorized investing lets you set up debits from your checking account
for $50 or more every month to purchase mutual fund shares. You may even
qualify for a waiver of the minimum on purchases made through payroll
deduction or qualified retirement plans.
* Electronic buying and selling 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. To take advantage of this feature, simply fill out the "Automatic
Investment Program," on your account application.
BACK COVER
23
<PAGE>
More information on the Fund is available free upon request.
SHAREHOLDER REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders.
In the Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its most recent fiscal year.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information (SAI) is on file with the SEC and is
incorporated by reference into (and is legally considered part of) this
prospectus. The SAI provides more details about the fund and its policies.
TO OBTAIN A SHAREHOLDER REPORT, SAI OR OTHER INFORMATION FREE OF CHARGE, CONTACT
US:
by telephone:
800-494-2755
by mail:
CONSECO STOCKCAR STOCKS INDEX FUND
C/O DECLARATION SERVICE COMPANY
555 NORTH LANE, SUITE 6160
CONSHOHOCKEN, PA 19428
on the Internet:
You can view text-only versions of the prospectus and other Fund details online
or download them from:
SEC
HTTP://WWW.SEC.GOV
Conseco StockCar Stocks Mutual Fund, Inc.
HTTP://WWW.STOCKCARSTOCKS.COM
24
<PAGE>
You can review and copy the documents at the SEC's Public Reference Room in
Washington, D.C. Call the SEC at 202-942-8090 for further details. The SEC will
furnish hard copies of the documents, upon payment of a duplicating fee, through
the Public Reference Section. Address your request to:
Public Reference Section of the SEC
Washington, DC 20549-6009
Conseco StockCar Stocks Index Fund
Registration Number: 811-8791
25
