September 30, 2000
Annual Report
Conseco StockCar
Stocks Index Fund
Investing in the companies that support America's #1 spectator sport
www.stockcarstocks.com
[CAR PHOTO]
NASCAR
Conseco, the Official Financial Services Provider of NASCAR
[LOGO]
CONSECO
Step up.SM
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POWERED BY THE GROWTH OF STOCKCAR RACING'S
TOP CORPORATE SPONSORS
The horsepower behind the fund's exciting return potential comes from the
companies it invests in. Each is either a major sponsor, or is closely
associated with many - if not all - of the NASCAR Winston Cup Series events you
enjoy.
GUIDED BY AN ESTABLISHED INDEX
The fund relies on the Conseco StockCar Stocks Index to guide it through
the market's twists and turns. The American Stock Exchange (AMEX) calculates and
publishes the index's daily value, under the ticker symbol RCE.
An index is an unmanaged portfolio typically used to determine the
performance of a specific market sector. While it is not possible to invest
directly in an index, this fund essentially mirrors its index in terms of the
companies it holds and the size of each holding. Since index funds are passively
managed, any time there is a change in the index 1, the same change is made in
the fund's holdings.
Certain risk factors will be present in the fund to the extent that they
are present in the holdings of the index. For example: smaller companies
historically have been subject to greater volatility than larger companies.
MANAGED BY CONSECO CAPITAL MANAGEMENT, INC.
Behind the fund's distinguished portfolio and investment guidelines lies
Conseco Capital Management, Inc. (CCM), the fund's investment adviser. With more
than $33 billion in taxable and tax-exempt assets under management, as of Sept.
30, 2000, CCM is a wholly owned subsidiary of Conseco, Inc.
A provider of wealth management solutions to nearly 12.5 million customers,
Conseco, Inc. became a publicly owned company in 1985 and is traded on the New
York Stock Exchange (symbol: CNC). In addition to sponsoring A.J. Foyt's Winston
Cup Series #14 Team Conseco Pontiac Grand Prix, Conseco also is the official
financial services provider of NASCAR.
TICKER SYMBOL
Advisor Class Share: NA
Direct Class Share: SCARX
Visit the Conseco StockCar Stocks Index Fund online at
www.stockcarstocks.com
1 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, 2000, it
had $4.8 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 start-up investing phase, we can't guarantee
that our selection will come close to matching the Index's performance.
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
PORTFOLIO MANAGER'S REVIEW........................................... 2
STATEMENT OF ASSETS AND LIABILITIES.................................. 4
STATEMENT OF OPERATIONS.............................................. 5
STATEMENT OF CHANGES IN NET ASSETS................................... 6
SCHEDULE OF INVESTMENTS.............................................. 8
NOTES TO FINANCIAL STATEMENTS........................................ 12
FINANCIAL HIGHLIGHTS................................................. 14
REPORT OF INDEPENDENT ACCOUNTANTS.................................... 16
BOARD OF DIRECTORS................................................... 17
This report is for the information of Conseco StockCar Stocks Index Fund
shareholders. It is authorized for distribution to other persons only when
preceded, or accompanied by, a current prospectus that contains more complete
information, including charges and expenses.
1
<PAGE>
PORTFOLIO MANAGER'S REVIEW
--------------------------------------------------------------------------------
September 30, 2000
This was a year dominated by extraordinary highs and lows in the financial
markets as investors sorted out the growth potential of stocks representing the
so-called "new economy" -- technology and dot-com stocks -- and those "old
economy" established, big-name companies. Many of those "old" companies are
found among the 56 companies currently in the Conseco StockCar Stocks Index.
MARKET VOLATILITY IS NOW A STAPLE OF AN INVESTOR'S LIFE
The first nine months of 2000 confirmed what we began to suspect back in
mid-1999: the stock markets couldn't sustain five consecutive years of
accelerating growth -- and stock price volatility is a staple of everyday life
for investors.
Last January, a month full of post-Y2K euphoria, saw continued stock market
growth and performance -- and the Dow Jones Industrial Average, Standard and
Poor's 500 Index (S&P 500) and Nasdaq 100 Index revved up to new highs.
By the end of March, however, many stocks were hitting slick spots on the
investment track. Prices rose to eye-popping new highs then plummeted. As we go
to press with this report to you, the financial markets seem to be on a course
far tougher than Watkins Glen.
WHAT'S CAUSING THE ROUGH RIDE?
You don't have to kick the Goodyears too hard to figure out what's been
causing the bad handling and rough ride over the past 12 months.
Seeking to slow down and control growth and offset any inflation, the
Federal Reserve continued to add wedge and tighten the economy's handling with
five 0.25% interest rate hikes. Oil prices jumped almost 30%. The slide in
Europe's single currency, the Euro, hurt earnings at many U. S. companies
operating overseas. Perhaps most significant: Investors generally exhibited no
patience when a company's earnings were less than expected and promptly sold
their stocks.
Old-line consumer goods companies in our portfolio like Coca-Cola Co.,
Eastman Kodak Co., McDonald's Corp. and Procter & Gamble Co. (Tide) felt the
sting. The net effect on the fund: direct shares returned -1.24% 1 verses the
S&P 500 return of 13.30% for the year ended Sept. 30, 2000.
This compares with a drop of -0.67% in the Conseco StockCar Stock Index,
the model on which the fund is based.
BENCHMARK PERSPECTIVE IS KEY TO UNDERSTANDING
YOUR FUND'S PERFORMANCE
When analyzing your fund's performance variations from the benchmark, you
should remember two things:
* The S&P 500 is a capitalization-weighted index of 500 companies-- stocks
of larger companies with more shares in the stock market influence its
performance more than the companies with a smaller market presence.
* Your fund's portfolio was "equal-weighted" at the beginning of the year
among 54 companies -- each company starts the year with the same
percentage weighting.
Consequently, the smallest company in the fund is equal in weight to the
largest at the beginning of the year, and return will be determined solely by
the price action of each individual component.
The S&P 500 also features many "new economy" high-growth companies such as
computer software, hardware, telecom and information systems firms. These
companies powered the S&P 500 to record heights over past several years, but are
now dragging the index.
"OLD ECONOMY" COMPANIES ARE USUALLY STABLE INFLUENCES
WITH PROVEN VALUE
Many of your fund's holdings are pillars of the "old economy" -- value
stocks that have returned to favor with investors seeking the stability of
established companies with earnings track records.
For example: R.J. Reynolds Tobacco Holdings, Inc., up more than 70% since
January 1, 2000, has been our best performer. Other standouts that rebounded
include PECO Energy Co. (Power Team), The Walt Disney Co., Pfizer Inc., MBNA
Corp., Associates First Capital Corp., PepsiCo, Inc., Block Drug Company, Inc.
and CBRL Group, Inc. (Cracker Barrel).
PECO Energy improved earnings and Pfizer realized gains from its merger
with Warner-Lambert. Financial services industry consolidation and renewed
investor interest in financial stocks helped MBNA and Associates First Capital.
2
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CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
On the downside, among those hit worst in your portfolio: Federal-Mogul
Corp., Action Performance Companies, Inc. and Oakwood Homes Corp.
Federal-Mogul's marketing strategy and earnings fell short. Action Performance's
earnings shortfalls, management upheavals and a failed online venture crippled
results. Rising mortgage interest rates, falling sales of manufactured housing,
liquidity problems and excess inventories caused operating losses, a suspended
dividend and a top-management shakeup at Oakwood Homes.
MORE BIG INTERNATIONAL NAMES ARE COMING INTO THE PORTFOLIO
Looking forward, there will be some noteworthy new names in the fund for
2001. Several NASCAR Winston Cup Series race teams will be switching to the
Dodge engines and body. This means that the renowned maker of Mercedes --
DaimlerChrysler Corp. -- will impact your fund's investment return.
Other new names expected to enhance your fund's return in 2001:
Georgia-Pacific Group, United Parcel Service, Inc., Sprint Corp. and News Corp.
(Fox Television Network).
HISTORICALLY, LONG-TERM INVESTING IS THE KEY TO SUCCESS
As we headed to press in mid-November 2000, your fund was reversing the
past year's trend and has out-performed the S&P 500 over the past month.
This trend reversal serves to amplify the validity of the fund's
philosophy: provide a long-term, buy and hold, tax-efficient investment vehicle
featuring a broadly diversified, all-cap stock portfolio of companies with the
potential for delivering stable, above-average returns.
Your fund will continue to strive toward meeting its investment objectives
during the coming year.
Robert Carter, Portfolio Manager
--------------------------------------------------------------------------------
1 Past performance may not be indicative of future results. Your investment
return and principal will fluctuate and your shares may be worth more or less
than their original cost. Total return is provided in accordance with SEC
guidelines for comparative purposes and reflects certain contractual expense
reimbursements in effect through April 30, 2002. If the expense reimbursements
were not in place, the fund's return would have been lower. Total return is
shown with the applicable sales load or contingent-deferred sales charge.
2 Direct class shares are "no-load" shares and are sold without sales load.
3 The maximum sales load for the Conseco StockCar Stocks Index Fund Advisor
Class Shares is 4.00%.
4 The S&P 500 Index is an unmanaged index considered to be representative of the
U.S. stock market in general.
GROWTH OF $10,000
Conseco Stockcar
Stocks Index Conseco StockCar
(Direct Class shares) S&P 500 Index Stocks ("CSCS") Index
30-Sep-98 $10,000.00 $10,000.00 $10,000.00
30-Oct-98 $11,180.08 $10,813.40 $10,928.20
30-Nov-98 $11,815.61 $11,468.80 $11,603.13
31-Dec-98 $12,185.27 $12,129.63 $11,923.60
29-Jan-99 $12,329.58 $12,636.89 $12,120.58
26-Feb-99 $12,032.99 $12,244.14 $11,843.87
31-Mar-99 $12,402.83 $12,734.03 $12,197.65
30-Apr-99 $12,950.85 $13,227.22 $12,760.81
28-May-99 $12,958.00 $12,914.92 $12,213.12
30-Jun-99 $12,989.26 $13,631.70 $12,716.05
30-Jul-99 $12,708.41 $13,206.12 $12,459.19
31-Aug-99 $12,192.75 $13,140.09 $11,938.27
30-Sep-99 $11,891.10 $12,779.92 $11,627.28
29-Oct-99 $12,187.83 $13,588.63 $11,933.31
30-Nov-99 $12,285.60 $13,864.89 $12,045.48
31-Dec-99 $12,317.20 $14,681.53 $12,075.23
31-Jan-00 $11,707.98 $13,943.93 $11,408.44
29-Feb-00 $10,984.54 $13,679.97 $10,674.99
31-Mar-00 $11,667.54 $15,018.28 $11,441.03
28-Apr-00 $11,655.96 $14,566.38 $11,245.04
31-May-00 $11,841.11 $14,267.48 $11,448.69
30-Jun-00 $11,541.20 $14,619.17 $11,233.68
31-Jul-00 $11,221.88 $14,390.68 $10,934.42
31-Aug-00 $11,676.79 $15,284.48 $11,446.92
30-Sep-00 $11,743.82 $14,477.61 $11,549.48
The growth of $10,000 chart is a comparison of the change in value of a $10,000
investment with dividends and capital gains reinvested for the period from
inception of the Direct Class shares through 09/30/00. Past performance is no
guarantee of future results.
AVERAGE ANNUAL TOTAL RETURN(1) (as of 09/30/00)
INCEPTION SINCE
DATE 1 YEAR INCEPTION
--------- -------- ----------
Direct Class Shares(2)..... 10/01/98 -1.24% 8.37%
Advisor Class Shares(3).... 07/30/99 -5.19% -9.66%
S&P 500 Index(4)........... 10/01/98 13.30% 20.33%
CSCS Index................. 10/01/98 -0.67% 7.47%
TOP 10 HOLDINGS (as of 09/30/00)
R.J. Reynolds Tobacco Holdings, Inc.............................. 3.5%
PECO Energy Co. (Power Team)..................................... 3.4%
PepsiCo, Inc..................................................... 2.8%
CBRL Group, Inc. (Cracker Barrel)................................ 2.8%
Pfizer, Inc...................................................... 2.7%
MBNA Corp........................................................ 2.6%
The Quaker Oats Co. (Gatorade)................................... 2.5%
Philip Morris Companies, Inc. (Miller Lite)...................... 2.5%
The Walt Disney Co. (ESPN, ABC).................................. 2.4%
Time Warner, Inc. (TBS, Cartoon Network)......................... 2.4%
TOP 5 SECTORS (as of 09/30/00)
Food and Kindred Products........................................ 18.7%
Petroleum Refining and Related Industries........................ 12.3%
Chemicals and Allied Products.................................... 8.2%
Amusement and Recreation Services................................ 6.8%
Communications................................................... 5.0%
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
September 30, 2000
ASSETS:
Investments in securities at cost................................... $5,301,607
--------------------------------------------------------------------------------
Investments in securities at value.................................. $4,757,852
Interest and dividends receivable................................... 11,797
--------------------------------------------------------------------------------
Total assets.................................................... 4,769,649
================================================================================
LIABILITIES AND NET ASSETS:
Payable to Conseco, Inc. and subsidiaries........................... 6,193
Accrued expenses.................................................... 792
Payable to custodian................................................ 6,204
Other payables...................................................... 110
--------------------------------------------------------------------------------
Total liabilities............................................... 13,299
--------------------------------------------------------------------------------
Net assets...................................................... $4,756,350
================================================================================
NET ASSETS CONSIST OF:
Paid-in capital..................................................... $5,075,230
Accumulated undistributed net investment income..................... 29,464
Accumulated undistributed net realized gain on investments.......... 195,411
Net unrealized depreciation on investments.......................... (543,755)
--------------------------------------------------------------------------------
Net assets...................................................... $4,756,350
================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
Advisor Class Shares:
Shares outstanding (unlimited shares of par
value $0.0001 authorized)......................................... 18,141
Net assets.......................................................... $ 239,900
Net asset value and redemption price per share...................... $ 13.22
Maximum sales charge per share
(4.00 percent of public offering price)........................... 0.55
Maximum offering price per share.................................... $ 13.77
================================================================================
Direct Class Shares:
Shares outstanding
(unlimited shares of par value $0.0001 authorized)................ 257,738
Net assets.......................................................... $4,516,450
Net asset value, offering price and redemption price per share...... $17.52
================================================================================
The accompanying notes are an integral part of these financial statements.
4
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STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
For the Year Ended September 30, 2000
INVESTMENT INCOME:
Interest (net of $51 in taxes withheld)............................ $ 7,940
Dividends.......................................................... 99,790
--------------------------------------------------------------------------------
Total investment income........................................ 107,730
================================================================================
EXPENSES:
Investment advisory fees........................................... 28,479
Distribution and service fees:
Advisor class.................................................. 667
Direct class................................................... 12,125
Administration fee................................................. 28,764
Transfer agent fee................................................. 30,533
Reports - printing................................................. 11,645
Directors' fees and expenses....................................... 9,597
Registration and filing fees....................................... 6,776
Custody fees....................................................... 1,908
Other expenses..................................................... 3,856
--------------------------------------------------------------------------------
Total expenses................................................. 134,350
================================================================================
Less fee waiver and/or expense reimbursement (Note 3).............. (60,459)
--------------------------------------------------------------------------------
Net expenses................................................... 73,891
--------------------------------------------------------------------------------
Net investment income.......................................... 33,839
================================================================================
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains on sales of investments......................... 195,422
Net change in unrealized appreciation or depreciation on investments (309,778)
--------------------------------------------------------------------------------
Net realized and unrealized gains (losses) on investments...... (114,356)
================================================================================
Net decrease in net assets from operations......................... $(80,517)
================================================================================
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 33,839 $ 6,551
Net realized gains on sales of investments...................................... 195,422 19,772
Net change in unrealized appreciation or depreciation on investments............ (309,778) (233,977)
---------------------------------------------------------------------------------------------------------------------
Net decrease from operations................................................ (80,517) (207,654)
---------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Advisor Class shares............................................................ (907) --
Direct Class shares............................................................. (10,019) --
---------------------------------------------------------------------------------------------------------------------
Net decrease from dividends from net investment income...................... (10,926) --
---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS OF NET CAPITAL GAINS:
Advisor Class shares............................................................ (1,355) --
Direct Class shares............................................................. (18,428) --
---------------------------------------------------------------------------------------------------------------------
Net decrease from distributions of net capital gains........................ (19,783) --
---------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold..................................................................... 1,247,385 5,249,363
Reinvested dividends and distributions.......................................... 30,344 --
Shares redeemed................................................................. (1,270,139) (281,723)
---------------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions................................ 7,590 4,967,640
---------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets..................................... (103,636) 4,759,986
---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period............................................................. 4,859,986 100,000
---------------------------------------------------------------------------------------------------------------------
End of period................................................................... $4,756,350 $4,859,986
=====================================================================================================================
Including undistributed net investment income................................... $ 29,464 $ 6,551
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30,
2000 1999
------------- ------------
SHARE DATA:
Advisor Class shares:
Sold............................................ 8,850 15,842
Reinvested dividends and distributions.......... 161 --
Redeemed........................................ (6,279) (433)
-----------------------------------------------------------------------------
Net increase................................ 2,732 15,409
-----------------------------------------------------------------------------
Shares outstanding:
Beginning of period............................. 15,409 --
-----------------------------------------------------------------------------
End of period................................... 18,141 15,409
=============================================================================
Direct Class shares:
Sold............................................ 63,548 270,133
Reinvested dividends and distributions.......... 1,529 --
Redeemed........................................ (68,117) (16,022)
-----------------------------------------------------------------------------
Net increase (decrease)..................... (3,040) 254,111
-----------------------------------------------------------------------------
Shares outstanding:
Beginning of period............................. 260,778 6,667
-----------------------------------------------------------------------------
End of period................................... 257,738 260,778
=============================================================================
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
September 30, 2000
NUMBER OF
SHARES VALUE
------------ --------
COMMON STOCKS (99.1%)
AMUSEMENT AND RECREATION SERVICES (6.8%)
5,000 Dover Downs Entertainment, Inc.................... $ 67,187
1,900 International Speedway Corp. - Class A............ 74,100
3,250 Speedway Motorsports, Inc.*....................... 67,641
3,000 The Walt Disney Co. (ESPN, ABC)................... 114,750
--------
323,678
--------
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY AND MOBILE HOME DEALERS (3.0%)
1,400 The Home Depot, Inc............................... 74,288
1,550 Lowe's Companies, Inc............................. 69,556
--------
143,844
--------
BUSINESS SERVICES (3.0%)
1,000 Lycos, Inc.*...................................... 68,766
9,500 NationsRent, Inc.*................................ 37,406
3,500 Walt Disney Internet Group*....................... 37,187
--------
143,359
--------
CHEMICALS AND ALLIED PRODUCTS (8.2%)
1,750 Block Drug Company, Inc. - Class A (Goody's
Headache Powder)................................ 75,469
1,800 The Clorox Co. (STP).............................. 71,212
1,450 E. I. du Pont de Nemours and Co................... 60,084
2,900 Pfizer, Inc....................................... 130,319
800 The Procter & Gamble Co. (Tide)................... 53,600
--------
390,684
--------
COMMUNICATIONS (5.0%)
2,000 BellSouth Corp.................................... 80,500
1,750 Global Crossing Ltd.*............................. 54,250
1,800 Viacom, Inc. - Class B*........................... 105,300
--------
240,050
--------
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
------------ --------
DEPOSITORY INSTITUTIONS (2.6%)
3,250 MBNA Corp......................................... $125,125
--------
DURABLE GOODS - WHOLESALE (1.9%)
5,000 Action Performance Companies, Inc.*............... 17,187
3,750 Genuine Parts Co. (NAPA).......................... 71,484
248 Visteon Corp...................................... 3,751
--------
92,422
--------
EATING AND DRINKING PLACES (4.2%)
9,250 CBRL Group, Inc. (Cracker Barrel)................. 132,969
2,200 McDonald's Corp................................... 66,413
--------
199,382
--------
ELECTRIC, GAS, AND SANITARY SERVICES (3.4%)
2,700 PECO Energy Co. (Power Team)...................... 163,519
--------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT AND COMPONENTS, EXCEPT
COMPUTER EQUIPMENT (4.1%)
10,600 Exide Corp........................................ 96,062
1,750 General Electric Co. (NBC)........................ 100,953
--------
197,015
--------
FOOD AND KINDRED PRODUCTS (18.7%)
1,750 Adolph Coors Co. - Class B........................ 110,578
2,650 Anheuser-Busch Companies, Inc..................... 112,128
1,650 The Coca-Cola Co.................................. 90,956
2,500 General Mills, Inc. (Cheerios).................... 88,750
3,000 Kellogg Co........................................ 72,563
2,900 PepsiCo, Inc...................................... 133,400
4,000 Philip Morris Companies, Inc. (Miller Lite)....... 117,750
1,525 The Quaker Oats Co. (Gatorade).................... 120,666
2,000 Sara Lee Corp..................................... 40,625
--------
887,416
--------
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
September 30, 2000
NUMBER OF
SHARES VALUE
------------ --------
FOOD STORES (2.3%)
4,750 The Kroger Co.*................................... $107,172
--------
GENERAL MERCHANDISE STORES (3.3%)
9,300 Kmart Corp.*...................................... 55,800
3,100 Sears, Roebuck and Co. (Die Hard)................. 100,502
--------
156,302
--------
INDUSTRIAL AND COMMERCIAL MACHINERY AND COMPUTER EQUIPMENT (2.9%)
2,025 Caterpillar, Inc.................................. 68,344
2,100 Deere & Co........................................ 69,825
--------
138,169
--------
INSURANCE CARRIERS (0.8%)
5,250 Conseco, Inc. (a)................................. 40,031
--------
LUMBER AND WOOD PRODUCTS, EXCEPT FURNITURE (0.7%)
21,000 Oakwood Homes Corp................................ 31,500
--------
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.4%)
6,000 Mattel, Inc....................................... 67,125
--------
MOTION PICTURES (2.4%)
1,450 Time Warner, Inc. (TBS, Cartoon Network).......... 113,463
--------
NON-DEPOSITORY CREDIT INSTITUTIONS (2.4%)
2,950 Associates First Capital Corp. - Class A.......... 112,100
--------
PETROLEUM REFINING AND RELATED INDUSTRIES (12.3%)
2,850 Ashland Inc. (Valvoline).......................... 96,009
1,550 BP Amoco p.l.c. ADR............................... 82,150
1,200 Exxon Mobil Corp.................................. 106,950
8,750 Pennzoil-Quaker State Co.......................... 91,875
1,850 Texaco, Inc....................................... 97,125
3,500 Tosco Corp. (Unocal 76)........................... 109,156
--------
583,265
--------
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
------------ --------
PHOTOGRAPHIC EQUIPMENT AND SUPPLIES (1.2%)
1,400 Eastman Kodak Co................................ $ 57,225
----------
RUBBER AND MISCELLANEOUS PLASTIC PRODUCTS (1.2%)
3,150 The Goodyear Tire & Rubber Co................... 56,700
----------
TOBACCO PRODUCTS (3.5%)
5,100 R.J. Reynolds Tobacco Holdings, Inc............. 164,475
----------
TRANSPORTATION EQUIPMENT (3.8%)
3,000 Federal-Mogul Corp.............................. 16,312
1,900 Ford Motor Co................................... 48,094
1,275 General Motors Corp............................. 82,875
900 General Motors Corp. - Class H.................. 33,462
----------
180,743
----------
Total common stock (cost $5,264,510).......... 4,714,764
----------
S&P DEPOSITORY RECEIPTS (0.9%)
300 S&P 500 Depository Receipt...................... 43,088
----------
Total S&P Depository Receipts (cost $37,097).. 43,088
----------
Total investments (cost $5,301,607) (100.0%)....................... 4,757,852
----------
Liabilities, less other assets (0.0%)............................. (1,502)
----------
Total net assets (100.0%)......................................... $4,756,350
==========
-------------
* Non-income producing security.
ADR - American Depository Receipt
(a) The shares of Conseco, Inc. were purchased prior to April 28, 2000, when
Conseco Capital Management, Inc., a wholly owned subsidiary of Conseco,
Inc., acquired the assets of StockCar Stocks Advisors, LLC. After April 28,
2000, the Fund will not invest in the securities of Conseco, Inc. or any of
its affiliates.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 2000
1. ORGANIZATION
Conseco StockCar Stocks Mutual Fund, Inc., (the "Company"), formerly
StockCar Stocks Mutual Fund, Inc. was incorporated under the laws of the state
of Maryland on May 18, 1998, and consists solely of Conseco StockCar Stocks
Index Fund (the "Fund"), formerly StockCar Stocks Index Fund. The Company is
registered as an open-end diversified management investment company of the
"series" type under the Investment Company Act of 1940 (the "1940 Act"). The
Fund became effective with the Securities and Exchange Commission on September
18, 1998 and commenced operations on October 1, 1998. The Fund's investment
strategy is to emphasize growth of capital and current income by investing in
the companies of the Conseco StockCar Stocks Index TM (the "Index"). The Index
currently consists of 56 companies that support NASCAR's Winston Cup Series. The
companies in the Index either sponsor NASCAR Winton cup racing teams or races,
or they earn money from NASCAR Winston Cup events. The Fund is registered to
offer two classes of shares, Advisor class and Direct class. Sales of Advisor
class shares may be subject to a front-end sales charge with a maximum of 4.00
percent.
2. SIGNIFICANT ACCOUNTING POLICIES
Security Valuation, Transactions, and Related Investment Income
The investments in the portfolio are valued at the close of regular trading
on the New York Stock Exchange on each business day. Investment transactions are
accounted for on the trade date (the date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date and interest income is
accrued daily. The cost of investments sold is determined on a specific
identification basis.
Common stocks and other equity-type securities which 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 sales, the bid price. Securities
for which market quotations are not readily available are valued at fair value
as determined under policies approved by the Board of Directors (the
"Directors"). Debt securities with maturities of sixty (60) days or less are
valued at amortized cost.
Dividends to Shareholders
Dividends will be declared and distributed at least annually. However, the
Directors may decide to declare dividends at other intervals.
Dividends to shareholders from net investment income are determined in
accordance with income tax regulations that may differ from generally accepted
accounting principles. Permanent book and tax differences relating to dividends
to shareholders may result in reclassifications to paid-in capital and may
affect the per-share allocation between net investment income, and realized and
unrealized gains (losses). Any taxable income or gain of the Fund remaining at
fiscal year end will be declared and distributed in the following year to the
shareholders of the Fund.
Organization Costs
The costs incurred in connection with the organization, initial
registration and public offering of shares have been paid for by StockCar Stocks
Advisors, LLC., formerly the adviser of the Fund. Accordingly, no organization
costs have been recorded by the Fund.
Federal Income Taxes
For federal income tax purposes, the Fund intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code by
distributing substantially all of its taxable income and net capital gains to
its shareholders annually and otherwise complying with the requirements for
regulated investment companies. Therefore, no provision has been made for
federal income taxes.
Expenses
Expenses directly attributable to the Fund are charged to operations.
Expenses directly attributable to a class of shares are charged to that class.
The Fund pays the expenses of its Directors who are not affiliated persons of
Conseco Capital Management, Inc. (the "Adviser") or the Company.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities, and the disclosure
of contingent assets and liabilities as of the date of the financial statements
and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results may differ from these
estimates.
3. AGREEMENTS WITH SUBSIDIARIES OF CONSECO
Investment Advisory Agreement
The Adviser acquired the assets of StockCar Stocks Advisors, LLC on April
28, 2000 and assumed the investment management of the Fund pursuant to a vote of
shareholders. The Adviser supervises the Company's management and investment
program, performs a variety of services in connection with the management and
operation of the Fund and pays all compensation of officers and Directors who
are affiliated persons of the Adviser or the Company. Under the investment
advisory agreement, the Adviser receives an investment advisory fee equal to an
annual rate of 0.65% of the average daily net asset value of the Fund. The
Adviser also manages other registered investment companies and the invested
assets of its parent company,
12
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Conseco, Inc. ("Conseco"). The total fees incurred for such services for the
period from April 28, 2000 through September 30, 2000 were $13,442.
Prior to April 28, 2000, the adviser to the Fund was StockCar Stocks
Advisors, LLC. The total fees incurred for such services for the period from
October 1, 1999 through April 27, 2000 were $15,037.
Effective April 28, 2000, the Adviser has contractually agreed to waive its
management fee and/or reimburse the Fund's other operating expenses to the
extent necessary to ensure that the total annual operating expenses do not
exceed 1.50% of the Fund's average daily net assets until April 30, 2002.
Administration Agreement
Conseco Services, LLC (the "Administrator"), a wholly owned subsidiary of
Conseco, supervises the preparation and filing of all documents required for
compliance by the Fund with applicable laws and regulations, supervises the
maintenance of books and records of the Fund and provides other general and
administrative services. For providing these services, the Administrator
receives compensation at the annual rate of 0.40% for the first $50,000,000;
0.30% for the next $25,000,000; and 0.20% in excess of $75,000,000 of the
average daily net assets of the Fund. The total fees incurred for such services
for the period from April 28, 2000 through September 30, 2000 were $8,915.
Prior to April 28, 2000, StockCar Stocks Advisors, LLC served the Fund
under an Operating Services Agreement. Under the terms of the Operating Services
Agreement, StockCar Stocks Advisors, LLC provided or arranged to provide
accounting, administrative, legal, dividend disbursing, transfer agent,
registrar, custodial, fund share distribution, shareholder reporting,
sub-accounting and record keeping services. The total fees incurred for such
services for the period from October 1, 1999 through April 27, 2000 were
$19,849.
Distribution Agreements
Conseco Equity Sales, Inc. (the "Distributor"), a wholly owned subsidiary
of Conseco, serves as the principal underwriter for the Fund pursuant to a
Principal Underwriting Agreement, dated April 28, 2000. The Distributor is a
registered broker-dealer and member of the National Association of Securities
Dealers, Inc. ("NASD"). The Distributor bears all the expenses of providing
services pursuant to the Principal Underwriting Agreement including the payment
of the expenses relating to the distribution of prospectuses for sales purposes,
as well as any advertising or sales literature.
The Company has adopted a plan of Distribution and Service pursuant to Rule
12b-1 (the "Plan") under the 1940 Act and the requirements of the applicable
rules of the NASD regarding asset-based sales charges.
Pursuant to the Plan, the 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 Plan authorizes payments up
to an annual rate of 0.25% of its average daily net assets of each share class
to the Distributor, dealers and others, for providing personal service and/or
maintaining shareholder accounts relating to the distribution of the Fund's
shares. The fees are paid on a monthly basis, based on the Fund's average daily
net assets attributable to each class of shares.
Pursuant to the Plan, the Distributor is paid a monthly fee equal to an
annual rate of 0.25% of the average net assets of each share class for expenses
incurred in the distribution and promotion of the Fund's shares, including but
not limited to, printing of the prospectuses and reports used for sales
purposes, preparation and distribution-related expenses as well as any
distribution or service fees paid to securities dealers or others who have
executed a dealer agreement with the Distributor. It is possible that Plan
accruals will exceed the actual expenditures by the Distributor for eligible
services. Accordingly, such fees are not strictly tied to the provision of such
services. The total fees incurred for such services for the period from April
28, 2000 through September 30, 2000 were $5,274.
Prior to April 28, 2000, Declaration Distributors, Inc. acted as
distributor of the Fund. The total fees incurred for such services for the
period from October 1, 1999 through April 27, 2000 were $7,518.
4. INVESTMENT TRANSACTIONS
The cost of investments and the composition of gross unrealized
appreciation and depreciation of investments at September 30, 2000, for federal
income tax purposes are shown below:
Gross unrealized appreciation................................. $ 554,402
Gross unrealized depreciation................................. (1,098,157)
--------------------------------------------------------------------------------
Net unrealized appreciation (depreciation).................... $ (543,755)
================================================================================
Cost of investments........................................... $5,301,607
The aggregate cost of purchases and the aggregate proceeds from sales of
investments, excluding short-term investments, for the year ended September 30,
2000, are shown below:
================================================================================
Purchases...................................................... $2,059,367
Sales.......................................................... 1,832,178
13
<PAGE>
Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE
ENDED PERIOD ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999(a)
------------------ ---------------------
<S> <C> <C>
Advisor Class shares
Net asset value per share, beginning of period............................ $13.49 $14.40
Income from investment operations:
Net investment income................................................. 0.09 0.01
Net realized gains (losses) and change in unrealized
appreciation or depreciation on investments......................... (0.25) (0.92)
---------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations...................... (0.16) (0.91)
---------------------------------------------------------------------------------------------------------------------
Distributions:
Dividends from net investment income.................................. (0.04) --
Distribution of net capital gains..................................... (0.07) --
---------------------------------------------------------------------------------------------------------------------
Total distributions................................................. (0.11) --
---------------------------------------------------------------------------------------------------------------------
Net asset value per share, end of period............................ $13.22 $13.49
---------------------------------------------------------------------------------------------------------------------
Total return(b)(c).................................................... (1.24%) (6.32%)
=====================================================================================================================
Ratios/supplemental data:
Net assets (dollars in thousands), end of period...................... $240 $ 208
Ratio of expenses to average net assets(d)
Before expense reimbursement........................................ 2.62% 1.41%
After expense reimbursement......................................... 1.44% 1.41%
Ratio of net investment income (loss) to average net assets(d)
Before expense reimbursement........................................ (0.52%) 0.63%
After expense reimbursement......................................... 0.66% 0.63%
<FN>
(a) For Advisor Class shares, period August 2, 1999 (commencement of operations)
through September 30, 1999.
(b) Total return figures do not include sales loads; results would be lower if
sales charges were included.
(c) Not annualized for periods of less than one full year.
(d) Annualized for periods of less than one full year.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
2000 1999
----------- ---------
<S> <C> <C>
Direct Class shares
Net asset value per share, beginning of period..................... $17.84 $15.00
Income from investment operations:
Net investment income.......................................... 0.12 0.02
Net realized gains (losses) and change in unrealized
appreciation or depreciation on investments.................. (0.34) 2.82
-------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations............... (0.22) 2.84
=======================================================================================================
Distributions:
Dividends from net investment income........................... (0.03) --
Distribution of net capital gains.............................. (0.07) --
-------------------------------------------------------------------------------------------------------
Total distributions.......................................... (0.10) --
-------------------------------------------------------------------------------------------------------
Net asset value per share, end of period..................... $17.52 $17.84
-------------------------------------------------------------------------------------------------------
Total return................................................... (1.24%) 18.93%
=======================================================================================================
Ratios/supplemental data:
Net assets (dollars in thousands), end of period............... $4,516 $4,652
Ratio of expenses to average net assets
Before expense reimbursement................................. 2.62% 1.41%
After expense reimbursement.................................. 1.44% 1.41%
Ratio of net investment income (loss) to average net assets
Before expense reimbursement................................. (0.52%) 0.28%
After expense reimbursement.................................. 0.66% 0.28%
=======================================================================================================
FOR THE YEAR ENDED SEPTEMBER 30,
2000 1999
----------- ---------
Supplemental data for all classes:
Net assets (dollars in thousands), end of period............... $4,756 $4,860
Portfolio turnover rate........................................ 37% 7%
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF CONSECO STOCKCAR STOCKS INDEX FUND
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Conseco StockCar Stocks Index Fund
(the "Fund") at September 30, 2000, the results of its operations, the changes
in its net assets and the financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at September 30, 2000 by correspondence with the
custodian, provides a reasonable basis for our opinion. The financial statements
of the Fund as of September 30, 1999 and for the period then ended were audited
by other independent accountants whose report dated October 29, 1999 expressed
an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Indianapolis, Indiana
November 17, 2000
16
<PAGE>
BOARD OF DIRECTORS
CONSECO STOCKCAR STOCKS INDEX FUND
Annual Report
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
William P. Daves, Jr. Maxwell E. Bublitz, CFA
Chairman of the Board President, Conseco Fund Group
Insurance and healthcare industries consultant Director, President and CEO, Conseco Capital Management, Inc.
Chairman and CEO, FFG Insurance Co. Senior VP of Investments, Conseco, Inc.
Gregory J. Hahn, CFA Harold W. Hartley, CFA
Senior VP, Portfolio Analytics Director, Ennis Business Forms, Inc.
Chief Fixed Income Investment Officer Former Executive VP, Tenneco Financial Services, Inc.
Conseco Capital Management, Inc.
Dr. R. Jan LeCroy Dr. Jess H. Parrish
Director, Southwest Securities Group, Inc. Higher education consultant
Former President, Dallas Citizens Council Former President, Midland College
David N. Walthall
Principal, Walthall Asset Management
Investment Adviser Distributor
Conseco Capital Management, Inc. Conseco Equity Sales, Inc.
Carmel, IN Carmel, IN
Transfer Agent Custodian
Firstar Mutual Fund Services, LLC The Bank of New York
Milwaukee, WI New York, NY
Independent AccountantS Legal Counsel
PricewaterhouseCoopers LLP Kirkpatrick & Lockhart LLP
Indianapolis, IN Washington, DC
17
</TABLE>
<PAGE>
Conseco StockCar Stocks Index Fund
Distributed by:
Conseco Equity Sales, Inc.
11815 N. Pennsylvania St. Carmel, IN 46032
Member NASD
Shareholder Services: 800-494-2755
www.stockcarstocks.com
