As filed with the Securities and Exchange Commission on May 12, 2000
Registration Nos. 811-08791/333-53683
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [5]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9 [ X ]
(Check appropriate box or boxes)
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
256 Raceway Drive, Suite 11, Mooresville, North Carolina 28117
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (202) 778-9079
Donald Smith, Esq.
Kirkpatrick & Lockhart
1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800
William P. Kovacs, Esq.
Conseco Capital Management, Inc.
11815 N. Pennsylvania Street, Carmel, Indiana 46032
(Name and Address of Agent for Service)
Approximate date of proposed public Offering: As soon as practicable following
the effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate space):
___X__ immediately upon filing pursuant to Rule 485 (b)
______ on May 5, 2000 pursuant to Rule 485 (b)
______ 60 days after filing pursuant to Rule 485 (a)(i)
______ on [date] pursuant to Rule 485 (a)(i)
______ 75 days after filing pursuant to Rule 485 (a) (ii)
______ on [date] pursuant to Rule 485 (a)(ii)
<PAGE>
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
Contents of Registration Statement
This Registration Statement consists of the following papers and documents:
* Cover Sheet
Contents of Registration Statement:
* Part A - Prospectus
* Part B - Statement of Additional Information
* Part C - Other Information
Signature Pages
Exhibits
<PAGE>
PART A
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Investing in the companies that support
America's #1 spectator sport
Advisor Class Shares
Prospectus
May 12, 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
<PAGE>
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
<PAGE>
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 is known as GROWTH OF CAPITAl) and passing
along the dividends paid by the companies that the Fund invests in (that is
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.
Sidebar A Look Under the Hood
The Conseco StockCar Stocks Index is a price-sensitive, equal-weighted stock
Index. The Fund invests based on the Index. On January 1, 2000, there were 54
companies in the Index. EQUAL-WEIGHTED means than on January 1st 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 underperfroming stock will be a smaller percentage. The
Fund buys and sells stock in accordance with the current Index for the 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 September 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.
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
<PAGE>
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 rebalanced and the process starts over again.
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. Less than TK% 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.
<PAGE>
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.
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.
<PAGE>
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.
1999 Total Return
Direct Class Shares
-------------------
1.10%
1999
The Fund's return from January 1, 2000 to March 31, 2000 was -5.34%.
The Fund's best quarterly return, 4.73%, came in 2ND quarter (2Q99).
Its worst quarterly return, -8.42%, came in 3RD quarter (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.
<PAGE>
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 December 31, 1999)
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR OCTOBER 1, 1998
------ ---------------
<S> <C> <C>
Direct Class shares 1.10% 16.70%
S&P 500 Index 21.04% 51.93%
Conseco StockCar
Stocks Index -0.22% 15.51%
</TABLE>
* 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.
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."
<PAGE>
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)
<TABLE>
<CAPTION>
<S> <C>
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)
</TABLE>
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.
<PAGE>
The example assumes that you invest $10,000 in 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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class $544 $835 $1147 $2027
</TABLE>
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.
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' primary sponsor by the corporate logo - it' 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
<PAGE>
The Index has no minimum earnings qualification -it doesn' 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' 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.
We try to come within 95% of the total return of the Index stocks. That is
before we deduct fees and expenses. We don't normally expect to match 100% of
the Index' 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.
<PAGE>
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.
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.
<PAGE>
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 January 1, April 1, July 1 or October 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.
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:
The 54 stocks listed above are included in the Index and reflect the broad
support NASCAR racing enjoys among American companies.
<PAGE>
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 December 31,
1999, CCM managed more than $34 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 09/30/99, 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 October 1, 1998, when the Fund began
operations. CCM acquired StockCar Stocks Advisors, LLC on April 28, 2000 and
assumed the investment management of the Fund.
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 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.
<PAGE>
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.
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
<PAGE>
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 December 31.
Dividends and capital gain distributions usually create the following tax
liability:
<TABLE>
<CAPTION>
TRANSACTION TAX STATUS
----------- ----------
<S> <C>
Income payout Ordinary income
Short-term capital gain distribution Ordinary income
Long-term capital gain distribution Capital gain
</TABLE>
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.
<TABLE>
<CAPTION>
TRANSACTION TAX STATUS
----------- ----------
<S> <C>
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
</TABLE>
Sidebar The Word from Pit Road
When you exchange Fund shares for shares in another Conseco Fund Group fund, the
government considers, for tax purposes, that you have sold shares in the Fund to
buy shares in the other fund.
After December 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.
<PAGE>
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 September 30, 1999,
which is available on request by calling 1-800-494-2755.
<TABLE>
<CAPTION>
Financial Highlights
ADVISOR CLASS SHARES
PER-SHARE OPERATING PERFORMANCE 8/2/99-9/30/99(1)
------------------------------- -----------------
<S> <C>
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 000s) $ 208
Ratio of expenses to average net assets 1.41%(2)
Ratio of net investment income to average
net assets 0.63%(2)
Portfolio turnover rate 6.60%
-----
</TABLE>
(1) The Fund first sold Advisor Class shares to the public on August 2, 1999.
(2) Annualized.
<PAGE>
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
Our business hours
We're open for business and you can buy and sell shares
whenever the New York Stock Exchange 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.
<TABLE>
<CAPTION>
MINIMUM FUND INVESTMENTS
<S> <C>
To open an account $250
Each new investment after the first $ 50
To open an automated investment plan $ 50
</TABLE>
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.
<PAGE>
"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.
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 and wire your investment to:
ABA#031201467
Credit to:
Declaration Service Company
Account #201422469583
Further credit to:
* Conseco StockCar Stocks Index Fund
* Your account name
<PAGE>
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:
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS A
IF YOUR PURCHASE IS ... % OF THE SHARE PRICE IS
----------------------- -----------------------
<S> <C>
less than $50,000 to $99,999 4.00
$100,00 to $249,999 3.00
$250,000 to $499,999 2.00
$500,000 to $999,999 1.00
$1,000,000 and over none
</TABLE>
You may be able to reduce the sales charge on the purchase of your Fund shares:
* You may add the value of any existing Conseco Fund Group investments to the
amount of your Fund investment to determine the sales charge.
* You may also add Conseco Fund Group funds held for your benefit in trust.
These include qualified retirement plans where you work as well as any
Conseco Variable Life Insurance Company variable annuities that you own.
* If you sign a letter of intent agreeing to invest a definite amount in the
Fund or any Conseco Fund Group fund Class A shares 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.
You may reinvest the proceeds of your Fund sale in the Fund or in Class A shares
of any other Conseco Fund Group fund anytime within 180 calendar days after you
sell your shares without paying any additional sales charge. You may exercise
this reinvestment privilege only once per Fund investment, and it may be subject
to other restrictions.
PAYING FOR SHAREHOLDER SERVICES
The Fund has adopted a 12b-1 service plan to compensate Conseco Equity Sales,
Inc., the principal underwriter, 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.
<PAGE>
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 New York Stock Exchange, 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.
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.
<PAGE>
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.
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.
<PAGE>
THE VIP TREATMENT
SPECIAL SHAREHOLDER SERVICES
We offer an array of special services free of charge to make investing in the
Fund and all Conseco Fund Group mutual funds 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.
* Conseco's Share Exchange program lets you exchange shares in the Fund for
Class A shares in any Conseco Fund Group fund free of charge.
- The value of the shares you are exchanging must meet the minimum purchase
requirement of the fund you're exchanging them for.
- Normally we will execute the entire transaction in a single business day.
- The Internal Revenue Service considers exchanges as the sale of shares in
one fund and the purchase of shares in another, so your exchange may have
tax consequences. Consult your tax advisor.
BACK COVER
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 their most recent fiscal
year.
STATEMENT OF ADDITIONAL INFORMATION
The SAI is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally considered part of) this prospectus.
The SAI provides more details about the fund and its policies.
<PAGE>
TO OBTAIN A SHAREHOLDER REPORT, STATEMENT OF ADDITIONAL INFORMATION 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
You can review and copy the documents at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. Call the SEC at
1-202-942-8090 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
<PAGE>
CONSECO STOCKCAR STOCKS INDEX FUND
Investing in the companies that support
America's #1 spectator sport
Direct Class Shares
Prospectus
May 12, 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
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
<PAGE>
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 is known as GROWTH OF CAPITAL) and passing
along the dividends paid by the companies that the Fund invests in (that is
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.
Sidebar A Look Under the Hood
The Conseco StockCar Stocks Index is a price-sensitive, equal-weighted stock
Index. The Fund invests based on the Index. On January 1, 2000, there were 54
companies in the Index. EQUAL-WEIGHTED means than on January 1st 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 underperfroming stock will be a smaller percentage. The
Fund buys and sells stock in accordance with the current Index for the trading
day.
- -----------------
* To own all the stocks in the Index, we estimate the Fund needs to have at
least $25 million to invest. (As of September 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 start-up investing phase, we can't guarantee that our selection
will come close to matching the Index's performance.
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.
<PAGE>
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 rebalanced and the process starts over again.
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. Less than TK% 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.
<PAGE>
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 could 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.
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%.
<PAGE>
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.
1999 TOTAL RETURN
DIRECT CLASS SHARES
-------------------
1.10%
1999
The Fund's return from January 1, 2000 to March 31, 2000 was -5.28%.
The Fund's best quarterly return, 4.73%, came in 2nd quarter (2Q99).
Its worst quarterly return, -8.42%, came in 3rd quarter (3Q99).
<PAGE>
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 December 31, 1999)
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR OCTOBER 1, 1998
------ ---------------
<S> <C> <C>
Direct Class shares 1.10% 16.70%
S&P 500 Index 21.04% TK%
Conseco StockCar -0.22% TK%
Stocks Index
</TABLE>
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.
ABOUT FUND SHARE CLASSES
The Fund offers two classes of shares: Direct Class shares and Advisor Class
shares, available through a separate prospectus. Direct Class 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 can buy Advisor Class shares from
your registered financial professional.
For complete details, check "In Ihe Driver's Seat: Managing Your Conseco
StockCar Stocks Index 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.
Direct Class Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C>
Maximum up-front
sales charge None
Maximum deferred
sales charge None
</TABLE>
The Fund will assess a fee of 0.50% of the value of the shares you sell if sell
them less than six months after purchasing them.
<PAGE>
Direct Annual Fund Operating Expenses (expenses that are deducted from total
Fund assets)
<TABLE>
<S> <C>
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%
</TABLE>
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' 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."
DIRECT 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 Direct 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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Direct Class $150 $466 $804 $1760
</TABLE>
<PAGE>
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 Index.
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.
<PAGE>
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 the Index stocks. From then on, the weight of
the Index stocks change with changes in their prices. 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.
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.
<PAGE>
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 corporate or U.S. government
bonds.
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 stock-car 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 the next
step in a lifelong investment program.
<PAGE>
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 January 1, April 1, July 1 or October 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 - when the stocks in the
Index account for 1/54 of the Fund's total investment - we buy and sell stocks
to match the Index.
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:
The 54 stocks listed above are included in the Index 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 foundation, endowment,
corporation, government, union and high net worth individuals. As of December
31, 1999, CCM managed more than $34 billion.
<PAGE>
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 09/30/99, the Adviser received $11, 599 for advisory
services provided. These advisory fees were paid to StockCar Stocks Advisors,
LLC, the Fund' investment adviser from October 1, 1998, when the Fund began
operations. CCM acquired StockCar Stocks Advisors, LLC on April 28, 2000 and
assumed the investment management of the Fund.
THE CREW
THE FUND' ADMINISTRATOR
Conseco Services, LLC is the Fund's Administrator. It is responsible for:
* Reports required by the federal Securities and Exchange Commission and state
securities commissions
* Maintaining the Fund's books and records
* Reports for the Fund's board of directors
* Proxy statements and shareholder report
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.
<PAGE>
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 charge.
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 in 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 December 31.
<PAGE>
Dividends and capital gain distributions usually create the following tax
liability:
<TABLE>
<CAPTION>
TRANSACTION TAX STATUS
- ----------- ----------
<S> <C>
Income payout Ordinary income
Short-term capital gain distribution Ordinary income
Long-term capital gain distribution Capital gain
</TABLE>
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.
<TABLE>
<CAPTION>
TRANSACTION TAX STATUS
- ----------- ----------
<S> <C>
You sell shares owned for more than one year Capital gain or loss
You sell shares owned for one year or less Ordinary income
Long-term capital gain distribution Gains treated as ordinary
income, losses Capital gain
subject to special rules
</TABLE>
SIDEBAR The Word from Pit Road
When you exchange Fund shares for shares in another Conseco Fund Group fund, the
government considers, for tax purposes, that you have sold shares in the Fund to
buy shares in the other fund.
After December 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, PA has
audited this information. Their report, along with the Fund's financial
statements, are included in the Fund's annual report dated September 30, 1999,
which is available on request by calling 1-800-494-2755.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Direct Class shares
PER-SHARE OPERATING PERFORMANCE 10/1/98-9/30/99
------------------------------- -------------------
<S> <C>
Net Asset Value at
beginning of period $15.00
INVESTMENT OPERATIONS
Net investment income 0.02
Net realized and unrealized
gain on investments 2.82
------
TOTAL FROM INVESTMENT OPERATIONS 2.84
NET ASSET VALUE,
END OF PERIOD $17.84
------
TOTAL RETURN 18.93%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period (in 000's) $4,652
Ratio of expenses to average net assets 1.41%
Ratio of net investment income to
average net assets 0.28%
Portfolio turnover rate 6.60%
</TABLE>
MANAGING YOUR FUND SHARES
CONTACTING THE PIT
IMPORTANT INFORMATION ABOUT CONTACTING THE CONSECO STOCKCAR STOCKS INDEX FUN
By phone
800-494-2755, 24 hours a day
<PAGE>
By mail
Conseco StockCar Stocks Index Fund - Direct 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 - Direct Class
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
800-494-2755
Our business hours
We're open for business and you can buy and sell shares whenever the New York
Stock Exchange 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.
<TABLE>
<CAPTION>
MINIMUM FUND INVESTMENTS
------------------------
<S> <C>
To open an account $250
Each new investment after the first $50
To open an automated investment plan $50
</TABLE>
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 share 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.
<PAGE>
START YOUR ENGINES
IMPORTANT INFORMATION ABOUT INVESTING IN THE FUND
By mail
Mail your completed application and a check payable to the Conseco StockCar
Stocks Index Fund - Direct 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 the address in Buying or selling shares by
mail under CONTACTING THE PIT and wire your investment to:
ABA#031201467
Credit to:
Declaration Service Company
Account #201422469583
Further credit to:
* Conseco StockCar Stocks Index Fund - Direct Class
* Your account name
REFUELING
Important Information about Buying Fund Shares
* You pay for your shares at the price quoted in the next daily price
calculation after we receive your purchase order.
* You must make your initial purchase by mail or wire.
* 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.
PAYING FOR SHAREHOLDER SERVICES
The Fund has adopted a 12b-1 service plan to compensate Conseco Equity Sales,
Inc., the principal underwriter, 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.
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
telephoned sales order is genuine. We do, however, protect you with these
safeguards:
- We record telephone orders.
- We require callers to provide specific identifying information.
- We send written confirmation of your order within five days.
* You cannot place orders by phone if you have rejected the telephone privilege
on your account application.
<PAGE>
If you sell by mail
Send your request to the address in Buying or selling shares by mail under
Contacting the Pit.
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.
* 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, broker/dealers, credit unions and savings associations, but not
from a notary public.
Calculating the proceeds from your sale
* We sell your shares at the next share price calculated after we receive your
request.
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 your original purchase check
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.
BACK COVER
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 their most recent fiscal
year.
STATEMENT OF ADDITIONAL INFORMATION
The SAI is on file with the Securities and Exchange Commission (SEC) and is
incorporated by reference into (is legally considered part of) this prospectus.
The SAI provides more details about the fund and its policies.
TO OBTAIN A SHAREHOLDER REPORT, STATEMENT OF ADDITIONAL INFORMATION OR OTHER
INFORMATION FREE OF CHARGE, CONTACT US:
<PAGE>
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
You can review and copy the documents at the Securities and Exchange
Commission's Public Reference Room in Washington D.C. Call the SEC at
1-202-942-8090 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
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
ADVISOR AND DIRECT SHARES
-------------------------
MAY 12, 2000
This Statement of Additional Information ("SAI") is not a prospectus. It
contains additional information about the Conseco StockCar Stocks Mutual Fund,
Inc. (the "Company") and a single series of shares, the Conseco StockCar Stocks
Index Fund (the "Fund"). It should be read in conjunction with the Fund's
Advisor Class prospectus and Direct Class prospectus (the "Prospectuses"), each
one dated May 12, 2000. You may obtain a copy by contacting the Company's
Administrative Office, 11815 N. Pennsylvania Street, Carmel, Indiana 46032 or by
phoning 800-494-2755.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
GENERAL INFORMATION
INVESTMENT RESTRICTIONS
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
PORTFOLIO TURNOVER
INVESTMENT PERFORMANCE
SECURITIES TRANSACTIONS
MANAGEMENT
FUND EXPENSES
DISTRIBUTION ARRANGEMENTS
PURCHASE, REDEMPTION AND PRICING OF SHARES
INFORMATION ON CAPITALIZATION AND OTHER MATTERS
TAXES
</TABLE>
<PAGE>
GENERAL INFORMATION
The Company was incorporated in Maryland on May 18, 1998. The Company is an
open-end management investment company registered with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940
Act"). The Company is a "series" type of mutual fund which may issue separate
series of shares, each of which may represent a separate portfolio of
investments. The Fund offers two classes of shares. This SAI relates to Advisor
Class shares and Direct Class shares of the Fund. Each class may have different
expenses, which may affect performance. Conseco Capital Management, Inc. (the
"Adviser" or "CCM") serves as the Company's investment adviser.
The Company is managed by a Board of Directors which approves all significant
agreements between the Company and the persons and companies that furnish
services to the Company, including agreements with the Company's custodian,
transfer agent, investment adviser and administrator. The day-to-day operations
of the Fund are delegated to the Adviser.
There is no assurance that the Fund will achieve its investment objectives.
INVESTMENT RESTRICTIONS
The Company has adopted the following policies relating to the investment of
assets of the Fund, and its activities. These are fundamental policies and may
not be changed without the approval of the holders of a "majority" of the
outstanding shares of the affected Fund. Under the 1940 Act, the vote of such a
"majority" means the vote of the holders of the lesser of (i) 67 percent of the
shares or interests represented at a meeting at which more than 50 percent of
the outstanding shares or interests are represented or (ii) more than 50 percent
of the outstanding shares or interests. Except for the limitation on borrowing,
any investment policy or limitation that involves a maximum percentage of
securities or assets will not be considered to be violated unless the percentage
limitation is exceeded immediately after, and because of, a transaction by the
Fund.
CONSECO STOCKCAR STOCKS INDEX FUND
The Fund may not (except as noted):
1. To the extent of 75% of its assets (valued at time of investment), invest
more than 5% of its assets in securities of any one issuer, except in
obligations of the United States Government and its agencies and
instrumentalities;
2. Acquire securities of any one issuer that at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
3. Borrow money except from banks for temporary or emergency purposes in
amounts not exceeding 5% of the value of the Fund's assets at the time of
borrowing;
4. Underwrite the distribution of securities of other issuers, or acquire
"restricted" securities that, in the event of a resale, might be required
to be registered under the Securities Act of 1933;
5. Make margin purchases or short sales of securities;
<PAGE>
6. Invest in companies for the purpose of management or the exercise of
control;
7. Lend money (but this restriction shall not prevent the Fund from investing
in debt securities or repurchase agreements);
8. Acquire or retain any security issued by a company, an officer or director
of which is an officer or director of the Company or an officer, director
or other affiliated person of the Adviser or Distributor;
9. Invest in oil, gas or other mineral exploration or development programs, or
marketable securities of companies engaged in oil, gas or mineral
exploration;
10. Purchase or sell real estate loans or real estate limited partnerships, or
invest in marketable securities of companies that invest in real estate or
interests in real estate;
11. Engage in the writing of put and call options, except that the Fund may
write (i.e. sell) covered put and call options, and may purchase put and
call options, on the equity securities of companies included in the Index
and on the Index itself. The Fund may enter into these transactions so long
as the value of the underlying securities on which such options contracts
may be written at any one time does not exceed 100% of the net assets of
the Fund, and so long as the initial margin required to enter into such
contracts does not exceed ten percent (10%) of the Fund's total net assets;
12. Purchase warrants on securities;
13. Issue senior securities;
14. Invest in commodities or in commodities futures or options;
15. Invest more than 5% of its assets (value at time of investment) in
securities of issuers that are not included in the Conseco StockCar Stocks
Index, except that the Fund may invest up to 25% of its average net assets
in other securities for temporary liquidity purposes; or
16. Invest more than 25% of its assets (valued at time of investment) in
securities of issuers that are in the same industry.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following restrictions are designated as non-fundamental with respect to the
Conseco StockCar Stocks Index Fund and may be changed by the Company's Board of
Directors ("Board") without shareholder approval.
The Fund may not:
1. Invest more than 5% of its net assets (valued at the time of investment) in
preferred stock;
2. Invest more than 15% of its net assets (valued at time of investment) in
securities that are not readily marketable;
<PAGE>
3. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission and
(b) where acquisition results from a dividend or merger, consolidation or
other reorganization;
4. Purchase more than 3% of the voting securities of any one investment
company nor invest more than 5% of the Funds assets (valued at time of
investment) in all investment company securities purchase by the Fund;
5. Pledge, mortgage or hypothecate its assets, except for temporary or
emergency purposes and then to an extent not greater than 5% of its total
assets at cost;
6. Invest more than 10% of the Fund's assets (valued at time of investment) in
initial margin deposits of options or futures contracts; or
7. Invest more than 25% of its net assets in any one or more of the following
investments: cash, money market instruments, debt securities and/or
repurchase agreements.
8. After April 28, 2000, the Fund may not invest in the securities of Conseco,
Inc. or any of its affiliates.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The investment objectives of the Fund are not fundamental. Unless otherwise
noted, investment policies and practices described in this SAI are not
fundamental, meaning that the Company's Board of Directors ("Board") may change
them without shareholder approval.
The Fund is a diversified Fund, meaning that the Fund limits the amount of its
assets invested in any one issuer and/or in any one industry, thereby reducing
the risk of loss incurred by that issuer or industry.
The normally will invest at least 95% of its total net assets in the common
stock of companies listed on the Conseco StockCar Stocks Index/TM/, in
approximately the same percentage as each company represents in the Index.
Because the Index is itself highly diverse, the Adviser does not anticipate any
diversification problems resulting from the Fund's investment policy.
To own all the stocks in Conseco StockCar Stocks Index, we estimate the Fund
needs to have at least $25 million to invest. (As of September 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.
For liquidity purposes, the Fund may invest up to 5% of its net assets in other
securities.
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 is known as GROWTH OF CAPITAL) and passing
along the dividends paid by the companies that the Fund invests in (that is
CURRENT INCOME).
The primary investments of the Fund are listed in the Fund's prospectus. The
following are additional securities that the Fund may invest in; and, where
necessary, a brief discussion of any risks unique to the particular security.
<PAGE>
COMMON STOCK
The Fund may invest in the common stock of the companies comprising the Index.
The market value of common stock can fluctuate significantly, reflecting the
business performance of the issuing company, investor perception and general
economic or financial market movements. Smaller companies are especially
sensitive to these factors. Despite the risk of price volatility, however,
common stocks historically have offered the greatest potential for gain on
investment, compared to other classes of financial assets. Under normal
circumstances, the Fund will invest at least 95% of its net assets in the common
stock of companies comprising the Index. This is a fundamental policy of the
Fund, and may not be changed without a vote of the majority of the outstanding
shares of the Fund.
FOREIGN SECURITIES
If a foreign company is included in the Index, the Fund will invest in the
common stock of that company in the form of American Depository Receipts (ADRs).
ADRs typically are issued by a U.S. bank or Trust company and evidence ownership
of underlying securities issued by a foreign corporation. Investments in foreign
securities involve greater risks compared to domestic investments. Foreign
companies are not subject to the regulatory requirements of U.S. companies and,
as such, there may be less publicly available information about issuers than is
available in the reports and ratings published about companies in the U.S.
Additionally, foreign companies are not subject to uniform accounting, auditing
and financial reporting standards. Dividends and interest on foreign securities
may be subject to foreign withholding taxes. Such taxes may reduce the net
return to shareholders. There is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which could
affect investments of foreign issuers domiciled in such nations. Further, there
is the risk of loss due to fluctuations in the value of a foreign corporation's
currency relative to the U.S. dollar. Further, if a foreign issuer is a member
of the Index, the Fund will be obligated to invest in such security, even
through the country of the issuer's domicile might not be considered by the
Adviser to be friendly or stable.
Additional Description of Securities and Investment Techniques
For liquidity purposes only, the Fund may invest up to 5% of its assets, in the
aggregate, in the following securities. The Fund will not invest in such
securities for temporary or defensive purposes. You should be aware that any
investment in securities not included in the Index will cause the performance of
the Fund to vary from that of the Index.
OTHER REGISTERED INVESTMENT COMPANIES
The Fund may invest in securities issued by other unaffiliated registered
investment companies ("mutual funds") to maintain liquidity. Such mutual funds
may include money market funds. An unaffiliated mutual fund means that the fund
is not part of the Conseco StockCar Stocks family of funds. As a shareholder of
another registered investment company, the Fund would bear its pro rata portion
of that company's Advisory fees and other expenses. Such fees and expenses will
be borne indirectly by the Fund's shareholders. The Fund may investment in other
mutual funds to the extent that such investments do not exceed 5% of the Fund's
net assets and/or 3% of any on investment company's outstanding securities.
DEBT SECURITIES
The Fund may invest in U.S. Government debt securities, including Treasury Bills
and short-term notes, to maintain liquidity. U.S. Government securities include
direct obligations of the U.S. Government and obligations issued by U.S.
Government agencies and instrumentalities. The market value of such securities
fluctuates in response to interest rates and the creditworthiness of the issuer.
In the case of securities backed by the full faith and credit of the United
States Government, shareholders are only exposed to interest rate risk. The Fund
will not invest more that 5% of its net assets in such securities, and will not
invest in any such security with a maturity in excess of one year.
<PAGE>
PREFERRED STOCK
The Fund may invest in the preferred stock of the companies that comprise the
Index, when the Adviser believes that such investments will help the Fund
achieve its investment objective of current income without substantially and
negatively affecting the Fund's investment objective of capital growth.
Preferred stock generally pays dividends at a specified rate and generally has
preference over common stock in the payments of dividends and the liquidation of
the issuer's assets. Dividends on preferred stock are generally payable at the
discretion of the issue's board of directors. Accordingly, shareholders may
suffer a loss of value if dividends are not paid. The market prices of preferred
stocks are also sensitive to changes in interest rates and in the issuer's
creditworthiness. Accordingly, shareholders may experience a loss of value due
to adverse interest rate movements or a decline in the issuer's credit rating.
Finally, preferred stock is not included in the Index, so any investment in such
stock will cause the performance of the Fund to vary from that of the index. For
these reasons, the Fund will not invest more than 5% of its net assets in
preferred stock.
REPURCHASE AGREEMENTS
The Fund may invest a portion of its assets in repurchase agreements ("Repos")
with broker- dealers, banks and other financial institutions to maintain
liquidity, provided that the Fund's custodian always has possession of the
securities serving as collateral for the Repos or has proper evidence of book
entry receipt of said securities. In a Repo, the Fund purchases securities
subject to the seller's simultaneous agreement to repurchase those securities
form the Fund at a specified time (usually one day) and price. The repurchase
price reflects an agreed-upon interest rate during the time of investment. All
Repos entered into by the Fund must be collateralized by U.S. Government
Securities, the market values of which equal or exceed 102% of the principal
amount of the money invested by the Fund. If an institution with whom the Fund
has entered into a Repo enters insolvency proceedings, the resulting delay, if
any, in the Fund's ability to liquidate the securities serving as collateral
could cause the Fund some loss if the securities declined in value prior to
liquidation. To minimize the risk of such loss, the Fund will enter into Repos
only with institutions and dealers considered creditworthy, and will not invest
more than 25% of its net assets in such transactions.
FUTURES AND OPTIONS ON EQUITY SECURITIES AND THE INDEX
The Fund may enter into futures contracts relating to the equity securities of
companies included in the Index, may write (i.e. sell) covered put and call
options on such securities and on the Index, and may purchase put and call on
such equity securities and on the Index. Such options can include long- term
options with durations of up to three years. Although not normally anticipated
to be widely employed, the Fund may use futures and options to increase or
decrease its exposure to the effects of changes in security prices, to hedge
securities held, to maintain cash reserves while remaining fully invested, to
facilitate trading, to reduce transaction costs, or to seek higher investment
returns when a futures or options contract is priced more attractively than the
underlying security or index. The Fund may enter into these transactions so long
as the value of the underlying securities on which such options or futures
contracts may be written at any one time does not exceed 100% of the net assets
of the Fund, and so long as the initial margin required to enter into such
contract does not exceed ten percent (10%) of the Fund's total net assets.
<PAGE>
Risk Factors Associated with Futures and Options. The primary risks associated
with the use of options and futures are; (1) imperfect correlation between a
change in the value of the underlying security or index and a change in the
price of the option or futures contract, and (2) the possible lack of a liquid
secondary market for an options or futures contract and the resulting inability
of the Fund to close out the position prior to the maturity date. The risk of
imperfect correlation will be minimized by investing only in those contracts
whose price fluctuations are expected to resemble those of the Fund's underlying
securities. The risk that the Fund will be unable to close out a position will
be minimized by entering into such transactions only on national exchanges and
over- the-counter markets with an active and liquid secondary market.
RESTRICTED AND ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in securities that the
Adviser determines, under the supervision of the Board of Directors, to be
illiquid and/or restricted. Illiquid securities are securities that cannot be
liquidated within seven (7) days at the approximate price at which the Fund has
valued the instrument. Also, the sale of some illiquid and other types of
securities may be subject to legal restrictions. Because illiquid and restricted
securities may present a greater risk of loss than other types of securities,
due to their lack of a ready market, the Fund will not invest in such securities
in excess of the limits set forth above. You should be aware that in the event
that more than 15% of the Index is comprised of companies considered to be
illiquid, the Fund will be unable to precisely match its investments to the
percentages contained in the Index and that inability may pose additional risks
to the Fund, including the risk that the performance of the Fund will vary from
that of the Index.
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS
The Fund may purchase securities of companies comprising the Index on a
when-issued basis, and it may purchase or sell such securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Adviser's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
Custodian consisting of cash, cash equivalents, U.S. Government Securities or
other high- grade liquid debt securities, denominated in U.S. dollars or
non-U.S. currencies, in an amount equal to the aggregate fair market value of
its commitments to such transactions.
STANDARD AND POOR'S DEPOSITORY RECEIPTS (SPDRS)
The Fund may purchase securities that represent ownership in long-term unit
investment trust that holds a portfolio of common stocks designed to track the
performance of the S&P 500 Index. A SPDR entitles a holder to receive
proportionate quarterly cash distributions corresponding to the dividends that
accrue to the S&P 500 stocks in the underlying portfolio, less trust expenses.
PORTFOLIO TURNOVER
The Fund does not have a predetermined rate of portfolio turnover since such
turnover will be incidental to transactions taken with a view to achieving their
respective objectives. The Fund expects that its annual portfolio turnover rate
will not exceed 50% under normal conditions. However, there can be no assurance
that the Fund will not exceed this rate, and the portfolio turnover rate may
vary from year to year. The following is the Fund's portfolio turnover rate for
the fiscal year ended September, 1999:
<TABLE>
<CAPTION>
FUND NAME YEAR ENDED 1999
- ---------------------------------- ---------------
<S> <C>
Conseco StockCar Stocks Index Fund* 6.60%
</TABLE>
* Because the Fund's inception date was October 1, 1998, there is no portfolio
turnover rate for 1998.
<PAGE>
THE CONSECO STOCKCAR STOCKS INDEX
Information on the Conseco StockCar Stocks Index (the "Index") is set forth in
the prospectus. This section contains additional information concerning the
Index
The Adviser has determined that a company is a sponsor of NASCAR (R), and is
therefore eligible for inclusion in the Index, only if it meets one or more of
the following criteria:
(1) PRIMARY CAR SPONSORS are those companies that are the lead sponsor for each
of the approximately 45 cars that participate in the Winston Cup (R)
Series. Primary Car Sponsors generally can be distinguished from other car
sponsors because the Company logo will appear on the hood of the car it
sponsors. A list of all Primary race Sponsors is published annually by
NASCAR (R), usually in December, for the following year's racing.
(2) LEAD RACE SPONSORS are those companies identified each year by NASCAR (R)
as the lead company sponsoring one or more of the 34 annual Winston Car (R)
series races. A list of all Lead race Sponsors is published annually by
NASCAR(R), usually in December, for the following year's racing.
(3) MAJOR PRODUCT SPONSORS are those companies that provide critical and
necessary products to the approximately 45 cars and teams that participate
in the Winston Cup (R) Series. The Adviser has determined that such
critical and necessary products are limited to tires, gasoline and
beverages for the teams.
A company will also qualify for inclusion in the Index if it derives revenues
from NASCAR (R) sanctioned racing events at the Winston Cup (R) Level. The
Adviser has determined that a company derives revenue from NASCAR(R), and is
therefore eligible for inclusion in the Index, only if it meets one or more of
the following criteria:
(1) It is a company that has an ownership interest in one or more of the race
tracks that host the 32 annual Winston Cup (R) races.
(2) It is a company that produces souvenirs or memorabilia for the Winston Cup
(R) Series under a licensing agreement with NASCAR (R).
(3) It is a company that broadcasts Winston Cup (R) Series races on television,
radio or the Internet under an agreement with NASCAR (R).
There are no minimum limits on the amount or percentage of total company revenue
that must be derived from one of the above-described activities to qualify a
company for inclusion in the Index. However, in order to minimize the risk of
liquidity problems for the Fund in purchasing such otherwise eligible companies,
the Adviser has determined that a company must have at least $100 million in
market capitalization in order to be included in the Index, and must maintain at
least $50 million in market capitalization to stay in the Index.
<PAGE>
INVESTMENT PERFORMANCE
STANDARDIZED YIELD QUOTATIONS. Each class of the Fund may advertise investment
performance figures, including yield. Each class' yield will be based upon a
stated 30-day period and will be computed by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:
YIELD = 2[((A-B/CD)+1)6-1]
Where:
A = the dividends and interest earned during the period.
B = the expenses accrued for the period (net of reimbursements, if any).
C = the average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. The Fund may advertise its
total return and its cumulative total return. The total return will be based
upon a stated period and will be computed by finding the average annual
compounded rate of return over the stated period that would equate an initial
amount invested to the ending redeemable value of the investment (assuming
reinvestment of all distributions), according to the following formula:
P(1+T)n=ERV
Where:
P = a hypothetical initial payment of $1,000.
T = the average annual total return.
n = the number of years.
ERV = the ending redeemable value at the end of the stated period of a
hypothetical $1,000 payment made at the beginning of the stated period.
The total return for Advisor shares of the Fund will assume the maximum
applicable sales charge is deducted at the times, in the amounts, and under the
terms disclosed in the Fund's Prospectus. The cumulative total return will be
based upon a stated period and will be computed by dividing the ending
redeemable value (i.e., after deduction of any applicable sales charges) of a
hypothetical investment by the value of the initial investment (assuming
reinvestment of all distributions).
Each investment performance figure will be carried to the nearest hundredth of
one percent.
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED SEPTEMBER 30, 1999
FUND ONE YEAR
---- --------
<S> <C>
Conseco StockCar Stocks Index Fund
Direct Class......................... 18.93%
</TABLE>
Because the Advisor Class has not completed a full fiscal year, it does not have
performance to report.
NON-STANDARDIZED PERFORMANCE. In addition, in order to more completely represent
the Fund's performance or more accurately compare such performance to other
measures of investment return, the Fund also may include in advertisements,
sales literature and shareholder reports other total return performance data
("Non-Standardized Return"). Non-Standardized Return may be quoted for the same
or different periods as those for which Standardized Return is required to be
quoted; it may consist of an aggregate or average annual percentage rate of
return, actual year-by-year rates or any combination thereof. Non-Standardized
Return for Advisor and Direct shares may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges,
if any, into account may be higher than data including the effect of such
charges. All non-standardized performance will be advertised only if the
standard performance data for the same period, as well as for the required
periods, is also presented.
GENERAL INFORMATION. From time to time, the Fund may advertise its performance
compared to similar funds or types of investments using certain unmanaged
indices, reporting services and publications. A description of an index which
may be used is listed below.
The Standard & Poor's 500 Composite Stock Price Index is a well diversified list
of 500 companies representing the U.S. stock market.
The index includes income and distributions but does not reflect fees, brokerage
commissions or other expenses of investing.
In addition, from time to time in reports and promotions (1) the Fund's
performance may be compared to other groups of mutual funds tracked by: (a)
Lipper Analytical Services and Morningstar, Inc., widely used independent
research firms which rank mutual funds by overall performance, investment
objectives, and assets; or (b) other financial or business publications, such as
Business Week, Money Magazine, Forbes and Barron's which provide similar
information; (2) the Consumer Price Index (measure for inflation) may be used to
assess the real rate of return from an investment in the Fund; (3) other
statistics such as GNP and net import and export figures derived from
governmental publications, e.g., The Survey of Current Business or statistics
derived by other independent parties, e.g., the Investment Company Institute,
may be used to illustrate investment attributes of the Fund or the general
economic, business, investment, or financial environment in which the Fund
operates; (4) various financial, economic and market statistics developed by
brokers, dealers and other persons may be used to illustrate aspects of the
Fund's performance; and (5) the sectors or industries in which the Fund invests
may be compared to relevant indices or surveys (e.g., S&P Industry Surveys) in
order to evaluate the Fund's historical performance or current or potential
value with respect to the particular industry or sector.
<PAGE>
SECURITIES TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities for the
Fund, broker-dealer selection, and negotiation of brokerage commission rates.
The Adviser's primary consideration in effecting a securities transaction will
be execution at the most favorable price.
In selecting a broker-dealer to execute a particular transaction, the Adviser
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; the size of
the order and the difficulty of execution; and the size of contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
Broker-dealers may be selected who provide brokerage and/or research services to
the Fund and/or other accounts over which the Adviser exercises investment
discretion. Such services may include furnishing advice concerning the value of
securities (including providing quotations as to securities), the advisability
of investing in, purchasing or selling securities, and the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto, such as clearance,
settlement and custody, or required in connection therewith.
Subject to the Conduct Rules of the NASD and to obtaining best prices and
executions, the Adviser may select brokers who provide research or other
services or who sell shares of the Fund to effect portfolio transactions. The
Adviser may also select an affiliated broker to execute transactions for the
Fund, provided that the commissions, fees or other remuneration paid to such
affiliated broker are reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
The Adviser shall not be deemed to have acted unlawfully, or to have breached
any duty created by the Fund's Investment Advisory Agreement or otherwise,
solely by reason of its having caused the Fund to pay a broker-dealer that
provides brokerage and research services an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker- dealer would have charged for effecting that transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The Adviser
allocates orders placed by it on behalf of the Fund in such amounts and
proportions as the Adviser shall determine and the Adviser will report on said
allocations regularly to the Fund indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
The receipt of research from broker-dealers may be useful to the Adviser in
rendering investment management services to the Fund and/or the Adviser's other
clients; conversely, information provided by broker-dealers who have executed
transaction orders on behalf of other clients may be useful to the Adviser in
carrying out its obligations to the Fund. The receipt of such research will not
be substituted for the independent research of the Adviser. It does enable the
Adviser to reduce costs to less than those which would have been required to
develop comparable information through its own staff. The use of broker-dealers
who supply research may result in the payment of higher commissions than those
available from other broker-dealers who provide only the execution of portfolio
transactions.
<PAGE>
MANAGEMENT
THE ADVISER
Conseco Capital Management, Inc., the Adviser, provides investment advice and,
in general, supervises the Company's management and investment program,
furnishes office space, prepares reports for the Fund, and pays all compensation
of officers and Board of Directors of the Company who are affiliated persons of
the Adviser. The Fund pays all other expenses incurred in the operation of the
Fund, including fees and expenses of unaffiliated Board of Directors of the
Company. The Adviser is a wholly owned subsidiary of Conseco, Inc. ("Conseco"),
a publicly-owned financial services company, the principal operations of which
are in development, marketing and administration of specialized annuity, life
and health insurance products. Conseco's offices are located at 11815 N.
Pennsylvania Street, Carmel, Indiana 46032. The Adviser manages and serves as
sub-adviser to other registered investment companies and manages the invested
assets of Conseco, which owns or manages several life insurance subsidiaries,
and provides investment and servicing functions to the Conseco companies and
affiliates. The Adviser also manages foundations, endowments, public and
corporate pension plans, and private client accounts. As of December 31, 1999,
the Adviser managed in excess of $34 billion in assets.
The Investment Advisory Agreement, dated April 28, 2000, between the Adviser and
the Company provides that the Adviser shall not be liable for any error in
judgment or mistake of law or for any loss suffered by the Fund in connection
with any investment policy or the purchase, sale or redemption of any securities
on the recommendations of the Adviser. The Agreement provides that the Adviser
is not protected against any liability to the Fund or its security holders for
which the Adviser shall otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed upon it
by the Agreement or the violation of any applicable law.
Under the terms of the Investment Advisory Agreements, the Adviser has
contracted to receive an investment advisory fee equal to an annual rate of
0.65% of the average daily net asset value of the Fund.
The Adviser has contractually agreed to waive it management fee and/or reimburse
the Fund's other 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. After such time, the Adviser may voluntarily waive
all or a portion of its management fee and/or reimburse all or a portion of Fund
operating expenses. The Adviser will waive fees and/or reimburse expenses on a
monthly basis and the Adviser will pay the Fund by reducing its fee. Any waivers
or reimbursements will have the effect of lowering the overall expense ratio for
the Fund and increasing its overall return to investors at the time any such
amounts were waived/and or reimbursed. Any such waiver or reimbursement is
subject to later adjustment to allow the Adviser to recoup amounts waived or
reimbursed, including initial organization costs of the Fund, provided, however,
that the Adviser shall only be entitled to recoup such amounts for a period of
three years from the date such amount was waived or reimbursed.
This contractual arrangement does not cover interest, taxes, brokerage
commissions, and extraordinary expenses.
The Fund may receive credits from its custodian based on cash held by the Fund
at the custodian. These credits may be used to reduce the custody fees payable
by the Fund. In that case, the Adviser's (and, other affiliates') agreement to
waive fees or reimburse expenses will be applied only after the Fund's custody
fees have been reduced or eliminated by the use of such credits.
<PAGE>
Prior to April 28, 2000, the Adviser to the Fund was StockCar Stocks Advisors,
LLC, a North Carolina limited liability company. For advisory services provided
to the Fund for the Fund's fiscal year ending September 30, 1999, StockCar
Stocks Advisor, LLC was paid total advisory fees of $11,599.
OTHER SERVICE PROVIDERS
THE ADMINISTRATOR. Conseco Services, LLC (the "Administrator") is a wholly owned
subsidiary of Conseco, and receives compensation from the Company pursuant to an
Administration Agreement dated April 28, 2000. Under that agreement, the
Administrator supervises the overall administration of the Fund. These
administrative services include supervising the preparation and filing of all
documents required for compliance by the Fund with applicable laws and
regulations, supervising the maintenance of books and records, and other general
and administrative responsibilities.
For providing these services, the Administrator receives a fee from the Fund at
an annual rate of 0.40% per annum 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 Fund's average daily net
assets. Pursuant to the Administration Agreement, the Administrator reserves the
right to employ one or more sub-administrators to perform administrative
services for the Fund. See "The Adviser" above regarding the Administrator's
contractual arrangement to waive its fees and/or reimburse Fund expenses.
For the fiscal year ended September 30, 1999 Stockcar Stocks Advisor, LLC served
the Fund under an Operating Services Agreement. Under the terms of the Operating
Services Agreement, StockCar Stocks Advisor, 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. For the services rendered, StockCar
Stocks Advisors, LLC received $18,821.
CUSTODIAN. First Union National Bank, 1345 Chestnut Street, Philadelphia PA
19101, acts as custodian for the Fund. As such, First Union National Bank holds
all securities and cash of the Fund, delivers and receives payment for
securities sold, receives and pays for securities purchased, collects income
from investments and performs other duties, all as directed by officers of the
Company. First Union does not exercise any supervisory function over management
of the Fund, the purchase and sale of securities or the payment of distributions
to shareholders.
TRANSFER AGENCY SERVICES. Declaration Services Company acts as transfer,
dividend disbursing, and shareholder servicing agent for the Fund pursuant to a
written agreement with the Company and the Adviser, dated August 15, 1998. Under
the agreement, Declaration Services Company is responsible for administering and
performing transfer agent functions, dividend distribution, shareholder
administration, and maintaining necessary records in accordance with applicable
rules and regulations.
For the services to be rendered as transfer agent, the Adviser shall pay
Declaration Service Company an annual fee, paid monthly, based on the average
net assets of the Fund, as determined by valuations made as of the close of each
business day of the month.
INDEPENDENT ACCOUNTANTS/AUDITORS. After April 28, 2000, PricewaterhouseCoopers
LLP, 2900 One American Square, Box 82002, Indianapolis, Indiana 46282-0002 will
serve as the Company's independent accountant.
Prior to April 28, 2000, Tait Weller & Baker, 8 Penn Center, Philadelphia, PA
served as the Fund's independent accountant.
<PAGE>
BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY
The Board of Directors of the Company decide upon matters of general policy for
the Company. In addition, the Board of Directors review the actions of the
Adviser, as set forth in "Management." The Company's officers supervise the
daily business operations of the Company. The Board of Directors and officers of
the Company, their affiliations, if any, with the Adviser and their principal
occupations are set forth below.
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH COMPANY DURING PAST 5 YEARS
------------- ------------ -------------------
<S> <C> <C>
William P. Daves, Jr. (74) Chairman of the Consultant to insurance and healthcare
5723 Trail Meadow Board, Director industries. Director, President and
Dallas, TX 75230 Chief Executive Officer, FFG
Insurance Co. Chairman of the Board
and Trustee of other mutual funds
managed by the Adviser.
Maxwell E. Bublitz* (44) President and Chartered Financial Analyst. President
11825 N. Pennsylvania St. Director and Director, Adviser. Previously,
Carmel, IN 46032 Senior Vice President, Adviser.
President and Trustee of other mutual
funds managed by the Adviser.
Gregory J. Hahn* (39) Vice President for Chartered Financial Analyst. Senior
11825 N. Pennsylvania St. Investments Vice President, Adviser. Portfolio
Carmel, IN 46032 Manager of the fixed income portion of
Balanced and Fixed Income Funds.
Trustee and portfolio manager of other
mutual funds managed by the Adviser.
Harold W. Hartley (76) Director Retired. Chartered Financial Analyst.
502 Canal Cove Court Previously, Executive Vice President,
Ft. Myers Beach, Fl 33931 Tenneco Financial Services, Inc.
Trustee of other mutual funds managed
by the Adviser. Director, Ennis
Business Forms, Inc.
Dr. R. Jan LeCroy (68) Director Retired. President, Dallas Citizens
841 Liberty Council. Trustee of other mutual funds
Dallas, TX 75204 managed by the Adviser. Director,
Southwest Securities Group, Inc.
Dr. Jesse H. Parrish (72) Director Former President, Midland College.
2805 Sentinel Higher Education Consultant. Trustee
Midland, TX 79701 of other mutual funds managed by the
Adviser.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH COMPANY DURING PAST 5 YEARS
------------- ------------ -------------------
<S> <C> <C>
William P. Kovacs (54) Vice President Vice President, Senior Counsel,
11825 N. Pennsylvania St. and Secretary Secretary, Chief Compliance Officer
Carmel, IN 46032 and Director of Adviser. Vice
President, Senior Counsel, Secretary
and Director, Conseco Equity Sales,
Inc. Vice President and Secretary of
other mutual funds managed by the
Adviser. Previously, Associate
Counsel, Vice President and Assistant
Secretary, Kemper Financial Services,
Inc. (1989-1996); previous to Of
Counsel, Rudnick & Wolfe (1997-
1998); previous to Of Counsel, Shefsky
& Froelich (1998).
James S. Adams (40) Treasurer Senior Vice President, Bankers
11815 N. Pennsylvania St. National, Great American Reserve.
Carmel, IN 46032 Senior Vice President, Treasurer, and
Director, Conseco Equity Sales, Inc.
Senior Vice President and Treasurer,
Conseco Services, LLC. Treasurer of
other mutual funds managed by the
Adviser.
William T. Devanney, Jr.(44) Vice President Senior Vice President, Corporate
11815 N. Pennsylvania St. Corporate Taxes Taxes, Bankers National and Great
Carmel, IN 46032 American Reserve. Senior Vice President,
Corporate Taxes, Conseco Equity
Sales, Inc. and Conseco Services LLC.
Vice President of other mutual funds
managed by the Adviser.
David N. Walthall (54) Director Principal, Walthall Asset
1 Galleria Tower, Suite 1050 Management. Former President, Chief
13355 Noel Road Executive Officer and Director of Lyrick
Dallas, TX 75240 Corporation. Formerly, President and
CEO, Heritage Media Corporation.
Formerly, Director, Eagle National
Bank. Trustee of other mutual funds
managed by the Adviser.
</TABLE>
__________________
* The Director so indicated is an "interested person," as defined in the 1940
Act, of the Company due to the positions indicated with the Adviser and its
affiliates.
<PAGE>
The following table shows the compensation of each disinterested Director for
the fiscal year ending September 30, 1999. In addition to Conseco StockCar
Stocks Mutual Fund, Inc., the Trust complex consists of Conseco Fund Group,
Conseco Series Trust and Conseco Strategic Income Fund.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM
AGGREGATE INVESTMENT COMPANIES IN THE
COMPENSATION COMPANY
NAME OF PERSON, POSITION FROM THE COMPANY COMPLEX PAID TO DIRECTORS
- ------------------------ ---------------- -------------------------
<S> <C> <C>
William P. Daves, Jr ............. $0 $24,000
(12)
Harold W. Hartley ................ $0 $24,000
(12)
Dr. R. Jan LeCroy ................ $0 $24,000
(12)
Dr. Jesse H. Parrish ............. $0 $24,000
(12)
David N. Walthall ................ $0 $24,000
</TABLE>
__________________
The Directors and officers of the Company, as a group, own less than 1% of the
Fund's outstanding shares. A shareholder owning of record or beneficially more
than 25% of the Fund's outstanding shares may be considered a controlling
person. That shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
FUND EXPENSES
The Fund pays its own expenses including, without limitation: (i) organizational
and offering expenses of the Fund and expenses incurred in connection with the
issuance of shares of the Fund; (ii) fees of its custodian and transfer agent;
(iii) expenditures in connection with meetings of shareholders and Directors;
(iv) compensation and expenses of Directors who are not interested persons of
the Company; (v) the costs of any liability, uncollectible items of deposit and
other insurance or fidelity bond; (vi) the cost of preparing, printing, and
distributing prospectuses and statements of additional information, any
supplements thereto, proxy statements, and reports for existing shareholders;
(vii) legal, auditing, and accounting fees; (viii) trade association dues; (ix)
filing fees and expenses of registering and maintaining registration of shares
of the Fund under applicable federal and state securities laws; (x) brokerage
commissions; (xi) taxes and governmental fees; and (xii) extraordinary and
non-recurring expenses.
DISTRIBUTION ARRANGEMENTS
Conseco Equity Sales, Inc. (the "Distributor") serves as the principal
underwriter for the Fund pursuant to an Underwriting Agreement, dated April 28,
2000. The Distributor is a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. ("NASD"). Subject to the compensation
arrangement discussed below, the Distributor bears all the expenses of providing
services pursuant to the Underwriting Agreement, including the payment of the
expenses relating to the distribution of Prospectuses for sales purposes and any
advertising or sales literature. The Underwriting Agreement continues in effect
for two years from initial approval and for successive one-year periods
thereafter, provided that each such continuance is specifically approved (i) by
the vote of a majority of the Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) by a majority
of the Directors who are not "interested persons" of the Company (as that term
is defined in the 1940 Act). The Distributor is not obligated to sell any
specific amount of shares of the Fund.
Prior to March 31, 2000, Declaration Distributors, Inc. acted as Distributor of
the Fund. The following is information about the compensation received by the
Distributor with respect to the Fund for the fiscal year ended September 30,
1999.
<PAGE>
DISTRIBUTION AND SERVICE PLAN
As noted in the Fund's Prospectus, each Share Class of the Fund has adopted a
plan pursuant to Rule 12b-1 under the 1940 Act and the requirements of the
applicable rules of the NASD regarding asset-based sales charges (the "Plans").
Pursuant to the Plans, 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 Plans authorize payments up
to 0.25% per annum of its average daily net assets of each Share Class to the
Adviser, 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 Plans, the Distributor is paid a monthly fee equal to 0.25% per
annum of 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 underwriter. You should be aware that 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 Plans have been approved by the Funds' Board of Directors, including all the
Directors who are non-interested persons as defined in the 1940 Act, and by the
shareholders of each of the Fund's share classes. The Plans must be renewed
annually by the Board of Directors, including a majority of the Directors who
are non-interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plans. The votes must be cast in
person at a meeting called for that purpose. It is also required that the
selection and nomination of such Directors be done by the non-interested
Directors.
The Plans and any related agreement may not be amended to increase materially
the amounts to be spent or distribution expenses without approval by a majority
of the Fund's outstanding shares, and all material amendments to the Plans or
any related agreements shall be approved by a vote of the non-interested
Directors, cast in person at a meeting called for the purpose of voting on any
such amendment.
<PAGE>
The Adviser is required to report in writing to the Board of Directors of the
Fund, at least quarterly, on the amounts and purpose of any payment made under
the Plans, as well as to furnish the Board with such other information as may
reasonably be requested in order to enable the Board to make an informed
determination of whether the Plans should be continued.
PURCHASE, REDEMPTION AND PRICING OF SHARES
SHARE PRICES AND NET ASSET VALUE
The Fund's shares are bought or sold at a price that is the Fund's net asset
value (NAV) per share. The NAV per share is determined for each class of shares
for the Fund as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern Time) on each business day by dividing the value of
the Fund's net assets attributable to a class (the class's pro rata share of the
value of the Fund's assets minus the class's pro rata share of the value of the
Fund's liabilities) by the number of shares of that class outstanding.
The assets of the Fund are valued as follows: Securities that are traded on
stock exchanges are valued at the last sale price as of the close of business on
the day the securities are being valued or, lacking any sales, at the mean
between the closing bid and asked prices. Securities traded in the
over-the-counter market are valued at the mean between the bid and asked prices
or yield equivalent as obtained from one or more dealers that make markets in
the securities. Fund securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the broadest and most
representative market, and it is expected that for debt securities this
ordinarily will be the over-the-counter market. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. Debt securities with maturities of sixty
(60) days or less are valued at amortized cost.
WAIVER OF ADVISOR CLASS INITIAL SALES CHARGE
No sales charge is imposed on sales of Advisor Class shares to certain
investors. However, in order for the following sales charge waivers to be
effective, the Transfer Agent must be notified of the waiver when the purchase
order is placed. The Transfer Agent may require evidence of your qualification
for the waiver. No sales charge is imposed on the following investments:
* by current or retired officers, directors or employees (and their immediate
family, including: parents, grandparents, spouse, children, grandchildren,
siblings, father-in-law, mother-in-law, sister/brother-in-law,
daughter/son-in-law, niece, nephew, and same sex domestic partners) of the
Trust, Conseco and its affiliates and the Transfer Agent;
* by any participant in (i) a tax qualified retirement plan provided that the
initial amount invested by the plan totals $500,000 or more, the plan has 50
or more employees eligible to participate at the time of purchase, or the plan
certifies that it will have projected annual contributions of $200,000 or
more; or (ii) by one of a group of tax qualified employee benefit plans that
purchase through an omnibus account relationship with the Funds maintained by
a single service provider, provided that such plans make an aggregated initial
investment of $500,000 or more;
<PAGE>
* by an omnibus account established by a sponsor for tax-qualified employee
benefit plans where the sponsor provides recordkeeping services for the plans,
and has entered into an agreement with the Distributor in connection with such
account;
* by brokers, dealers, and other financial intermediaries that have a selling
agreement with the Distributor, if they purchase shares for their own accounts
or for retirement plans for their employees;
* by employees and registered representatives (and their parents, grandparents,
spouses and minor children) of brokers, dealers, and other financial
intermediaries described above; the purchaser must certify to the Distributor
at the time of the purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's parents, grandparents, spouse
or minor children);
* by any charitable organization, state, county, city, or any instrumentality,
department, authority or agency thereof which has determined that Advisor
Class is a legally permissible investment and which is prohibited by
applicable investment law from paying a sales charge or commission in
connection with the purchase of shares of any registered management investment
company;
* by one or more members of a group of at least 100 persons (and persons who are
retirees from such group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor children of
such persons, pursuant to a marketing program between the Distributor and such
group;
* (i) through an investment adviser who makes such purchases through a broker,
dealer, or other financial intermediary (each of which may impose transaction
fees on the purchase), or (ii) by an investment adviser for its own account or
for a bona fide advisory account over which the investment adviser has
investment discretion;
* through a broker, dealer or other financial intermediary which maintains a net
asset value purchase program that enables the Fund to realize certain
economies of scale;
* through bank trust departments or trust companies on behalf of bona fide trust
or fiduciary accounts by notifying the Distributor in advance of purchase; a
bona fide advisory, trust or fiduciary account is one which is charged an
asset-based fee and whose purpose is other than purchase of Fund shares at net
asset value;
* by purchasers in connection with investments related to a bona fide medical
savings account; or
* by an account established under a wrap fee or asset allocation program where
the accountholder pays the sponsor an asset-based fee.
Additionally, no sales charge is imposed on shares that are (a) issued in plans
of reorganization, such as mergers, asset acquisitions and exchange offers, to
which the Fund is a party, (b) purchased by the reinvestment of loan repayments
by participants in retirement plans, (c) purchased by the reinvestment of
dividends or other distributions from the Fund, or (d) purchased and paid for
with the proceeds of shares redeemed in the prior 60 days from a mutual fund on
which an initial sales charge or contingent deferred sales charge was paid
(other than a fund managed by the Adviser or any of its affiliates that is
subject to the exchange privilege described below); the purchaser must certify
to the Distributor at the time of purchase that the purchaser is a prior load
investor.
<PAGE>
INFORMATION ON CAPITALIZATION AND OTHER MATTERS
Shareholders of the Fund are entitled: (i) to one vote per full share; (ii) to
such distributions as may be declared by the Company's Board of Directors out of
funds legally available; and (iii) upon liquidation, to participate ratably in
the assets available for distribution. There are no conversion or sinking fund
provisions applicable to the shares, and the holders have no preemptive rights
and may not cumulate their votes in the election of the directors. The shares
are redeemable and are fully transferable. All shares issued and sold by the
Fund will be fully paid and nonassessable.
The Company will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when required in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares.
The Corporation's by-laws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director of
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
Each issued and outstanding share of each class of the Fund is entitled to
participate equally in dividends and other distributions of the respective class
of the Fund and, upon liquidation or dissolution, in the net assets of that
class remaining after satisfaction of outstanding liabilities. The shares of the
Fund have no preference, preemptive or similar rights, and are freely
transferable.
Under Rule 18f-2 under the 1940 Act, as to any investment company which has two
or more series outstanding and as to any matter required to be submitted to
shareholder vote, such matter is not deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding voting
securities of each series affected by the matter. Such separate voting
requirements do not apply to the election of Directors, the ratification of the
contract with the principal underwriter or the ratification of the selection of
accountants. The rule contains special provisions for cases in which an advisory
contract is approved by one or more, but not all, series. A change in investment
policy may go into effect as to one or more series whose holders so approve the
change even though the required vote is not obtained as to the holders of other
affected series. Under Rule 18f-3 under the 1940 Act, each class of the Fund
shall have a different arrangement for shareholder services or the distribution
of securities or both and shall pay all of the expenses of that arrangement,
shall have exclusive voting rights on any matters submitted to shareholders that
relate solely to a particular class' arrangement, and shall have separate voting
rights on any matters submitted to shareholders in which the interests of one
class differ from the interests of any other class.
The Amended and Restated Articles of Incorporation provide that the Directors
will not be liable for errors of judgment or mistakes of fact or law, but
nothing in the Articles of Incorporation protects a Director against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
CODE OF ETHICS
Under CCM's personal securities trading policy (the "Policy"), CCM employees
must preclear personal transactions in securities not exempt under the Policy.
In addition, CCM employees must report their personal securities transactions
and holdings, which are reviewed for compliance with the Policy. CCM access
persons, including portfolio managers and investment personnel, who comply with
the Policy's preclearance and disclosure procedures, and the requirements of the
Policy, may be permitted to purchase, sell or hold securities which also may be
or are held in fund(s) they manager or for which they otherwise provide
investment advice.
<PAGE>
TAXES
GENERAL
To qualify or continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended ("Code"),
the Fund -- which is treated as a separate corporation for these purposes --
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
and (2) at the close of each quarter of the Fund's taxable year, (i) at least
50% of the value of its total assets must be represented by cash and cash items,
U.S. Government securities, securities of other RICs and other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities, and (ii) not more than 25% of the
value of its total assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares.
Distributions, if any, in excess of the Fund's current or accumulated earnings
and profits, as computed for federal income tax purposes, will constitute a
return of capital, which first will reduce a shareholder's tax basis in the
Fund's shares and then (after such basis is reduced to zero) generally will give
rise to capital gains. Under the Taxpayer Relief Act of 1997 ("Tax Act"),
different maximum tax rates apply to a non-corporate taxpayer's net capital gain
(the excess of net long-term capital gain over net short-term capital loss)
depending on the taxpayer's holding period and marginal rate of federal income
tax -- generally, 28% for gain recognized on capital assets held for more than
one year but not more than 18 months and 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the amount of cash they would have received had they elected to receive
the distributions in cash, divided by the number of shares received.
At the time of an investor's purchase of shares of the Fund, a portion of the
purchase price is often attributable to unrealized appreciation in the Fund's
portfolio or undistributed taxable income. Consequently, subsequent
distributions from that appreciation (when realized) or income may be taxable to
the investor even if the net asset value of the investor's shares is, as a
result of the distributions, reduced below the investor's cost for the shares
and the distributions in reality represent a return of a portion of the purchase
price.
The Fund will be subject to a nondeductible 4% federal excise tax ("Excise Tax")
on certain amounts not distributed (and not treated as having been distributed)
on a timely basis in accordance with annual minimum distribution requirements.
The Fund intends under normal circumstances to avoid liability for such tax by
satisfying those distribution requirements.
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements of the Fund for the fiscal year ended September
30, 1999 are incorporated herein by reference to the Fund's annual report to
shareholders.
<PAGE>
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Incorporation:
-- Articles of Incorporation, incorporated herein by reference to Exhibit
No. 1 to Pre-Effective Amendment No. 2 to the Registration Statement
on Form N-1 (File No. 333-53683) filed on September 2, 1998; Amended
and Restated Articles of Incorporation. Filed herewith.
(b) Bylaws
-- By-Laws, incorporated herein by reference to Exhibit No. 2 to
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1 (File No. 333-53683) filed on September 2, 1998; Amended and
Restated By-Laws.
(c) Instruments Defining Rights of Security Holders
-- Not Applicable.
(d) Investment Advisory Contracts
-- Investment Advisory Agreements, incorporated by reference to Exhibit
No. 5 to the Pre-Effective Amendment No. 2 to the Registration
Statement on Form N-1A (File No. 333-53683) filed on September 2,
1998.
-- Investment Advisory Agreements between Conseco Capital Management,
Inc. and Conseco StockCar Stocks Mutual Fund, Inc. Filed herewith.
(e) Underwriting Contracts
-- Underwriting Contracts, incorporated by reference to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-1A (File No.
333-53683) filed on September 2, 1998
-- Principal Underwriting Agreement between Conseco Equity Sales, Inc.
and Conseco StockCar Stocks Mutual Fund, Inc. Filed herewith.
(f) Bonus or Profit Sharing Contracts
-- Not Applicable.
<PAGE>
(g) Custodian Agreements
-- Custodian Agreement, incorporated by reference to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-1A (File No.
333-53683) filed on September 2, 1998.
(h) Other Material Contracts
-- Operating Services Agreement, incorporated by reference to
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A (File No. 333-53683) filed on September 2, 1998.
-- Investment Services Agreement, incorporated by reference to
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A (File No. 333-53683) filed on September 2, 1998.
-- Administration Agreement between Conseco StockCar Stocks Mutual Fund,
Inc. and Conseco Services, LLC. Filed herewith.
(i) Legal Opinion
-- Consent and Opinion of Counsel. Filed herewith.
(j) Consent of Independent Accountants
-- Filed herewith.
(k) Omitted Financial Statements
-- Not Applicable.
(i) Letter of Intent
-- Not Applicable.
(m) Rule 12b-1 Plan
-- Rule 12b-1 Plan , incorporated by reference to Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A (File No.
333-53683) filed on June 9, 1999.
-- Rule 12b-1 Plan. Filed herewith.
(n) Financial Data Schedule.
-- None
(o) Form of Rule 18f-3 Plan
-- Filed herewith.
(p) Code of Ethics
-- Filed herewith.
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The following information concerns the principal companies that may be deemed to
be controlled by or under common control with Registrant (all 100% owned unless
indicated otherwise):
CONSECO, INC. (Indiana) - (publicly traded)
Conseco Capital Management, Inc. (Delaware)
Marketing Distribution Systems Consulting Group, Inc. (Delaware)
MDS of New Jersey, Inc. (New Jersey)
Conseco Equity Sales, Inc. (Texas)
Conseco Risk Management, Inc. (Indiana)
Conseco Mortgage Capital, Inc. (Delaware)
Conseco Group Risk Management Company (Mississippi)
Conseco Finance (Delaware)
CIHC, Incorporated (Delaware)
Conseco Services, LLC (Indiana)
Conseco Marketing, LLC (Indiana)
Conseco Securities, Inc. (Delaware)
Bankers National Life Insurance Company (Texas)
National Fidelity Life Insurance Company (Missouri)
Bankers Life Insurance Company of Illinois (Illinois)
Bankers Life & Casualty Company (Illinois)
Certified Life Insurance Company (Illinois)
Jefferson National Life Insurance Company of Texas (Texas)
Conseco Direct Life Insurance Company (Pennsylvania)
Conseco Annuity Assurance Company (Illinois)
Vulcan Life Insurance Company (Indiana)
Conseco Senior Health Insurance Company (Pennsylvania)
<PAGE>
Continental Life Insurance Company (Texas)
United General Life Insurance Company (Texas)
Conseco Life Insurance Company of New York (New York)
Conseco Variable Insurance Company (Texas)
Providential Life Insurance Company (Arkansas)
Washington National Corporation (Delaware)
Washington National Insurance Company (Illinois)
United Presidential Corporation (Indiana)
United Presidential Life Insurance Company (Indiana)
Wabash Life Insurance Company (Kentucky)
Conseco Life Insurance Company (Indiana)
Lincoln American Life Insurance Company (Tennessee)
Pioneer Financial Services, Inc. (Delaware)
Geneva International Insurance Company, Inc. (Turks and Caicos Islands)
Pioneer Life Insurance Company (Illinois)
Health and Life Insurance Company of America (Illinois)
Manhattan National Life Insurance Company (Illinois)
Conseco Medical Insurance Company (Illinois)
Capital American Financial Corporation (Ohio)
Conseco Health Insurance Company (Arizona)
Frontier National Life Insurance Company (Ohio)
Consumer Acceptance Corporation (Indiana)
General Acceptance Corporation (Indiana)
NAL Financial Group, Inc. (Delaware)
Conseco Series Trust (Massachusetts)*
Conseco Fund Group (Massachusetts) (publicly held)**
Conseco Strategic Income Fund (Massachusetts) (publicly held) ***
* The shares of Conseco Series Trust currently are sold to insurance separate
accounts, both affiliated and unaffiliated.
** The shares of the Conseco Fund Group are sold to the public; Conseco
affiliates currently hold in excess of 35% of its shares.
*** The shares of the Conseco Strategic Income Fund, a closed-end management
investment company, are traded on the New York Stock Exchange.
<PAGE>
ITEM 25. INDEMNIFICATION
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified
circumstances. Section 7 of Article VII of the bylaws of the registrant (exhibit
2 to the registration statement, which is incorporated herein by reference)
provides in effect that the registrant shall provide certain indemnification to
its directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Conseco Capital Management, Inc. (the "Adviser") is an Indiana
corporation which offers investment advisory services. The Adviser is a
wholly-owned subsidiary of Conseco, Inc., also an Indiana corporation, a
publicly owned financial services company. Both the Adviser's and Conseco,
Inc.'s offices are located at 11825 N. Pennsylvania Street, Carmel, Indiana
46032.
The principal officers and directors of Conseco Capital Management,
Inc. are as follows:
Maxwell E. Bublitz, CEO, President and Director; Senior Vice President
of Conseco, Inc.; President and Trustee of Conseco Fund Group; President and
Trustee of Conseco Strategic Income Fund; President and Trustee of Conseco
Series Trust.
Gregory J. Hahn, Senior Vice President, Portfolio Analytics; Trustee of
Conseco Fund Group; Trustee of Conseco Strategic Income Fund.
Thomas A. Meyers, Senior Vice President, Director of Marketing
Thomas J. Pence, Senior Vice President
William P. Kovacs, Senior Counsel and Secretary; Chief Compliance
Officer and Director; Vice President and Secretary of Conseco Fund Group; Vice
President and Secretary of Conseco Strategic Income Fund; Vice President and
Secretary of Conseco Series Trust; Vice President and Secretary Conseco Equity
Sales, Inc.; Vice President and Secretary of Conseco Securities, Inc.
Information as to the officers and directors of the Adviser is included
in its current Form ADV filed with the SEC and is incorporated by reference
herein.
ITEM 27. PRINCIPAL UNDERWRITER
Conseco Equity Sales, Inc. will serve as the Registrant's Principal
Underwriter.
<PAGE>
The following information is furnished with respect to the officers and
directors of Conseco Equity Sales, Inc. The principal business address of each
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
- ---------------- -------------------------- ---------------
<S> <C> <C>
L. Gregory Gloeckner President None
William P. Kovacs Vice President, Senior Counsel, Vice President and Secretary
Secretary, and Director
James S. Adams Senior Vice President, Treasurer, Treasurer, Principal Financial
and Director and Accounting Officer
William T. Devanney, Jr. Senior Vice President, Corporate Vice President, Corporate Taxes
Taxes
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books, or other documents required to be maintained by
the Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and the rules promulgated thereunder are in the possession of the Adviser,
Conseco Capital Management, Inc., or the Custodian, Declaration Services
Company, 555 North Lane, Suite 6160, Conshohocken, Pennsylvania.
ITEM 29. MANAGEMENT SERVICES
Declaration Services Company, 555 North Lane, Suite 6160, Conshohocken,
Pennsylvania.
ITEM 30. UNDERTAKINGS
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Conseco StockCar Stocks Mutual
Fund, Inc., certifies that it meets all of the requirements for effectiveness of
this Post-Effective Amendment No. 9 to the Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 5 to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Carmel, of the State of Indiana, on the
12th day of May, 2000.
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
By: /s/ Maxwell E. Bublitz
---------------------------------------
Maxwell E. Bublitz
President (Principal Executive Officer)
and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 9 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ MAXWELL E. BUBLITZ* President May 12, 2000
- ---------------------------- (Principal Executive Officer)
Maxwell E. Bublitz and Trustee
/s/ WILLIAM P. DAVES, JR.* Chairman of the Board and May 12, 2000
- ---------------------------- Trustee
William P. Daves, Jr.
/s/ HAROLD W. HARTLEY* Trustee May 12, 2000
- ----------------------------
Harold W. Hartley
/s/ DR. R. JAN LECROY* Trustee May 12, 2000
- ----------------------------
Dr. R. Jan LeCroy
/s/ Dr. JESSE H. PARRISH* Trustee May 12, 2000
- ----------------------------
Dr. Jesse H. Parrish
/s/ JAMES S. ADAMS Treasurer May 12, 2000
- ----------------------------
James S. Adams
/s/ DAVID N. WALTHALL* Trustee May 12, 2000
- ----------------------------
David N. Walthall
* /S/ William P. Kovacs
- ----------------------------
William P. Kovacs
Attorney-in-fact
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
<S> <C>
(a) Amended and Restated Articles of Incorporation - Filed herewith.
(b) Amended and Restated By-Laws - To be filed by amendment.
(d) Investment Advisory Agreement - Filed herewith.
(e) Principal Underwriting Agreement - Filed herewith.
(h) Administration Agreement - Filed herewith.
(i) Consent and Opinion of Counsel - Filed herewith.
(j) Consent of Independent Accountants - Filed herewith.
(m) Rule 12b-1 Plan - Filed herewith.
(o) Form of Rule 18f-3 Plan - Filed herewith.
(p) Code of Ethics - Filed herewith.
</TABLE>
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
Conseco Stockcar Stocks Mutual Fund, Inc., a Maryland corporation (the
"Corporation"), desires to amend and restate its existing Articles of
Incorporation by adopting the following Amended and Restated Articles of
Incorporation, as approved by a majority of the Board of Directors on February
7, 2000 and as approved by an affirmative vote of shareholders holding two
thirds of the outstanding voting securities of the Corporation. The provisions
set forth in this Amended and Restated Articles of Incorporation amend several
provisions of the existing Articles of Incorporation and restate all the
provisions of the charter currently in effect and otherwise permitted by
Maryland General Corporate Law.
FIRST: INCORPORATOR
Vera M. Norris, whose post office address is 11 East Chase Street,
Baltimore, MD 21202, being at least eighteen years of age, under and by virtue
of the General Laws of the State of Maryland authorizing the formation of
corporations, did act as the sole incorporator with the intention of forming a
corporation.
SECOND: NAME.
The name of the Corporation is Conseco Stockcar Stocks Mutual Fund,
Inc.
THIRD: DURATION.
The duration of the Corporation shall be perpetual.
FOURTH: Corporate Purposes.
The purposes for which the Corporation is formed are to act as an
open-end management investment company under the Investment Company Act of 1940,
as amended, and to exercise and enjoy all of the powers, rights and privileges
granted to, or conferred upon, corporations of a similar character by the Public
General Laws of the State of Maryland now or hereafter in force.
FIFTH: ADDRESS AND RESIDENT AGENT.
The post office address of the principal office of the Corporation in
this State is c/o CSC - Lawyers Incorporating Service Company, 11 East Chase
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in this State is CSC - Lawyers Incorporating Service Company, and
the post office address of the resident agent is 11 East Chase Street,
Baltimore, Maryland 21202.
SIXTH: Capital Stock.
Section 6.1. Authority to Issue. The total number of shares of capital
stock which the Corporation shall have authority to issue is five hundred
million (500,000,000) shares, $0.001 par value per share ("Shares"), having an
aggregate par value of $500,000, comprising 500 million (500,000,000) Shares of
the Conseco Stockcar Stocks Mutual Fund. The Shares may be issued by the Board
of Directors in such separate and distinct series ("Series") and classes of
Series ("Classes") as the Board of Directors shall from time to time create and
establish. The Board of Directors shall have full power and authority, in its
sole discretion, to create and establish Series and Classes having such
preferences, rights, voting powers, terms of conversion, restrictions,
limitations on dividends, qualifications, and terms and conditions of redemption
as shall be fixed and determined from time to time by resolution or resolutions
providing for the issuance of such Shares adopted by the Board of Directors. In
event of establishment of Classes, each Class of a Series shall represent
interests in the assets of that Series and have identical voting, dividend,
liquidation and other rights and the same terms and conditions as any other
Class of that Series, except as provided in these Articles of Incorporation and
except that expenses allocated to the Class of a Series may be borne solely by
such Class as shall be determined by the Board of Directors and a Class of a
Series may have exclusive voting rights with respect to matters affecting only
that Class. Expenses related to the distribution of, and other identified
expenses that should properly be allocated to, the Shares of a particular Class
or Series may be charged to and borne solely by such Class or Series and the
bearing of expenses solely by a Class or Series may be appropriately reflected
(in a manner determined by the Board of Directors) and cause differences in the
net asset value attributable to, and the dividend, redemption and liquidation
rights of, the Shares of each Class or Series. In addition, the Board of
Directors is hereby expressly granted authority to increase or decrease the
number of Shares of any Series or Class, but the number of Shares of any Series
or Class shall not be decreased by the Board of Directors below the number of
Shares thereof then outstanding.
<PAGE>
The Board of Directors of the Corporation is authorized from time to
time to classify or to reclassify, as the case may be, any unissued Shares of
the Corporation in separate Series or Classes. The Shares of said Series or
Classes shall have such preferences, rights, voting powers, terms of conversion,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined from time to time by
the Board of Directors. The Corporation may hold as treasury shares, reissue for
such consideration and on such terms as the Board of Directors may determine, or
cancel, at their discretion from time to time, any Shares reacquired by the
Corporation. No holder of any of the Shares shall be entitled as of right to
subscribe for, purchase, or otherwise acquire any Shares of the Corporation
which the Corporation proposes to issue or reissue.
The Corporation shall have authority to issue any additional Shares
hereafter authorized and any Shares redeemed or repurchased by the Corporation.
All Shares of any Series or Class when properly issued in accordance with these
Articles of Incorporation shall be fully paid and nonassessable.
Section 6.2. Redemption by Stockholders. Each holder of Shares
("Stockholder") shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his or her
Shares at a redemption price per Share equal to the net asset value per Share at
such time as the Board of Directors shall have prescribed by resolution. In the
absence of such resolution, the redemption price per Share shall be the net
asset value next determined (in accordance with Section 6.4) after receipt by
the Corporation of a request for redemption in proper form less such charges as
are determined by the Board of Directors and described in the Corporation's
Registration Statement under the Securities Act of 1933. The Board of Directors
may specify conditions, prices, and places of redemption, and may specify
binding requirements for the proper form or forms of requests for redemption.
Payment of the redemption price may be wholly or partly in securities or other
assets at the value of such securities or assets used in such determination of
net asset value, or may be in cash. Notwithstanding the foregoing, the Board of
Directors may postpone payment of the redemption price and may suspend the right
of the holders of Shares to require the Corporation to redeem Shares during any
period or at any time when and to the extent permissible under the Investment
Company Act of 1940.
Section 6.3. Redemption by the Corporation. If, at any time, when a
request for transfer or redemption of Shares of any Series is received by the
Corporation or its agent, the value of the Shares of such Series in a
Stockholder's account is less than two hundred fifty dollars ($250), or such
greater amount as the Board of Directors in their discretion shall have
determined, after giving effect to such transfer or redemption, the Board of
Directors may cause the Corporation to redeem at current net asset value the
remaining Shares of such Series in such Stockholder's account. No such
redemption shall be effected unless the Corporation has given the Stockholder at
least sixty (60) days' notice of its intention to redeem the Shares and an
opportunity to purchase a sufficient number of additional Shares to bring the
current net asset value of his or her Shares in such Series to two hundred fifty
dollars ($250). Upon redemption of Shares pursuant to this Section, the
Corporation shall promptly cause payment of the full redemption price to be made
to the holder of Shares so redeemed.
<PAGE>
Section 6.4. Net Asset Value per Share. The net asset value of each
Share of the Corporation, or each Series or Class, shall be the quotient
obtained by dividing the value of the net assets of the Corporation, or if
applicable of the Series (being the value of the assets of the Corporation or of
the particular Series less its actual and accrued liabilities exclusive of
capital stock and surplus), by the total number of outstanding Shares of the
Corporation, or of the Series. Such determination may be made on a
Series-by-Series basis or made or adjusted on a Class-by-Class basis, as
appropriate and shall include any expenses allocated to a specific Series or
Class thereof. The Board of Directors shall have the power and duty to determine
from time to time the net asset value per Share at such times and by such
methods as it shall determine, subject to any restrictions or requirements under
the Investment Company Act of 1940, as amended, and the rules, regulations and
interpretations thereof promulgated or issued by the Securities and Exchange
Commission or insofar as permitted by any order of the Securities and Exchange
Commission applicable to the Corporation. The Board of Directors may delegate
such power and duty to any one or more of the directors and officers of the
Corporation, the Corporation's administrator, investment adviser, custodian or
depository of the Corporation's assets, or another agent of the Corporation.
Section 6.5. Establishment of Series or Class. The establishment of any
Series or Class shall be effective upon the adoption of a resolution by a
majority of the Directors setting forth such establishment and designation and
the relative rights and preferences of the Shares of such Series or Class. At
any time that there are no Shares outstanding of any particular Series or Class
previously established and designated, the Directors may by a majority vote
abolish that Series or Class and the establishment and designation thereof.
Section 6.6. Assets and Liabilities of Series. All consideration
received by the Corporation for the issuance or sale of Shares of a particular
Series, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange, or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form, shall be referred to as "assets belonging to" that Series. In addition,
any assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Series shall
be allocated by the Board of Directors between and among one or more of the
Series in such manner as the Board of Directors, in its sole discretion, deems
fair and equitable. Each such allocation shall be conclusive and binding upon
the Stockholders of all Series for all purposes, and shall be referred to as
assets belonging to that Series. The assets belonging to a particular Series
shall be so recorded upon the books of the Corporation. The assets belonging to
each particular Series shall be charged with the liabilities of that Series and
all expenses, costs, charges, and reserves attributable to that Series or
allocable to any particular Class thereof shall be borne by that Series or
allocable to any particular Class. Any general liabilities, expenses, costs,
charges, or reserves of the Corporation which are not readily identifiable as
belonging to any particular Series or Class shall be allocated and charged by
the Board of Directors between or among any one or more of the Series or Classes
in such a manner as the Board of Directors in its sole discretion deems fair and
equitable. Each such allocation shall be conclusive and binding upon the
Stockholders of all Series or Classes for all purposes.
<PAGE>
Section 6.7. Dividends. Dividends and distributions on Shares with
respect to each Series or Class may be declared and paid with such frequency and
in such form and amount as the Board of Directors may from time to time
determine. Dividends may be declared daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the Board
of Directors may determine.
All dividends and distributions of Shares of a particular Series shall
be distributed pro rata to the holders of that Series in proportion to the
number of Shares of that Series held by such holders at the date and time of
record established for the payment of such dividends or distributions, except
that such dividends and distributions shall appropriately reflect expenses
allocated to a particular Class of such Series.
The Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends (including dividends designated in
whole or in part as capital gain distributions) amounts sufficient, in the
opinion of the Board of Directors, to enable the Corporation, or where
applicable each Series of the Corporation, to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended, or any successor or
comparable statute thereto, and regulations promulgated thereunder, and to avoid
liability of the Corporation, or each Series of the Corporation, for federal
income tax in respect of that year. The foregoing shall not limit the authority
of the Board of Directors to make distributions greater than or less than the
amount necessary to qualify as a regulated investment company and to avoid
liability of the Corporation, or any Series of the Corporation, for such tax.
Dividends and distributions may be paid in cash, property or Shares, or
a combination thereof, as determined by the Board of Directors or pursuant to
any program that the Board of Directors may have in effect at the time. Any such
dividend or distribution paid in Shares will be paid at the current net asset
value thereof as defined in Section 6.4.
Section 6.8. Classes of Stock. Two hundred fifty million (250,000,000)
Shares of the Conseco Stockcar Stocks Mutual Fund are designated Direct Class;
and two hundred fifty million (250,000,000) Shares of the Conseco Stockcar
Stocks Mutual Fund are designated Advisor Class. The Direct Class and the
Advisor Class of each Series represent interests in the same investment
portfolio of such Series. Shares of each Class of Common Stock of a Series shall
be subject to all provisions of Article SIXTH hereof relating to stock of the
Corporation generally and shall have the same preferences, conversion and other
rights, voting powers (except as otherwise provided herein), restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption, except as follows:
(1) The dividends and distributions of investment income and capital
gains with respect to the Common Stock shall be in such amount as may be
declared from time to time by the Board of Directors, and such dividends and
distributions may vary between the Classes to reflect differing allocations of
the expenses of each Series of the Corporation between the Classes to such
extent and for such purposes as the Board of Directors may deem appropriate.
(2) The proceeds of the redemption of a Share of Common Stock
(including a fractional share) shall be reduced by the amount of any applicable
contingent deferred sales charge payable on such redemption to the distributor
of the Common Stock pursuant to the terms of the issuance of the Shares (to the
extent consistent with the Investment Company Act of 1940, as amended, or
regulations or exemptions thereunder) and the Corporation shall promptly pay to
such distributor the amount of such contingent deferred sales charge.
<PAGE>
SEVENTH: ISSUANCE OF COMMON STOCK.
Section 7.1. Issuance of New Stock. The Board of Directors is
authorized to issue and sell or cause to be issued and sold from time to time
(without the necessity of offering the same or any part thereof to existing
Stockholders) all or any portion or portions of the entire authorized but
unissued Shares of the Corporation, and all or any portion or portions of the
Shares of the Corporation from time to time in its treasury, for cash or for any
other lawful consideration or considerations and on or for any terms,
conditions, or prices consistent with the provisions of law and of the Articles
of Incorporation at the time in force; provided, however, that in no event shall
Shares of the Corporation be issued or sold for a consideration or
considerations less in amount or value than the par value of the Shares so
issued or sold, and provided further that in no event shall any Shares of the
Corporation be issued or sold, except as a stock dividend distributed to
Stockholders, for a consideration (which shall be net to the Corporation after
underwriting discounts or commissions) less in amount or value than the net
asset value of the Shares so issued or sold determined as of such time as the
Board of Directors shall have by resolution prescribed. In the absence of such a
resolution, such net asset value shall be that next determined after an
unconditional order in proper form to purchase such Shares is accepted, except
that Shares may be sold to an underwriter at (a) the net asset value next
determined after such orders are received by a dealer with whom such underwriter
has a sales agreement or (b) the net asset value determined at a later time.
Section 7.2. Issuance of Fractional Shares. The Corporation may issue
and sell fractions of Shares having pro rata all the rights of full Shares,
including, without limitation, the right to vote and to receive dividends, and
wherever the words "Share" or "Shares" are used in these Articles or in the
By-Laws they shall be deemed to include fractions of Shares, where the context
does not clearly indicate that only full Shares are intended.
EIGHTH: VOTING.
On each matter submitted to a vote of the Stockholders, each holder of
a Share shall be entitled to one vote for each Share and fractional votes for
fractional Shares standing in his or her name on the books of the Corporation;
provided, however, that when required by the Investment Company Act of 1940, as
amended, or rules thereunder or when the Board of Directors has determined that
the matter affects only the interests of one Series or Class, matters may be
submitted to a vote of the Stockholders of a particular Series or Class, and
each holder of Shares thereof shall be entitled to votes equal to the full and
fractional Shares of the Series or Class standing in his or her name on the
books of the Corporation. The presence in person or by proxy of the holders of
one-third of the Shares outstanding and entitled to vote shall constitute a
quorum for the transaction of business at a Stockholders' meeting, except that
where any provision of law or of these Articles of Incorporation permit or
require that holders of any Series or Class shall vote as a Series or Class,
one-third of the aggregate number of Shares of that Series or Class outstanding
and entitled to vote shall constitute a quorum for the transaction of business
by that Series or Class.
Notwithstanding any provision of law requiring a greater proportion
than a majority of the votes of all Shares of the Corporation or of all Series
or Classes (or of any Series or Class entitled to vote thereon as a separate
Series or Class) to take or authorize any action, in accordance with the
authority granted by Section 2-104(b)(5) of the Maryland Corporations and
Associations Code, the Corporation is hereby authorized to take such action upon
the concurrence of a majority of the aggregate number of Shares entitled to vote
thereon (or of a majority of the aggregate number of Shares of a Series or Class
entitled to vote thereon as a separate Series or Class). The right to cumulate
votes in the election of directors is expressly prohibited.
<PAGE>
NINTH: BOARD OF DIRECTORS.
All corporate powers and authority of the Corporation (except as
otherwise provided by statute, these Articles of Incorporation, or the By-Laws
of the Corporation) shall be vested in and exercised by the Board of Directors.
The number of directors constituting the Board of Directors shall be such number
as may from time to time be fixed in or in accordance with the By-Laws of the
Corporation, provided that after stock is issued to more than one Stockholder,
such number shall not be less than three. Except as provided in the By-Laws, the
election of directors may be conducted in any way approved at the meeting
(whether of Stockholders or directors) at which the election is held, provided
that such election shall be by ballot whenever requested by any person entitled
to vote. The names of the persons who shall act as directors of the Corporation
until their respective successors are duly chosen and qualified are William P.
Daves, Jr., Harold W. Hartley, Dr. R. Jan LeCroy, Dr. Jess H. Parrish, David N.
Walthall, and Maxwell E. Bublitz.
TENTH: CONTRACTS.
Section 10.1. Contracts in General. The Board of Directors may in its
discretion from time to time enter into an exclusive or nonexclusive
distribution contract or contracts providing for the sale of Shares whereby the
Corporation may either agree to sell Shares to the other party to the contract
or appoint such other party its sales agent for such Shares (such other party
being herein sometimes called the "underwriter"), and in either case on such
terms and conditions as may be prescribed in the By-Laws, if any, and such
further terms and conditions as the Board of Directors may in its discretion
determine not inconsistent with the provisions of these Articles of
Incorporation and such contract may also provide for the repurchase of Shares of
the Corporation by such other party or parties as agent of the Corporation. The
Board of Directors may also in its discretion from time to time enter into an
investment advisory or management contract or contracts whereby the other party
to such contract shall undertake to furnish to the Board of Directors such
management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions as the Board of Directors may in its discretion determine.
Section 10.2. Parties to Contracts. Any contract of the character
described in Section 10.1 or for services as administrator, custodian, transfer
agent or disbursing agent or related services may be entered into with any
corporation, firm, trust or association, although any one or more of the
directors or officers of the Corporation may be an officer, director, trustee,
stockholder or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Corporation under or
by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article
TENTH. The same person (including a firm, corporation, trust, or association)
may be the other party to contracts entered into pursuant to Section 10.1 above,
and any individual may be financially interested or otherwise affiliated with
persons who are parties to any or all of the contracts mentioned in this Section
10.2.
ELEVENTH: LIABILITY OF DIRECTORS AND OFFICERS.
Section 11.1. Liability. To the maximum extent permitted by applicable
law (including Maryland law and the Investment Company Act of 1940) as currently
in effect or as may hereafter be amended, no director or officer of the
Corporation shall be liable to the Corporation or its stockholders for money
damages.
<PAGE>
Section 11.2. Indemnification. To the maximum extent permitted by
applicable law (including Maryland law and the Investment Company Act of 1940)
currently in effect or as may hereafter be amended, the Corporation shall
indemnify and advance expenses as provided in the By-Laws to its present and
past directors, officers, employees and agents, and persons who are serving or
have served at the request of the Corporation as a director, officer, employee
or agent in similar capacities for other entities.
Section 11.3. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability.
Section 11.4. Modification. Any repeal or modification of this Article
ELEVENTH by the Stockholders of the Corporation, or adoption or modification of
any other provision of the Articles of Incorporation or By-Laws inconsistent
with this Article ELEVENTH, shall be prospective only, to the extent that such
repeal or modification would, if applied retrospectively, adversely affect any
limitation on the liability of any director or officer of the Corporation or
indemnification available to any person covered by these provisions with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.
TWELVETH: AMENDMENT.
Section 12.1. Articles of Incorporation. The Corporation reserves the
right from time to time to make any amendment of these Articles of
Incorporation, now or hereafter authorized by law, including any amendment which
alters contract rights, as expressly set forth in these Articles of
Incorporation, of any outstanding Shares. The Board of Directors may in its
discretion amend these Articles of Incorporation without Stockholder approval as
permitted by Maryland General Corporate Law. Any amendment to these Articles of
Incorporation that requires the approval of Stockholders may be adopted at a
meeting of the Stockholders upon receiving an affirmative vote of a majority of
all votes entitled to be cast thereon.
Section 12.2. By-Laws. Except as may otherwise be provided in the
By-Laws, the Board of Directors of the Corporation is expressly authorized to
make, alter, amend and repeal By-Laws or to adopt new By-Laws of the
Corporation, without any action on the part of the Stockholders; but the By-
Laws made by the Board of Directors and the power so conferred may be altered or
repealed by the Stockholders. IN WITNESS WHEREOF, CONSECO STOCKCAR STOCKS MUTUAL
FUND, INC. has caused these presents to be signed in its name and on its behalf
by its [Vice President] and attested by the Corporation's [Secretary] on this __
day of March, 2000, who swear under penalty of perjury to the best of their
knowledge, information and belief, that the matters and facts set forth in these
Articles are true in all material respects.
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
By: /s/ Maxwell E. Bublitz
---------------------------------
Maxwell E. Bublitz, President
EXHIBIT D
INVESTMENT ADVISORY AGREEMENT
<PAGE>
INVESTMENT ADVISORY AGREEMENT
BETWEEN CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
AND
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of this 28th day
of April, 2000, by and between Conseco StockCar Stocks Mutual Fund, Inc. (the
"Company"), a Maryland corporation, and Conseco Capital Management, Inc. (the
"Adviser"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the " 1940 Act"), as an open-end diversified management
investment company;
WHEREAS, the Company is authorized to issue various series of shares,
each of which represents a separate diversified portfolio of investments, and
may establish additional series of shares (each series now or hereafter listed
on Schedule A hereto, as such schedule may be amended from time to time, shall
be referred to herein as a "Fund");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940;
WHEREAS, the Company desires to retain the Adviser to render investment
advice and furnish portfolio management services to each Fund; and
WHEREAS, the Adviser is willing to render such advice and furnish such
services pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties mutually agree as follows:
1. EMPLOYMENT; DUTIES OF THE ADVISER. (a) The Company hereby employs
the Adviser as investment adviser of each Fund. The Adviser hereby accepts such
employment and agrees to provide the services set forth herein in return for the
compensation under Paragraph 8.
(b) Subject to the supervision and direction of the Board of
Directors of the Company (the "Directors"), the Adviser shall provide a
continuous investment program for each Fund and shall, as part of its duties
hereunder, (i) furnish investment research and management with respect to the
investment of the assets of each Fund, (ii) determine from time to time
securities or other investments to be purchased, sold, retained or lent by each
Fund, (iii) furnish, without cost to each Fund, such office space, equipment,
facilities and personnel as needed for servicing the investments of the Fund to
the extent not provided by the Company's administrator under a separate
agreement with the Company, (iv) maintain all books and records with respect to
portfolio transactions of each Fund, and (v) permit its directors, officers and
employees to serve, without compensation from the Company or each Fund, as
Directors or officers of the Company. The Adviser shall carry out its duties
under this Agreement in accordance with each Fund's stated investment objective,
policies, and restrictions, the 1940 Act and other applicable laws and
regulations, and such other guidelines as the Directors may reasonably establish
from time to time.
<PAGE>
(c) The Adviser will place orders for each Fund either directly with
the issuer or with any broker or dealer. In placing orders with brokers and
dealers, the Adviser will attempt to obtain the best net results in terms of
price and execution. Consistent with this obligation, the Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers that provide brokerage and research services. The Adviser may pay such
brokers and dealers a higher commission than may be charged by other brokers and
dealers if the Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided. This determination may be viewed in terms either of the particular
transaction or of the overall responsibility of the Adviser to the Funds and its
other clients.
2. RETENTION OF A SUB-ADVISER. Subject to such approval as may be
required under the 1940 Act, the Adviser may retain a sub-adviser, at the
Adviser's own cost and expense, for the purpose of making investment
recommendations and research available to the Adviser. Retention of a
sub-adviser with respect to any or all Funds shall in no way reduce the
responsibilities or obligations of the Adviser under this Agreement, and the
Adviser shall be responsible to the Company and each such Fund for all acts or
omissions of the sub-adviser in connection with the performance of the Adviser's
duties hereunder.
3. INDEPENDENT CONTRACTOR STATUS; SERVICES NOT EXCLUSIVE. The Adviser
shall, for all purposes herein, be deemed to be an independent contractor. The
services to be rendered by the Adviser pursuant to the provisions of this
Agreement are not to be deemed exclusive and the Adviser shall therefore be free
to render similar or different services to others, provided that, its ability to
render the services described herein shall not be impaired thereby.
4. FURNISHING OF INFORMATION. (a) Each Fund shall from time to time
furnish or make available to the Adviser detailed statements of the investments
and assets of the Fund, information pertaining to the investment objectives and
needs of the Fund, financial reports, proxy statements, and such legal or other
information as the Adviser may reasonably request in connection with the
performance of its obligations hereunder.
(b) The Adviser will furnish the Directors with such periodic and
special reports (including data on securities, economic conditions and other
pertinent subjects) as the Directors may reasonably request.
5. FUND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser agrees that all records which it maintains for
the Company shall be the property of the Company and shall be surrendered
promptly to the Company upon request. The Adviser further agrees to preserve all
such records for the periods prescribed by Rule 3la-2 under the 1940 Act. The
Adviser agrees that it will maintain all records and accounts regarding the
investment activities of each Fund in a confidential manner. All such accounts
or records shall be made available within five (5) business days of request to
the accountants or auditors of each Fund during regular business hours at the
Adviser's offices. In addition, the Adviser will provide any materials
reasonably related to the investment advisory services provided hereunder as may
be reasonably requested in writing by the designated officers of the Company or
as may be required by any duly constituted authority.
<PAGE>
6. ALLOCATION OF COSTS AND EXPENSES.
(a) The Adviser shall pay the costs of rendering its services
pursuant to the terms of this Agreement, other than the costs of securities
(including brokerage commissions, if any) purchased by the Funds.
(b) Each Fund shall bear all expenses of its operation (including
its proportionate share of the general expenses of the Company) not specifically
assumed by the Adviser. Expenses borne by each Fund shall include, but are not
limited to, (i) organizational and offering expenses of the Fund and expenses
incurred in connection with the issuance of shares of the Fund; (ii) fees of the
Company's custodian and transfer agent; (iii) costs and expenses of pricing and
calculating the net asset value per share for each class of the Fund and of
maintaining the books and records required by the 1940 Act; (iv) expenditures in
connection with meetings of shareholders and Directors, other than those called
solely to accommodate the Adviser; (v) compensation and expenses of Directors
who are not interested persons of the Company or the Adviser ("Disinterested
Directors"); (vi) the costs of any liability, uncollectible items of deposit and
other insurance or fidelity bond; (vii) the cost of preparing, printing, and
distributing prospectuses and statements of additional information, any
supplements thereto, proxy statements, and reports for existing shareholders;
(viii) legal, auditing, and accounting fees; (ix) trade association dues; (x)
filing fees and expenses of registering and maintaining registration of shares
of the Fund under applicable federal and state securities laws; (xi) brokerage
commissions; (xii) taxes and governmental fees; and (xiii) extraordinary and
non-recurring expenses.
(c) To the extent the Adviser incurs any costs which are an
obligation of a Fund as set forth herein and to the extent such costs have been
reasonably rendered, the Fund shall promptly reimburse the Adviser for such
costs.
7. INVESTMENT ADVISORY FEES.
(a) As compensation for the advice and services rendered and the
expenses assumed by the Adviser pursuant hereto, each Fund shall pay to the
Adviser a fee computed at the annual rate set forth on Schedule A hereto, as
such schedule may be amended from time to time.
(b) The investment advisory fee shall be accrued daily by each Fund
and paid to the Adviser at the end of each calendar month.
(c) In the case this Agreement becomes effective or terminates with
respect to any Fund before the end of any month, the investment advisory fee for
that month shall be calculated on the basis of the number of business days
during which it is in effect for that month.
8. ADDITIONAL FUNDS. In the event that the Company establishes one or
more series of shares with respect to which it desires to have the Adviser
render services under this Agreement, it shall so notify the Adviser in writing.
If the Adviser agrees in writing to provide said services, such series of shares
shall become a Fund hereunder upon execution of a new Schedule A and the
approval of the Directors and the shareholders of the series as required by the
1940 Act.
<PAGE>
9. COMPLIANCE WITH APPLICABLE LAW. Nothing contained herein shall be
deemed to require the Funds to take any action contrary to (a) the Agreement and
Declaration of Company of the Company, (b) the By-laws of the Company, or (c)
any applicable statute or regulation. Nothing contained herein shall be deemed
to relieve or deprive the Directors of their responsibility for and control of
the conduct of the affairs of the Company or the Funds.
10. LIABILITY. (a) In the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser, or reckless disregard by the
Adviser of its obligations or duties hereunder, the Adviser shall not be subject
to liability to the Company or any Fund or its shareholders for any act or
omission in the course of or in connection with rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
(b) No provision of this Agreement shall be construed to protect any
Director or officer of the Company, or any director or officer of the Adviser,
from liability to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence on the part of such person,
or reckless disregard by such person of obligations or duties hereunder.
(c) A copy of the Company's Amended and Restated Articles of
Incorporation is on file with the Secretary of Maryland, and notice is hereby
given that this Agreement is executed on behalf of the Directors as Directors
and not individually. The Adviser acknowledges and agrees that the obligations
of a Fund hereunder are not personally binding upon any of the Directors or
shareholders of the Fund but are binding only upon property of that Fund and no
other.
11. TERM OF AGREEMENT. This Agreement shall become effective on the
date above written with respect to each Fund listed on Schedule A hereto on such
date and shall continue in effect for two years from such date unless sooner
terminated as hereinafter provided. With respect to each series added by
execution of a new Schedule A, this Agreement shall become effective on the date
of such execution and shall remain in effect for two years after such execution
unless sooner terminated as hereinafter provided. Thereafter, this Agreement
shall continue in effect with respect to each Fund from year to year so long as
such continuation is approved at least annually for each Fund by (i) the
Directors or by the vote of a majority of the outstanding voting securities of
the Fund, and (ii) the vote of a majority of the Disinterested Directors, with
such vote being cast in person at a meeting called for the purpose of voting on
such approval.
12. TERMINATION. This Agreement may be terminated with respect to any
Fund at any time without payment of any penalty (a) by the Directors or by vote
of a majority of the outstanding voting securities of the Fund, upon delivery of
sixty (60) days' written notice to the Adviser, or (b) by the Adviser upon sixty
(60) days' written notice to the Fund. Termination of this Agreement with
respect to one Fund shall not affect the continued effectiveness of this
Agreement with respect to any other Fund. This Agreement shall terminate
automatically in the event of its assignment.
<PAGE>
13. AMENDMENT OF AGREEMENT. This Agreement may only be modified or
amended by mutual written agreement of the parties hereto.
14. NO WAIVER. The waiver by any party of any breach of or default
under any provision or portion of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach or default.
15. USE OF NAME. In consideration of the execution of this Agreement,
the Adviser hereby grants to the Company the right to use the name "Conseco" as
part of its name and the names of the Funds. The Company agrees that in the
event this Agreement is terminated, it shall immediately take such steps as are
necessary to amend its name to remove the reference to "Conseco."
16. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana, except insofar as the 1940
Act may be controlling.
17. DEFINITIONS. For purposes of application and operation of the
provisions of this Agreement, the terms "majority of the outstanding voting
securities, "interested persons," and "assignment" shall have the meaning as set
forth in the 1940 Act. In addition, when the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is modified, interpreted or
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
18. SEVERABILITY. The provisions of this Agreement shall be considered
severable and if any provision of this Agreement is deemed to be invalid or
contrary to any existing or future law, such invalidity shall not impair the
operation of or affect any other provision of this Agreement which is valid.
<PAGE>
19. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers on the day and year
first above written.
ATTEST: CONSECO STOCKCAR STOCKS
MUTUAL FUND, INC.
/s/ William P. Kovacs
- ----------------------- By: /s/ Maxwell E. Bublitz
William P. Kovacs, Esq. ----------------------
Maxwell E. Bublitz
President
ATTEST: CONSECO CAPITAL MANAGEMENT, INC.
/s/ William P. Kovacs
- ----------------------- By: /s/ Maxwell E. Bublitz
William P. Kovacs, Esq. ----------------------
Maxwell E. Bublitz
President
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ADVISORY AGREEMENT
SCHEDULE A
Series Annual Rate
------ -----------
<S> <C>
Conseco StockCar Stocks Index Fund 0.65%
</TABLE>
EXHIBIT E
PRINCIPAL UNDERWRITING AGREEMENT
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
BETWEEN CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
AND
CONSECO EQUITY SALES, INC.
THIS PRINCIPAL UNDERWRITING AGREEMENT is entered into as of this 28th
day of April, 2000, by and between Conseco StockCar Stocks Mutual Fund, Inc.
(the "Company"), a Maryland corporation, and Conseco Equity Sales, Inc., a Texas
corporation (the "Underwriter").
WITNESSETH:
-----------
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the " 1940 Act"), as an open-end diversified management
investment company, and its shares are registered pursuant to the Securities Act
of 1933 (the "1933 Act");
WHEREAS, the Company is authorized to issue various series of shares,
each of which represents a separate diversified portfolio of investments, and
may establish additional series of shares (each series now or hereafter listed
on Schedule A hereto, as such schedule may be amended from time to time, shall
be referred to herein as a "Fund");
WHEREAS, the Company has issued shares of each Fund in one or more
classes (each a "Class"), and has adopted Plans of Distribution and Service (the
"Plans") pursuant to Rule 12b-1 under the 1940 Act with respect to certain of
those Classes (each a "12b- 1 Class");
WHEREAS, the Underwriter is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, the Company desires to retain the Underwriter to act as the
Company's principal underwriter in connection with the offering and sale of
shares of each Fund and to furnish certain other services; and
WHEREAS, the Underwriter is willing to act as principal underwriter and
to furnish such services pursuant to the terms and conditions set forth herein;
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties mutually agree as follows:
1. EMPLOYMENT; DUTIES OF THE UNDERWRITER.
(a) The Company hereby employs the Underwriter, and the Underwriter
hereby accepts employment, as the principal underwriter and exclusive sales
agent in connection with the offering and sale of the shares of each Fund. It is
understood, however, that such employment does not preclude sales made directly
by the Company or through its transfer agent as set forth in the Company's
Registration Statement. As used herein, the term "Registration Statement" shall
mean the registration statement most recently filed by the Company under the
1933 Act and the 1940 Act, including any amendments or supplements thereto. The
Underwriter agrees to use its best efforts to promote the sale of the Funds'
shares. The Underwriter is not obligated to sell any specific number of shares.
(b) The Underwriter shall hold itself available to receive purchase
and redemption orders for shares of each Fund and to accept such orders on
behalf of the Company. The Underwriter shall promptly notify the Company or its
transfer agent of all orders received. Orders shall be deemed effective at the
time and in the manner set forth in the Registration Statement.
(c) The Company reserves the right at all times to suspend or limit
the public offering of the shares of any or all Funds (or of any or all Classes
thereof) upon written notice to the Underwriter. The Company and the Underwriter
each has the right to reject any order in whole or in part.
(d) The Underwriter shall provide or obtain certain shareholder
services, including, but not limited to, maintaining account records for
shareholders; answering inquiries relating to shareholders' accounts, the
policies of the Funds and the performance of their investments; providing
assistance and handling transmission of funds in connection with purchase,
redemption and exchange orders for shares; providing assistance in connection
with changing account setups and enrolling in various optional services; and
producing and disseminating shareholder communications or servicing materials.
The Underwriter may pay compensation and expenses, including overhead, salaries,
and telephone and other communications expenses, to Authorized Dealers (as
defined below) and employees who provide such services.
(e) The Underwriter in its discretion may enter into agreements with
such brokers, dealers or other financial intermediaries ("Authorized Dealers")
as it may select regarding the distribution of Fund shares and/or the servicing
of shareholder accounts. To the extent required by applicable law, each
Authorized Dealer shall be appropriately registered and qualified to carry out
its duties under its agreement with the Underwriter.
2. INDEPENDENT CONTRACTOR STATUS; SERVICES NOT EXCLUSIVE. The
Underwriter shall, for all purposes herein, be deemed to be an independent
contractor. The services to be rendered by the Underwriter pursuant to the
provisions of this Agreement are not to be deemed exclusive, and the Underwriter
shall therefore be free to render similar or different services to others;
provided that, its ability to render the services described herein shall not be
impaired thereby.
<PAGE>
3. FURNISHING OF INFORMATION. Each Fund shall keep the Underwriter
fully informed with regard to its affairs. Each Fund shall furnish the
Underwriter at least annually with audited financial statements of its books and
accounts certified by its independent public accountants. In addition, from time
to time, each Fund shall furnish such additional financial or other information
as the Underwriter may reasonably request.
4. OFFERING PRICE. Each Class of Fund shares shall be offered at a
price equivalent to its net asset value per share (determined in the manner and
at the time or times set forth in the Registration Statement) plus any
applicable sales charge. On each day on which the New York Stock Exchange
("NYSE") is open for business, the Company shall furnish (or arrange for another
person to furnish) the Underwriter with each Class' net asset value per share.
5. COMPENSATION.
(a) As compensation for its activities under this Agreement with
respect to any Class of Fund shares with an initial sales charge, the
Underwriter shall receive the sales charge, if any, imposed on purchases of
shares of that Class. The amount of the sales charge shall be calculated in
accordance with the Registration Statement. The Distributor is authorized to
collect the gross proceeds derived from the sale of such shares, remit the net
asset value thereof to the Company and retain the initial sales charge.
(b) As compensation for its activities under this Agreement with
respect to any Class of Fund shares with a contingent deferred sales charge, the
Underwriter shall receive the sales charge, if any, imposed on redemptions of
shares of that Class. The amount of the sales charge shall be determined in
accordance with the Registration Statement.
(c) As additional compensation, the Underwriter shall receive a
distribution and service fee with respect to each 12b-1 Class at the rate set
forth in the applicable Plan, as such Plan may be amended from time to time.
(d) The Underwriter may reallow to Authorized Dealers any or all of
the initial sales charges, contingent deferred sales charges, or distribution
and service fees which it is paid under this Agreement; provided, however, that
the Distributor may not make payments to any Authorized Dealer for shareholder
servicing in an amount in excess of .25% of the average annual net asset value
of the shares owned by clients of such Authorized Dealer.
6. PURCHASES FOR UNDERWRITER'S OWN ACCOUNT. The Underwriter shall not
purchase shares for its own account for the purpose of resale to the public, but
the Underwriter may purchase shares for its own account only upon written
assurance that the purchase is for investment purposes and that the shares shall
not be resold except through redemption by the Company.
7. ALLOCATION OF EXPENSES. (a) Each Fund will pay all fees and expenses
in connection with (i) preparing audited and certified financial statements;
(ii) registering and maintaining the registration of its shares under applicable
federal and state securities laws; and (iii) preparing, printing and
distributing prospectuses and statements of additional information, any
supplements thereto, reports, and other communications that are sent to existing
shareholders.
<PAGE>
(b) The Underwriter shall pay (or reimburse) all fees and expenses
of each Fund in connection with (i) printing and distributing additional copies
of prospectuses, statements of additional information, any supplements thereto,
reports, and other communications for other than existing shareholders used to
offer shares to the public; and (ii) preparing, printing and distributing all
advertising and sales literature relating to the Fund.
(c) The Underwriter shall pay all of its own expenses in connection
with its services under this Agreement and may pay the salaries and expenses of
Authorized Dealers or employees who engage in or support the distribution of
Fund shares or who service shareholder accounts.
8. REPORTS OF UNDERWRITER. The Underwriter shall prepare, at least
quarterly, reports for the Directors showing expenditures under this Agreement
and the purposes for which such expenditures were made.
9. CONDUCT OF BUSINESS. The Company authorizes the Underwriter to
provide only such information and to make only such statements and
representations as permitted in accordance with federal and state securities
laws and applicable rules of self-regulatory organizations.
10. ADDITIONAL FUNDS. In the event that the Company establishes one or
more series of shares with respect to which it desires to have the Underwriter
render services under this Agreement, it shall so notify the Underwriter in
writing. If the Underwriter agrees in writing to provide said services, such
series of shares shall become a Fund hereunder upon execution of a new Schedule
A and approval by the Directors.
11. LIABILITY. In the absence of willful misfeasance, bad faith or
gross negligence on the part of the Underwriter or reckless disregard by the
Underwriter of its obligations or duties hereunder, the Underwriter shall not be
subject to liability to the Company or any Fund or its shareholders for any act
or omission in the course of or in connection with rendering services hereunder.
12. TERM OF AGREEMENT. This Agreement shall become effective on the
date above written and shall continue in effect for two years from such date
unless sooner terminated as hereinafter provided. Thereafter this Agreement
shall continue in effect with respect to each Fund from year to year so long as
such continuation is approved at least annually for each Fund by (i) the
Directors or by the vote of a majority of the outstanding voting securities of
the Fund and (ii) the vote of a majority of the Directors of the Company who are
not parties to this Agreement or interested persons of any such party
("Disinterested Directors") and by a majority of those Disinterested Directors
who have no direct or indirect financial interest in any Plan or this Agreement.
("Rule 12b-1 Directors"), with such vote being cast in person at a meeting
called for the purpose of voting on such approval.
13. TERMINATION. This Agreement may be terminated with respect to any
Fund at any time without payment of any penalty (a) by the Directors, by vote of
a majority of the outstanding voting securities of the Fund, or by the vote of a
majority of the Rule 12b-1 Directors, upon delivery of sixty (60) days' written
notice to the Underwriter, or (b) by the Underwriter upon sixty (60) days'
written notice to the Fund. Termination of this Agreement with respect to one
Fund shall not affect the continued effectiveness of this Agreement with respect
to any other Fund. This Agreement shall terminate automatically in the event of
its assignment.
<PAGE>
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the entire
agreement between the parties hereto and supersedes any prior agreement between
the parties pertaining to the subject matter hereof, whether oral or written.
This Agreement may only be modified or amended by mutual written agreement of
the parties hereto.
15. NO WAIVER. The waiver by any party of any breach of or default
under any provision or portion of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach or default.
16. DEFINITIONS. For purposes of application and operation of the
provisions of this Agreement, the terms "assignment," "interested persons" and
"majority of the outstanding voting securities" shall have the meanings set
forth in the 1940 Act. In addition, when the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is modified, interpreted or
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
17. SEVERABILITY. The provisions of this Agreement shall be considered
severable and if any provision of this Agreement is deemed to be invalid or
contrary to any existing or future law, such invalidity shall not impair the
operation of or affect any other provision of this Agreement which is valid.
18. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
19. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed postage prepaid to the other party at the
address such other party may designate from time to time for the receipt of such
notices.
20. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Indiana, except insofar as the 1940
Act may be controlling.
21. LIMITATIONS OF LIABILITY OF THE DIRECTORS AND SHAREHOLDERS. A copy
of the Amended and Restated Articles of Incorporation is on file with the
Secretary of State in Maryland and notice is hereby given that this Agreement is
executed on behalf of the Directors as Directors, and not individually. The
Underwriter acknowledges and agrees that the obligations of a Fund hereunder are
not binding upon any of the Directors or shareholders of the Fund personally but
are binding only upon the assets and property of that Fund and no other.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers on the day and year
first above written.
CONSECO STOCKCAR STOCKS MUTUAL
FUNDS, INC.
ATTEST: By: /s/ Maxwell E. Bublitz
-----------------------------
Maxwell E. Bublitz, President
/s/ William P. Kovacs
- ---------------------
CONSECO EQUITY SALES, INC.
ATTEST: By: /s/ L. Gregory Gloeckner
------------------------
L. Gregory Gloeckner,
/s/ William P. Kovacs President
- ---------------------
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
SCHEDULE A
SERIES
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
EXHIBIT H
ADMINISTRATION AGREEMENT
<PAGE>
ADMINISTRATION AGREEMENT
BETWEEN CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
AND
CONSECO SERVICES LLC
THIS ADMINISTRATION AGREEMENT is entered into as of this 28th day of
April, 2000, by and between Conseco Stockcar Stocks Mutual Fund, Inc. (the
"Company"), a Maryland corporation having its principal office and place of
business at 11825 N. Pennsylvania St., Carmel, Indiana, and Conseco Services LLC
(the "Administrator"), an Indiana limited liability company having its principal
office and place of business at 11815 N. Pennsylvania St., Carmel, Indiana.
WITNESSETH:
-----------
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the " 1940 Act"), as an open-end diversified management
investment company;
WHEREAS, the Company is authorized to issue various series of shares,
each of which represents a separate portfolio of investments, and may establish
additional series of shares (each series now or hereafter listed on Schedule A
hereto, as such schedule may be amended from time to time, shall be referred to
herein as a "Fund"); and
WHEREAS, the Company desires to retain the administrator to provide
administrative services to the Fund, and the Administrator is willing to provide
said services directly or through other entities;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties mutually agree as follows:
1 EMPLOYMENT; DUTIES OF THE ADMINISTRATOR
1.1 The Company hereby employs the Administrator as administrator of each Fund,
and the Administrator agrees to provide the services set forth herein in
return for the compensation under Paragraph 2.
1.2 Subject to the supervision and direction of the Board of Directors of the
Company (the "Directors"), the Administrator shall supervise the Fund's
business and affairs and shall provide the services required for the
effective administration of the Fund to the extent not otherwise provided
by employees, agents or contractors of the Company. These services shall
include: (i) furnishing, without cost to the Fund, such office space,
equipment, facilities and personnel as needed in connection with the Fund's
operations, (ii) supervising the preparation and filing of all documents
required for compliance by the Fund with the federal and state securities
laws, (iii) monitoring and reporting on compliance by the Fund with its
investment policies and restrictions, (iv) furnishing clerical and
bookkeeping services as needed by the Fund in connection with its operation
(including establishing appropriate expense accruals, maintaining expense
files and coordinating payment of invoices), (v) maintaining the books and
records required by the 1940 Act, (vi) fund accounting, (vii) assisting in
the preparation and distribution of annual and other reports to
shareholders of the Fund, (viii) monitoring and reporting on compliance
with NASD rules, (ix) monitoring and reporting on compliance with
applicable Internal Revenue Code provisions and regulations, (x)
supervising the preparation and filing of any federal, state and local
income tax returns, (xi) preparing for meetings of the Directors and
shareholders, (xii) permitting its directors, officers and employees to
serve, without compensation from the Company or the Fund, as Directors or
officers of the Company, (xiii) overseeing the determination and
publication of the Fund's net asset value per share in accordance with the
Fund's policies, and (xiv) overseeing relations with, and the performance
of, agents engaged by the Company, such as its transfer agent, custodian,
independent accountants and legal counsel.
<PAGE>
Nothing contained herein shall be deemed to relieve or deprive the
Directors of their responsibility for and control of the conduct of the
affairs of the Company or the Fund.
1.3 The administrative services provided hereunder will exclude (i) portfolio
custodial services provided by the Company's custodian, (ii) transfer
agency services provided by the Company's transfer agent, (iii)
distribution services provided by the distributor of the Company's shares,
Conseco Equity Sales, Inc., and (iv) any administrative services provided
by the Company's investment adviser pursuant to its investment advisory
agreements with the Company.
1.4 This agreement shall not become effective until such time as Declaration
Service Company is no longer providing services to the Trust. This date
shall be the earliest practical date as Conseco Services, LLC is able to
assume responsibility currently provided to the Trust.
2. ADMINISTRATION FEES
2.1 As compensation for the services rendered and the expenses assumed by the
Administrator pursuant to this Agreement, the Fund shall pay the
Administrator a fee computed at the annual rate set forth on Schedule A, as
such schedule may be amended from time to time.
2.2 The administration fee shall be accrued daily by the Fund and paid to the
Administrator at the end of each calendar month. In the case this Agreement
becomes effective or terminates with respect to the Fund before the end of
any month, the administration fee for that month shall be calculated on the
basis of the number of business days during which it is in effect for that
month.
<PAGE>
3 EXPENSES
The Fund shall bear all expenses of its operation (including its
proportionate share of the general expenses of the Company) not
specifically assumed by the Administrator. Expenses borne by the Fund shall
include, but are not limited to, (i) organizational and offering expenses
of the Fund and expenses incurred in connection with the issuance of shares
of the Fund; (ii) fees of the Company's custodian and transfer agent; (iii)
expenditures in connection with meetings of shareholders and Directors,
other than those called solely to accommodate the Administrator; (iv)
compensation and expenses of Directors who are not interested persons of
the Company or the Administrator ("Disinterested Directors"); (v) the costs
of any liability, uncollectible items of deposit and other insurance or
fidelity bond; (vi) the cost of preparing, printing, and distributing
prospectuses and statements of additional information, any supplements
thereto, proxy statements, and reports for existing shareholders; (vii)
legal, auditing, and accounting fees; (viii) trade association dues; (ix)
filing fees and expenses of registering and maintaining registration of
shares of the Fund under applicable federal and state securities laws; (x)
brokerage commissions; (xi) taxes and governmental fees; and (xii)
extraordinary and non-recurring expenses.
4. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR AND THE COMPANY
4.1 The Administrator represents and warrants to the Company that:
(a) It is a limited liability company duly organized and existing, in good
standing, under the laws of the State of Indiana.
(b) It is duly qualified to carry on its business in the State of Indiana.
(c) It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
(d) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
(e) It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
4.2 The Company represents and warrants to the Administrator that:
(a) It is a corporation duly organized and existing, in good standing,
under the laws of the State of Maryland.
(b) It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
<PAGE>
(c) All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
(d) A registration statement under the Securities Act of 1933, as amended,
and the 1940 Act is currently effective and will remain effective, and
appropriate securities filings have been made and will continue to be
made, with respect to all shares of the Funds being offered for sale.
5. CONFIDENTIALITY
Subject to the duty of the Company or the Administrator to comply with
applicable law, each party agrees, on its own behalf and on behalf of its
employees, agents and contractors, to treat as confidential all information
with respect to the other party received pursuant to this Agreement.
6. DELEGATION OF DUTIES
The Administrator may delegate to a sub-administrator the performance of
any or all of its duties hereunder with respect to one or more Funds. The
Administrator shall be responsible to the Company and the Funds for the
acts and omissions of any sub-administrator to the same extent as it is for
its own acts and omissions. The Administrator shall compensate any
sub-administrator retained pursuant to this Agreement out of the fees it
receives pursuant to Paragraph 2 above.
7. LIABILITY
7.1 The Administrator and its officers, directors or employees shall not be
liable for, and each Fund shall indemnify and hold the Administrator
harmless from, any and all losses, damages, or expenses resulting from any
action taken or omitted to be taken by the Administrator hereunder, except
a loss, damage or expense resulting from willful misfeasance, bad faith or
negligence of the Administrator or that of its officers, directors or
employees or the reckless disregard by the Administrator or its officers,
directors or employees of obligations and duties hereunder. Nothing herein
shall in any way constitute a waiver or limitation of any rights which may
exist under any federal securities laws.
7.2 A copy of the Company's Amended and Restated Articles of Incorporation of
Company is on file with the Secretary of State of Maryland, and notice is
hereby given that this Agreement is executed on behalf of the Directors as
Directors and not individually. The Administrator acknowledges and agrees
that the obligations of a Fund hereunder are not binding upon any of the
Directors or shareholders of the Fund personally but are binding only upon
the assets and property of that Fund and no other.
<PAGE>
8. FUND RECORDS
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Administrator agrees that all records which it maintains on behalf of the
Company are the property of the Company, will be preserved for the periods
prescribed by Rule 31a-2 under the 1940 Act, and will be surrendered
promptly to the Company upon request.
9. ADDITIONAL FUNDS
In the event that the Company establishes one or more series of shares with
respect to which it desires to have the Administrator render services under
this Agreement, it shall so notify the Administrator in writing. If the
Administrator agrees in writing to provide said services, such series of
shares shall become a Fund hereunder upon execution of a new Schedule A and
approved by the Directors.
10. TERM OF AGREEMENT
This Agreement, as amended, shall become effective on the date above
written and shall continue in effect for two years from such date unless
sooner terminated as hereinafter provided. Thereafter, this Agreement shall
continue in effect with respect to each Fund from year to year so long as
such continuation is approved at least annually for each Fund by (i) the
Directors or by the vote of a majority of the outstanding voting securities
of the Fund and (ii) the vote of a majority of the Disinterested Directors,
with such vote being cast in person at a meeting called for the purpose of
voting on such approval.
11. TERMINATION
This Agreement may be terminated by either party upon sixty (60) days'
prior written notice to the other. Termination of this Agreement with
respect to one Fund shall not affect the continued effectiveness of this
Agreement with respect to any other Fund.
12. AMENDMENT
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by the Directors.
13. ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other
party. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
<PAGE>
14. APPLICABLE LAW
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the State of Indiana, except
insofar as the 1940 Act may be controlling.
15. DEFINITIONS
As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons," and "assignment" shall have the meaning
as set forth in the 1940 Act. In addition, when the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is modified,
interpreted or relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
16. SEVERABILITY
The provisions of this Agreement shall be considered severable and if any
provision of this Agreement is deemed to be invalid or contrary to any
existing or future law, such invalidity shall not impair the operation of
or affect any other provision of this Agreement which is valid.
17. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
18. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers on the day and year
first above written.
CONSECO STOCKCAR STOCKS MUTUAL
FUNDS, INC.
ATTEST: By: ___________________________________
Maxwell E. Bublitz
_________________ President
CONSECO SERVICES LLC
ATTEST: By: ___________________________________
Thomas J. Kilian,
_________________ President
EXHIBIT I
CONSENT AND OPINION OF COUNSEL
<PAGE>
KIRKPATRICK & LOCKHART LLP 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com
May 12, 2000
Conseco StockCar Stocks Mutual Fund, Inc.
-- Conseco StockCar Stocks Index Fund
11815 N. Pennsylvania Street, K1B
Carmel IN 46032
Ladies and Gentlemen:
We have acted as counsel to Conseco StockCar Stocks Mutual Fund, Inc. a
Maryland corporation (the "Corporation"), in connection with Post-Effective
Amendment No. 9 ("PEA") to the Corporation's Registration Statement on Form N-1A
(File No. 811-8791) relating to the issuance and sale of Shares of the Conseco
StockCar Stocks Index Fund, a series of the Corporation. You have requested our
opinion with respect to the matters set forth below.
In this opinion letter, the term "Shares" refers to the shares of common
stock of the Conseco StockCar Stocks Index Fund that may be issued during the
time that the PEA is effective and has not been superseded by another
post-effective amendment.
In connection with rendering the opinions set forth below, we have examined
copies, believed by us to be genuine, of the Corporation's Articles of
Incorporation, and Bylaws, and any amendments thereto, and such other documents
relating to its organization and operation and such resolutions of the
Corporation's Board of Directors as we have deemed relevant to our opinions, as
set forth herein.
The opinions set forth in this letter are limited to the laws and facts in
existence on the date hereof, and are further limited to the laws (other than
laws relating to choice of law) of the State of Maryland that in our experience
are normally applicable to the issuance of shares of corporations organized
under the laws of the State of Maryland and to the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder.
Based on and subject to the foregoing, and the additional qualifications
and other matters set forth below, it is our opinion that as of the date hereof
the Shares, when sold in accordance with the terms contemplated by the PEA,
including receipt by the Corporation of full payment for the Shares and
compliance with the 1933 Act and 1940 Act, will have been validly issued and
will be fully paid and non-assessable.
<PAGE>
KIRKPATRICK & LOCKHART LLP
Conseco StockCar Stocks Mutual Fund, Inc.
May 12, 2000
Page 2
We are furnishing this opinion letter to you solely in connection with the
issuance of the Shares. You may not rely on this opinion letter in any other
connection, and it may not be furnished to or relied upon by any other person
for any purpose, without specific prior written consent.
The foregoing opinions are rendered as of the date of this letter, except
as otherwise indicated. We assume no obligation to update or supplement our
opinions to reflect any changes of law or fact that may occur.
We hereby consent to this opinion letter accompanying the PEA when it is
filed with the SEC and to the reference to our firm in the statement of
additional information that is being filed as part of such PEA.
Very truly yours,
-------------------------------
/s/ KIRKPATRICK & LOCKHART LLP
KIRKPATRICK & LOCKHART LLP
EXHIBIT J
CONSENT OF INDEPENDENT ACCOUNTANTS
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 9 to the
Registration Statement of Conseco StockCar Stocks Mutual Fund, Inc. (the
"Company") on Form N-1A (File No. 333-53683) of our report dated October 29,
1999, on our audit of the financial statements and financial highlights of the
Company, which report is included in the Annual Report to Shareholders for the
year ended September 30, 1999, which is incorporated by reference in the
Post-Effective Amendment to the Registration Statement. We also consent to the
reference to our Firm under the caption "Independent Accountants".
/s/ Tait Weller & Baker
Tait, Weller & Baker
Philadelphia, Pennsylvania
May 12, 2000
EXHIBIT M
RULE 12B-1 PLAN
<PAGE>
PLAN OF DISTRIBUTION AND SERVICE
PURSUANT TO RULE 12B-1
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
APRIL 28, 2000
WHEREAS, Conseco StockCar Stocks Mutual Fund, Inc. (the "Company"), a
Maryland Corporation, is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Company is authorized to issue various series of shares,
each of which represents a separate portfolio of investments, and may establish
additional series of shares (each series of the Company shall be referred to
herein as a "Fund"); and
WHEREAS, the Company is authorized to issue shares of each Fund in one
or more classes (each a "Class").
WHEREAS, the Company has engaged Conseco Equity Sales, Inc. (the
"Distributor") as distributor of the shares of the Fund pursuant to a Principal
Underwriting Agreement dated April 28, 2000; and
WHEREAS, the Company desires to adopt a Plan of Distribution and
Service (the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to
those Classes of the Fund listed on Schedule A hereto, as such schedule may be
amended from time to time, (each a "Designated Class" and collectively the
"Designated Classes") and the Board of Directors of the Company (the
"Directors") has determined that there is a reasonable likelihood that adoption
of this Plan will benefit the Company, each Fund and the shareholders of each
Designated Class thereof.
NOW, THEREFORE, the Company, with respect to each Designated Class,
hereby adopts this Plan in accordance with Rule12b-1, on the following terms and
conditions:
1. Each Fund shall pay to the Distributor, as compensation for distributing
each Designated Class's shares and for servicing shareholder accounts, a
fee for each Designated Class computed at the annual rate set forth on
Schedule A hereto, as such schedule may be amended from time to time. The
fees shall be payable regardless of whether those fees exceed or are less
than the actual expenses incurred by the Distributor with respect to that
Designated Class in a particular year. Such compensation shall be
calculated and accrued daily and paid monthly or at such other intervals as
the Directors may determine.
2. As principal underwriter of each Designated Class's shares, the Distributor
may spend such amounts as it deems appropriate on any activities or
expenses primarily intended to result in the sale of such shares,
including, but not limited to, compensation to employees of the
Distributor; compensation to the Distributor and to brokers, dealers or
other financial intermediaries that have a Selling Group Agreement in
effect with the Distributor ("Authorized Dealers"); expenses of the
Distributor and Authorized Dealers, including overhead, salaries, and
telephone and other communication expenses; the printing of prospectuses,
statements of additional information, and reports for other than existing
shareholders; and the preparation, printing, and distribution of sales
literature and advertising materials.
<PAGE>
The Distributor may spend such amounts as it deems appropriate on the
servicing of shareholder accounts, including, but not limited to,
maintaining account records for shareholders; answering inquiries relating
to shareholders' accounts, the policies of the Funds and the performance of
their investments; providing assistance and handling transmission of funds
in connection with purchase, redemption and exchange orders for shares;
providing assistance in connection with changing account setups and
enrolling in various optional services; and producing and disseminating
shareholder communications or servicing materials; and may pay compensation
and expenses, including overhead, salaries, and telephone and other
communications expenses, to Authorized Dealers and employees who provide
such services.
3. This Plan shall not take effect with respect to any Class of a Fund until
the Plan, together with any related agreement(s), has been approved for the
Class of the fund by votes of a majority of both (a) the Directors and (b)
those Directors who are not "interested persons" of the Company (as defined
in the 1940 Act) and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to the Plan (the "Rule
12b-1 Directors") cast in person at a meeting called for the purpose of
voting on the Plan and such related agreement(s); and only if the Directors
who approve the Plan have reached the conclusion required by 12b-1(e) with
respect to that Class's shares.
4. This Plan shall remain in effect for one year from the date above written
and shall continue in effect with respect to each Designated Class
thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 3.
5. The Distributor shall provide to the Directors and the Directors shall
review, at least quarterly, a written report of the amounts expended by the
Distributor under the Plan and the purposes for which such expenditures
were made.
6. This Plan may be terminated with respect to any Designated Class at any
time by vote of a majority of the Rule 12b-1 Directors or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act)
of that Designated Class, voting separately from any other Class.
7. This Plan may not be amended to increase materially the amount of
compensation payable by any Designated Class under paragraph 1 hereof
unless such amendment is approved by a vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of that
Designated Class, voting separately from any other Class. No material
amendment to the Plan shall be made unless approved in the manner provided
in paragraph 3 hereof.
<PAGE>
8. While this Plan is in effect, the selection and nomination of Directors who
are no "interested persons" of the Company (as defined in the 1940 Act)
shall be committed to the discretion of the Directors who are themselves
not such interested persons.
9. The Company shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 5 hereof, for a period of not
less than six years from the date of the Plan, any such agreement, or any
such report, as the case may be, the first two years in an easily
accessible place.
IN WITNESS WHEREOF, the Company has executed this Plan as of the day and
year first above written.
CONSECO STOCKCAR STOCKS MUTUAL
FUND, INC.
By: /s/ Maxwell E. Bublitz
-----------------------------
Maxwell E. Bublitz, President
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
SERIES ANNUAL FEE
------ ----------
<S> <C>
Conseco StockCar Stocks Mutual Fund, Inc.
Advisor Class 0.25%
Direct Class 0.25%
</TABLE>
EXHIBIT O
RULE 18F-3 PLAN
FORM OF
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
APRIL 28, 2000
Conseco StockCar Stocks Mutual Fund, Inc., a Maryland corporation (the
"Corporation"), engages in business as an open-end management investment
company. The Corporation issues shares of beneficial interest in separate
series, with shares of each series representing interests in a separate
portfolio of securities and other assets (the Corporation's series together with
all other such series subsequently established by the Corporation are referred
to herein individually as a "Series" and collectively as the "Series"). The
Corporation has designated for each Series certain separate classes of shares,
as set forth on Schedule A hereto (each a "Class"). The Directors of the
Corporation, including a majority of the Directors who are not interested
persons of the Corporation (as defined in the Investment Company Act of 1940, as
amended ("1940 Act") ("Non-interested Directors")), having been furnished with
and having evaluated information reasonably necessary to evaluate this Third
Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 ("Plan"), have
determined in the exercise of their reasonable business judgment that the Plan
is in the best interests of each class of each Series individually, and each
Series and the Corporation as a whole. Accordingly, the Corporation has hereby
adopted this Plan on behalf of its Series set forth on Schedule A hereto.
SECTION 1. CLASS DIFFERENCES.
Each Class of a Series shall represent an equal pro rata interest in
the same portfolio of investments of that Series and, except as otherwise set
forth in this Plan, shall differ solely with respect to : (i) distribution,
service and other charges and expenses as provided for in Sections 2 and 3 of
this Plan; (ii) the exclusive voting rights of each Class on matters submitted
to shareholders that relate solely to that Class; (iii) the separate voting
rights of each Class on matters submitted to shareholders in which the interests
of one Class differ from the interests of another Class, (iv) such differences
relating to eligible investors as may be set forth in the prospectuses and
statements of additional information of each Series, as the same may be amended
or supplemented from time to time (each a "Prospectus" and "SAI" and
collectively, the "Prospectus" and "SAI"); (v) the designation of each Class;
(vi) exchange privileges; and (vii) conversion features.
SECTION 2. DISTRIBUTION AND SERVICE ARRANGEMENTS.
DIRECT CLASS SHARES shall not be subject to any sales charge. Direct
Class shares shall be subject to a annual distribution and service fees under a
Distribution and Service Plan adopted pursuant to Rule 12b-1 under the 1940 Act.
The amount of fees under the Distribution and Service Plan pertaining to the
Direct Class shares, are set forth on Schedule B hereto.
<PAGE>
Purchases of Direct Class shares more may be subject to a redemption
fee if such shares are redeemed within six months of the purchase date.
ADVISOR CLASS SHARES shall be subject to an initial sales charge. The
initial sales charge shall be reduced or waived for certain eligible purchasers
and for certain large volume purchases, as set forth in the Prospectus or SAI.
Advisor Class shares shall be charged annual distribution and service fees under
a Distribution and Service Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of the initial sales charge, and the amount of fees under the
Distribution and Service Plan pertaining to the Advisor Class shares, are set
forth on Schedule B hereto.
Purchases of Advisor Class shares more may be subject to a redemption
fee if such shares are redeemed within six months of the purchase date.
SECTION 3. EXPENSE ALLOCATION.
(A) CLASS EXPENSES.
Certain expenses may be attributable to a particular Class ("Class
Expenses"). Class Expenses shall be allocated exclusively to the particular
Class to which they are attributable. In addition to the distribution and
service fees described in Section 2 above, Class Expenses may include, but are
not limited to, (a) expenses associated with the addition of classes of shares
to the Corporation (to the extent that the expenses were not fully accrued prior
to the issuance of the new classes of shares); (b) expenses of administrative
personnel and services required to support the shareholders of a specific Class;
(c) litigation or other legal expenses relating to a specific Class of shares;
(d) Directors" fees or expenses incurred as a result of issues relating to a
specific Class of shares, (e) accounting expenses relating to a specific Class
of shares; and (f) transfer agency fees and expenses.
Expenses attributable to a Series other than Class Expenses shall be
allocated to each Class based on its net asset value relative to the net asset
value of the Series.
SECTION 4. EXCHANGE PRIVILEGE.
Shares of a Class may be exchanged only for shares of the same Class of
another Series, or for shares of a money market fund, as set forth in the
Prospectus.
SECTION 5. ADDITIONAL INFORMATION.
The Prospectus and SAI contain additional information about each Class
and the Series' multiple class structure. This Plan is subject to the terms of
the Prospectus and SAI; provided, however, that none of the terms set forth in
the Prospectus and SAI shall be inconsistent with the terms of this Plan.
<PAGE>
SECTION 6. TERM AND TERMINATION.
(A) THE SERIES.
This Plan shall become effective with respect to each Series as set
forth on Schedule A hereto, and shall continue in effect with respect to the
Classes of each such Series until terminated in accordance with the provisions
of Section 7(b) hereof.
(B) TERMINATION.
This Plan may be terminated at any time with respect to the Corporation
or any Series or Class thereof, as the case may be, by vote of a majority of
both the Directors of the Corporation and the Non-Interested Directors. The Plan
may remain in effect with respect to the Corporation or any Series or Class
thereof even if it has been terminated in accordance with this Section 7(b) with
respect to any other Series or Class of the Corporation.
SECTION 7. AMENDMENTS.
Before any material amendment to this Plan affecting the Corporation or
any Series or Class thereof, a majority of both the Directors of the Corporation
and the Non-Interested Directors shall find that the amendment is in the best
interests of each Class of each Series individually and each Series and the
Corporation as a whole.
<PAGE>
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
SCHEDULE A
NAME OF SERIES & CLASSES DATE SUBJECT TO PLAN
------------------------ ---------------------
CONSECO STOCKCAR STOCK INDEX FUND April 28, 2000
Direct Class Shares and Advisor Class
Shares
<PAGE>
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
SCHEDULE B
1. DIRECT CLASS SHARES
The offering price of Direct Class share is net asset value with no sales
charge.
REDEMPTION FEE. The Corporation 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.
AMOUNT OF DISTRIBUTION AND SERVICE PLAN FEES. Advisor Class shares of each
Series are subject to distribution and service fees at a rate of up to 0.25% of
the average daily net assets of that Class.
2. ADVISOR CLASS SHARES
The offering price of Advisor Class shares is net asset value plus a
varying sales charge depending on the amount invested. The maximum initial sales
charge imposed on purchases of Advisor Class shares of the Funds listed in
Schedule A hereto is 4.00% of the offering price. The sales charge applicable to
Advisor Class shares is determined as follows:
SALES CHARGE
As % of Public As % of Net
Offering Price Amount Invested
-------------- ---------------
On purchases of:
$Less than $50,0000 to 99,999 4.00%
$100,000 - 249,999 3.00%
$250,000 - 999,999 2.00%
$1,000,000 or more None None
WAIVER OF ADVISOR CLASS SHARES INITIAL SALES CHARGE. The provisions for
waiving the Advisor Class shares initial sales charge shall be those as set
forth in the relevant Series' current Prospectus and SAI.
REDEMPTION FEE. The Corporation 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.
AMOUNT OF DISTRIBUTION AND SERVICE PLAN FEES. Advisor Class shares of each
Series are subject to distribution and service fees at a rate of up to 0.25% of
the average daily net assets of that Class.
EXHIBIT P
CODE OF ETHICS
<PAGE>
CODE OF ETHICS
FOR
CONSECO CAPITAL MANAGEMENT, INC.
I. STATEMENT OF POLICY:
This Code of Ethics (hereinafter "Code") is adopted under rule 17j-1
promulgated by the Securities and Exchange Commission pursuant to Section
17(j) of the Investment Company Act of 1940 (the "Investment Company Act")
and under the Insider Trading and Securities Fraud Enforcement Act of 1988
(the "Insider Trading Act"). In general, the Investment Company Act and
Rule 17j-1 impose an obligation on registered investment companies and on
certain registered investment advisers and registered broker-dealers to
adopt written compliance procedures and a Code of Ethics covering
securities activities of their directors, officers and certain employees.
This Code is designed to ensure that those individuals who have access, due
to their duties and responsibilities with Conseco Capital Management, Inc.
(hereinafter the "Adviser") to material, non-public information regarding
the activities of the Adviser, or to information about the portfolio
securities and the activities of the Adviser and its Clients, do not
intentionally use such information for their personal benefit.
The Code is intended to cover all Access Persons (as hereinafter
defined) of the Adviser. All Access Persons are subject to and bound by the
terms of this Code. It is not the intention of this Code to prohibit
personal securities transactions by Access Persons, but rather to prescribe
rules designed to prevent actual and apparent conflicts of interest. While
it is not possible to specifically define and prescribe rules addressing
all possible situations in which conflicts may arise, this Code sets forth
the Adviser's policy regarding conduct in those situations in which
conflicts are most likely to develop.
Every Access Person should keep the following general principles in
mind in discharging his or her obligations under the Code:
(A) No Access Person should knowingly place his or her own interests ahead
of the Adviser or its Clients; and
(B) No Access Person should use knowledge of the activities of the Adviser
or its Clients to his or her profit or advantage.
II. DEFINITIONS:
(A) "Access Person" means any director, officer or Advisory Person of the
Adviser.
(B) "Adviser" means the investment adviser, Conseco Capital Management,
Inc.
(C) "Advisory Person" means any employee of the Adviser, or any company or
natural person in a control relationship to the Adviser, who, in
connection with his regular functions or duties, makes, participates
in, or obtains information regarding the purchase or sale of a
security by the Client, or whose functions relate to the making of any
recommendations with respect to such purchases or sales.
(D) "Beneficial Ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that it applies to all securities which
an Access Person has or acquires. Beneficial ownership includes direct
or indirect pecuniary interest in securities, such as securities held
by members of a person's immediate family sharing the same household.
(E) "Board" means the Board of Directors of the Adviser.
(F) "Client" means any corporation, insurance company, individual, pension
plan, endowment, institution, investment company, separate account,
trust, business trust, or subsidiary of Conseco, Inc. or its
subsidiaries, who, for a fee, has selected the Adviser to act on its
behalf in the offering of portfolio management, investment consulting,
or other advisory services.
<PAGE>
(G) "Conseco" means Conseco, Inc.
(H) "Control" means the power to exercise a controlling influence over the
management of policies of a company (Section 2(a)(9) of the Investment
Company Act).
(I) "Designated Officer" means the Chief Compliance Officer or, in his
absence, the President of the Adviser.
(J) "Director" means a member of the Board of Directors of the Adviser.
(K) "He" or "his" includes feminine gender.
(L) "Investment Company" means a company registered as such under the
Investment Company Act and for which the Adviser is the investment
adviser.
(M) "Purchase or sale of a security" includes, inter alia, the writing of
an option to purchase or sell a security and the exercise of a stock
option.
(N) "Security" includes any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, investment
contract, limited partnership shares, etc. (as defined in Section
2(a)(36) of the Investment Company Act). "Security" shall not include
shares of registered open-end investment companies, securities issued
by the United States Government, short-term debt securities which are
"government securities" (meaning any security issued or guaranteed as
to principal or interest by the United States, or by any person acting
as an instrumentality of the United States government, per Section
2(a)(16) of the Investment Company Act), bankers acceptances, bank
certificates of deposit, commercial paper, and any other money market
instrument as designated by the Board.
(O) A security is "being considered for purchase or sale" when a
recommendation has been made and communicated, or when a person who
participates in making recommendations performs investigative or
analytical work for the purpose of making a recommendation or when
there is an outstanding order to purchase or sell that security for a
Client.
III. EXEMPTED TRANSACTIONS:
The prohibitions of Section IV of this Code shall not apply to the
following transactions:
(A) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
(B) Purchases or sales which are non-volitional on the part of either the
Access Person or the Adviser;
(C) Purchases which are part of an automatic dividend reinvestment plan;
(D) Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from the issuer;
(E) Purchases or sales of securities which are not eligible for purchase
or sale by any Client (any Access Person desiring to engage in such a
transaction should obtain the prior written approval of the Designated
Officer);
(F) Purchases or sales which receive prior written approval from the
Designated Officer because they are only remotely potentially harmful
to the Client because they are unlikely to affect a highly
institutional market, or because they are clearly not related
economically to the securities to be purchased, sold or held by the
Client;
<PAGE>
(G) Purchases or sales of securities which are not then being purchased or
sold by the Adviser on behalf of any Client or considered for purchase
or sale by the Client, provided that the Access Person has first
obtained the prior written approval of the Designated Officer;
(H) Purchases of securities which are then being sold or considered for
sale by the Adviser on behalf of the Client and sales of securities
which are then being purchased or considered for purchase by the
Adviser on behalf of the Client. The Designated Officer must give
prior written permission and will require written explanations for all
such trades by an Access Person; and
(I) Purchases or sales of other securities of the same issuer whose
securities are being purchased or sold or considered for purchase or
sale by the Adviser on behalf of a Client. However all equity
securities of an issuer shall be deemed the same security and all debt
securities of an issuer shall be deemed the same security.
The reporting requirements of Section V of the Code shall remain
applicable to all of the above transactions, except that no person
shall be required to make a report with respect to the transactions
listed in paragraphs (A), (B) and (C) above.
IV. PROHIBITED TRANSACTIONS:
The following prohibitions shall apply to this Code:
A. Purchases and Sales of Securities.
No Access Person shall purchase or sell, directly or indirectly, any
security in which he has, or by reason of such transaction acquires,
any direct or indirect beneficial ownership and which security to his
knowledge at the time of such purchase and sale:
(1) is being considered for purchase or sale by the Adviser on behalf
of any Client, or
(2) is being purchased or sold by the Adviser on behalf of any
Client.
It is the responsibility of every Access Person, prior to effecting a
purchase or sale of any security in which he has, or acquires, any
direct or indirect beneficial ownership, to ascertain whether such
security is being purchased or sold, or is being considered for
purchase or sale, by the Adviser for a Client. In order to confirm
that such security is not then being purchased or sold or being
considered for purchase or sale on behalf of any Client, the Access
Person must seek and receive prior written clearance for the proposed
trade from the Designated Officer. The Designated Officer will first
review the Restricted Securities List. Subject to the following
paragraphs, if the security which the Access Person wishes to trade is
not on this List at the time in question, the Designated Officer may
clear the Access Person to trade the security on that same day. The
Restricted Securities List is the list of those securities which are
either being considered for purchase or sale by the Adviser on behalf
of any Client (including securities which are being held for trading
and may be expected to be sold at any time) and those securities being
purchased or sold by the Adviser on behalf of any Client. This List
will be prepared and updated each business day by the Adviser. The
Restricted Securities List shall contain all securities which the
Adviser on behalf of its Clients is purchasing or selling or
considering for purchase or sale. It will be the duty of the Adviser
to place on the Restricted Securities List all such securities as
promptly as possible. If there is any type or class of securities as
to which the Adviser cannot readily determine which securities it is
trading or considering for trade, such type or class of securities
will be so identified by the Adviser whether on the Restricted
Securities List or otherwise; any Access Person wishing to trade in
any such security must first seek and receive prior written clearance
for his trade from the Designated Officer. The Access Person must
submit a copy of any such clearance prior to or with his report on
such trade pursuant to Section V below.
<PAGE>
Reliance on the above-mentioned prior written clearance by an Access
Person shall be conclusive evidence that such Person was not aware
that such security was being purchased or sold, or considered for
purchase or sale, as the case may be, except in the case of an Access
Person who because of his or her position as trader, portfolio manager
or securities analyst or because of special access to knowledge
concerning that security had, or should have had, knowledge concerning
such purchase or sale of such consideration for purchase or sale.
In any event, no Access Person, who because of his or her position has
actual knowledge about the impending or actual purchase or sale or
consideration of a purchase or sale of a security by the Adviser on
behalf of any Client prior to the publication of such security on the
Restricted Securities List, may purchase or sell such security until
such security is thereafter removed from the Restricted Securities
List.
B. Purchases and Sales of Recommended Securities by Analysts or Portfolio
Managers.
No Access Person shall purchase or sell a security, in which he has or
acquires any direct or indirect beneficial interest, following the
preparation of a written recommendation by such Access Person that
such security be purchased or sold until such time as it is determined
that such recommendation will not be acted upon or until such time as
it is removed from the Restricted Securities List, if longer.
Any Access Person who manages a Client's portfolio shall not purchase
or sell a security eligible for purchase by that portfolio within
seven calendar days before or after that portfolio trades in that
security; this prohibition does not apply to a sale of such a security
by such portfolio manager within seven calendar days after a sale of
such security by that portfolio or to his purchase of such security
within seven calendar days after a purchase of such security by that
portfolio. Any profits realized on trades within the periods
proscribed in Sections IV.A. and IV.B. above must be disgorged to the
Adviser for the benefit of the affected Clients.
C. Receipt of Gifts, etc.
No Access Person or a member of his or her family shall seek or accept
gifts, favors, compensation or deals in securities more favorable than
those offered to the public from any broker, dealer, investment
adviser, financial institution or other supplier of goods and services
to the Adviser or from any company whose securities have been
purchased or sold or considered for purchase or sale by the Adviser.
The foregoing provision shall not prohibit any benefit, direct or
indirect, in the form of compensation to the Access Person from any
entity under common control with the Adviser for bona fide services
rendered as an officer, member of the Board or employee of such
entity. This prohibition shall not apply to:
(1) lunches or dinners conducted for business purposes;
(2) cocktail parties or similar social gatherings conducted for
business purposes; or
(3) gifts of small value, usually in the nature of reminder
advertising, such as pens, calendars, etc.
D. Material, Non-public Information and Insider Trading.
(1) General. No Access Person may buy or sell securities on the basis
of non-public "material information" known by the Access Person
or "tip" other persons about such information. Any violation of
these restrictions may subject the Adviser and the Access Person
to serious criminal and civil liabilities and sanctions,
including up to $1 million in criminal fines, up to 10 years in
jail and civil penalties up to three times the illegal profit
gained or loss avoided. In addition to governmental fines and
other sanctions, private actions brought by "professional
plaintiffs" against public companies and their insiders have
become quite common and can involve substantial costs, both
monetary and in terms of time, even if the claim ultimately is
dismissed. Equally important, any appearance of impropriety on
the part of the Adviser or its insiders could impair investor
confidence in the Adviser and severely damage its reputation and
business relationships. Accordingly, considerable care should be
taken to avoid even inadvertent violations. In light of these
restrictions, the Adviser has adopted a general policy that the
Adviser's personnel may not trade in securities of Conseco, Inc.
or its publicly-held affiliates ("Conseco") or any other company
while in possession of non-public, material information. Each
Access Person should obtain approval from Conseco's legal
department prior to trading in Conseco securities.
<PAGE>
Each Access Person is also prohibited from directly or indirectly
disclosing material, non-public information about any issuer to
any other person, including family members and relatives, except
for persons who have a legitimate need to know.
(2) Trading in Conseco or Client Securities. Each Access Person and
his family members who share his household should not, under any
circumstances, trade options for, or sell "short," any securities
of Conseco. No Access Person shall buy or sell the equity
securities issued by any Client that is not affiliated with
Conseco, Inc. or the derivatives of such equity securities
without first obtaining written approval from an appropriate
representative of the Client.
(3) Material Information. The term "material information," as used in
this Statement of Policy, means information relating to a
company, its business operations or securities, the public
dissemination of which would likely affect the market price of
any of its securities, or which would likely be considered
important by a reasonable investor in determining whether to buy,
sell or hold such securities. While it is impossible to list all
types of information that might be deemed material under
particular circumstances, information dealing with the following
subjects is often found material: internal forecasts or budgets;
dividends; major new discoveries or advances in research;
acquisitions, including mergers and tender offers; sales of
substantial assets; changes in debt ratings; significant
writedowns of assets or additions to reserves for bad debts or
contingent liabilities; liquidity problems; extraordinary
management developments; public offerings; major price or
marketing changes; labor negotiations; and significant litigation
or investigations by governmental bodies. Information about a
company generally is not material if its public dissemination
would not have an impact on the price of the company's publicly
traded securities. It should be noted that either positive or
adverse information may be material.
(4) No Use or Solicitation of Inside Information. No Access Person
shall utilize material, non-public information about any issuer
of securities in the course of rendering investment advice or
making investment decisions on behalf of Clients. No Access
Person should solicit from any issuer of securities any such
material, non-public information. Any Access Person inadvertently
receiving non-public information regarding securities held by any
Client should notify the Designated Officer or any Vice President
of the Adviser immediately.
E. Confidentiality.
Serious problems could arise for the Adviser and any Access Person by
any unauthorized disclosure of internal information about Conseco,
Inc. or its affiliated companies including the Adviser (the "Conseco
Companies"), or a Client whether or not for the purpose of
facilitating improper trading in the securities of a Conseco Company
or a Client. It is the Adviser's policy that no Access Person should
discuss internal Conseco Company or Client matters or developments
with anyone outside of the Conseco Companies (including family
members, relatives and friends), except as required in the performance
of his regular employment duties. Similarly, no Access Person should
discuss Conseco Company or Client affairs in public or quasi-public
areas where your conversation may be overhead (e.g., restaurants,
restrooms, elevators, etc.). This prohibition also applies to
inquiries about Conseco Companies or Clients which may be made by the
financial press, investment analysts or others in the financial
community. It is important that all such communications on behalf of
the Conseco Companies or the Adviser be made only through authorized
individuals. If you receive any inquiries of this nature, you should
decline comment and refer the inquirer directly to the Conseco
Companies' investor relations spokesman, James Rosensteele, at (317)
573- 2893.
F. Initial Public Offerings.
No Access Person shall purchase a security, in which he by reason of
such transaction acquires any direct or indirect beneficial interest,
in an initial public offering.
<PAGE>
G. Private Placements.
No Access Person shall purchase a security, in which he by reason of
such transaction acquires any direct or indirect beneficial interest,
in a private placement, without obtaining the prior written approval
of the Designated Officer. In giving his approval, the Designated
Officer must consider, among other factors, whether the investment
opportunity should be reserved for a Client and whether the
opportunity is being offered to the individual by virtue of his
position as an Access Person. Any Access Person who has been
authorized to so acquire securities must disclose that investment when
he plays a part in any subsequent consideration of an investment in
the issuer by any Client. In such circumstances, such decision for a
Client to purchase securities of that issuer must be reviewed
independently by other investment personnel of the Adviser who have no
personal interest in the issuer.
H. Directorships of Publicly Traded Companies.
No Access Person may serve on the boards of directors (or equivalent
governing bodies) of publicly traded companies, except the Board of
Directors of the Adviser's parent company, unless that Access Person
first obtains in writing the prior approval of the Designated Officer
if the latter is satisfied that the Access Person will normally be
isolated from the investment making decisions of the Adviser for its
Clients.
<PAGE>
V. REPORTING REQUIREMENTS:
A. In General.
1. Every Access Person shall direct his broker to supply to the
Designated Officer, on a timely basis, duplicate copies of
confirmations of all security transactions in which such Access
Person has, or by reason of such transaction acquires, any direct
or indirect beneficial ownership in the security and copies of
periodic statements for all securities accounts.
2. Every Access Person shall report to the Designated Officer the
information with respect to the transactions in any security in
which such Access Person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership in the
security; provided, however, that an Access Person shall not be
required to make a report with respect to transactions effected
for any account over which such Access Person does not have any
direct or indirect influence or control.
3. Notwithstanding the above, an Access Person need not duplicate
information recorded pursuant to (i) Rule 204-2(a)(12) of the
Investment Advisers Act of 1940, or (ii) the confirmations and
statements supplied under paragraph V.A.1. above. The reporting
under this Code will satisfy that Rule.
4. A Director of the Adviser who is not otherwise an Access Person
need only report a transaction in a security if such member, at
the time of that transaction, knew or, in the ordinary course of
fulfilling his official duties as a Director, should have known
that, during the 15-day period immediately preceding or after the
date of the transaction by the Director, such security was
purchased or sold by the Adviser or was being considered for
purchase or sale by the Adviser. Any Director, who pursuant to
the preceding sentence is not required to report any transaction
in a security during the period in question, need not make any
other report or disclosure of personal securities holdings during
such period under this Section V.
B. Report Contents.
Every report under Paragraph V.A.2. shall be made not later than ten
(10) days after the end of the calendar quarter in which the
transaction to which the report relates was effected, and unless such
information has been supplied under paragraph V.A.1. above, shall
contain the following information:
(1) The date of the transaction, the title and the number of shares
or the principal amount of each security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission of direct or indirect beneficial ownership
in said security.
C. Review.
The Chief Compliance Officer shall review or supervise the review of
the personal securities transactions reported pursuant to Section V.
As part of the review, each such reported securities transaction may
be compared against the portfolio transactions of Clients to determine
whether a violation of this Code may have occurred. If the Chief
Compliance Officer believes that a violation may have occurred, he may
submit the pertinent information regarding the transaction to, and
consult with the General Counsel of Conseco. The Chief Compliance
Officer shall evaluate whether a material violation of this Code has
occurred, taking into account all the exemptions provided under
Section III. Before making any determination that a violation has
occurred, the Chief Compliance Officer shall give the person involved
an opportunity to supply additional information regarding the
transaction in question and shall consult with counsel, if any, for
the Access Person whose transaction is in question.
<PAGE>
D. Annual Disclosure and Certification.
Every Access Person shall disclose all securities in which he has any
direct or indirect beneficial ownership in the securities upon the
commencement of his employment and thereafter on an annual basis.
Every Access Person shall certify annually that he has read and
understands this Code of Ethics and is subject thereto and that he has
reported or disclosed all personal securities trades required to be
reported or disclosed thereunder.
VI. SANCTIONS.
If the Chief Compliance Officer determines that a material violation of the
Code or of the Insider Trading Act has occurred, he shall provide a written
report of his determination to the Board, as is appropriate under the
circumstances, for such further action and sanctions as such Board deems
appropriate, which may include, but shall not be limited to, a letter of
censure, suspension with pay, termination of employment or disgorgement of
any profits realized on transactions in violation of this Code. If a
securities transaction of a Designated Officer is under consideration, the
General Counsel of Conseco shall act in all respects in the manner
prescribed herein for the Designated Officer.
VII. MISCELLANEOUS PROVISIONS.
A. Records.
The Chief Compliance Officer shall maintain records in the manner and
to the extent set forth below, which records may be maintained on film
or computer storage medium under conditions described in Rule 31a-
2(f)(1) under the 1940 Act and shall be available for examination by
representatives of the Securities and Exchange Commission:
(1) A copy of this Code and any other code which is, or at any time
within the past five (5) years has been in effect, shall be
preserved in an easily accessible place;
(2) A record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five (5) years
following the end of the fiscal year in which the violation
occurs;
(3) A copy of each report made by the Access Person pursuant to this
Code shall be preserved for a period of not less than five (5)
years from the end of the fiscal year in which it is made, the
first two (2) years in an easily accessible place; and
(4) A list of all persons who are, or within the past five (5) years
have been, required to make reports pursuant to this Code shall
be maintained in an easily accessible place.
B. Confidentiality of Reports.
All reports of securities transactions and any other information filed
with the Designated Officer or furnished to any person pursuant to
this Code shall be treated as confidential, but are subject to review
as provided herein and by representatives of the Securities and
Exchange Commission or of the client investment company.
C. Interpretation of Provisions.
The Board may from time to time adopt such interpretation of this Code
as they deem appropriate.
<PAGE>
D. Effect of Violation of this Code.
In adopting Rule 17j-1, the Commission specifically noted in
Investment Company Act Release No. IC- 11421 (Oct. 31, 1980) that a
violation of any provision of a particular code of ethics, such as
this Code, would not be considered a per se unlawful act prohibited by
the general anti-fraud provisions of that Rule. In adopting this Code
of Ethics, it is not intended that a violation of this Code is or
should be considered to be a violation of Rule 17j-1.
Attachments:
Certification of Compliance (To be signed by all Access Persons of the
Adviser) Annual Certification of Compliance (To be signed annually)
Report of Personal Securities Transactions (To report quarterly or for
single transactions) Prior Clearance Form (To be completed prior to
each transaction)
<PAGE>
[ATTACH PERSONAL SECURITIES TRANSACTIONS REPORT FORM AFTER ANNUAL
CERTIFICATION OF COMPLIANCE FORM]
<PAGE>
CERTIFICATION OF COMPLIANCE
CONSECO CAPITAL MANAGEMENT, INC.
To: Chief Compliance Officer
I have read in detail and understand the Conseco Capital Management, Inc.
Code of Ethics, dated January, 1995, and will comply in all respects with
the policies and procedures contained therein.
Signature:
----------------------------
Print Name:
----------------------------
Date:
---------------------------------
<PAGE>
ANNUAL CERTIFICATION OF COMPLIANCE
CONSECO CAPITAL MANAGEMENT, INC.
To: Chief Compliance Officer
I have read and understand the Conseco Capital Management, Inc. Code of
Ethics, dated January, 1995, to which I am subject. During the period from
to the date of this annual certification, I have
complied in all respects with the policy and procedures contained in the
Code of Ethics, including the annual disclosure to Conseco Capital
Management, Inc. of all personal securities holdings in which I have any
direct or indirect beneficial ownership.*
Signature:
----------------------------
Print Name:
----------------------------
Date:
---------------------------------
- -------------
* In addition to the securities holdings reported on my broker-dealer
statement(s) for the preceding calendar year end, I directly or indirectly
beneficially own the following securities at such date. (If none, please so
state):
Complete Security Description: Number of Shares
(Name) (Stock) or Par
(Coupon) (Bonds)
(Maturity Date)
--------------- ----------------
<PAGE>
CONSECO CAPITAL MANAGEMENT, INC.
PRIOR CLEARANCE FORM
FOR PERSONAL SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
---------------------------------------------------------------
(Printed Name of Access Person) Phone Ext.
The undersigned seeks clearance for the following trade(s) to be
effected today, .
----------------------.
<TABLE>
<CAPTION>
BROKER-DEALER APPROXIMATE PRICE
SECURITY DESCRIPTION ORDER SIZE TYPE OF TRANSACTION OR BANK INVOLVED OF SECURITY
<S> <C> <C> <C> <C>
(Issuer, (No. of Shares, (Buy, Sell, (rounded to nearest
Coupon, Par Value, etc.) Short, Gift, etc.) whole dollar)
Maturity Date, etc.)
</TABLE>
* If research or equity analyst, written recommendation must be attached to or
written on this form.
-----------------------------------------
(Signature of Access Person)
The foregoing transaction(s) has (have) been cleared for trading on this date.
-----------------------------------------
(Signature of Designated Officer)
Note: A copy of this completed form (including the signatures of both the
Access Person and the Designated Officer) must
be returned to, or left with, the Designated Officer. 8/97
<PAGE>
CONSECO CAPITAL MANAGEMENT, INC.
REPORT OF PERSONAL SECURITIES TRANSACTIONS
In compliance with Investment Advisers Act of 1940, Regulation 204-2(a) (12) and
the Company's Code of Ethics, the following securities transactions(s) are
listed. Include any transactions in warrants, convertible issues, puts, calls,
straddles, short sales, or other direct or indirect transactions in securities.
List your personal transactions, transactions made on your behalf in the name of
another person, transactions made by an immediate member of your family - parent
spouse, children, or other person living in your household, or transactions on
behalf of any other person, and others in which you have beneficial ownership.
"Security" is defined in Section II(N) of the Code of Ethics.
Please Check [ ] only if this is a Single Transaction Report:
Consolidated Quarterly Report for calendar quarter ending
-----------------------
Must be filed not later than 10 days after end of quarter. If you had no
securities transactions during the quarter, please so indicate. If all your
securities transactions during this period were already reported to the Adviser
by your broker-dealer and will not be reported below, please so indicate.
<TABLE>
<CAPTION>
=======================================================================================================
NO. OF SHARES
(STOCK) OR BROKER-DEALER OR
COMPLETE SECURITY DESCRIPTION: PAR (BONDS) TRADE DATE TRANSACTION* PRICE BANK INVOLVED
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Name)
(Coupon)
(Maturity Date)
Diect or
Indirect
=======================================================================================================
</TABLE>
* buy, sell, short, gift, etc.
I hereby certify that the above securities transactions represent all
transactions for the period indicated in which I had a direct or indirect
interest, except for transactions exempted by Section III (A), (B) and (C) of
the code of Ethics and that I received clearance from the Designated Officer
immediately prior to my effecting the transaction(s) set forth above. I
further certify that during such period I did not communicate nor use any
material, non-public information in violation of Section IV D. of the Code of
Ethics.
-----------------------------------------------------
(Signature) (Date)
-----------------------------------------------------
(Printed Name) (Cost Center)
-----------------------------------------------------
Reviewed By
