SCHEDULE 14A
(RULE 14a-101)
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
StockCar Stocks Mutual Fund, Inc.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form of schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
StockCar Stocks Mutual Fund, Inc.
256 Raceway Drive, Suite 11
Mooresville, North Carolina 28115
March 1, 2000
Dear Shareholder:
StockCar Stocks Advisors, LLC, the Investment Manager for StockCar
Stocks Mutual Fund, Inc., has agreed to sell its business assets to Conseco
Capital Management, Inc. ("CCM"), a subsidiary of Conseco, Inc. Conseco, Inc. is
a financial holding company and is also the official financial services sponsor
of NASCAR. More information about CCM and Conseco, Inc. can be found inside the
proxy statement.
We are sending this proxy statement to you because your vote is
important to the planned StockCar Stocks Advisors transaction. Because of the
acquisition, it is necessary for your fund to approve a new investment advisory
agreement, to approve a new Rule 12b-1 plan, to approve the Amended and Restated
Articles of Incorporation, to elect a new Board of Directors and to ratify the
selection of PricewaterhouseCoopers LLP as the Fund's independent auditors for
the current fiscal year.
Your Fund Board has approved the proposals and recommends them for your
approval. I encourage you to vote in favor of the proposals. PLEASE VOTE NOW TO
HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
/s/ John P. Allen, II
- -------------------------
John P. Allen, II
President
<PAGE>
StockCar Stocks Mutual Fund, Inc.
256 Raceway Drive, Suite 11
Mooresville, North Carolina 28115
March 1, 2000
Dear Shareholder:
We would like to tell you about a special shareholder meeting of StockCar Stocks
Mutual Fund, Inc. (the "Fund"), which is described in the enclosed materials. A
number of important proposals will be voted on.
While we encourage you to read the full text of the enclosed proxy statement,
here is a brief overview of the major matters to be voted upon.
Q: WHAT IS HAPPENING?
A. The Fund's investment manager StockCar Stocks Advisors, LLC ("SSA") has
agreed to sell its business assets to Conseco Capital Management, Inc.
("CCM"), a subsidiary of Conseco, Inc. Conseco, Inc. is a financial
services holding company with two major operating segments: (i)
insurance subsidiaries which develop, market, and administer a wide
range of health, life, and other insurance products; and (ii) finance
subsidiaries, which originate, purchase, sell, and service consumer and
commercial finance loans throughout the United States. For CCM to serve
as investment manager of your Fund after the transaction, it is
necessary for your Fund to approve a new investment advisory agreement.
Your vote is also being sought to approve a new Rule 12b-1 plan to
finance the distribution of the Fund's shares, to approve the Amended
and Restated Articles of Incorporation, to elect a new Board of
Directors, and to ratify the selection of independent auditors.
Q: WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A: The Investment Company Act of 1940 requires a shareholder vote if an
investment management contract is assigned. CCM's transaction with SSA
may be viewed as such an assignment. As a result, shareholder approval
of a new investment advisory agreement is required.
<PAGE>
Q: HOW WILL THE STOCKCAR STOCKS/CONSECO TRANSACTION AFFECT ME AS A FUND
SHAREHOLDER?
A: You will still own the same number of shares in the same Fund. If the
new investment advisory agreement and Rule 12b-1 plans are approved and
the transaction is consummated, the Fund's total annual operating
expenses will increase 0.09%, but will not exceed 1.50% on an annual
basis for a period of two years following the proposed transaction. CCM
has committed to provide all resources necessary to provide your Fund
with top quality investment management and shareholder services.
Q: HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A: After careful consideration, the Board members of your Fund, including
the independent members, recommend that you vote "For" all the items on
the enclosed ballot.
Q: WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A: CCM and StockCar Stocks Advisors, LLC, are paying all costs of the
Fund's shareholder meeting and proxy solicitation. Your Fund is not
paying for any of these costs.
2
<PAGE>
StockCar Stocks Mutual Fund, Inc.
256 Raceway Drive, Suite 11
Mooresville, North Carolina 28115
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 12, 2000
To our Shareholders:
You are invited to attend a special meeting of shareholders of the
StockCar Stocks Mutual Fund, Inc. (the "Fund"). The meeting will be held at
Conseco Conference Center, 530 College Drive, Carmel, Indiana, 11:00 a.m., local
time, April 12, 2000, for the following purposes and to transact such other
business as may properly come before the meeting or any adjournment of the
meeting:
1. To approve a new investment advisory agreement with Conseco Capital
Management, Inc. (Proposal No. 1);
2. To approve a new Rule 12b-1 distribution plan (Proposal No. 2);
3. To approve Amended and Restated Articles of Incorporation (Proposal No.
3);
4. To elect six (6) Directors to the Board of Directors (Proposal No. 4);
5. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent auditors for the current fiscal year (Proposal No. 5); and
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors of the Fund has selected the close of business on
February 16, 2000 as the record date for the determination of shareholders of
the Fund entitled to notice of and to vote at the meeting. Shareholders are
entitled to one vote for each share held.
By Order of the Board of Directors
/s/ KIMETHA TORRENCE
--------------------
Kimetha Torrence, Secretary
March 1, 2000
Whether Or Not You Expect To Attend The Meeting, Please Sign And Promptly Return
The Enclosed Proxy In The Enclosed Self-Addressed Envelope. To Avoid The
Additional Expense To The Fund Of Further Solicitation, We Ask Your Cooperation
In Mailing In Your Proxy Promptly. Instructions For The Proper Execution Of
Proxies Are Set Forth On The Inside Cover.
<PAGE>
STOCKCAR STOCKS MUTUAL FUND, INC.
256 Raceway Drive, Suite 11
Mooresville, North Carolina 28115
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PROXY STATEMENT
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The accompanying proxy is being solicited by the Board of Directors (the
"Board") of the StockCar Stocks Mutual Fund, Inc. (the "Company") for voting at
the special meeting of shareholders of the Company to be held at Conseco
Conference Center, 530 College Drive, Carmel, Indiana, 11:00 a.m., local time,
April 12, 2000, and at any and all adjournments thereof (the "Meeting"). This
proxy statement was first mailed to shareholders on or about March 6, 2000.
The Company currently offers a single series of shares, the StockCar Stocks
Index Fund (the "Fund"), which is divided into two classes: Direct Class and
Advisor Class. Shares of each class represent a proportionate interest in the
Fund's assets allocable to that class.
Shareholders of the Fund are being asked to approve the following five
proposals, which are described in more detail below:
o Proposal 1 - Approval of a new investment advisory agreement
o Proposal 2 - Approval of a new Rule 12b-1 plan
o Proposal 3 - Approval of Amended and Restated Articles of Incorporation
o Proposal 4 - Election of a new Board of Directors
o Proposal 5 - Ratification of the Board's selection of
PricewaterhouseCoopers LLP to serve as the Fund's independent auditors
for the current fiscal year
The vote required to approve each proposal is described under the "Other
Information" section of this proxy statement. All shareholders are asked to vote
on all proposals. Except for the approval of a new Rule 12b-1 plan, each of the
proposals will be voted on by shareholders of the Fund as a whole. The Rule
12b-1 plan will be implemented with respect to a class only with the approval of
the shareholders of that class.
The Board has fixed the close of business on February 16, 2000 ("Record Date")
as the record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting. As of February 16, 2000, the Fund had
286,204 Direct Class and 21,367 Advisors Class shares issued and outstanding.
Page 1
<PAGE>
PROPOSAL 1: APPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT
INTRODUCTION
StockCar Stocks Advisors, LLC ("SSA"), located at 256 Raceway Drive, Suite 11,
Mooresville, NC, serves as the Fund's investment adviser and manager pursuant to
an investment advisory agreement ("current advisory agreement") dated September
15, 1998, which was approved by the Board and the sole shareholder on September
2, 1998. SSA has agreed to sell substantially all of its assets to Conseco
Capital Management, Inc. ("CCM"), a subsidiary of Conseco, Inc. ("Conseco") (the
"Transaction"). The closing ("Closing") of the Transaction will take place on
April 28, 2000 or as soon thereafter as all the closing conditions are
satisfied.
Conseco is a financial services holding company with two major operating
segments: (i) insurance subsidiaries, which develop, market, and administer a
wide range of health, life, and other insurance products; and (ii) finance
subsidiaries, which originate, purchase, sell, and service consumer and
commercial finance loans throughout the United States. On September 3, 1999,
Conseco became the "Official Financial Services Provider of NASCAR" through a
marketing partnership with NASCAR. Involvement with the Stockcar Stocks Fund
will enhance this marketing initiative.
As a result of the Transaction, assuming shareholder approval of the proposals
described in this proxy statement, CCM will serve as the Fund's new investment
advisor and Conseco Equity Sales, Inc. ("CES") will serve as the Fund's new
distributor. It is anticipated that total operating expenses will increase 0.09%
compared with current total operating expenses of 1.41%, but will not exceed
1.50% for a period of two years following the Closing. It is also anticipated
that other affiliates of CCM will provide other services to the Fund. As a
result of the Transaction, the advisory fee charged to the Fund will increase by
0.15%, but in the administrative fee will decrease by 0.26%. However, the new
administrator, an affiliate of CCM, will not assume some of the expenses which
are currently paid for by SSA under its operating services agreement with the
Fund, including expenses related to (1) payments to sub-contractor's for fund
accounting, fund administration, transfer agency and custodian services; (2)
external auditor's fees; (3) legal counsel fees; (4) blue sky registration fees;
(5) fidelity bond premiums and (6) Board of Directors compensation and expenses.
However, for a period of two years after the Closing, CCM has agreed to assume
all Fund expenses in excess of 1.50%. In addition, the distribution fee charged
to each class of the Fund will remain at its current level.
Consummation of the Transaction will be an "assignment" of the Fund's advisory
agreement with SSA, as that term is defined in the Investment Company Act of
1940 (the "1940 Act"). As required by the 1940 Act, the current advisory
agreement automatically terminates in the event of its assignment. To ensure
that the Fund will continue to receive advisory services following the
Transaction, a new investment advisory agreement between the Fund and CCM
("proposed advisory agreement") is being proposed for approval by shareholders
of the Fund. A copy of the form of the proposed advisory agreement is attached
hereto as Exhibit A.
Information about the Board's deliberations and the reasons for its
recommendation are described below in "Board Considerations."
COMPARISON OF THE CURRENT AND PROPOSED ADVISORY AGREEMENTS
If the proposed advisory agreement is approved by shareholders and the
Transaction is consummated, CCM will act as the Fund's investment adviser. Under
the proposed advisory
2
<PAGE>
agreement CCM would provide a continuous investment program for the Fund and, as
part of its duties, would: (i) furnish investment research and management with
respect to the investment of the Fund's assets, (ii) determine from time to time
securities or other investments to be purchased, sold, retained, or lent by the
Fund, (iii) furnish, without cost to the Fund, office space, equipment,
facilities, and personnel to the Fund to the extent not provided by the Fund's
administrator, (iv) maintain the Fund's books and records, (v) permit its
directors, officers, and employees to serve, without compensation from the
Company or the Fund, as Directors or officers of the Company, and (vi) provide
periodic and special reports on the Fund's investments and other pertinent
subjects as the Board may reasonably request. These services are the same as
those provided by SSA under the current advisory agreement.
Under the proposed advisory agreement, the Fund will pay CCM an advisory fee
computed at the annual rate of 0.65% of the average daily net assets of the
Fund, as determined in accordance with the Fund's Prospectus and Statement of
Additional Information. The Fund currently pays SSA an advisory fee at the
annual rate of 0.50% of average daily net assets of the Fund. Total annual
operating expenses are expected to increase 0.09% to 1.50%, but will not exceed
this level for a period of two years following Closing. This minimal increase is
a result of an "unbundling" of current service agreements and a subsequent
restructuring of proposed agreements to more closely meet industry standards.
The Fund paid investment advisory fees to SSA, for the fiscal year ended
September 30, 1999 totaling $11,599 (0.50% of average daily net assets). It is
estimated that under the proposed investment advisory agreement, the Fund would
have paid investment advisory fees to CCM totaling $15,027 (0.65% of average
daily net assets) for the same time period. This difference is an increase of
$3,428 (0.15% of average daily net assets).
This "unbundling" of current service agreements would eliminate the investment
adviser as the Fund's administrator. SSA received $18,821 for services provided
pursuant to the operating services agreement for the fiscal year ended September
30, 1999. Under this operating services agreement between the Fund and SSA, most
expenses of the Fund are borne directly by SSA. These expenses, include, but are
not limited to (1) payments to sub-contractors for fund accounting, fund
administration, transfer agency and custodian services, (2) external auditors
fees, (3) legal counsel fees, (4) blue sky registration fees, (5) fidelity bond
premiums and (6) Board of Director's compensation and expenses. In the Fund's
fiscal year ended September 30, 1999, because of the operating services
agreement obligates SSA to pay for all operating services, it is estimated that
SSA paid in excess of $135,000 (5.8% of average daily net assets) in fund
expenses (such as those listed above) and there were no "other expenses" when
calculating total current operating expenses (see Table on page 4).
Under the proposed service agreements, the Fund will contract directly with the
service providers and allocate fund expenses more consistently with industry
practices. As noted, CCM will waive receipt of its fees and/or assume certain
expenses of the Fund for two years after the closing of its Transactions, if it
becomes necessary to help ensure that the Fund's total annual operating expenses
do not exceed 1.50% annually. This 1.50% expense limitation is consistent with
SSA's current commitment in the Fund's statement of additional information dated
February 1, 2000. A table describing the current and pro forma fees and expenses
of the Fund as follows:
FEES AND EXPENSES
The table below describe the fees and expenses that you may pay if you buy and
hold shares of the Fund. The pro forma information reflects the effects of the
Transaction. The information set forth below is based on the Fund's fees and
expenses for the year ended September 30, 1999.
<TABLE>
<CAPTION>
Shareholder Fees Current Pro Forma
(fees paid directly from ------------------------------- -----------------------------
your investment) Advisor Class Direct Class Advisor Class Direct Class
- ---------------------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on 4.00% None 4.00% None
Purchases
(as a percentage of
offering price)
Redemption Fees(1)
0.50% 0.50% 0.50% 0.50%
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses Current Pro Forma
(expenses that are deducted from (for both Advisor and Direct (for both Advisor and Direct
fund assets) Class) Class)
- ------------------------------------ -------------------------- ----------------------------
<S> <C> <C>
Management and 1.16% 1.05%(2)
Administration Fees
Distribution and/or Service 0.25% 0.25%(3)
(12-1) Fees
Other Expenses 0.00% 0.71%
---- ----
Total Annual Fund Operating Expenses 1.41% 2.01%
====
Less: Expense Waivers and/or Reimbursement (0.51%)
Total Net Expenses 1.50%(4)
====
</TABLE>
1. Redemption fee of 0.50% for redemptions within the first six months.
2. Management fees include 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.
3. 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.
4. CCM has contractually agreed to waive receipt of fees and/or pay
certain expenses of the fund, if it becomes necessary, to help ensure
that the fund's total annual operating expenses do not exceed 1.50%
annually for two years after the closing of the Transaction.
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in the Fund with the cost of investing in
other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and the
Fund's operating expenses remain the same. Although your actual cost may be
higher or lower, based on these assumptions your costs would be:
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
Direct Class $150 $466 $ 804 $1760
Advisors Class $544 $835 $1147 $2027
For the Advisor Class shares, the maximum front-end sales charge of 4.00% of
your purchase amount is included in these calculations. There is no sales load
charged on Direct Class shares.
A redemption fee, charged on both the Advisor and Direct Class, of 0.50% of net
assets redeemed prior to six months is not included in these calculations. If
that fee were included, your costs would be higher.
Additional information about the administrative services is provided below in
"Other Information Concerning CCM and Affiliates of CCM."
In order to conform with the "safe harbor" provisions of Section 15(f) of the
1940 Act with respect to the Transaction, CCM has agreed that it would use its
reasonable best efforts (1) for a period of two years after the Closing, to
ensure that there would not be imposed on the Fund an "unfair burden" (as
defined in the 1940 Act) as a result of the Transaction, and (2) for three years
after the Closing, to ensure that at least 75% of the members of the Board are
members of the Board who are not parties to the proposed advisory agreement or
interested persons of any such party ("Independent Directors"). For at least two
years, CCM will limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest, and extraordinary expenses) to the annual rate noted above. As
a result, the maximum expense ratio borne by the Fund will remain capped at its
current level for two years after the closing of the Transaction.
Under the proposed advisory agreement, CCM shall bear and pay the costs of
rendering its services pursuant to the terms of the agreement, including the
fees paid to any sub-adviser which CCM may retain. The Fund shall bear and pay
for all other expenses of its operation. The current advisory agreement provides
that the Fund shall pay all costs and expenses in connection with its operation
and organization except to the extent that SSA has assumed such costs and
expenses or that SSA is required by law to pay them.
The current and proposed advisory agreements both provide that the adviser shall
not be liable for any error of judgment, or for any loss suffered by the Fund in
connection with the matters to which the advisory agreement relates, except a
loss resulting from willful misfeasance, bad faith, or gross negligence on the
part of the Fund's adviser in the performance of its obligations and duties or
by reason of its reckless disregard of its obligations and duties under the
advisory agreement.
3
<PAGE>
The proposed advisory agreement for the Fund will be dated as of the date of the
consummation of the Transaction. The proposed advisory agreement will continue
in effect for an initial term of two (2) years and may continue thereafter from
year to year if specifically approved at least annually by vote of "a majority
of the outstanding voting securities" of the Fund, as defined under the 1940
Act, or by a majority of the Board and, in either event, the vote of a majority
of the Independent Directors, cast in person at a meeting called for such
purpose.
ALLOCATION OF PORTFOLIO TRANSACTIONS
Under the current advisory agreement, SSA implements the Fund's policy of
seeking best execution of purchases and sales of portfolio securities for the
Fund's account. SSA may, however, pay a higher broker commission or dealer
spread on those transactions in exchange for research, analysis, and other
services. SSA must then determine in good faith that the commission or spread is
reasonable in terms of the particular transaction or of SSA's overall
responsibility to the Fund and that the total commissions paid by the Fund will
be reasonable in relation to the anticipated benefits to the Fund over the long
term.
Under the proposed advisory agreement, with respect to the allocation of
portfolio transactions, CCM will follow procedures substantially similar to
SSA's procedures, with a few minor differences. Under the proposed advisory
agreement, any research benefits derived will be available for all clients of
CCM;, including clients of affiliated companies. In selecting among firms
believed to meet the criteria for handling a particular transaction, CCM may
give consideration to those firms that have sold or are selling shares of the
Fund, as well as to those firms that provide market, statistical, and other
research information to the Fund and CCM. CCM may in certain instances be
permitted to pay higher brokerage commissions solely for receipt of market,
statistical, and other research services if CCM determines in good faith that
the greater commission is reasonable in relation to the value of the research
services provided by the executing firm viewed in terms either of a particular
transaction or CCM's overall responsibilities to the Fund or other clients.
OTHER INFORMATION CONCERNING CCM AND AFFILIATES OF CCM
The following information concerning CCM and affiliates of CCM has been provided
to the Fund by CCM. As described below, CCM anticipates that, after the Closing,
a number of CCM affiliates will provide services to the Fund and that the
officers of the Fund will also change.
Conseco was incorporated in 1979, began operations in 1982 and became a public
company in 1985. Conseco is a leading consumer financial services company, with
a broad array of insurance, investment and lending products. Conseco today has
approximately $97 billion of managed assets. CCM manages over $34 billion for
institutional and individual clients in a variety of fixed income and mid-cap
equity portfolios. CCM also manages a total of 12 mutual funds, which are series
of Conseco Series Trust and Conseco Fund Group, as well as one closed-end
investment company. The advisory fee schedule for those funds is set forth in
Exhibit C. Conseco's and CCM's home office is located at 11815 North
Pennsylvania Street, Carmel, Indiana, 46032.
4
<PAGE>
The current senior officers of CCM and their principal occupations are set forth
below.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION HELD PRINCIPAL OCCUPATION(S)
WITH CCM DURING PAST 5 YEARS
<S> <C> <C>
Maxwell E. Bublitz President and Chartered Financial Analyst. President
11825 N. Pennsylvania St. Director and Director of CCM. Previously,
Carmel, IN 46032 Senior Vice President, CCM. President
and Trustee of other mutual funds
managed by the CCM.
Gregory J. Hahn Senior Vice Chartered Financial Analyst. Senior
11825 N. Pennsylvania St. President Vice President, CCM. Trustee and
Carmel, IN 46032 portfolio manager of other mutual funds
managed by CCM.
Thomas A. Meyers Senior Vice Senior Vice President, Director of
11825 N. Pennsylvania St. President, Director Marketing of CCM.
Carmel, IN 46032 of Marketing
Thomas J. Pence Senior Vice Senior Vice President of CCM.
11825 N. Pennsylvania St. President
Carmel, IN 46032
Albert J. Gutierrez Senior Vice Senior Vice President of CCM.
11825 N. Pennsylvania St. President
Carmel, IN 46032
</TABLE>
After the Closing, provided that Proposal 2 below is approved by shareholders,
it is anticipated that CES, a wholly owned subsidiary of Conseco and an
affiliated person of CCM, will act as the distributor of shares of the Fund and
will furnish certain other services to the Fund, as fully described in Proposal
2.
After the Closing, it is anticipated that Conseco Services, LLC ("Conseco
Services"), an affiliated person of CCM, will replace SSA as the Fund's
administrator. The administrator supervises all aspects of the operations of the
Fund except those performed by the adviser. Under the proposed administration
agreement, Conseco Services would supervise the preparation and filing of all
documents required for compliance by the Fund with applicable laws and
regulations, supervise the maintenance of books and records of the Trust, and
provide other general and administrative services. Conseco Services may, at its
own expense, arrange for provision of any of these services by other companies.
For providing these services, Conseco Services is expected to receive
compensation at an annual rate of 0.40% for the first $50,000,000; 0.30% for the
next $25,000,000; and 0.20% in excess of $75,000,000 of the Fund's average daily
net assets. The services provided by Conseco Services would commence after the
Closing. The Fund paid administrative service fees to SSA for the fiscal year
ended September 30, 1999 totaling $18,821 (0.66% of average daily assets). It is
estimated that under the proposed administrative services agreement, the Fund
would have paid administrative services fees to Conseco Services, LLC totaling
$9,247 (0.40% of average daily net assets) for the same time period. This
difference is a reduction of $9,574 (0.41% of average daily net assets).
BOARD CONSIDERATIONS
The Board met on February 7, 2000 to consider the Transaction and its
anticipated effects upon the Fund and upon the investment management and other
services provided to the Fund.
In connection with its deliberations, the Board evaluated the terms and
conditions of the proposed advisory agreement with CCM. The Board considered
that, although the proposed advisory fee would be 0.15% higher than the current
advisory fee, and total fund expenses would increase 0.09%, CCM would waive
receipt of its fees and/or assume certain expenses of the Fund to ensure that
the Fund's Total Annual Expenses will not exceed 1.50% of the Fund's average
daily net assets for two years following the Closing of the Transaction. The
Board also considered a number of other factors, including the following: (1)
CCM's assurance that mutual funds are a core business in a strategic market and
would be an integral part of CCM's continuing asset management strategy; (2) the
expectation that the Fund's investment objective, strategies, and policies would
not materially change as a result of the Transaction; (3) the expectation that
the nature and quality of the investment services provided to the Fund by CCM
would be substantially equivalent to the services provided by SSA; (4) CCM's
intention to conform the proposed advisory agreement and other arrangements for
Fund services to the safe harbor provisions of Section 15(f) of the 1940 Act;
(5) the potential to expand the distribution of the Fund's shares; (6) the
additional administrative and financial services that a larger organization such
as
5
<PAGE>
CCM can provide; and (7) the access that Fund's shareholders would have to other
Conseco funds through the anticipated exchange privileges with those funds.
The Board was informed that Mr. John P. Allen II, Director and President of the
Fund, and Ms. Kimetha L. Torrence, Director and Secretary of the Fund,
respectively have an approximately 36% and 18% interest in SSA and therefore
have a financial interest in the Transaction. Conseco has agreed to pay SSA over
the following four years an amount up to a maximum of $5,000,000 for SSA's
assets. The exact amount of the purchase price will be based on future sales of
Fund shares. The Board was informed that Conseco Services, LLC will enter into
Employment Agreements with Mr. Allen and Ms. Torrence, who would become officers
of Conseco Equity Sales after the Closing. Mr. Allen and Ms. Torrence further
informed the Board that, in such capacities, they would be responsible for the
day-to-day marketing and sales activities of the Fund. The Board, including the
independent Directors, noted with approval that Mr. Allen and Ms. Torrence would
be continuing to serve the Fund and that there would be a continuity of service
to the Fund. In that regard, the Board was also informed that Mr. Robert Carter,
currently portfolio manager for SSA, with day-to-day responsibility for the
investment of the Fund's assets, would be entering into an Employment Agreement
with CCM primarily with respect to managing the StockCar Stock Index.
The Board also considered the possible direct and indirect benefits to CCM from
its advisory relationship to the Fund, including the receipt of investment
research from broker-dealers who execute portfolio trades for the Fund. Other
benefits which may flow to CCM or Conseco, Inc. from the advisory relationship
include: the benefit to CCM of having increased revenues from advisory fees if
the assets of the Fund increase; and the benefit to Conseco, Inc. of enhancing
their product lines by offering Fund shares.
Thereafter, the Board was given CCM's financial reports and other information
regarding CCM and Conseco. In addition, counsel to the Board and the Independent
Directors distributed an analysis of the Board's fiduciary obligations with
respect to approving a new advisory agreement.
As a result of their deliberations and consideration of the Transaction and the
new advisory agreement, at its meeting on February 7, 2000, the Board, including
the Independent Directors voting separately, voted to approve the new advisory
agreement and to recommend it to shareholders for their approval.
The Board recommends that shareholders vote FOR Proposal 1.
PROPOSAL 2: APPROVAL OF A NEW RULE 12b-1 PLAN OF DISTRIBUTION
INTRODUCTION
Consummation of the Transaction will be an "assignment" of the Fund's 12b-1
Plan, as that term is defined in the 1940 Act, and it will be necessary to adopt
a new Rule 12b-1 Plan. An investment company may pay for the distribution of its
shares pursuant to a plan of distribution (a "Rule 12b-1 Plan") that complies
with the provisions of Rule 12b-1 under the 1940 Act. The Fund's current Rule
12b-1 Plan for Direct Class shares and Advisor Class shares was approved by the
Board on April 29, 1999 and by the Fund's shareholders on May 26, 1999. Under
this Rule 12b-1 Plan, the Fund's Advisor, SSA, receives a distribution fee,
payable as an expense of the Direct Class shares and Advisor Class shares of the
Fund, which SSA uses to pay for services related to the distribution of Fund
shares and to pay Declaration Distributors, Inc. the current principal
underwriter, located at 555 North Lanes, Suite 6160, Conshohocken, P.A. For the
fiscal year ended September 30, 1999, total 12b-1 fees accrued and paid were
$2,227 (0.25% of average daily net assets) for the Direct Class and $62 (0.25%
of average daily assets) for the Advisor Class.
In order to reflect the provision of services by CES, the Board including a
majority of the Independent Directors who have no direct or indirect financial
interest in the operation of the Rule 12b-1 Plan ("Plan Directors"), voted, on
February 7, 2000, to approve the new Rule 12b-1
6
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Plan, and directed that it be submitted to the Direct Class and Advisor Class
shareholders of the Fund at the Meeting, along with a recommendation that such
shareholders approve such Rule 12b-1 Plan. If the new Rule 12b-1 Plan is
approved, it will become effective and will replace the current Rule 12b-1 Plan
upon consummation of the Transaction. A form of the new Rule 12b-1 Plan is
attached hereto as Exhibit B.
DESCRIPTION OF THE NEW RULE 12b-1 PLAN
Assuming approval of this Proposal by shareholders, under the new Rule 12b-1
Plan, CES would receive a distribution fee, payable as an expense of the Direct
Class shares and the Advisor Class shares of the Fund, to pay for distribution
services. CES would bear all the expenses of providing such services, including
the payment of any commissions or distribution fees. Under the current 12b-1
Plan, a distribution fee is payable to SSA for distribution services and SSA
bears all the expenses of providing these distribution services. Under the new
12b-1 Plan, CES would provide for the preparation of advertising or sales
literature and bear the cost of printing and mailing prospectuses to persons
other than existing shareholders. The major difference between the current and
proposed 12b-1 Plan is the detail that is used within the Plan to describe the
shareholder services to be provided to the Fund by CES. Under the new Rule 12b-1
Plan, 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 Fund, 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.
Under both the new and proposed Rule 12b-1 Plans, each class of the Fund pays or
would pay the distributor a fee computed at the annual rate of 0.25% of the
average daily net assets of each respective class of the Fund.
In addition to providing distribution services, CES may enter into related
selling group agreements with various broker-dealers, including affiliates of
CES, that provide distribution services to investors. As part of those selling
group agreements, CES may assign some or all of the fees payable under the Rule
12b-1 Plan to the brokers, dealers, and other financial services who sell shares
of the Fund.
The new Rule 12b-1 Plan will continue in effect for an initial term of one year
and may continue thereafter from year to year for a class if specifically
approved at least annually by vote of a "majority of the outstanding voting
securities" of that class, as defined under the 1940 Act, or by the Board,
including, in either event, the vote of a majority of the Independent Directors,
cast in person at a meeting called for such purpose.
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Pursuant to the new Rule 12b-1 Plan, CES will prepare reports to the Board on a
quarterly basis showing the amounts paid to the various firms and such other
information as from time to time the Board may reasonably request.
BOARD CONSIDERATIONS
In approving the new Rule 12b-1 Plan, the Board, including the Plan Directors,
concluded that the new Rule 12b-1 Plan is in the best interest of the Fund
because CES, the proposed underwriter, has established distribution channels
currently being used for other affiliated mutual funds that would become
available to the Fund. These channels will allow for distribution of Fund shares
through a significantly larger group of financial intermediaries with a goal of
increasing total Fund shares sold. An increase in shares sold should spread the
costs of distribution resulting in possible economies of scale that will
ultimately benefit the Fund and its shareholders.
BOARD RECOMMENDATION
As a result of their consideration of the foregoing factors, the Board,
including the Plan Directors voting separately, voted to approve the new Rule
12b-1 Plan and to submit it to the shareholders for their approval.
The Board recommends that shareholders vote FOR Proposal 2.
PROPOSAL 3: APPROVAL OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
The Company is organized as a Maryland corporation under Articles of
Incorporation (the "Articles") dated as of May 18, 1998. The Board has approved
certain changes to the Articles and has advised that shareholders approve the
proposed Amended and Restated Articles of Incorporation (the "Amended
Articles"). A copy of the Amended Articles is attached hereto as Exhibit D.
The Amended Articles set forth in greater detail the manner in which the Company
operates. In addition, the Amended Articles would provide the Fund with greater
flexibility in its operations. In particular, the Amended Articles provide that
the Amended Articles may be amended by the vote of a majority of all votes
entitled to be cast. Currently a two-third vote is required to amend the
Articles. In addition, the proposed Amended Articles expressly provide that the
Board may classify or reclassify any unissued shares of the Company into
separate series (i.e., additional mutual funds) or classes. The Board would also
be able to set the preferences, rights, voting powers, terms of conversion,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of those shares. If the proposed Amended Articles are
approved by shareholders, it is anticipated that the day-to-day operations of
the Fund would be substantially the same as its current operations, but will
provide the Board with increased latitude in its ability to conduct Fund
business and bring the Amended Articles in line with industry standards.
The Board advises that you vote FOR Proposal 3.
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PROPOSAL 4: ELECTION OF BOARD OF DIRECTORS
The current Board has nominated the six (6) individuals listed below (the
"Nominees") for election to the Board to serve as the new Board of the Fund
following the consummation of the Transaction. Biographical information about
each Nominee is set forth below.
Each Nominee elected will serve as a director of the Fund until the next annual
meeting of shareholders, or a special meeting held for that purpose; provided,
however, if no annual meeting of the shareholders is required to be held in a
particular year pursuant to the Company's By-Laws, Directors shall be elected at
the next annual meeting held. The term of office of each Director shall be from
the time of his or her election and qualification until the election of
Directors next succeeding his or her election and until his or her successor
shall have been elected and shall have qualified.
Name and Age Principal Occupation and Business
Experience for Past Five Years
William P. Daves, Jr., 74 Trustee and Chairman of the Board of Conseco
Fund Group, Conseco Series Trust and Conseco
Strategic Income Fund; Consultant to
insurance and healthcare industries;
Director, Chairman of the Board and Chief
Executive Officer, FFG Insurance Co. Address:
5723 Trail Meadow, Dallas, Texas 75230.
Maxwell E. Bublitz, 44* Trustee and President of Conseco Fund Group,
Conseco Series Trust and Conseco Strategic
Income Fund; Chartered Financial Analyst;
CEO, President and Director, Adviser;
Previously, Senior Vice President, Adviser.
Address: 11825 North Pennsylvania Street,
Carmel, Indiana 46032.
Dr. Jess H. Parrish, 72 Trustee of Conseco Fund Group, Conseco Series
Trust and Conseco Strategic Income Fund;
Higher Education Consultant; Retired prior to
1995, President, Midland College. Address:
2805 Sentinel, Midland, Texas 79701.
David N. Walthall, 54 Trustee of Conseco Fund Group, Conseco Series
Trust and Conseco Strategic Income Fund;
Principal, Walthall Asset Management;
Formerly President, Chief Executive Officer
and Director of Lyrick Corporation; Formerly,
President and CEO, Heritage Media
Corporation; Formerly, Director, Eagle
National Bank. Address: 1 Galleria Tower,
Suite 1050, 13355 Noel Road, Dallas, Texas
75240.
Harold W. Hartley, 76 Trustee of Conseco Fund Group, Conseco Series
Trust and Conseco Strategic Income Fund;
Chartered Financial Analyst; Director, Ennis
Business Forms, Inc.; Retired prior to 1995,
Executive Vice President, Tenneco Financial
Services, Inc. Address: 317 Peppard Drive,
S.W., Ft. MyersBeach, Florida 33913.
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Dr. R. Jan LeCroy, 68 Trustee of Conseco Fund Group, Conseco Series
Trust and Conseco Strategic Income Fund;
Director, Southwest Securities Group, Inc.;
Retired in 1998, President, Dallas Citizens
Council. Address: 841 Liberty, Dallas, Texas
75204.
*This Nominee will be an "interested person" of the Fund as defined in the 1940
Act, due to his employment with CCM and its affiliates.
The persons named in the accompanying form of proxy intend to vote each such
proxy for the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. Should any of the Nominees become unable to accept election, the
persons named in the proxy will exercise their voting power in favor of such
person or persons as the Board may recommend. Each Nominee has consented to
being named in this proxy statement and has agreed to serve as a Director if
elected. The Board knows of no reason why any of its Nominees would be unable to
accept election.
To the knowledge of the Fund's management, as of the Record Date, the Directors,
Nominees, and officers of the Fund owned, as a group, less than 1% of the
outstanding shares of the Fund.
In addition, there are no individuals who own of record or are known by the Fund
to own 5% or more of either class of the Fund's outstanding securities.
During the Fund's fiscal year ended September 30, 1999, the Board held six (6)
meetings, and the Audit Committee of the Board met one (1) time. The Audit
Committee provides oversight regarding (i) the Fund's accounting and financial
reporting practices and (ii) the quality and objectivity of the Fund's financial
statements. Each Director attended 75% or more of the respective meetings of the
Board, and each Audit Committee member, comprising of John P. Allen II, Heather
Wharton-Flynn, Scott R. Poole and Andrew Miller, attended 75% of more of the
Audit Committee meetings.
None of the current Directors receives any compensation for his or her services
other than reimbursement for travel and out-of-pocket expenses of the
Independent Directors. It is anticipated that the new Board would approve
compensation of $5,000 per year plus $1,000 for each Board meeting attended in
person or by telephone. The Fund would also continue to reimburse each
Independent Director for travel and out-of-pocket expenses. Directors or
officers who are "interested persons" receive no compensation from the Fund. The
Fund does not pay any other remuneration to its officers and/or Directors, nor
does the Fund have a bonus, pension, profit-sharing, or retirement plan. None of
the nominees have any significant financial interest in the proposed
transaction.
The aggregate amount of compensation paid to each Nominee by all funds in the
Conseco Family of Funds (the fund complex of which the Fund will be a part) for
which such Nominee was a Board member (the number of which is set forth in
parenthesis next to each Nominee's total compensation) for the year ended
December 31, 1999, was as follows:
Total Compensation
From Fund Complex
Name of Nominee Paid to Nominee*
--------------- ------------------
William P. Daves, Jr. $27,000 (12)
Maxwell E. Bublitz $0 (12)
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Dr. Jess H. Parrish $24,000 (12)
David N. Walthall $27,000 (12)
Harold W. Hartley $27,000 (12)
Dr. R. Jan LeCroy $27,000 (12)
*Represents total compensation from all investment companies in the fund complex
for which the Nominee serves as a Board Member.
The Board recommends that shareholders vote FOR all the Nominees.
PROPOSAL 5: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Fund's independent auditors must be appointed by a majority of the Fund's
Independent Directors, and that appointment must be submitted to the Fund's
shareholders for ratification or rejection. The employment of the independent
auditors is conditioned upon the right of the Fund, by vote of a majority of its
outstanding securities at any meeting called for that purpose, to terminate the
employment without penalty.
The Fund's current independent auditors, Tait, Weller & Baker, Inc., were
appointed by the Board, including a majority of the Independent Directors, to
audit the books and records of the Fund for the current fiscal year ending
September 30, 2000. However, in anticipation of the Transaction, a selection of
new independent auditors is being proposed for approval by shareholders of the
Fund.
The Board, including a majority of the Independent Directors, have selected, and
recommend that shareholders ratify the selection of, PricewaterhouseCoopers LLP
to audit the books and records of the Fund for the current fiscal year. Apart
from fees received as independent auditors, neither PricewaterhouseCoopers LLP
nor any of its partners has a direct, or material indirect, financial interest
in the Fund. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the meeting, will have an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions.
The Board recommends that shareholders vote FOR the ratification of the
selection of PricewaterhouseCoopers LLP.
OTHER INFORMATION
PROXY SOLICITATION
The cost of preparing, printing, and mailing the enclosed proxy, notice, and
proxy statement and all other costs in connection with the solicitation of
proxies will be paid either by SSA or CCM. CCM will pay up to $50,000 of such
cost. In addition to solicitation by mail, certain officers and representatives
of the Fund, officers and employees of CCM and certain financial services firms
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<PAGE>
and their representatives, may solicit proxies by telephone, telegraph or
personally. In addition, SSA and CCM may retain Georgeson & Co. to solicit
proxies on behalf of the Fund's Directors, the fee (estimated to be $8,000) for
which will be borne by CCM and/or SSA.
GENERAL
A copy of your Fund's most recent annual report and semi-annual report are
available without charge upon request by writing to the Fund, c/o Declaration
Service Company, 555 North Lane, Suite 6160, Conshohocken, PA 19428, or by
calling 1-626-844-1446.
FUND OFFICERS AND DIRECTORS
Information about the Fund's executive officers and directors is set forth
below. The business address of each officer and director is 256 Raceway Drive,
Suite 11, Mooresville, North Carolina 28115.
NAME, AGE, AND POSITION PRINCIPAL OCCUPATION AND BUSINESS
WITH FUND EXPERIENCE FOR PAST FIVE YEARS
John P. Allen, II, (Age 28)* Previously was Vice President of marketing,
Director, President of the Fund Nations Banc Advisers, Inc. from 1994 to
1998. Chief Executive Officer of StockCar
Stocks Advisors, LLC, the Investment
Adviser to StockCar Stocks Mutual Fund,
Inc. since May, 1998. BS from Davidson
College. Mr. Allen received $72,000 as
compensation from SSA in 1999.
Kimetha Torrence, (Age 29)* Previously was a Broker in Direct Sales
Director, Secretary of the Fund Unit of NationsBanc Investments, Inc. from
1996 to 1998. President of StockCar Stocks
Advisors, LLC, the Investment Adviser to
StockCar Stocks Mutual Fund, Inc. since
May, 1998. BA from Stetson University,
1993. Ms. Torrence received $69,000 as
compensation from SSA in 1999.
Pamela Clement, (Age 45)* Partner in Piedmont Venture Partners,
Director venture capital firm, since 1996.
Previously was President, Chief Operating
Officer and Director of Sovereign Advisers,
a financial services firm, Co-Founder,
Chairman and Director of New York based
Prime Asset Management Corp., and was a
senior officer at Smith Barney and Lehman
Brothers. She currently serves on the Board
of Directors of American Aircarriers
Support, Inc. (NASDAQ:AIRS) and on boards
of a number of private portfolio companies
in Piedmont's venture fund including
MotorTrax Interactive. MotorTrax
Interactive has licensing agreements with
NASCAR and dozens of top drivers, including
Dale Earnhardt and Jeff Gordon, to
broadcast the live conversations between
drivers and crew via telephone and the
Internet. Pam has over 23 years of
experience as a venture capitalist, Wall
Street investment professional and
institutional money manager.
David M. Furr, (Age 42)* An attorney since 1983 practicing with
Director Gray, Layton, Kersh, Solomon, Sigmon, Furr
& Smith, P.A. in Gastonia, North Carolina,
David brings extensive NASCAR experience
and connections, having represented the
sale of Sports Image, Inc., owned by Dale
and Teresa Earnhardt, to Action Performance
Companies, Inc. (NASDAQ:ACTN). He also
served as general counsel to the NASCAR
licensees MotorTrax Interactive and Wave
Media. David brings extensive Wall Street
contracts, having assisted in the public
offerings of Action Performance and Wheels
Sports Group (NASDAQ:WHELE), and most
recently took American Aircarriers Support,
Inc. (NASDAQ:AIRS) public.
Scott R. Poole, (Age 28) Associate with Bank of America (f/k/a
Director NationsBank Capital Investors) in
Charlotte, North Carolina since 1995. Mr.
Poole works in the principal investment
group which provides risk capital for
growth financings, buyouts, acquisitions
and recapitalizations. Previously Mr. Poole
was a Financial Analyst with First Union
Capital Partners specializing in private
equity and subordinated debt financing
(1994-1995). Graduated University of
Virginia in 1994.
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Andrew Miller, (Age 29) President of Research Solutions, a
Director quantitative research and consulting firm
specializing in the financial services
industry since 1997. Most recently he
served as an Investment and Communication
Consultant, providing marketing services at
Putnam Investments in Boston (1996-97).
Prior to working at Putnam Investments, Mr.
Miller was employed as an Assistant Vice
President of Retirement Services Marketing
at NationsBanc Advisors, Inc. (1992-96).
Heather Wharton-Flynn, (Age 32) Previously Product Manager, New York
Director offices, Chase Manhattan Bank (1988-90).
Product Manager, United Bank of Switzerland
in the Institutional Index Sales Department
(1990-92). Ms. Wharton-Flynn also served as
Vice President of Marketing for NationsBanc
Advisors, Inc. (1992-97). Currently is
President of Pentimento, LLC, an antique
and art retail shop, in Charlotte, North
Carolina since 1997.
*Indicates an "interested person" as defined in the Investment Company Act of
1940.
PROPOSALS OF SHAREHOLDERS
As a Maryland corporation, the Company is not required to hold annual
shareholder meetings unless required under the 1940 Act, but will hold special
meetings if required or deemed desirable. Since the Company does not hold
regular shareholder meetings, the anticipated date of the next special
shareholder meeting cannot be provided. To be included in the proxy solicitation
material for a special shareholder meeting, a shareholder proposal must be
received by the Company not later than four (4) months prior to the date when
proxy statements are mailed to shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of the Fund is not aware of any matters that will be presented for
action at the Meeting other than the matters set forth herein. Should any other
matters requiring a vote of shareholders arise, the proxy in the accompanying
form will confer upon the person or persons entitled to vote the shares
represented by such proxy the discretionary authority to vote the shares as to
any such other matters in accordance with their best judgment in the interest of
the Fund.
VOTING, QUORUM
Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the holders of that class of shares of the Fund at the Meeting shares
have cumulative voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR Items 1, 2, 3 and 5 and FOR Item 4, the election of the persons who have
been nominated as directors of the Fund. Shareholders who execute proxies may
revoke them at any time before they are voted, either by writing to the Fund or
in person at the time of the Meeting. Proxies given by telephone or
electronically transmitted instruments may be counted if obtained pursuant to
procedures designed to verify that such instructions have been authorized.
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On Proposals 1, 3, 4 and 5, Direct Class shareholders and Advisor Class
shareholders will vote together as a whole. On Proposal 2, approval of a new
Rule 12b-1 Plan, Direct Class shareholders and Advisor Class shareholders will
vote separately, with each Class voting on the Plan that applies to their share
class. Proposal 1 requires the affirmative vote of a "majority of the
outstanding voting securities" of the Class voting for the applicable Rule 12b-1
Plan.
A "majority of the outstanding voting securities", as defined in the 1940 Act,
means the lesser of (1) 67% of the voting securities of the Fund (or Class of
shares on Proposal 2) present at the meeting if more than 50% of the outstanding
shares of the Fund (or Class on Proposal 2) are present in person or by proxy;
or (2) more than 50% of the outstanding shares of the Fund (or Class on Proposal
2).
Proposal 3 requires the affirmative vote of two-thirds of the outstanding voting
securities of the Fund. Proposal 4 requires a plurality vote of the total
outstanding shares of the Fund for each nominee, which means that the six
nominees receiving the largest number of votes will be elected. Proposal 5
requires the affirmative vote of a majority of the votes cast.
The Company's Articles of Incorporation and By-Laws provide that the presence at
a shareholder meeting in person or by proxy of at least 33 1/3% of the shares of
the Fund constitutes a quorum. If, by the time scheduled for the Meeting, a
quorum of shareholders is not present or if a quorum is present but sufficient
votes in favor of any of the items have not been received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
soliciting of proxies from shareholders. Any adjournment will require the
affirmative vote of a majority of the shares present (in person or by proxy) at
the session of the Meeting to be adjourned. The persons named as proxies will
vote in favor of adjournment if they determine that adjournment and additional
solicitation are reasonable and in the interest of shareholders.
In counting shareholder votes, abstentions and "broker-non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Proposals 1, 2 and 3, abstentions and broker non-votes
will be considered to be both present at the Meeting and issued and outstanding
and, as a result, will have the effect of being counted as voted against the
Proposals. On Proposal 4, abstentions and broker non-votes will have no effect;
six nominees receiving the largest number of votes will be elected. On Proposal
5, abstentions and broker non-votes will not be counted as "votes cast" and will
not affect the result of the vote. The Board recommends an affirmative vote on
all Proposals.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Kimetha Torrence
Secretary
14
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EXHIBIT A
FORM OF
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 [____]
day of [_________________, 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.
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<PAGE>
(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.
(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.
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(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.
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
17
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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.
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
18
<PAGE>
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.
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.
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.
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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.
By:
- --------------------------- ------------------------
William P. Kovacs, Esq. Maxwell E. Bublitz
President
ATTEST: CONSECO CAPITAL MANAGEMENT,
INC.
By:
- --------------------------- ------------------------
William P. Kovacs, Esq. Maxwell E. Bublitz
President
20
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EXHIBIT B
FORM OF
Plan of Distribution and Service
Pursuant to Rule 12b-1
CONSECO STOCKCAR STOCKS MUTUAL FUND, INC.
[_______________, 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 [________, 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
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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.
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.
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<PAGE>
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.
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:
---------------------------------
Maxwell E. Bublitz
President
23
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SCHEDULE A
Series Annual Fee
------ ----------
Conseco StockCar Stocks Mutual Fund, Inc.
Advisor Class 0.25%
Direct Class 0.25%
24
<PAGE>
EXHIBIT C
ADVISORY AGREEMENT FEE SCHEDULE
FOR CONSECO FUNDS AS OF DECEMBER 31, 1999
Fund Name Compensation
- ---------------------------------------- ------------
Conseco Series Trust
Balanced Portfolio 0.65%
Fixed Income Portfolio 0.50%
Equity Portfolio 0.65%
Government Portfolio 0.50%
Money Market Portfolio 0.50%
Conseco High Yield Portfolio 0.70%
Conseco 20 Focus Portfolio 0.70%
Conseco Fund Group
Conseco Fixed Income Fund 0.45%
Conseco High Yield Fund 0.70%
Conseco Convertible Securities Fund 0.85%
Conseco Balanced Fund 0.70%
Conseco Equity Fund 0.70%
Conseco 20 Fund 0.70%
Conseco Strategic Income Fund 0.90%
25
<PAGE>
EXHIBIT D
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 ______,
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.
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<PAGE>
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.
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
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<PAGE>
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.
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.
28
<PAGE>
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.
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
29
<PAGE>
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.
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.
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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.
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
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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.
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.
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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:
---------------------------------------
Attest:
-----------------------------------
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YOUR VOTE IS NEEDED!
Please vote on the reverse side of this form and sign this form in the space
provided. Please return your completed proxy in the enclosed envelope today!
The signers of this proxy hereby appoint Krista Ziegler and David F. Ganley,
and each of them, attorneys and proxies, with power of substitution in each, to
vote all shares for the signers at the special meeting of shareholders to be
held April 12, 2000, and at any adjournments thereof, as specified herein, and
in accordance with their best judgment, on any other business that may properly
come before this meeting. If no specification is made herein, all shares will be
voted to "approve" the proposal set forth on this proxy.
1. To approve a new investment advisory agreement with Conseco Capital
Management, Inc.:
For [_] Against [_] Abstain [_]
2. To approve a new Rule 12b-1 distribution plan:
For [_] Against [_] Abstain [_]
3. To approve the Amended and Restated Articles of Incorporation:
For [_] Against [_] Abstain [_]
4. To elect the following as directors: 01) Maxwell E. Bublitz 02) William P.
Daves, Jr. 03) Dr. Jess H. Parrish 04) David N. Walthall 05) Dr. R. Jan LeCroy
06) Harold W. Hartley
For [_] Against [_] For all Except [_]
To withhold authority to vote for any individual nominee(s), please print the
number(s) of such nominee(s) on the line below
- ---------------------------------------------------------------
5. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent auditors for the current fiscal year.
For [_] Against [_] Abstain [_]
<PAGE>
STOCKCAR STOCKS MUTUAL FUND, INC.
SHAREHOLDER MEETING APRIL 12, 2000
BALLOT
UNLESS INDICATED TO THE CONTRARY, THIS PROXY GRANTS THE AUTHORITY TO VOTE, IN
THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT THEREOF.
Signature(s) (All registered owners of accounts shown to the left must sign. If
a corporation, estate or trust, please indicate your capacity or title.)
X
---------------------------------------------------------
Signature Date
X
---------------------------------------------------------
Signature Date
Please vote using blue or black ink to mark an X in one of the three boxes
provided on your ballot. Mark--Approve, Against or Abstain. Then sign, date and
return your ballot in the accompanying postage-paid envelope. All registered
owners of an account, as shown in the address on the ballot, must sign the
ballot. If you are signing for a corporation, trust or estate, please indicate
your title or position.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF STOCKCAR STOCKS MUTUAL
FUND, INC. WHICH RECOMMENDS A VOTE TO "APPROVE" ALL MATTERS.
PLEASE VOTE TODAY! PLEASE VOTE PROMPTLY! PLEASE VOTE TODAY!
