CONSECO FUND GROUP
CLASS A SHARES
Equity Fund
Asset Allocation Fund
Fixed Income Fund
Supplement Dated January 20, 1998 to
Prospectus dated August 6, 1997
The sections regarding the purchase of Class A shares are revised to reduce the
minimum purchase amount from $500 to $250, and to change certain provisions
regarding the sales charge for Class A shares. The fee table on page 2 is
revised to be read as follows:
FEE TABLE
The following fee table is provided to assist investors in
understanding the various costs and expenses which may be borne directly or
indirectly by an investment in Class A shares of the Funds.
<TABLE>
<CAPTION>
Asset Fixed
Shareholder Transaction Expenses Equity Allocation Income
-------------------------------- ------ ---------- ------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a 5.75% 5.75% 5.00%
percentage of offering price)
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)
None None None
Deferred Sales Charge None None None
Redemption Fees None None None
</TABLE>
The section (pages 12-13) is revised to be read as follows:
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares
You may purchase shares from any broker, dealer, or other financial
intermediary that has a selling agreement with the Distributor. These firms may
charge for their services in connection with your purchase order. In addition,
as discussed below, an account may be opened for the purchase of shares of a
Fund by mailing to the Conseco Fund Group, PO Box 8017, Boston, Massachusetts
02266-8017, a completed account application and a check payable to the
appropriate Fund. Or you may telephone (800) 986-3384 to obtain the number of an
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account to which you can wire or electronically transfer funds and then send in
a completed application.
Purchase orders for all Funds are accepted only on a business day as
defined below. Orders for shares received by the Funds' Transfer Agent on any
business day prior to the close of regular trading on the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. Eastern Time) will receive that day's
offering price, which is net asset value plus any applicable sales charge.
Orders received by the Transfer Agent after such time but prior to the close of
business on the next business day will receive the next business day's offering
price. If you purchase shares through a broker, dealer or other financial
intermediary, that firm is responsible for forwarding payment promptly to the
Transfer Agent. A "business day" is any day on which the NYSE is open for
business. It is anticipated that the NYSE will be closed Saturdays and Sundays
and on days on which the NYSE observes New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
The minimum initial investment by a shareholder is $250, and the
minimum subsequent investment is $50. These requirements may be changed or
waived at any time at the discretion of a Fund's officers. Each Fund and the
Distributor or Transfer Agent reserves the right to reject any order for the
purchase of shares in whole or in part. The Trust reserves the right to cancel
any purchase order for which payment has not been received by the third business
day following placement of the order. The offering price of Class A is the net
asset value plus a varying sales charge, depending on the amount invested. The
sales charge applicable to shares of Class A is determined as follows:
Sales Charge - Equity Fund and Asset Allocation Fund
As % of Public As % of Net Dealer Reallowance
Offering Price Amount Invested As % of Offering Price
-------------- --------------- ----------------------
On purchases of:
$250 - 50,000 5.75% 6.10% 5.00%
$50,000 - 100,000 4.50% 4.71% 3.75%
$100,000 - 250,000 3.50% 3.63% 2.75%
$250,000 - 500,000 2.50% 2.56% 2.00%
Over $500,000 None None 1.00%
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Sales Charge - Fixed Income Fund
As % of Public As % of Net Dealer Reallowance
Offering Price Amount Invested As % of Offering Price
-------------- --------------- ----------------------
On purchases of:
$250 - 50,000 5.00% 5.56% 4.50%
$50,000 - 100,000 4.50% 4.71% 3.75%
$100,000 - 250,000 3.50% 3.63% 2.75%
$250,000 - 500,000 2.50% 2.56% 2.00%
Over $500,000 None None 1.00%
The sales charge assessed upon the purchase of shares of Class A is not
an expense of Class A and has no effect on the net asset value of shares of
Class A. The Distributor may allow the selling broker, dealer or financial
intermediary to retain 100% of the sales charge. This may result in the selling
firm being considered an underwriter under the Securities Act of 1933, as
amended.
The Distributor may provide promotional incentives including cash
compensation in excess of the applicable sales charge to certain brokers,
dealers or financial intermediaries whose representatives have sold or are
expected to sell significant amounts of shares of one or more of the Funds.
Other programs may provide, subject to certain conditions, additional
compensation to brokers, dealers, or financial intermediaries based on a
combination of aggregate shares sold and increases of assets under management.
All of the above payments will be made by the Distributor or its affiliates out
of their own assets. These programs will not change the price an investor will
pay for shares or the amount that a Fund will receive from such sale.
You will receive a confirmation of each new transaction in your
account, which will also show you the number of Fund shares you own and the
number of shares being held in safekeeping by the Transfer Agent for your
account. You may rely on these confirmations in lieu of certificates as evidence
of your ownership.
Certificates representing shares of the Funds will not be issued.
The section regarding investment performance relating to Class A shares
(pages 19-21) is revised to be read as follows:
THE ADVISER'S INVESTMENT PERFORMANCE
The Funds commenced operations on January 2, 1997. The total returns
for Class A of the Funds for the period from January 2, 1997 to June 30, 1997
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assuming the maximum initial sales charge were 2.26%, .52% and -1.80% for Equity
Fund, Asset Allocation Fund and Fixed Income Fund, respectively. The total
returns for Class A of the Funds for that period with no initial sales charge
were 8.5%, 6.65% and 3.41% for Equity Fund, Asset Allocation Fund and Fixed
Income Fund, respectively.
The total returns for Class A of the Funds for the period from January
2, 1997 to September 30, 1997 assuming the maximum initial sales charge were
22.71%, 14.48% and 1.33% for Equity Fund, Asset Allocation Fund, and Fixed
Income Fund, respectively. The total returns for Class A of the Funds for that
period with no initial sales charge were 30.20%, 21.46%, and 6.71% for Equity
Fund, Asset Allocation Fund, and Fixed Income Fund, respectively.
The Equity Fund, Asset Allocation Fund and Fixed Income Fund are
modeled after previously existing funds of the Conseco Series Trust (the "CST
Funds") that are managed by the Adviser and have investment objectives and
policies substantially similar to the corresponding Funds. The CST Funds are
used as investment vehicles for the assets of variable annuity and variable life
insurance contracts issued by Conseco affiliates.
Below you will find information about the performance of the CST Funds.
Although the Funds offered by this Prospectus have substantially similar
investment objectives and policies, the same investment adviser and the same
portfolio managers as the corresponding CST Funds, you should not assume that
the Funds will have the same future performance as the CST Funds. For example,
any Fund's future performance may be greater or less than the performance of the
corresponding CST Fund due to, among other things, differences in expenses and
cash flows between a Fund and the corresponding CST Fund. Moreover, past
performance information is based on historical earnings and is not intended to
indicate future performance.
The investment characteristics of each Fund will closely resemble the
investment characteristics of the corresponding CST Fund. Depending on the Fund
involved, similarity of investment characteristics may involve factors such as
industry diversification, portfolio beta, portfolio quality, average maturity of
fixed-income assets, equity/non-equity mixes, and individual holdings.
The Funds do have differences from the CST Funds, although the Adviser
does not believe these practices would cause a significant change in investment
results. Investors should note the following differences from the CST Funds: (1)
the Funds may invest in swaps, caps, floors and collars; (2) the Funds may lend
portfolio securities; and (3) the Funds may sell securities short. See the SAI
for further details about these practices.
The table below sets forth each Fund, its corresponding CST Fund, the
date the Adviser began managing the CST Fund (referred to as the "inception
date") and asset size as of September 30, 1997.
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Fund Corresponding CST Fund
- ---- (Inception Date and Asset Size)
--------------------------------
Equity Fund Common Stock Portfolio (November 20, 1991)
$225,244,341
Asset Allocation Fund Asset Allocation Portfolio (November 20, 1991)
$25,746,193
Fixed Income Fund Corporate Bond Portfolio (May 1, 1993)
$20,159,512
The following two tables show the average annualized total returns for
the CST Funds for the one, three and five year periods ended September 30, 1997
and for the periods from inception of the CST Funds to September 30, 1997. These
figures are based on the gross investment performance of the CST Funds. Note
that the actual investment performance experienced by investors in variable
annuity and variable life insurance contracts issued by Conseco affiliates would
be lower than the gross investment performance of the CST Funds due to expenses
at the separate account level; these expenses typically are higher than those
borne by investors in the Funds. From the gross investment performance figures,
the Total Operating Expenses reflected in the fee table herein are deducted to
arrive at the net return. The first table reflects a deduction for the maximum
applicable sales charges, while the second table reflects no deduction for sales
charges. Performance figures will be lower when sales charges are taken into
account. CST Fund performance does not represent the historical performance of
the Funds and should not be interpreted as indicative of the future performance
of the Funds.
Assuming Each Fund's Class A Share Total Operating Expenses and Maximum Initial
- --------------------------------------------------------------------------------
Sales Charge
- ------------
CST Fund 1 Year 3 Years 5 Years Since Inception
------ ------- ------- ---------------
Common Stock Portfolio 32.66% 33.49% 31.98% 22.79%
Asset Allocation Portfolio 22.40% 24.03% 19.07% 16.36%
Corporate Bond Portfolio 5.30% 8.52% N/A 6.19%
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Assuming Each Fund's Class A Share Total Operating Expenses With No Initial
- --------------------------------------------------------------------------------
Sales Charge1/
- ------------
CST Fund 1 Year 3 Years 5 Years Since Inception
------ ------- ------- ---------------
Common Stock Portfolio 39.66% 35.78% 33.34% 23.87%
Asset Allocation Portfolio 28.82% 26.18% 20.30% 17.38%
Corporate Bond Portfolio 10.84% 10.40% N/A 7.44%
- -----------------
1/ Certain persons may purchase Class A shares that are not subject to the Class
A initial sales charge (see "Waiver of Class A Initial Sales Charge" in this
Prospectus) and certain other persons may purchase Class A shares subject to
less than the maximum initial sales charge.
Each of the Funds may from time to time advertise certain investment
performance information. Performance information may consist of yield and
average annual total return quotations reflecting the deduction of all
applicable charges over a period of time. A Fund also may use aggregate total
return figures for various periods, representing the cumulative change in value
of an investment in a Fund for the specific period. Performance information may
be shown in schedules, charts or graphs. These figures are based on historical
earnings and are not intended to indicate future performance.
The "yield" of a Fund refers to the annualized net income generated by
an investment in that Fund over a specified 30-day period, calculated by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period.
The "average annual total return" of a Fund refers to the total rate of
return of an investment in the Fund. The figure is computed by calculating
average annual compounded rates of return over the 1, 5 and 10 year periods that
would equate to the initial amount invested to the ending redeemable value,
assuming reinvestment of all income dividends and capital gain distributions.
"Total return" quotations reflect the performance of the Fund and include the
effect of capital changes.
Further information about the performance of the Funds is contained in the SAI
and in the Funds' semi-annual and annual reports to shareholders, which you may
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obtain without charge by writing the Funds' address or calling the telephone
number set forth on the cover page of this Prospectus.
