CONSECO FUND GROUP
CLASS Y SHARES
EQUITY FUND
ASSET ALLOCATION FUND
FIXED INCOME FUND
Supplement Dated January 13, 1998 to
Prospectus dated August 6, 1997
The section regarding investment performance relating to Class Y shares
(pages 13-15) is revised to read as follows:
THE ADVISER'S INVESTMENT PERFORMANCE
The Funds commenced operations on January 2, 1997. The total returns for
Class Y of the Funds for the period from January 2, 1997 to June 30, 1997 were
8.82%, 8.85% and 3.97% for Equity Fund, Asset Allocation Fund and Fixed Income
Fund, respectively, and for the period from January 2, 1997 to September 30,
1997 were 30.70%, 21.92% and 7.15% for the 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.
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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.
Corresponding CST Fund
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 table shows 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. 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.
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CLASS Y SHARE TOTAL OPERATING EXPENSES.
CST Fund
1 Year 3 Years 5 Years Since Inception
------ ------- ------- ---------------
Common Stock 39.80% 35.81% 33.34% 23.88%
Portfolio
Asset Allocation 28.95% 26.21% 20.31% 17.39%
Portfolio
Corporate Bond 10.89% 10.41% N/A 7.44%
Portfolio
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 obtain without charge by writing the Funds' address or calling the telephone
number set forth on the cover page of this Prospectus.
