CONSECO FUND GROUP
SUPPLEMENT DATED DECEMBER 1, 2000
TO THE PROSPECTUS DATED APRIL 13, 2000
AS REVISED MAY 22, JULY 27, 2000 AND OCTOBER 23, 2000
December 1, 2000
Dear Investor,
This supplement to the Prospectus dated April 13, 2000 for Conseco Fund
Group ("CFG") describes important changes affecting your fund(s). These changes
were proposed by Conseco Capital Management, Inc. ("CCM") and approved by the
board of your fund(s) as in the best interests of fund shareholders. If you have
any questions about these changes, you should contact us or your Financial
Advisor.
The purpose of this supplement is to notify you of
* New investment management arrangements for the Conseco Equity
Fund and the equity portion of the Conseco Balanced Fund,
including the appointment of Chicago Equity Partners LLC
("Chicago Equity") as sub-adviser, effective December 1, 2000,
* New investment management arrangements for the Conseco 20 Fund,
including the appointment of Oak Associates, Ltd. ("Oak
Associates") as sub-adviser, effective December 1, 2000, and
* Related changes in the funds' investment strategies and portfolio
managers.
More information about the new investment management arrangements and
related investment strategy and portfolio manager changes follows. Shareholders
of the funds will be asked to approve their new investment management
arrangements at a meeting expected to be held in March 2001.
NEW INVESTMENT MANAGEMENT ARRANGEMENTS
On November 30, 2000, the Board of Trustees for Conseco Fund Group
terminated the existing Investment Advisory Agreement ("Old Advisory Contract")
with Conseco Capital Management, Inc. ("CCM") relating to the funds and approved
new interim investment management arrangements that became effective on December
1, 2000.
These new investment management arrangements for the funds consist of a
new Interim Investment Management Contract ("Interim Management Contract") with
CCM and Interim Sub-Advisory Contracts with Chicago Equity Partners, LLC and Oak
Associates Ltd. Under the Interim Management Contract, CCM continues to directly
manage the Conseco Fixed Income, Conseco High Yield, and Conseco Convertible
Securities Funds and the fixed income segment of the Conseco Balanced Fund.
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Under the Interim Management Contract with respect to the Conseco 20,
Conseco Equity and equity segment of the Conseco Balanced Fund, CCM's primary
management responsibility is to identify appropriate sub-advisers to manage the
assets of these funds, to supervise and monitor the abilities and performance of
those sub-advisers and make recommendations about the retention or replacement
of sub-advisers.
The Interim Management Contract and the Interim Sub-Advisory Contracts
all terminate automatically either (1) 150 days after their effective dates or
(2) upon execution of similar contracts in a form approved by fund shareholders.
The fees payable by each fund to CCM under the Interim Management
Contract are identical to the fees under the Old Advisory Contract. CCM (not CFG
or any of the funds) pays Chicago Equity and Oak Associates for their services
under the Interim Sub-Advisory Contracts.
These arrangements and some related changes in the funds' investment
strategies are described in greater detail in the revisions to the funds'
Prospectus set out below.
AS A RESULT OF THESE CHANGES, THE PROSPECTUS DATED APRIL 13, 2000, AS
SUPPLEMENTED, IS FURTHER REVISED AS FOLLOWS:
THE SECTION CAPTIONED "THE CONSECO FUND GROUP'S APPROACH TO MANAGING YOUR MUTUAL
FUND INVESTMENT" ON P. 1 OF THE PROSPECTUS IS REPLACED IN ITS ENTIRETY BY THE
FOLLOWING:
THE CONSECO FUND GROUP'S APPROACH TO
MANAGING YOUR MUTUAL FUND INVESTMENT
Conseco Capital Management, Inc. ("CCM"), is the Investment Adviser for all of
the Conseco Fund Group funds. It directly manages all fixed-income funds, and
selects and supervises sub-advisers for the equity funds. CCM also directly
manages or supervises the sub-advisers for the investments of other affiliated
mutual funds. As of Sept. 30, 2000, CCM managed more that $33 billion.
CCM's fixed-income analysts emphasize fundamental investment research in making
their investment decisions. They examine the total financial resources of the
issuer of any security we might consider buying. They seek to learn if the
issuer, whether a business or a government entity, has the resources to support
its spending plans and meet its obligations in good economic times and bad.
In considering securities issued by a business, our fixed-income analysts take
the "big picture" into account. They inquire into the state of the industry the
business is competing in, whether it is growing or declining. They look at the
business's position in the industry and whether or not its market share is
growing. They consider the quality of the goods or services it provides and its
ability to innovate. They get to know its management.
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This intensive fundamental research guides our fixed-income funds in buying and
selling securities. Because of CCM's active management style, our funds
generally have a higher portfolio turnover rate than other funds, which means
that our funds may have higher taxable distributions and increased trading costs
that may affect performance.
We also conduct extensive research on the abilities and performance of other
money management firms. This research enables us to identify appropriate
sub-advisers for our equity funds. After a sub-adviser is selected, CCM
continuously supervises and monitors its performance and recommends to the
Fund's Board of Trustees which sub-advisers should be retained or released.
The funds have the ability to change their investment objectives without
shareholder approval, although they do not currently intend to do so.
Any mutual fund investment is subject to risk and may decline in value. You
could lose part or even all of the money invested in the funds.
THE SECTION AT P. 3 OF THE PROSPECTUS CAPTIONED "CONSECO 20 FUND - ADVISER'S
STRATEGY " IS RETITLED "SUB-ADVISER'S STRATEGY" AND IS AMENDED AS FOLLOWS:
Oak Associates, Ltd, is the fund's sub-adviser. It is a growth manager seeking
to maximize returns over a market cycle through investments in the manager's
"best ideas." The fund is nondiversified - it is not limited by the percentage
of assets it may invest in any one issuer.
The sub-adviser starts by establishing a global economic outlook, particularly
interest rate anticipation, then concentrates on investments in specific
industries. Relying on readily available information from financial
publications, third-party analysis and fundamental research, investments are
made with a long-term orientation, generally involving purchases of securities
that will be held for at least a year, which results in relatively low portfolio
turnover. The investment style tends to be contrarian, seeking out-of-favor
situations at attractive prices. The fund strives to be fully invested in
15 to 25 stocks. Value is seen in both relative and absolute terms. Stock
selections may be influenced by:
* Growth rate/price earnings comparison
* P/E ratios versus historical and current levels
* Contrarian considerations
A three-to-five year time horizon is generally required to evaluate the results
of such an approach to selecting stocks.
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The fund may also invest on occasions in any or all of the following securities
in addition to common stocks:
* Preferred stock (which generally does not have voting rights but does have a
stated dividend payment)
* Convertible securities (bonds, debentures, notes or preferred stock that can
be converted into common stock)
* Warrants (contracts allowing purchase of a specific amount of common stock at
a specific price)
* Bonds and other fixed-income securities
For defensive purposes, the fund may temporarily depart from its investment
objective and invest without limitation in cash and short-term debt securities.
This could help the fund avoid losses but may mean lost opportunities.
THE SECTION AT P. 4 OF THE PROSPECTUS CAPTIONED "CONSECO EQUITY FUND - ADVISER'S
STRATEGY" IS RETITLED "SUB-ADVISER'S STRATEGY" AND IS REPLACED IN ITS ENTIRETY
WITH THE FOLLOWING:
The fund primarily invests in U.S. common stocks but may also invest in other
U.S. and foreign securities, including:
* Preferred stocks
* Covertible securities that may be exchanged for common stock at a prestated
price
* Warrants that entitle the owner to purchase a set amount of common stock
at a prestated price
Normally, the fund will be widely diversified by industry and company. It will
focus on small and medium-size companies. They may be start-ups or
better-established firms in the early phases of their growth. While they have
the potential for attractive long-term returns, their stock may involve greater
risk and more volatility that larger companies with a stronger competitive
advantage.
Chicago Equity Partners, LLC is the fund's sub-adviser. The sub-adviser uses a
disciplined investment strategy, utilizing a proprietary multi-factor model to
select securities, which include momentum, value and quality factors. The
process focuses on security selection while remaining industry, sector, style
and capitalization neutral. The sub-adviser seeks to consistently apply an
objective, quantitative, fundamental investment approach that identifies
overvalued and undervalued securities within industry sectors.
For defensive purposes, the fund may temporarily depart from its investment
objectives and invest without limitation in money market instruments. This could
help the fund avoid losses but may mean lost opportunities.
Chicago Equity Partners has more than $8.4 billion assets under management, and
offers services to a variety of institutional clients, including corporations,
public entities, Taft-Hartley plans, endowments and foundations.
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THE SECTION AT P. 6 OF THE PROSPECTUS CAPTIONED "THE EQUITY PORTION OF THE
PORTFOLIO" IS RETITLED "THE SUB-ADVISER'S STRATEGY FOR THE EQUITY PORTION OF THE
PORTFOLIO" AND IS REPLACED IN ITS ENTIRETY WITH THE FOLLOWING:
The fund primarily invests in U.S. common stocks but may also invest in other
U.S. and foreign securities, including:
* Preferred stocks
* Covertible securities that may be exchanged for common stock at a prestated
price
* Warrants that entitle the owner to purchase a set amount of common stock at a
prestated price
Normally, the fund will be widely diversified by industry and company. It will
focus on small and medium-size companies. They may be start-ups or
better-established firms in the early phases of their growth. While they have
the potential for attractive long-term returns, their stock may involve greater
risk and more volatility that larger companies with a stronger competitive
advantage.
Chicago Equity Partners, LLC is the fund's sub-adviser. The sub-adviser uses a
disciplined investment strategy, utilizing a proprietary multi-factor model to
select securities, which include momentum, value and quality factors. The
process focuses on security selection while remaining industry, sector, style
and capitalization neutral. The sub-adviser seeks to consistently apply an
objective, quantitative, fundamental investment approach that identifies
overvalued and undervalued securities within industry sectors.
For defensive purposes, the fund may temporarily depart from its investment
objectives and invest without limitation in money market instruments. This could
help the fund avoid losses but may mean lost opportunities.
Chicago Equity Partners has more than $8.4 billion assets under management, and
offers services to a variety of institutional clients, including corporations,
public entities, Taft-Hartley plans, endowments and foundations.
THE SECTION AT P. 22 OF THE PROSPECTUS CAPTIONED "ADVISER" IS RETITLED
"INVESTMENT ADVISER AND SUB-ADVISERS" AND IS REPLACED IN ITS ENTIRETY WITH THE
FOLLOWING:
Conseco Capital Asset Management, Inc. ("CCM"), the funds'
Investment Adviser, is located at 11825 N. Pennsylvania
Street, Carmel, Indiana 46032. CCM is a wholly owned
subsidiary of Conseco, Inc., a publicly owned financial
services company that provides specialized annuity, and life
and health insurance products. CCM manages investments for
Conseco, Conseco-affiliated insurance companies, the Conseco
Fund Group family of mutual funds and other Conseco mutual
funds, as well as for foundations, endowments, corporations,
government entities, unions and high net worth individuals. As
of September 30, CCM managed more than $33 billion.
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Chicago Equity Partners, LLC ("Chicago Equity"), located at
180 N. LaSalle Street, Suite 3800, Chicago, Illinois 60601 is
the sub-adviser for the Equity Portfolio and the equity
portion of the Balanced Portfolio. Chicago Equity is a leading
investment management firm with approximately $8.4 billion in
assets under management as of September 30, 2000.
Oak Associates, Ltd. ("Oak Associates"), located at 3875
Embassy Parkway, Suite 250, Akron, Ohio, 44333 is the
sub-adviser for the Conseco 20 Fund. Oak Associates is a
leading investment management firm with approximately $31
billion in assets under management as of September 30, 2000.
THE SECTION AT P.22 OF THE PROSPECTUS CAPTIONED "PORTFOLIO MANAGERS OF THE
CONSECO FUND GROUP" IS AMENDED TO READ AS FOLLOWS:
Chicago Equity Partners utilizes a team approach to manage the Conseco Equity
Fund and the equity portion of the Conseco Balanced Fund.
Oak Associates utilizes a team approach to manage the Conseco 20 Fund.
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