CONSECO FUND GROUP
CONSECO LARGE-CAP FUND/CONSECO SCIENCE & TECHNOLOGY FUND
SUPPLEMENT DATED JANUARY 18, 2001
TO THE STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 27, 2000
January 18, 2001
THE SECTION CAPTIONED "SECURITIES TRANSACTIONS" ON PAGE 24 OF THE STATEMENT OF
ADDITIONAL INFORMATION ("SAI") IS REPLACED IN ITS ENTIRETY AS FOLLOWS:
SECURITIES TRANSACTIONS
The Adviser/Sub-advisers (the "Advisers") are responsible for decisions to
buy and sell securities for these Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The primary consideration in
effecting a securities transaction will be execution at the most favorable
price. A substantial majority of a Fund's portfolio transactions in fixed income
securities will be transacted with primary market makers acting as principal on
a net basis, with no brokerage commissions being paid by a Fund. In certain
instances, purchases of underwritten issues may be at prices which include
underwriting fees.
In selecting a broker-dealer to execute a particular transaction, the
Advisers will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of the order and the difficulty of execution; and the
size of contribution of the broker-dealer to the investment performance of a
Fund on a continuing basis. Broker-dealers may be selected who provide brokerage
and/or research services to these Funds and/or other accounts over which the
Advisers exercise investment discretion. Such services may include furnishing
advice concerning the value of securities (including providing quotations as to
securities); the advisability of investing in, purchasing or selling securities,
and the availability of securities or the purchasers or sellers of securities;
furnishing analysis and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts; and
effecting securities transactions and performing functions incidental thereto,
such as clearance, settlement and custody, or required in connection therewith.
Subject to the Conduct Rules of the NASD and to obtaining best prices and
executions, the Advisers may select brokers who provide research or other
services or who sell shares of the Funds to effect portfolio transactions. The
Advisers may also select an affiliated broker to execute transactions for the
Funds, provided that the commissions, fees or other remuneration paid to such
affiliated broker are reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
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The Advisers shall not be deemed to have acted unlawfully, or to have
breached any duty created by a Fund's Investment Advisory Agreement or
otherwise, solely by reason of its having caused the Fund to pay a broker-dealer
that provides brokerage and research services an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Advisers determine in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Advisers' overall responsibilities with respect to
the Fund. The Advisers allocate orders placed by them on behalf of these Funds
in such amounts and proportions as the Advisers shall determine and the Advisers
will report on said allocations regularly to a Fund indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The receipt of research from broker-dealers may be useful to the Advisers
in rendering investment management services to these Funds and/or the Advisers'
other clients; conversely, information provided by broker-dealers who have
executed transaction orders on behalf of other clients may be useful to the
Advisers in carrying out its obligations to these Funds. The receipt of such
research will not be substituted for the independent research of the Adviser. It
does enable the Advisers to reduce costs to less than those which would have
been required to develop comparable information through its own staff. The use
of broker-dealers who supply research may result in the payment of higher
commissions than those available from other broker-dealers who provide only the
execution of portfolio transactions.
Orders on behalf of these Funds may be bunched with orders on behalf of
other clients of the Adviser. It is the Adviser's policy that, to the extent
practicable, all clients with similar investment objectives and guidelines be
treated fairly and equitably in the allocation of securities trades.
The Board periodically reviews the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Trust.
THE SECTION CAPTIONED "MANAGEMENT, THE ADVISER" ON PAGE 25 OF THE SAI IS
RETITLED "MANAGEMENT, THE ADVISER AND THE SUB-ADVISERS" AND THE FIRST TWO (2)
PARAGRAPHS ARE REPLACED AS FOLLOWS:
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MANAGEMENT
THE ADVISER
Conseco Capital Management, Inc. (the "Adviser") provides investment advice
and, in general, supervises the Trust's management and investment program,
furnishes office space, prepares reports for the Funds, and pays all
compensation of officers and Trustees of the Trust who are affiliated persons of
the Adviser. Each Fund pays all other expenses incurred in the operation of the
Fund, including fees and expenses of unaffiliated Trustees of the Trust.
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 with respect to the Conseco Science &
Technology and Large-Cap Funds, 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 portfolio to CCM under the Interim Management
Contract are identical to the fees under the Old Advisory Contract. CCM (not CFG
or any of the portfolios) pays Chicago Equity and Oak Associates for their
services under the Interim Sub-Advisory Contracts.
The Adviser is a wholly-owned subsidiary of Conseco, Inc. ("Conseco"), a
publicly-owned financial services company, the principal operations of which are
in development, marketing and administration of specialized annuity, life and
health insurance products. Conseco's offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. The Adviser manages and serves as
sub-adviser to other registered investment companies and manages the invested
assets of Conseco, which owns or manages several life insurance subsidiaries,
and provides investment and servicing functions to the Conseco companies and
affiliates.
The Investment Advisory Agreements provide that the Advisor shall not be
liable for any error in judgment or mistake of law or for any loss suffered
by the Trust in connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendations of the Adviser. The
Agreements provide that the Advisor is not protected against any liability to
the Trust or the security holders for which the Adviser shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by the Agreements or the
violation of any applicable law.
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THE SUB-ADVISERS
Chicago Equity Partners, LLC ("Chicago Equity"), located at 180 N. LaSalle
Street, Suite 3800, Chicago, Illinois 60601 is the sub-adviser for the Conseco
Large-Cap Fund. 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 Science &
Technology Fund. Oak Associates is a leading investment management firm with
approximately $31 billion in assets under management as of September 30, 2000.
THE FOLLOWING SENTENCE IS ADDED AS THE THIRD AND FOURTH PARAGRAPHS,
RESPECTIVELY, FOLLOWING THE TABLE ENTITLED "NET EXPENSES":
With respect to Fund transactions, it is the policy of Conseco Capital
Management, Inc. ("CCM") and the Advisers/Sub-advisers ("the Advisers") on
behalf of their clients, including the Funds, to have purchases and sales of
portfolio securities executed at the most favorable prices, considering all
costs of the transaction, including brokerage commission and spreads, and
research services, consistent with obtaining best execution.
In seeking best execution, the Advisers will select brokers/dealers on the
basis of their professional capability and the value and quality of their
brokerage services. Brokerage services include the ability to execute most
effectively large orders without adversely affecting markets and the positioning
of securities in order to effect orderly sales for clients.
THE FOLLOWING PARAGRAPH IS ADDED FOLLOWING THE "TRUSTEES AND OFFICERS OF THE
TRUST" SECTION:
Effective July 1, 2000, each Trustee who is not an "interested person" of
the Fund receives an annual retainer fee of $7,500, a fee of $1,500 for each
Board meeting or independent Trustee meeting they attend, and a fee of $500 for
Board meetings and separate committee meetings attended that are conducted by
telephone. The Chairman of the Board receives an additional per meeting fee of
$375 for in-person Board meetings. The Fund also reimburses each Trustee who is
not an "interested person" of the Fund for travel and out-of-pocket expenses.
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CONSECO FUND GROUP
CONSECO 20 FUND CONSECO CONVERTIBLE SECURITIES FUND
CONSECO EQUITY FUND CONSECO HIGH YIELD FUND
CONSECO BALANCED FUND CONSECO FIXED INCOME FUND
SUPPLEMENT DATED JANUARY 18, 2001
TO THE STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 13, 2000
January 18, 2001
THE SECTION CAPTIONED "SECURITIES TRANSACTIONS" ON PAGE 40 OF THE STATEMENT OF
ADDITIONAL INFORMATION ("SAI") IS REPLACED IN ITS ENTIRETY AS FOLLOWS:
SECURITIES TRANSACTIONS
The Adviser/Sub-advisers (the "Advisers") are responsible for decisions to
buy and sell securities for these Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The primary consideration in
effecting a securities transaction will be execution at the most favorable
price. A substantial majority of a Fund's portfolio transactions in fixed income
securities will be transacted with primary market makers acting as principal on
a net basis, with no brokerage commissions being paid by a Fund. In certain
instances, purchases of underwritten issues may be at prices which include
underwriting fees.
In selecting a broker-dealer to execute a particular transaction, the
Advisers will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of the order and the difficulty of execution; and the
size of contribution of the broker-dealer to the investment performance of a
Fund on a continuing basis. Broker-dealers may be selected who provide brokerage
and/or research services to these Funds and/or other accounts over which the
Advisers exercise investment discretion. Such services may include furnishing
advice concerning the value of securities (including providing quotations as to
securities); the advisability of investing in, purchasing or selling securities,
and the availability of securities or the purchasers or sellers of securities;
furnishing analysis and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts; and
effecting securities transactions and performing functions incidental thereto,
such as clearance, settlement and custody, or required in connection therewith.
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<PAGE>
Subject to the Conduct Rules of the NASD and to obtaining best prices and
executions, the Advisers may select brokers who provide research or other
services or who sell shares of the Funds to effect portfolio transactions. The
Advisers may also select an affiliated broker to execute transactions for the
Funds, provided that the commissions, fees or other remuneration paid to such
affiliated broker are reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
The Advisers shall not be deemed to have acted unlawfully, or to have
breached any duty created by a Fund's Investment Advisory Agreement or
otherwise, solely by reason of its having caused the Fund to pay a broker-dealer
that provides brokerage and research services an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Advisers determine in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Advisers' overall responsibilities with respect to
the Fund. The Advisers allocate orders placed by them on behalf of these Funds
in such amounts and proportions as the Advisers shall determine and the Advisers
will report on said allocations regularly to a Fund indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The receipt of research from broker-dealers may be useful to the Advisers in
rendering investment management services to these Funds and/or the Advisers'
other clients; conversely, information provided by broker-dealers who have
executed transaction orders on behalf of other clients may be useful to the
Advisers in carrying out its obligations to these Funds. The receipt of such
research will not be substituted for the independent research of the Adviser. It
does enable the Advisers to reduce costs to less than those which would have
been required to develop comparable information through its own staff. The use
of broker-dealers who supply research may result in the payment of higher
commissions than those available from other broker-dealers who provide only the
execution of portfolio transactions.
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<PAGE>
THE SECTION CAPTIONED "MANAGEMENT, THE ADVISER" ON PAGE 42 OF THE SAI IS
RETITLED "MANAGEMENT, THE ADVISER AND THE SUB-ADVISERS" AND THE FIRST TWO (2)
PARAGRAPHS ARE REPLACED WITH THE FOLLOWING LANGUAGE:
MANAGEMENT
THE ADVISER
Conseco Capital Management, Inc. (the "Adviser") provides investment advice
and, in general, supervises the Trust's management and investment program,
furnishes office space, prepares reports for the Funds, and pays all
compensation of officers and Trustees of the Trust who are affiliated persons of
the Adviser. Each Fund pays all other expenses incurred in the operation of the
Fund, including fees and expenses of unaffiliated Trustees of the Trust.
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.
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.
The Adviser is a wholly-owned subsidiary of Conseco, Inc. ("Conseco"), a
publicly-owned financial services company, the principal operations of which are
in development, marketing and administration of specialized annuity, life and
health insurance products. Conseco's offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. The Adviser manages and serves as
adviser to other registered investment companies and manages the invested assets
of Conseco, which owns or manages several life insurance subsidiaries, and
provides investment and servicing functions to the Conseco companies and
affiliates.
The Investment Advisory Agreements provide that the Advisor shall not be
liable for any error in judgment or mistake of the law or for any loss suffered
by the Trust in connection with any investment policy or the purchase, sale or
redemption of any securities on the recommendations of the Advisor. The
Agreements provide that the Advisor is not protected against any liability to
the Trust or the security holders for which the Advisor shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by the Agreements or the
violation of any applicable law.
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THE SUB-ADVISERS
Chicago Equity Partners, LLC ("Chicago Equity"), located at 180 N. LaSalle
Street, Suite 3800, Chicago, Illinois 60601 is the sub-adviser for the Conseco
Equity Fund and the equity portion of the Conseco Balanced Fund. 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 FOLLOWING SENTENCE IS ADDED TO PAGE 43 PRECEDING THE TABLE ENTITLED
"ADVISORY FEES ACCRUED, AMOUNT REIMBURSED/WAIVED":
With respect to Fund transactions, it is the policy of Conseco Capital
Management, Inc. ("CCM") and the Advisers/Sub-advisers ("the Advisers") on
behalf of their clients, including the Funds, to have purchases and sales of
portfolio securities executed at the most favorable prices, considering all
costs of the transaction, including brokerage commission and spreads, and
research services, consistent with obtaining best execution.
In seeking best execution, the Advisers will select brokers/dealers on the
basis of their professional capability and the value and quality of their
brokerage services. Brokerage services include the ability to execute most
effectively large orders without adversely affecting markets and the positioning
of securities in order to effect orderly sales for clients.
THE FOLLOWING PARAGRAPHS ARE ADDED FOLLOWING THE "TRUSTEES AND OFFICERS OF THE
TRUST" SECTION:
Effective July 1, 2000, each Trustee who is not an "interested person" of
the Fund receives an annual retainer fee of $7,500, a fee of $1,500 for each
Board meeting or independent Trustee meeting they attend, and a fee of $500 for
Board meetings and separate committee meetings attended that are conducted by
telephone. The Chairman of the Board receives an additional per meeting fee of
$375 for in-person Board meetings. The Fund also reimburses each Trustee who is
not an "interested person" of the Fund for travel and out-of-pocket expenses.
The Fund does not pay any other remuneration to its officers and Board
members, and the Fund does not have a bonus, pension, profit-sharing or
retirement plan.
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