CONSECO SERIES TRUST
SUPPLEMENT DATED DECEMBER 1, 2000
TO THE PROSPECTUS DATED MAY 1, 2000
AS REVISED JULY 27, 2000 AND OCTOBER 23, 2000
December 1, 2000
Dear Investor,
This supplement to the Prospectus dated May 1, 2000 for Conseco Series
Trust ("CST") 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
o New investment management arrangements for the Equity Portfolio and
the equity portion of the Balanced Portfolio, including the
appointment of Chicago Equity Partners LLC ("Chicago Equity") as
sub-adviser, effective December 1, 2000,
o New investment management arrangements for the Conseco 20 Focus
Portfolio, including the appointment of Oak Associates, Ltd. ("Oak
Associates") as sub-adviser, effective December 1, 2000, and
o 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 Series Trust
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 High Yield Portfolio, Fixed Income Portfolio, Government Securities
Portfolio, Money Market Portfolio and the fixed income segment of the Balanced
Portfolio.
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Under the Interim Management Contract with respect to the Conseco 20 Focus
Portfolio, Equity Portfolio and equity segment of the Balanced Portfolio, 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 CST
or any of the portfolios) pays Chicago Equity and Oak Associates for their
services under the Interim Sub-Advisory Contracts.
These arrangements and some related changes in the portfolios' investment
strategies are described in greater detail in the revisions to the portfolios'
Prospectus set out below.
AS A RESULT OF THESE CHANGES, THE PROSPECTUS DATED MAY 1, 2000, AS SUPPLEMENTED,
IS FURTHER REVISED AS FOLLOWS:
THE SECTION CAPTIONED "THE ADVISER'S INTEGRATED APPROACH TO MONEY MANAGEMENT" ON
P. 3 OF THE PROSPECTUS IS REPLACED IN ITS ENTIRETY BY THE FOLLOWING:
THE ADVISER'S INTEGRATED APPROACH
TO MONEY MANAGEMENT
Conseco Capital Management, Inc. ("CCM"), is the Investment Adviser for all of
the Conseco Series Trust Portfolios. It directly manages all fixed-income
portfolios, and selects and supervises sub-advisers for the equity portfolios.
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 portfolios in buying
and selling securities. Because of CCM's active management style, our portfolios
generally have a higher portfolio turnover rate than other portfolios, which
means that our portfolios may have higher taxable distributions and increased
trading costs that may affect performance.
Each of the Portfolios may invest in restricted securities, such as private
placements, which are not registered with the Securities and Exchange
Commission. Restricted securities are generally illiquid; however, CCM focuses
on those that are liquid and may not invest in any restricted security that
would cause more than 15 percent of the Portfolio's total assets to be invested
in illiquid securities. The Portfolios also may invest in securities that
qualify to be sold directly to institutional investors pursuant to Rule 144A
under the Securities Act of 1933.
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 portfolios. After a sub-adviser is selected, CCM
continuously supervises and monitors its performance and recommends to the CST
Board of Trustees which sub-advisers should be retained or released.
The portfolios 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 portfolios.
PLEASE NOTE: DEFINITIONS FOR BOLD-FACED WORDS WITHIN THE TEXT CAN BE FOUND
DIRECTLY FOLLOWING EACH PORTFOLIO'S PRIMARY RISK CONSIDERATIONS.
THE SECTION AT P. 4 OF THE PROSPECTUS CAPTIONED "CONSECO 20 FOCUS PORTFOLIO
ADVISER'S STRATEGY " IS RETITLED " CONSECO 20 FOCUS PORTFOLIO, SUB-ADVISER'S
STRATEGY" AND IS AMENDED AS FOLLOWS:
Oak Associates, Ltd, is the portfolio'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 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 portfolio is NON-DIVERSIFIED and 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
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A three-to-five year time horizon is generally required to evaluate the results
of such an approach to selecting stocks.
The portfolio may also invest from time to time in any or all of the following
securities in addition to common stocks:
> PREFERRED STOCK
> CONVERTIBLE SECURITIES
> WARRANTS
> BONDS AND OTHER FIXED-INCOME SECURITIES
For defensive purposes, the portfolio may temporarily depart from its investment
objective and invest without limitation in money market instruments. This could
help the portfolio avoid losses but may mean lost opportunities.
THE SECTION AT P. 8 OF THE PROSPECTUS CAPTIONED "EQUITY PORTFOLIO - ADVISER'S
STRATEGY" IS RETITLED "EQUITY PORTFOLIO - SUB-ADVISER'S STRATEGY" AND IS
REPLACED IN ITS ENTIRETY WITH THE FOLLOWING:
The portfolio primarily invests in U.S. common stocks but may also invest in
other U.S. and foreign securities, including convertible securities and
warrants.
Normally, the portfolio 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 portfolio'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 Portfolio may temporarily depart from its investment
objective and invest all or part of the Portfolio's assets in money market
instruments. This could help the Portfolio 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
BALANCED PORTFOLIO" IS RETITLED "THE SUB-ADVISER'S STRATEGY FOR THE EQUITY
PORTION OF THE BALANCED PORTFOLIO" AND IS REPLACED IN ITS ENTIRETY WITH THE
FOLLOWING:
The portfolio primarily invests in U.S. common stocks but may also invest in
other U.S. and foreign securities, including convertible securities and
warrants.
Normally, the portfolio 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 portfolio'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 Portfolio may temporarily depart from its investment
objective and invest all or part of the Portfolio's assets in money market
instruments. This could help the Portfolio 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. 20 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 portfolio's
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.
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
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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 Focus Portfolio. 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. 21 OF THE PROSPECTUS CAPTIONED "PORTFOLIO MANAGERS OF THE
CONSECO SERIES TRUST" IS AMENDED FOR THE FOLLOWING PORTFOLIO AND READS AS
FOLLOWS:
CONSECO 20 FOCUS PORTFOLIO:
Oak Associates, Ltd.: Oak Associates utilizes a team approach to manage the
portfolio.
EQUITY PORTFOLIO:
Chicago Equity Partners LLC: Chicago Equity Partners, LLC utilizes a team
approach to manage the portfolio.
BALANCED PORTFOLIO, EQUITY:
Chicago Equity Partners LLC: Chicago Equity Partners utilizes a team approach to
manage the portfolio.
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