CONSECO SERIES TRUST
SUPPLEMENT DATED JANUARY 18, 2001
TO THE STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 2000
January 18, 2001
THE FIRST FIVE (5) PARAGRAPHS UNDER THE SECTION CAPTIONED "SECURITIES
TRANSACTIONS" ARE REPLACED AS FOLLOWS:
SECURITIES TRANSACTIONS
The Adviser/Sub-advisers (the "Advisers") are responsible for decisions to
buy and sell securities for the Trust, 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 portion of the Trust'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 the Trust. In certain
instances, purchases of underwritten issues may be at prices which include
underwriting fees.
In selecting a broker-dealer to execute each 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; and the size of contribution of the broker-dealer to the
investment performance of the Trust on a continuing basis. Broker-dealers may be
selected who provide brokerage and/or research services to the Trust and/or
other accounts over which the Advisers exercises investment discretion. Such
services may include advice concerning the value of securities (including
providing quotations as to securities); the advisability of investing in,
purchasing or selling securities; 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 and 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.
1
<PAGE>
The Advisers shall not be deemed to have acted unlawfully, or to have
breached any duty created by a Portfolio's Investment Advisory Agreement or
otherwise, solely by reason of its having caused the Portfolio 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 Portfolio. The Advisers allocate orders placed by them on behalf of these
Portfolios in such amounts and proportions as the Advisers shall determine and
the Advisers will report on said allocations regularly to a Portfolio 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 Portfolios 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 Portfolios. 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.
THE SECTION CAPTIONED "MANAGEMENT, THE ADVISER" IS RETITLED "MANAGEMENT, THE
ADVISER AND THE SUB-ADVISERS" AND THE FIRST THREE (3) PARAGRAPHS OF THIS SECTION
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 Trust, monitors compliance by
the Trust in its investment activities and pays all compensation of officers and
Trustees of the Trust who are affiliated persons of the Adviser. The Trust pays
all other expenses incurred in the operation of the Trust, including fees and
expenses of unaffiliated Trustees of the Trust.
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
2
<PAGE>
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.
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.
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 Investment Advisory Agreements provide that the Adviser 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 Adviser is not protected against any liability to
the Trust or its 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.
3
<PAGE>
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 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 Focus
Portfolio. Oak Associates is a leading investment management firm with
approximately $31 billion in assets under management as of September 30, 2000.
THE FOLLOWING LANGUAGE IS ADDED AS THE THIRD PARAGRAPH AND FOURTH PARAGRAPH,
RESPECTIVELY, UNDER THE TABLE ENTITLED "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"
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.
4
<PAGE>
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.
