THE GCG TRUST
AN AFFILIATE OF BANKERS TRUST COMPANY
1001 JEFFERSON STREET, WILMINGTON, DE 19801
Tel: (302) 576-3400
Fax: (302) 576-3540
(date)
Dear [GoldenSelect] Contractowner:
I'm writing to tell you about some exciting changes
concerning The GCG Trust (the "Trust")[,Golden American Life
Insurance Company ("Golden American"),] and Directed Services,
Inc. ("DSI") - the Trust's Manager, and to send you proxy
materials for an upcoming special meeting of shareholders of the
Trust that will be held on July 29, 1996. The Trust contains the
mutual fund portfolios that serve as the investment vehicles for
[GoldenSelect variable annuity and variable life insurance
contracts][your variable annuity or variable life insurance
contract].
The Trustees of the Trust have approved the proposals in the
proxy materials and recommend that you vote "FOR" the proposals
on the enclosed proxy card. I urge you to review the attached
proxy statement, to cast your vote, and to promptly return the
enclosed proxy card in the envelope provided.
AGREEMENT TO ACQUIRE [GOLDEN AMERICAN AND] DSI BY EQUITABLE OF
IOWA COMPANIES
Equitable of Iowa Companies has entered into an agreement to
acquire [Golden American and] DSI. The agreement is subject to
several conditions, including approval from certain state
insurance authorities and approval of shareholders of each series
of the Trust to certain agreements, as described in the attached
proxy materials. Equitable of Iowa Companies is a new York Stock
Exchange listed company that owns Equitable Life Insurance
Company of Iowa, USG Annuity & Life Company, Locust Street
Securities, Inc., and Equitable Investment Services, Inc. It had
assets of $10 billion as of March 31, 1996. It is intended that
[Golden American and] DSI would maintain [their][its] Delaware
operations and management. [The acquisition would align [Golden
American and] DSI with a financially strong family of life
insurance companies.]
SPECIAL SHAREHOLDERS MEETING TO APPROVE CHANGES
A special meeting of shareholders has been called for
purposes that are related to the acquisition described above.
Upon the closing of the agreement under which Equitable of Iowa
Companies would acquire [Golden American and] DSI, the existing
Management Agreement under which DSI serves as Manager to the
Trust would terminate. Similarly, the Portfolio Management
Agreements with the Portfolio Managers of the Trust's operating
Series may also terminate. Accordingly, shareholders will be
asked to approve at the Special Meeting of Shareholders (1) a new
Management Agreement between the Trust and DSI, and (2) new
Portfolio Management Agreements between the Trust, DSI, and each
of the Portfolio Managers of the Trust's operating Series. The
terms of the new Management Agreement and new Portfolio
Management Agreements are identical in all material respects to
the terms of the agreements they would replace. The proposals in
this proxy statement are intended to keep in place the current
management and advisory arrangements for the Trust after the
prospective change in the ownership of DSI.
We believe that the prospective acquisition by Equitable of
Iowa Companies will provide a financially strong parent for
[Golden American and] DSI that is committed to seeking growth in
the assets of the Trust.
TRUSTEES RECOMMEND APPROVAL
The Trustees of the Trust have approved the proposals in the
proxy materials and recommend that you vote "FOR" the proposals
on the enclosed proxy card. I urge you to review the attached
proxy statement, to cast your vote, and to promptly return the
enclosed proxy card in the envelope provided.
Sincerely,
Terry L. Kendall
President, The GCG Trust
<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential for Commission
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE GCG TRUST
(Name of Registrant as Specified In Its Charter)
THE GCG TRUST
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
_____________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_____________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
(5) Total fee paid:
_____________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid:
___________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________
(3) Filing Party:
___________________________________
(4) Date Filed:
___________________________________
THE GCG TRUST
1001 JEFFERSON STREET
SUITE 400
WILMINGTON, DE 19801
(800-________)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
JULY 29, 1996
TO THE SHAREHOLDERS OF THE GCG TRUST:
Notice is hereby given to the holders of shares of beneficial interest
(the "Shares") of The GCG Trust (the "Trust"), a Massachusetts business
trust, that a Special Meeting of the Shareholders of the Trust (the
"Meeting") will be held at 1001 Jefferson Street, Suite 400, Wilmington,
Delaware, 19801, on July 29, 1996, at 10:00 a.m., local time, for the
following purposes:
1. To approve a new Management Agreement (the "New Management
Agreement") between the Trust and Directed Services, Inc. ("DSI") to be
effective upon the acquisition of BT Variable, Inc. ("BTV") by Equitable
of Iowa Companies ("Equitable of Iowa"), which New Management Agreement
would be substantively identical to the current Management Agreement
which presently is in effect.
2. To approve the following new Portfolio Management Agreements among
the Trust, DSI and the respective portfolio managers listed below to be
effective upon the acquisition of BTV by Equitable of Iowa:
(ALL-GROWTH SERIES ONLY)
(A) A new Portfolio Management Agreement with respect to the All-
Growth Series among the Trust, DSI and Warburg, Pincus Counsellors, Inc.
(CAPITAL APPRECIATION SERIES ONLY)
(B) A new Portfolio Management Agreement with respect to the
Capital Appreciation Series among Trust, the DSI and Chancellor Trust
Company.
(EMERGING MARKETS SERIES AND MARKET MANAGER SERIES ONLY)
(C) A new Portfolio Management Agreement with respect to the
Emerging Markets Series and the Market Manager Series among the Trust,
DSI and Bankers Trust Company.
(FULLY MANAGED SERIES ONLY)
(D) A new Portfolio Management Agreement with respect to the Fully
Managed Series among the Trust, DSI and T. Rowe Price Associates, Inc.
(MULTIPLE ALLOCATION SERIES AND STRATEGIC EQUITY SERIES ONLY)
(E) A new Portfolio Management Agreement with respect to the
Multiple Allocation Series and Strategic Equity Series among the Trust,
DSI and Zweig Advisors Inc.
(NATURAL RESOURCES SERIES ONLY)
(F) A new Portfolio Management Agreement with respect to the
Natural Resources Series among the Trust, DSI and Van Eck Associates
Corporation.
(REAL ESTATE SERIES)
(G) A new Portfolio Management Agreement with respect to the Real
Estate Series among the Trust, DSI and E.I.I. Realty Securities, Inc.
(RISING DIVIDENDS SERIES ONLY)
(H) A new Portfolio Management Agreement with respect to the
Rising Dividends Series among the Trust, DSI and Kayne, Anderson
Investment Management, L.P.
(SMALL CAP SERIES ONLY)
(I) A new Portfolio Management Agreement with respect to the Small
Cap Series among the Trust, DSI and Fred Alger Management, Inc.
(VALUE EQUITY SERIES ONLY)
(J) A new Portfolio Management Agreement with respect to the Value
Equity Series among the Trust, DSI and Eagle Asset Management, Inc.
(LIMITED MATURITY BOND SERIES AND LIQUID ASSET SERIES ONLY)
3. To approve a new Portfolio Management Agreement among the Trust,
DSI and Equitable Investment Services, Inc., for the Limited Maturity
Bond Series and Liquid Asset Series of the Trust to be effective upon
the acquisition of BTV by Equitable of Iowa.
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on June 28, 1996,
as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Trustees
______________________, Secretary
Myles R. Tashman
July ___, 1996.
MANAGEMENT OF THE TRUST RECOMMENDS THAT YOU CAST YOUR VOTE FOR THE
APPROVAL OF THE NEW MANAGEMENT AGREEMENT AND PORTFOLIO MANAGEMENT
AGREEMENTS.
YOUR VOTE IS IMPORTANT! PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE
ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ACCOMPANYING
POSTAGE PREPAID ENVELOPE. IF YOU SIGN, DATE AND RETURN THE PROXY BUT
GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED IN FAVOR OF ALL
PROPOSALS NOTICED ABOVE.
THE GCG TRUST
1001 JEFFERSON STREET
SUITE 400
WILMINGTON, DE 19801
(800-________)
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
JULY 29, 1996
This Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees (the "Board") of The GCG Trust
(the "Trust"), a Massachusetts business trust, of proxies to be voted at
a Special Meeting of the Shareholders of the Trust, and at any and all
adjournments thereof (the "Meeting"), to be held at 1001 Jefferson
Street, Suite 400, Wilmington, Delaware, 19801, on July 29, 1996, at
10:00 a.m. local time. The approximate mailing date of this Proxy
Statement and accompanying form of proxy is July ___, 1996.
The Board has fixed the close of business on June 28, 1996, as the
record date (the "Record Date") for the determination of holders of
shares of beneficial interest ("Shares") of the Trust entitled to vote
at the Meeting. Shareholders on the Record Date will be entitled to one
vote for each full Share held and a fractional vote for each fractional
Share.
The Board of Trustees of the Trust is soliciting shareholder votes
on proposals affecting more than one Series. The following tables
summarize the proposals and indicate which shareholders are being
requested to vote on each proposal:
ALL- CAPITAL EMERGING FULLY
GROWTH APPRECIATION MARKETS MANAGED
SERIES SERIES SERIES SERIES
Proposal 1 -- Approval of X X X X
new Management Agreement
Proposal 2 -- Approval of X X X X
new Portfolio Management 2(A) 2(B) 2(C) 2(D)
Agreements
Proposal 3 -- Approval of
new Portfolio Management
Agreement
LIMITED LIQUID MARKET MULTIPLE NATURAL
MATURITY ASSET MANAGER ALLOCATION RESOURCES
BOND SERIES SERIES SERIES SERIES
SERIES
Proposal 1 -- Approval of X X X X X
new Management Agreement
Proposal 2 -- Approval of X X X
new Portfolio Management 2(C) 2(E) 2(F)
Agreements
Proposal 3 -- Approval of X X
new Portfolio Management
Agreement
REAL RISING SMALL STRATEGIC VALUE
ESTATE DIVIDENDS CAP EQUITY EQUITY
SERIES SERIES SERIES SERIES SERIES
Proposal 1 -- Approval of X X X X X
new Management Agreement
Proposal 2 -- Approval of X X X X X
new Portfolio Management 2(G) 2(H) 2(I) 2(E) 2(J)
Agreements
Proposal 3 -- Approval of
new Portfolio Management
Agreement
The series comprise 14 of the operational portfolios or "Series" of
the Trust. The Shares of the Series currently are offered to insurance
company separate accounts to serve as an investment medium for variable
annuity contracts and variable life insurance policies (collectively,
"Variable Contracts") issued by insurance companies. Some of these
separate accounts are registered with the Securities and Exchange
Commission as investment companies. In accordance with The Investment
Company Act of 1940 (the "1940 Act"), it is expected that an insurance
company issuing a Variable Contract funded by a registered separate
account that participates in the Trust will request voting instructions
from the owners of the Variable Contracts ("Variable Contract Owners")
and will vote Shares or other voting interests in the separate account
in proportion to the voting instructions received. Each insurance
company is required to vote Shares of the Series held by its registered
separate accounts in accordance with instructions received form Variable
Contract Owners. The insurance company is also required to vote Shares
of the Series held in each registered separate account for which it has
not received instructions in the same proportion as it votes Shares held
by that separate account for which it has received instructions. Shares
held by an insurance company in its general account, if any, must be
voted in the same proportion as the votes cast with respect to Shares
held in all of the insurer's separate accounts, in the aggregate.
Variable Contract Owners permitted to give instructions for the Series
and the number of shares for which such instructions may be given for
purposes of voting at the Meeting, and at any adjournment thereof, will
be determined as of the Record Date for the Meeting. In connection with
the solicitation of such instructions from Variable Contract Owners, it
is expected that participating insurance companies will furnish a copy
of this Proxy Statement to Variable Contract Owners. The participating
insurance companies have fixed the close of business on July 24, 1996,
as the last day on which voting instructions will be accepted. A proxy
may be revoked at any time before it is voted by the furnishing of a
written revocation, properly executed, to the Trust's Secretary before
the Meeting or by attending the Meeting. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers
and employees of the Trust or participating insurance companies or their
agents or affiliates personally or by telephone. All expenses in
connection with the solicitation of the proxies will be borne by
Equitable of Iowa Companies.
VOTING. Shares which represent interests in a particular Series of
the Trust vote separately on those matters which pertain only to that
Series. These matters are Proposals 1, 2, 3 and, as appropriate, any
other business which may properly come before the Meeting. With respect
to such matters, a vote of all Shareholders of the Trust may not be
binding on a Series whose Shareholders have not approved such matter.
The voting requirement for approval of each proposal requires a vote of
the "majority of the outstanding voting securities" of a Series which
means the lesser of: (i) 67% or more of the shares of each Series
entitled to vote thereon present at the Meeting, if the holders of more
than 50% of the outstanding Shares of the Series are present or
represented by proxy; or (ii) more than 50% of the outstanding shares of
the Series.
A Portfolio Management Agreement must be approved separately by
each Series to which the Portfolio Management Agreement pertains.
Approval of each Portfolio Management Agreement is contingent upon
approval of the New Management Agreement by the shareholders of the
pertinent Series. If the New Management Agreement is approved and the
New Portfolio Management Agreements are each approved by a majority vote
of the outstanding shares of the applicable Series, the New Portfolio
Management Agreements will take effect concurrently with the New
Management Agreement. If the shareholders of a Series should fail to
approve the New Portfolio Management Agreement, the Board of Trustees
shall meet to consider appropriate action. If the shareholders of a
Series should fail to approve a New Portfolio Management Agreement that
pertains to more than one Series, the Portfolio Manager may serve under
the Portfolio Management Agreement with respect to any Series whose
shareholders have approved the Portfolio Management Agreement. In such
event, the Board of Trustees shall meet to consider appropriate action.
In the event that a quorum is present at the Meeting but sufficient
votes to approve any of the proposals are not received, the persons
named as proxies may propose one or more adjournments of such Meeting to
permit further solicitation of proxies provided they determine that such
an adjournment and additional solicitation is reasonable and in the
interest of the shareholders based on a consideration of all relevant
factors including the nature of the relevant proposal, the percentage of
votes then cast, the percentage of negative votes then cast, the nature
of the proposed solicitation activities and the nature of the reasons
for such solicitation. A vote may be taken on a proposal in this Proxy
Statement for the Trust prior to any adjournment if sufficient votes
have been received for approval of that proposal.
The presence in person or by proxy of the holders of thirty percent
of the outstanding Shares is required to constitute a quorum at the
Meeting. Since participating insurance companies are the legal owners
of approximately ___% of the Shares, attendance by the participating
insurance companies at the meeting will constitute a quorum under the
Trust's Amended and Restated Agreement and Declaration of Trust. Shares
beneficially held by Variable Contract Owners present in person or
represented by proxy at the Meeting will be counted for the purpose of
calculating the votes cast on the issues before the Meeting.
The Trust knows of no items of business other than those mentioned
in the Items 1 through 3 of the Notice which will be presented for
consideration at the Meeting. If any other matters are properly
presented, it is the intention of the persons named as proxies to vote
proxies in accordance with their best judgment.
BACKGROUND INFORMATION.
Directed Services, Inc. ("DSI"), 1001 Jefferson Street, Suite 400,
Wilmington, DE 19801, is the Trust's Manager and Distributor. See
Exhibit M for a list of the Directors and principal executive officer of
DSI. DSI is a wholly owned subsidiary of BT Variable, Inc. ("BTV").
BTV is a wholly owned subsidiary of Whitewood Properties Corp.
("Whitewood") which, in turn, is a wholly owned subsidiary of Bankers
Trust Company ("Bankers Trust"). Golden American Life Insurance
Company, ("Golden American") is a wholly owned subsidiary of BTV and an
affiliate of DSI. Equitable of Iowa Companies ("Equitable of Iowa") is
a holding company for Equitable Life Insurance Company of Iowa
("Equitable Life"), USG Annuity & Life Company ("USG"), Locust Street
Securities, Inc., ("Locust Street") and Equitable Investment Services,
Inc. ("Equitable Investment Services"). See Exhibit N for a list of the
Directors and principal executive officer of Equitable Investment
Services. Equitable of Iowa currently is not affiliated with Bankers
Trust, Whitewood, BTV, DSI, Golden American or any of the current
Portfolio Managers of the Trust.
On May 3, 1996, Whitewood and Equitable of Iowa entered into a
Stock Purchase Agreement pursuant to which Equitable of Iowa has agreed,
subject to certain conditions and regulatory approvals, that it or an
affiliate will acquire 100% ownership of BTV (the "Transaction").
Consummation of the Transaction may constitute an "assignment" (as
defined in the 1940 Act) of the current Management Agreement between the
Trust and DSI ("Current Management Agreement"). Additionally,
consummation of the Transaction may constitute an assignment of the
Portfolio Management Agreements between the Trust, DSI and the
respective Portfolio Managers as those entities are identified below.
The total purchase price to be paid by Equitable of Iowa to Whitewood is
$144 million in cash, which includes repayment of $51 million in debt
owed by BTV to Bankers Trust. A specific proportion of this
consideration has not been apportioned to the value of DSI.
Section 15(f) of the 1940 Act permits the sale of controlling
interests in an investment adviser to an investment company to occur,
including receipt by the investment adviser or any of its affiliated
persons of an amount or benefit in connection with such sale, as long as
two conditions are satisfied. First, an "unfair burden" must not be
imposed on the investment company for which the investment adviser acts
in such capacity as a result of the sale of such interests, or any
express or implied terms, conditions or understandings applicable
thereto. The term "unfair burden", as defined in the 1940 Act, includes
any arrangement during the two-year period after any such transaction
whereby the investment adviser (or predecessor or successor adviser) or
any interested person of any such adviser, receives or is entitled to
receive any compensation, directly or indirectly, from the investment
company or its security holders (other than fees for bona fide
investment advisory and any other services) or from any person in
connection with the purchase or sale of securities or other property to,
from or on behalf of the investment company (other than ordinary fees
for bona fide principal underwriting services). Management of the Trust
is aware of no circumstances arising from the Transaction that might
result in the imposition of an "unfair burden" on the Trust. Moreover,
Equitable of Iowa has agreed with Whitewood that subsequent to
consummation of the Transaction it would conduct its business, subject
to applicable fiduciary duties, to ensure that no "unfair burden" would
be imposed on the Trust by or as a result of the Transaction.
The second condition of Section 15(f) is that during the three-year
period immediately following consummation of a transaction to which
Section 15(f) is applicable, at least 75% of the investment company's
board of trustees must not be "interested persons" (as defined in the
1940 Act) of such investment company, investment adviser or predecessor
adviser. The Board of Trustees presently consists of five Trustees, two
of whom, Messrs. Terry L. Kendall and John L. Murphy, are interested
persons of DSI. To facilitate compliance with this provision of Section
15(f) of the 1940 Act, at the June 10, 1996 Board of Trustees meeting,
John L. Murphy submitted his resignation as a Trustee effective upon the
consummation of the Transaction.
** 1996. (*CONFIRM*)
PROPOSAL 1
APPROVAL OF A NEW MANAGEMENT AGREEMENT
BETWEEN THE TRUST AND DIRECTED SERVICES, INC.
As stated above, consummation of the Transaction may constitute an
"assignment" of the Current Management Agreement between DSI and the
Trust. As required by the 1940 Act, the Current Management Agreement
provides for automatic termination in the event of an assignment. In
anticipation of the closing of the Transaction, and in order for DSI to
continue to serve as Manager to the Trust after consummation of the
Transaction, a new Management Agreement ("New Management Agreement")
between DSI and the Trust must be approved (i) by a majority of the
Trustees, including a majority of the non-interested Trustees of the
Trust, and (ii) as to each Series, by holders of a majority of the
outstanding voting securities of each such Series of the Trust. The New
Management Agreement is included as Exhibit A.
At the Board of Trustees meeting held on June 10, 1996, the
Trustees, including all of the non-interested Trustees, concluded that,
if the Transaction occurs, entry by the Trust into the New Management
Agreement would be in the best interests of the Trust and the Trust's
shareholders. The Board unanimously approved the New Management
Agreement and recommended such New Management Agreement for approval by
the shareholders of the Trust at a Special Meeting. The New Management
Agreement would take effect upon the later to occur of (i) the obtaining
of shareholder approval, or (ii) the closing of the Transaction. The
New Management Agreement, if approved by shareholders, will continue in
effect until two years after its effective date and thereafter for
successive annual periods as long as such continuance is approved in
accordance with the 1940 Act.
In the event that shareholders of the Trust do not approve the New
Management Agreement, Whitewood and Equitable have reserved the right to
determine whether to consummate the Transaction. If the Transaction is
not consummated, DSI would continue to serve as Manager of all Series of
the Trust under the Current Management Agreement.
The Current Management Agreement, dated October 1, 1993, and
amended on November 7, 1994, September 29, 1995, and December 29, 1995,
provides, among other things, that DSI is appointed as manager of the
activities of the Trust, subject to the direction of the Board of
Trustees. As such, DSI has agreed to provide advisory, management,
administrative, and other services with respect to each Series of the
Trust. Further, DSI in fulfilling its obligations has agreed to provide
general, overall advice and guidance with respect to each Series and
provide advice and guidance to the Trustees, and oversee the management
of the investments of each Series and the composition of each Series'
portfolio of securities and investments, including cash, and the
purchase, retention and disposition of such securities and cash, all in
accordance with each Series' investment objective and policies as stated
in the Trust's current registration statement. Additionally, DSI has
agreed to select and recommend for consideration by the Trust's Board of
Trustees investment advisory firms to provide investment advice to one
or more of the Series and, at the expense of DSI, to engage such
investment advisory firms ("the Portfolio Managers") to render
investment advice and management of the investments of such series. DSI
has agreed to monitor and evaluate the performance of the Portfolio
Managers with respect to the investment objectives and policies of the
Series and to monitor their activities to ensure compliance with the
1940 Act and all applicable federal and state laws and regulations. DSI
also has agreed to provide or procure on behalf of the Trust, at its
expense, custodian, portfolio accounting and transfer agency, dividend
disbursing and other services necessary for the ordinary operation of
the Trust. Under the New Management Agreement, all services provided by
DSI would continue.
Pursuant to the Current Management Agreement, neither DSI nor its
stockholders, officers, directors, employees, or agents shall be subject
to, and the Trust will indemnify such persons from and against, any
liability for, or any damages, expenses, or losses incurred in
connection with any act or omission connected with or arising out of any
services rendered under the Current Management Agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of DSI's duties, or by reason or reckless disregard of DSI's
obligations and duties under the Current Management Agreement. The
Current Management Agreement also provides that, except as otherwise may
be required by the 1940 Act, neither DSI nor its stockholders, officers,
directors, employees, or agents shall be subject to, and the Trust will
indemnify such persons from any liability for, or any damages, expenses,
or losses incurred in connection with, any act or omission by a
Portfolio Manager or any of the Portfolio Managers' stockholders or
partners, officers, directors, employees, or agents connected with or
arising out of any services rendered under a Portfolio Management
Agreement, except by reason or willful misfeasance, bad faith, or gross
negligence in the performance of DSI's duties under the Current
Management Agreement, or by reason of reckless disregard of DSI's
obligations and duties under the Current Management Agreement. Under
the New Management Agreement, the same rights will be granted to and the
same responsibilities will be imposed on DSI.
The Current Management Agreement was last renewed by the Board of
Trustees at a meeting held on September 21, 1995 and was last submitted
to shareholders of the Trust for approval on August 31, 1993. The
Current Management Agreement provides that it may be terminated at any
time without payment of any penalty, by DSI or the Board of Trustees, or
by a vote of a majority of the outstanding voting shares of each Series.
Additionally, the Current Management Agreement automatically and
immediately terminates in the event of its assignment.
As compensation for the actions of DSI under the Current Management
Agreement, the Trust pays DSI the following fees at an annual rate equal
to a percentage of the average daily net assets of each Series (based on
combined assets of the indicated groups of Series) which fees are
computed and accrued daily and paid monthly:
SERIES RATE
------ ----
All-Growth, Capital Appreciation, 1.00% of first $750 million;
Fully Managed, Multiple Allocation, 0.95% of next $1.25 billion;
Natural Resources, Real Estate, 0.90% of next $1.5 billion; and
Rising Dividends, Small Cap, 0.85% of amount in excess of $3.5
Strategic Equity and Value Equity billion.
Limited Maturity Bond 0.60% of first $200 million;
and Liquid Asset 0.55% of next $300 million; and
0.50% of amount in excess of
$500 million.
Emerging Markets 1.5% of average daily net assets.
Under the Current Management Agreement, the Trust pays DSI on
behalf of the Market Manager Series a quarterly fee equal to an annual
rate of 1.0% of the average daily net assets of the Series. Under the
New Management Agreement, the schedule of compensation payable to DSI
will not change.
During 1995, the Trust paid DSI pursuant to the scheduled
compensation described above the following fee amounts:
SERIES* AGGREGATE FEE
------ -------------
All-Growth $ 832,889
Capital Appreciation $1,055,352
Emerging Markets $ 817,859
Fully Managed $1,102,160
Limited Maturity Bond $ 516,872
Liquid Asset $ 254,546
Market Manager $ 51,724
Multiple Allocation $3,056,095
Natural Resources $ 291,869
Real Estate $ 347,823
Rising Dividends $ 641,200
Strategic Equity $ 11,085
Value Equity $ 108,140
*The Small Cap Series commenced operations on January 2, 1996.
There were no other material payments made by any Series to DSI, or
any affiliated person of DSI, during 1995.
The Trust has entered into a Distribution Agreement with DSI to
serve as the Distributor of Shares of the Trust. DSI is a registered
broker-dealer and a member of the National Association of Securities
Dealers, Inc. ("NASD"), and acts as Distributor, without remuneration
from the Trust. DSI also serves as the Distributor for the Variable
Contracts issued by Golden American. After an initial two-year term,
the Distribution Agreement continues in effect from year to year
provided such continuance is approved at least annually with respect to
the Trust by the Board of Trustees (or by the Shareholders of the Trust)
and by the non-interested Trustees. As required by the 1940 Act, the
Distribution Agreement provides for its automatic termination in the
event of an assignment. As noted above, consummation of the Transaction
may constitute an assignment under the 1940 Act. The Board of Trustees
of the Trust, including the non-interested trustees, has approved a new
Distribution Agreement between the Trust and DSI, on the same terms and
conditions as the current Distribution Agreement (except for dates of
execution, effectiveness and termination) which new Distribution
Agreement will take effect in the event the Transaction is consummated.
BOARD OF TRUSTEES' EVALUATION. The Board of Trustees, including
the non-interested Trustees, has determined that, by approving the New
Management Agreement on behalf of the Trust, the Trust can best assure
itself that the services currently provided by DSI will continue after
the Transaction without interruption. The Board has determined that, as
with the Current Management Agreement, the New Management Agreement will
enable the Trust to obtain services of high quality at costs deemed
appropriate, reasonable and in the best interests of the Trust and its
Shareholders.
IN EVALUATING THE NEW MANAGEMENT AGREEMENT, THE BOARD TOOK INTO
ACCOUNT THAT, EXCEPT FOR THE DATES OF EXECUTION, EFFECTIVENESS AND
TERMINATION, THERE ARE NO DIFFERENCES BETWEEN THE TERMS AND CONDITIONS
OF THE TRUST'S CURRENT MANAGEMENT AGREEMENT AND THE NEW MANAGEMENT
AGREEMENT, INCLUDING THE TERMS RELATING TO THE SERVICES TO BE PROVIDED
THEREUNDER BY DSI AND THE FEES AND EXPENSES PAYABLE BY THE TRUST.
The Board also considered the terms of the New Management
Agreement, and the possible effects of the Transaction upon the Trust
and DSI's organization, and upon the ability of DSI to provide advisory
and other services to the Trust. The Board also considered the
qualifications of DSI to provide an appropriate range of management and
administrative services, the performance record of DSI, and the
financial condition of DSI. The standards used by the Board in its
evaluation were reviewed by the Trust's legal counsel. In light of the
circumstances, the Trustees concluded that the terms of the New
Management Agreement are fair and reasonable.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE
NOT INTERESTED PERSONS OF ANY PARTY TO THE NEW MANAGEMENT AGREEMENT,
RECOMMENDS APPROVAL OF THE NEW MANAGEMENT AGREEMENT BETWEEN TRUST AND
DSI.
PROPOSALS 2(A) - 2(J)
APPROVAL OF NEW PORTFOLIO MANAGEMENT AGREEMENTS FOR THE ALL-GROWTH
SERIES, CAPITAL APPRECIATION SERIES, EMERGING MARKETS SERIES, FULLY
MANAGED SERIES, MARKET MANAGER SERIES, MULTIPLE ALLOCATION SERIES,
NATURAL RESOURCES SERIES, REAL ESTATE SERIES, RISING DIVIDENDS SERIES,
SMALL CAP SERIES, STRATEGIC EQUITY SERIES AND VALUE EQUITY SERIES.
As stated above, the Transaction will result in a change of control
of DSI and may operate to terminate automatically the portfolio
management agreements currently applicable to each of the above-
identified Series (collectively, the "Current Portfolio Management
Agreements"). In order for the management of each Series to continue
uninterrupted after the Transaction, shareholder approval of "New
Portfolio Management Agreements" is being sought.
Each of the Current Portfolio Management Agreements requires the
Portfolio Manager to provide, subject to supervision of Trust's Board of
Trustees and DSI, a continuous investment program for the Series'
portfolio and to determine the composition of the assets of the Series'
portfolio, including determination of the purchase, retention, or sale
of the securities, cash, and other investments contained in the
portfolio. Each of the Current Portfolio Management Agreements requires
the Portfolio Manager to provide investment research and conduct a
continuous program of evaluation, investment, sales, and reinvestment of
the Series' assets by determining the securities and other investments
that shall be purchased, sold, closed or exchanged for the Series, when
these transactions should be executed, and what portion of the assets of
the Series should be held in the various securities and other
investments in which it may invest, all in accordance with the Series'
investment objectives and policies. Under the New Portfolio Management
Agreements, all services and responsibilities of the Portfolio Managers
would continue.
Pursuant to each of the Current Portfolio Management Agreements, a
Portfolio Manager is not subject to liability for, or subject to any
damages, expenses, or losses in connection with, any act or omission
connected with or arising out of any services rendered under the
applicable agreement, except by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties under the
agreement. Under the New Portfolio Management Agreements, the same
responsibilities will be imposed on the Portfolio Managers.
Each of the Current Portfolio Management Agreements provides that
it will terminate automatically in the event of its "assignment," as
that term is described in the 1940 Act. In addition, each such
agreement may be terminated by the DSI or by the Portfolio Manager upon
60 days' written notice to the other parties, and by the Trust upon the
vote of a majority of the Trust's Board of Trustees or a majority of the
outstanding shares of the applicable Series, upon 60 days' written
notice to DSI or the Portfolio Manager.
For the services provided by the Portfolio Managers pursuant to
each of the Current Portfolio Management Agreements, DSI, and not the
Trust, pays a monthly fee (except for the Market Manager Series which is
paid quarterly) at the following annual rates, which are expressed as
percentages of the value of the average daily net assets of each Series:
PORTFOLIO MANAGER SERIES RATE
- ----------------- ------ ----
Warburg, Pincus Counsellors, Inc. All-Growth 0.50%
("Warburg, Pincus")
Chancellor Trust Company Capital Appreciation 0.50%
("Chancellor")
Bankers Trust Company Emerging Markets 0.75%
("Bankers Trust")
T. Rowe Price Associates, Inc. Fully Managed 0.50%
("T. Rowe Price")
Bankers Trust Market Manager 0.50%
Zweig Advisors Inc. Multiple Allocation 0.50%
("Zweig")
Van Eck Associates Corporation Natural Resources 0.50%
("Van Eck")
E.I.I. Realty Securities, Inc. Real Estate 0.50%
("E.I.I. Realty")
Kayne, Anderson Investment Rising Dividends 0.50%
Management, L.P.
("Kayne, Anderson")
Fred Alger Management, Inc. Small Cap 0.50%
("Fred Alger")
Zweig Strategic Equity 0.50%
Eagle Asset Management, Inc. Value Equity 0.50%
("Eagle Asset")
Under the New Portfolio Management Agreements, the schedule of
compensation payable to the Portfolio Managers will not change.
Fees paid by DSI to the Portfolio Managers for their services under
the Old Portfolio Management Agreements for the year ended December 31,
1995, were as follows: Warburg, Pincus - $417,408 for the All-Growth
Series; Chancellor - $559,368 for the Capital Appreciation Series;
Bankers Trust - $410,190 for the Emerging Markets Series and $22,410 for
the Market Manager Series; T. Rowe Price - $552,676 for the Fully
Managed Series; Zweig - $1,623,170 for the Multiple Allocation Series
and $5,543 for the Strategic Equity Series; Van Eck - $150,474 for the
Natural Resources Series; E.I.I. Realty - $174,495 for the Real Estate
Series; Kayne, Anderson - $325,429 for the Rising Dividends Series; and
Eagle Asset - $54,070 for the Value Equity Series. The Small Cap Series
commenced operations January 2, 1996.
THE NEW PORTFOLIO MANAGEMENT AGREEMENTS. The New Portfolio
Management Agreements will be between the Trust, DSI and each of the
following:
PORTFOLIO MANAGER SERIES
----------------- ------
Warburg, Pincus All-Growth
Chancellor Capital Appreciation
Bankers Trust Emerging Markets
T. Rowe Price Fully Managed
Bankers Trust Market Manager
Zweig Multiple Allocation
Van Eck Natural Resources
E.I.I. Realty Real Estate
Kayne, Anderson Rising Dividends
Fred Alger Small Cap
Zweig Strategic Equity
Eagle Asset Value Equity
At the June 10, 1996 meeting of the Board of Trustees, each of the
New Portfolio Management Agreements was approved by the Board of
Trustees, including a majority of the Trustees who are not interested
parties to the New Portfolio Management Agreements or interested persons
of such parties. The New Portfolio Management Agreements with Warburg,
Pincus, Chancellor, Bankers Trust, T. Rowe Price, Zweig, Van Eck, E.I.I.
Realty, Kayne, Anderson, Fred Alger, and Eagle Asset, are included as
Exhibits B, C, D, E, F, G, H, I, J and K, respectively.
The New Portfolio Management Agreement for each Series as approved
by the Board of Trustees is submitted for approval by the shareholders
of the Series to which the New Portfolio Management Agreement applies.
The New Portfolio Management Agreements must be voted upon separately by
the Series to which a New Portfolio Management Agreement pertains. If
the New Portfolio Management Agreement is approved by the vote of a
majority of the outstanding shares of the applicable Series, it will
take effect upon the closing of the Transaction and will continue in
effect for two years and thereafter for successive annual periods as
long as such continuance is approved in accordance with the 1940 Act.
For this purpose, the vote of the holders of a majority of the Series'
outstanding shares means the lesser of: (i) 67% or more of the shares of
each Series entitled to vote thereon present at the Meeting, if the
holders of more than 50% of the outstanding shares of the Series are
present or represented by proxy; or (ii) more than 50% of the
outstanding shares of the Series. If the Shareholders of a Series
should fail to approve the New Portfolio Management Agreement that
pertains to that Series, the Portfolio Manager may continue to serve in
that capacity with respect to any other Series whose shareholders
approve the New Portfolio Management Agreement. In such an event, the
Board of Trustees shall meet to consider appropriate action. If the
Shareholders of any Series should fail to approve the New Portfolio
Management Agreements, Equitable of Iowa and Whitewood have reserved the
right to determine whether to consummate the Transaction. If the
Transaction is not consummated the Portfolio Managers will continue to
service all Series of the Trust under the Current Portfolio Management
Agreements.
THE TERMS OF EACH OF THE NEW PORTFOLIO MANAGEMENT AGREEMENTS ARE
IDENTICAL IN ALL MATERIAL RESPECTS, INCLUDING THE FEES PAYABLE TO THE
PORTFOLIO MANAGERS, TO THE TERMS OF THE CURRENT PORTFOLIO MANAGEMENT
AGREEMENTS.
INFORMATION ABOUT THE PORTFOLIO MANAGERS
PROPOSAL 2(A) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH
WARBURG, PINCUS FOR THE ALL-GROWTH SERIES
INFORMATION ABOUT WARBURG, PINCUS
- ---------------------------------
Warburg, Pincus, with offices at 466 Lexington Avenue, New York,
New York 10017, is incorporated in the State of Delaware. Warburg,
Pincus is a wholly owned subsidiary of Warburg, Pincus Counsellors G.P.,
a New York general partnership which has no business other than being a
holding company of Warburg, Pincus and its subsidiaries. E.M. Warburg,
Pincus & Co., Inc. is deemed to control Warburg, Pincus through its
ownership of a class of voting preferred stock. As of February 29,
1996, Warburg, Pincus managed approximately $14 billion of assets,
including approximately $7.7 billion of investment company assets in 16
investment company portfolios.
Warburg, Pincus manages the assets of the All-Growth Series
pursuant to a Portfolio Management Agreement dated June 9, 1994, among
the Trust, DSI, and Warburg, Pincus. The Portfolio Management Agreement
was approved by the Board of Trustees on September 21, 1995 and was
approved by Shareholders of the All-Growth Series at a meeting held on
September 15, 1994.
Warburg, Pincus acts as investment adviser to a variety of
separately managed accounts, three of which have similar investment
objectives to those of the All-Growth Series. See Exhibit O for a list
of the directors and the principal executive officer of Warburg, Pincus
and a table setting forth the other investment companies with similar
investment objectives to those of the All-Growth Series for which
Warburg, Pincus serves as investment adviser, including the fees payable
by such investment companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(A).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the All-Growth Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested person of DSI or Warburg, Pincus,
considered various matters and materials provided by DSI and Warburg,
Pincus. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received by Warburg,
Pincus for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND WARBURG, PINCUS.
PROPOSAL 2(B) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH
CHANCELLOR FOR THE CAPITAL APPRECIATION SERIES
INFORMATION ABOUT CHANCELLOR
- ----------------------------
Chancellor, with offices at 1166 Avenue of the Americas, New York,
New York 10036, is a New York State chartered limited purpose trust
company. Chancellor is a wholly owned subsidiary of Chancellor Capital
Management, Inc. ("Chancellor Capital"), which is owned 51% on a fully-
diluted basis by Chancellor Partners, L.P. (the "Partnership").
Chancellor Partners, Inc. is the General Partner of the Partnership and
a group of employees of Chancellor Capital are the limited partners of
the Partnership. Robert G. Wade, Jr. is the President and sole
stockholder of Chancellor Partners, Inc. USF&G Investment Management
Group, Inc. owns convertible exchangeable preferred stock in Chancellor
Capital, representing the remaining 49% ownership interest on a fully-
diluted basis of Chancellor Capital. Chancellor, its parent, and its
affiliates had over $31.53 billion in assets under management as of
February 29, 1996. Chancellor acts as investment adviser to individual
and institutional clients, including a variety of separately managed
accounts and an investment fund in a commingled employee benefit trust
which have similar investment objectives to those of the Capital
Appreciation Series. See Exhibit P for a list of the directors and the
principal executive officer of Chancellor.
Chancellor manages the assets of the Capital Appreciation Series
pursuant to a Portfolio Management Agreement dated September 30, 1992,
and Addenda dated October 1, 1993, and April 30, 1995, among the Trust,
DSI, and Chancellor. The Portfolio Management Agreement was last
approved by the Board of Trustees on September 21, 1995. The Addendum
to the Portfolio Management Agreement dated April 30, 1995, was approved
by Shareholders of the Capital Appreciation Series at a meeting held on
April 28, 1995, and was submitted to Shareholders for the purpose of
approving a decrease in the portfolio management fee paid by DSI to
Chancellor.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(B).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Capital Appreciation Series and
to recommend approval to shareholders, the Board of Trustees, including
the Trustees who are not interested persons of DSI or Chancellor,
considered various matters and materials provided by DSI and Chancellor.
Information considered by the Trustees included, among other things, the
following: (1) the compensation to be received by Chancellor for its
investment advisory services and the fairness of such compensation, and
that the fee under the New Portfolio Management Agreement is the same as
that under the Current Portfolio Management Agreement; (2) the nature
and the quality of the investment advisory services to be rendered; and
(3) the effect of the Transaction on the services to be rendered under
the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND CHANCELLOR.
PROPOSAL 2(C) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH BANKERS
TRUST FOR THE EMERGING MARKETS SERIES AND MARKET MANAGER SERIES
INFORMATION ABOUT BANKERS TRUST
- -------------------------------
Bankers Trust, with offices at 130 Liberty Street, New York, New
York 10006, is a wholly owned subsidiary of Bankers Trust New York
Corporation. As of December 31, 1995, Bankers Trust New York
Corporation was the seventh largest bank holding company in the United
States with total assets of approximately $104 billion. Bankers Trust
conducts a variety of general banking and trust activities and is a
leading wholesale supplier of financial services to the domestic and
international markets. The unit of Bankers Trust that serves as
Portfolio Manager to the Emerging Markets Series is the Global
Investment Management division which, as of December 31, 1995, managed
institutional assets approximating $185 billion. The unit of Bankers
Trust that serves as Portfolio Manager to the Market Manager Series is
the Derivative Investment Strategies Group.
Bankers Trust manages the assets of the Emerging Markets Series and
Market Manager Series pursuant to a Portfolio Management Agreement dated
September 30, 1992, and Addenda dated October 1, 1993, and November 7,
1994, among the Trust, DSI, and Bankers Trust. The Portfolio Management
Agreement was last approved by the Board of Trustees on September 21,
1995. The Portfolio Management Agreement was approved by the sole
Shareholder of the Emerging Markets Series by written consent dated
September 30, 1993, and was approved by the sole Shareholder of the
Market Manager Series by written consent dated November 7, 1994.
BT Brokerage Corporation is a registered broker-dealer which is
affiliated with Bankers Trust. During the fiscal year ended December
31, 1995, the Market Manager Series paid $1,425 (90.48% of total
brokerage commissions) to BT Brokerage Corporation.
See Exhibit Q for a list of the directors and the principal
executive officer of Bankers Trust and a table setting forth the other
investment companies with similar investment objectives to those of the
Emerging Markets Series, including the fees payable by such investment
companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(C).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Emerging Markets Series and
Market Manager Series and to recommend approval to shareholders, the
Board of Trustees, including the Trustees who are not interested persons
of DSI or Bankers Trust, considered various matters and materials
provided by DSI and Bankers Trust. Information considered by the
Trustees included, among other things, the following: (1) the
compensation to be received by Bankers Trust for its investment advisory
services and the fairness of such compensation, and that the fee under
the New Portfolio Management Agreement is the same as that under the
Current Portfolio Management Agreement; (2) the nature and the quality
of the investment advisory services to be rendered; and (3) the effect
of the Transaction on the services to be rendered under the New
Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND BANKERS TRUST.
PROPOSAL 2(D) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH T. ROWE
PRICE FOR THE FULLY MANAGED SERIES
INFORMATION ABOUT T. ROWE PRICE ASSOCIATES, INC.
- ------------------------------------------------
T. Rowe Price is located at 100 East Pratt St., Baltimore, Maryland
21202. T. Rowe Price was founded in 1937 by the late Thomas Rowe Price,
Jr. and currently serves as investment adviser to the Fully Managed
Series. As of December 31, 1995, T. Rowe Price and its affiliates
managed over $70 billion in assets of approximately 3.5 million
individual and institutional investor accounts.
T. Rowe Price manages the assets of the Fully Managed Series
pursuant to a Portfolio Management Agreement dated January 1, 1995,
among the Trust, DSI, and T. Rowe Price. The Portfolio Management
Agreement was approved by the Board of Trustees on December 20, 1994 and
was approved by Shareholders of the Fully Managed Series at a meeting
held on April 28, 1995.
See Exhibit R for a list of the directors and the principal
executive officer of T. Rowe Price and a table setting forth the other
investment companies with similar investment objectives to those of the
Fully Managed Series, including the fees payable by such investment
companies and their approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(D).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Fully Managed Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of DSI or T. Rowe Price,
considered various matters and materials provided by DSI and T. Rowe
Price. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received by T. Rowe
Price for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND T. ROWE PRICE.
PROPOSAL 2(E) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH ZWEIG
FOR THE MULTIPLE ALLOCATION SERIES AND STRATEGIC EQUITY SERIES
INFORMATION ABOUT ZWEIG
- -----------------------
Zweig, with offices at 900 Third Avenue, New York, New York 10022,
was organized on May 7, 1986. Dr. Martin E. Zweig, the President of
Zweig, has been engaged in the business of providing investment advisory
and portfolio management services for over 20 years. He is currently
affiliated with investment advisers which, as of December 31, 1995,
managed in excess of $10 billion in total assets of investment companies
and pension plan, individual, and other securities accounts. Zweig
currently serves as investment adviser to The Zweig Fund, Inc., a closed-
end, diversified management investment company. Dr. Zweig owns
approximately 64% of the outstanding shares of Zweig. See Exhibit S for
a list of the directors and the principal executive officer of Zweig.
Zweig manages the assets of the Multiple Allocation Series and
Strategic Equity Series pursuant to a Portfolio Management Agreement
dated September 30, 1992, and Addenda dated October 1, 1993, April 30,
1995, and September 29, 1995, among the Trust, DSI, and Zweig. The
Portfolio Management Agreement was last approved by the Board of
Trustees on September 21, 1995. The Addendum to the Portfolio
Management Agreement dated April 30, 1995, was approved by Shareholders
of the Multiple Allocation Series at a meeting held on April 28, 1995,
and was submitted to Shareholders for the purpose of approving a
decrease in the portfolio management fee paid by DSI to Zweig. The
Portfolio Management Agreement was approved by the sole Shareholder of
the Strategic Equity Series by written consent dated September 29, 1995.
Watermark Securities, Inc. and Zweig Securities Corp. are
registered broker-dealers which are affiliated with Zweig. During the
fiscal year ended December 31, 1995, the Multiple Allocation Series paid
$86,365 (16.61% of total brokerage commissions) to Watermark Securities,
Inc.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(E).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Multiple Allocation Series and
Strategic Equity Series and to recommend approval to shareholders, the
Board of Trustees, including the Trustees who are not interested persons
of DSI or Zweig, considered various matters and materials provided by
DSI and Zweig. Information considered by the Trustees included, among
other things, the following: (1) the compensation to be received by
Zweig for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND ZWEIG.
PROPOSAL 2(F) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH VAN ECK
FOR THE NATURAL RESOURCES SERIES
INFORMATION ABOUT VAN ECK
- -------------------------
Van Eck, with offices at 99 Park Avenue, New York, New York 10016,
acts as investment adviser to ten other mutual funds and portfolios of
pension plans with similar investment objectives to the Natural
Resources Series. In addition, Van Eck acts as an adviser to nine other
mutual funds with investment objectives different from the Natural
Resources Series. Total aggregate assets under management of Van Eck as
of December 31, 1995 were approximately $1.65 billion. John C. van Eck
and members of his family own 100% of the stock of Van Eck.
Van Eck manages the assets of the Natural Resources Series pursuant
to a Portfolio Management Agreement dated September 30, 1992, and
Addenda dated October 1, 1993, and April 30, 1995, among the Trust, DSI,
and Van Eck. The Portfolio Management Agreement was last approved by
the Board of Trustees on September 21, 1995. The Addendum to the
Portfolio Management Agreement dated April 30, 1995, was approved by
Shareholders of the Natural Resources Series at a meeting held on April
28, 1995, and was submitted to Shareholders for the purpose of approving
a decrease in the portfolio management fee paid by DSI to Van Eck.
See Exhibit T for a list of the directors and the principal
executive officer of Van Eck and a table setting forth the other
investment companies with similar investment objectives to those of the
Natural Resources Series for which Van Eck serves as investment adviser,
including the fees payable by such investment companies and their
approximate net assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(F).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Natural Resources Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of DSI or Van Eck, considered
various matters and materials provided by DSI and Van Eck. Information
considered by the Trustees included, among other things, the following:
(1) the compensation to be received by Van Eck for its investment
advisory services and the fairness of such compensation, and that the
fee under the New Portfolio Management Agreement is the same as that
under the Current Portfolio Management Agreement; (2) the nature and the
quality of the investment advisory services to be rendered; and (3) the
effect of the Transaction on the services to be rendered under the New
Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND VAN ECK.
PROPOSAL 2(G) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH E.I.I.
REALTY FOR THE REAL ESTATE SERIES
INFORMATION ABOUT E.I.I. REALTY
- -------------------------------
E.I.I. Realty, with offices at 667 Madison Avenue, 16th Floor, New
York, New York 10021, serves as investment adviser to the Real Estate
Series. See Exhibit U for a list of the directors and the principal
executive officer of E.I.I. Realty.
E.I.I. Realty is a professional investment adviser which, with its
affiliates, has been providing services to employee benefit plans,
corporations, and high net worth individuals, both foreign and domestic,
since 1983. As of December 31, 1995, E.I.I. Realty and/or its
affiliates had investment management authority with respect to
approximately $520 million of real estate securities assets. E.I.I.
Realty is a wholly owned subsidiary of European Investors Incorporated.
E.I.I. Realty manages the assets of the Real Estate Series pursuant
to a Portfolio Management Agreement dated January 1, 1995, among the
Trust, DSI, and E.I.I. Realty. The Portfolio Management Agreement was
approved by the Board of Trustees on December 20, 1994. The Portfolio
Management Agreement was approved by the Shareholders of the Real Estate
Series at a meeting held on April 28, 1995.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(G).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Real Estate Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of DSI or E.I.I. Realty,
considered various matters and materials provided by DSI and E.I.I.
Realty. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received by E.I.I.
Realty for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND E.I.I. REALTY.
PROPOSAL 2(H) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH KAYNE,
ANDERSON FOR THE RISING DIVIDENDS SERIES
INFORMATION ABOUT KAYNE, ANDERSON
- ---------------------------------
Kayne, Anderson, with offices at 1800 Avenue of the Stars, Suite
200, Los Angeles, California 90067, is a registered investment adviser
organized on June 24, 1994 as a California limited partnership
succeeding to the investment advisory business of Kayne, Anderson
Investment Management, Inc., which was formed in 1984. Kayne, Anderson
is in the business of furnishing investment advice to institutional and
private clients. The General Partner is Kayne, Anderson Investment
Management, Inc., which was founded by Richard A. Kayne and John E.
Anderson. Messrs. Kayne, Anderson and Rudnick in the aggregate own 97%
of the limited partnership interests in the Portfolio Manager. As of
December 31, 1995, Kayne, Anderson managed portfolios which, in the
aggregate, amounted to approximately $1.631 billion. See Exhibit V for
a list of the principal executive officer of Kayne, Anderson and the
stockholders of the general partner of Kayne, Anderson.
Kayne, Anderson manages the assets of the Rising Dividends Series
pursuant to a Portfolio Management Agreement dated October 1, 1993, and
an Addendum dated April 30, 1995, among the Trust, DSI, and Kayne,
Anderson. The Portfolio Management Agreement was last approved by the
Board of Trustees on September 21, 1995. The Addendum to the Portfolio
Management Agreement dated April 30, 1995, was approved by Shareholders
of the Rising Dividends Series at a meeting held on April 28, 1995, and
was submitted to Shareholders for the purpose of approving a decrease in
the portfolio management fee paid by DSI to Kayne, Anderson.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(H).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Rising Dividends Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of DSI or Kayne, Anderson,
considered various matters and materials provided by DSI and Kayne,
Anderson. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received by Kayne,
Anderson for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND KAYNE, ANDERSON.
PROPOSAL 2(I) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH FRED
ALGER FOR THE SMALL CAP SERIES
INFORMATION ABOUT FRED ALGER
- ----------------------------
Fred Alger, with offices at 75 Maiden Lane, New York, New York
10038, serves as investment adviser to the Small Cap Series. Fred Alger
has been in the business of providing investment advisory services since
1964 and, as of March 31, 1996, had approximately $5.5 billion under
management, $3.7 billion in mutual fund accounts and $1.8 billion in
other advisory accounts. Fred Alger is owned by Fred Alger & Company,
Incorporated, which in turn is owned by Alger Associates, Inc., a
financial services holding company. Fred M. Alger III and his brother,
David D. Alger, are the majority shareholders of Alger Associates, Inc.
and may be deemed to control that company and its subsidiaries.
Fred Alger manages the assets of the Small Cap Series pursuant to a
Portfolio Management Agreement dated December 29, 1995, among the Trust,
DSI, and Fred Alger. The Portfolio Management Agreement was approved by
the Board of Trustees on December 5, 1995. The Portfolio Management
Agreement was approved by the sole Shareholder of the Small Cap Series
by written consent dated December 29, 1995.
See Exhibit W for a list of the directors and the principal
executive officer of Fred Alger and a table setting forth the other
investment companies with similar investment objectives to those of the
Small Cap for which Fred Alger serves as investment adviser, including
the fees payable by such investment companies and their approximate net
assets.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(I).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Small Cap Series and to recommend
approval to shareholders, the Board of Trustees, including the Trustees
who are not interested persons of DSI or Fred Alger, considered various
matters and materials provided by DSI and Fred Alger. Information
considered by the Trustees included, among other things, the following:
(1) the compensation to be received by Fred Alger for its investment
advisory services and the fairness of such compensation, and that the
fee under the New Portfolio Management Agreement is the same as that
under the Current Portfolio Management Agreement; (2) the nature and the
quality of the investment advisory services to be rendered; and (3) the
effect of the Transaction on the services to be rendered under the New
Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND FRED ALGER.
PROPOSAL 2(J) -- APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT WITH EAGLE
ASSET FOR THE VALUE EQUITY SERIES
INFORMATION ABOUT EAGLE ASSET
- -----------------------------
Eagle Asset, with offices at 880 Carillon Parkway, St. Petersburg,
Florida 33716, is a registered investment adviser organized on February
8, 1984 as a Florida corporation. See Exhibit X for a list of the
directors and the principal executive officer of Eagle Asset.
Eagle Asset is in the business of managing institutional clients
and individual accounts on a discretionary basis. Eagle Asset is a
wholly owned subsidiary of Raymond James Financial, Inc., a publicly
traded company whose shares are listed on the New York Stock Exchange.
Thomas A. James is the principal shareholder of Raymond James Financial,
Inc.
Eagle Asset manages the assets of the Value Equity Series pursuant
to a Portfolio Management Agreement dated January 1, 1995, among the
Trust, DSI, and Eagle Asset. The Portfolio Management Agreement was
approved by the Board of Trustees on September 27, 1994. The Portfolio
Management Agreement was approved by the sole Shareholder of the Value
Equity Series by written consent dated December 30, 1994.
Raymond James & Associates, Inc. is a registered broker-dealer
which is affiliated with Eagle Asset. During the fiscal year ended
December 31, 1995, the Value Equity Series paid $240 (0.40% of total
brokerage commissions) to Raymond James & Associates, Inc.
THE TRUSTEES' RECOMMENDATION - PROPOSAL 2(J).
In determining whether or not it was appropriate to approve the New
Portfolio Management Agreement for the Value Equity Series and to
recommend approval to shareholders, the Board of Trustees, including the
Trustees who are not interested persons of DSI or Eagle Asset,
considered various matters and materials provided by DSI and Eagle
Asset. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received by Eagle
Asset for its investment advisory services and the fairness of such
compensation, and that the fee under the New Portfolio Management
Agreement is the same as that under the Current Portfolio Management
Agreement; (2) the nature and the quality of the investment advisory
services to be rendered; and (3) the effect of the Transaction on the
services to be rendered under the New Portfolio Management Agreement.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW PORTFOLIO MANAGEMENT
AGREEMENT, RECOMMENDS THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT
AGREEMENT AMONG THE TRUST, DSI, AND EAGLE ASSET.
PROPOSAL 3
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT FOR THE LIMITED
MATURITY BOND SERIES AND LIQUID ASSET SERIES
As stated above, consummation of the Transaction will result in a
change of the control of DSI and may operate to automatically terminate
the Current Portfolio Management Agreement applicable to of the Limited
Maturity Bond Series and Liquid Asset Series. Shareholder approval of a
New Portfolio Management Agreement with Equitable Investment Services
("New Equitable Investment Services Portfolio Management Agreement") is
being sought.
The New Equitable Investment Services Portfolio Management
Agreement requires Equitable Investment Services to provide, subject to
supervision of the Trust's Board of Trustees and DSI, a continuous
investment program for each of the Limited Maturity Bond Series' and
Liquid Asset Series' portfolios and to determine the composition of the
assets of each of these Series' portfolios, including determination of
the purchase, retention, or sale of the securities, cash, or other
investments contained in the portfolios. The New Equitable Investment
Services Portfolio Management Agreement also requires Equitable
Investment Services to provide investment research and conduct a
continuous program of evaluation, investment, sales and reinvestment of
each of these Series' assets by determining the securities and other
investments that shall be purchased, sold, closed or exchanged for each
Series, when these transactions should be executed and what portion of
the assets of each Series should be held in the various securities and
other investments in which they may invest, all in accordance with each
Series' investment objective and policies.
Pursuant to the New Equitable Investment Services Portfolio
Management Agreement, the Portfolio Manager is not subject to liability
for, or subject to any damages, expenses, or losses in connection with
any act or omission arising out of any services rendered except by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties under the agreement. The same responsibilities
will be imposed on Equitable Investment Services as are imposed upon
Bankers Trust.
For the services provided by Portfolio Manager pursuant to the New
Equitable Investment Services Portfolio Management Agreement, DSI, and
not the Trust, pays a monthly fee at the following annual rates, which
are expressed as percentages of the value of the average daily net
assets of each Series:
SERIES RATE
------ ----
Limited Maturity Bond 0.30% of the first $25 million;
0.25% of the next $50 million;
0.20% of the next $75 million;
0.15% of the amount over $150 million,
subject to a minimum annual fee of
$35,000 (payable at the end of each
calendar year).
Liquid Asset 0.20% of the first $25 million;
0.15% of the next $50 million;
0.10% of the amount over $75 million,
subject to a minimum annual fee of
$35,000 (payable at the end of each
calendar year).
Under the New Equitable Investment Services Portfolio Management
Agreement, the schedule of compensation payable to Equitable Investment
Services will not change from the schedule of compensation currently
payable to Bankers Trust. Fees paid to Bankers Trust for services under
the Bankers Trust Portfolio Management Agreement for the year ended
December 31, 1995, were as follows: $222,697 for the Limited Maturity
Bond Series and $76,360 for the Liquid Asset Series.
THE NEW EQUITABLE INVESTMENT SERVICES PORTFOLIO MANAGEMENT AGREEMENT
At the June 10, 1996, meeting of the Board of Trustees the New
Portfolio Management Agreement for the Limited Maturity Bond Series and
Liquid Asset Series was approved by the Board, including the majority of
the Trustees who are not interested parties to the New Equitable
Investment Services Portfolio Management Agreement or interested persons
of such parties. The New Equitable Investment Services Management
Agreement is included as Exhibit L.
The New Equitable Investment Services Management Agreement for the
Limited Maturity Bond Series and Liquid Asset Series as approved the
Board of Trustees is submitted for approval by the shareholders of each
Series. The New Equitable Investment Services Portfolio Management
Agreement shall be voted upon separately by each of the Limited Maturity
Bond Series and Liquid Asset Series. If it is approved by the vote of a
majority of the outstanding shares of each Series, it will take effect
upon the closing of the Transaction and will continue in effect for two
years and thereafter for successive annual periods as long as such
continuance is approved in accordance with the 1940 Act. For this
purpose, the vote of the holders of the majority of a Series'
outstanding Shares means the lesser of: (i) the vote of 67% or more of
the each entitled to vote thereon Series present at the Meeting, if more
than 50% outstanding shares of the Series are present or represented; or
(ii) more than 50% of the outstanding Shares of each Series. If the
Shareholders of either Series should fail to approve the New Equitable
Investment Services Portfolio Management Agreement, but it is approved
by the other Series, Equitable Investment Services may act as the
Portfolio Manager with respect to the Series whose Shareholders approve
the New Equitable Investment Services Portfolio Management Agreement.
In such an event, the Board of Trustees will consider what appropriate
action to take. Such action may include entering into new portfolio
management arrangements, subject to approval of Shareholders of the
affected Series, or the possible resubmission of the Proposal to
Shareholders at a later date. If the Transaction is not consummated
Bankers Trust will continue to serve as Portfolio Manager for the
Limited Maturity Bond Series and Liquid Asset Series under the Current
Bankers Trust Portfolio Management Agreement.
INFORMATION ABOUT EQUITABLE INVESTMENT SERVICES
- -----------------------------------------------
Equitable Investment Services is an Iowa corporation with its place
of business at 699 Walnut Street, Des Moines, Iowa 50309. Equitable
Investment Services is a registered investment adviser under the
Investment Advisers Act of 1940. Equitable Investment Services is a
wholly owned subsidiary of Equitable of Iowa and an affiliate of
Equitable Life, USG and Locust Street Securities. Equitable Life is an
Iowa domiciled life insurance company. USG is an Oklahoma domiciled
life insurance company. Equitable Life and USG offer their individual
annuity and life insurance products in 49 states and the District of
Columbia. Locust Street is an Iowa corporation which is registered with
the Securities and Exchange Commission as a broker-dealer and is a
member of the NASD. Equitable Life, USG, Locust Street and Equitable
Investment Services currently are not affiliated with Bankers Trust,
Whitewood, BTV, DSI, Golden American or any of the current Portfolio
Managers of Trust. The address of Equitable of Iowa is 604 Locust
Street, Des Moines, Iowa 50319. Equitable Investment Services is the
investment adviser to, and administrator of, the Equi-Select Series
Trust. The Equi-Select Series Trust is the investment medium for
variable annuities issued by Equitable Life. The Equi-Select Series
Trust has assets of approximately $150 million. In addition to its
responsibility for the overall management of the investment strategies
and policies of the ten portfolios of the Equi-Select Series Trust,
Equitable Investment Services directly manages the Money Market
Portfolio, Mortgage-Backed Securities Portfolio, and Advantage Portfolio
of the Equi-Select Series Trust. Additionally, Equitable Investment
Services serves as the investment adviser to Equitable Life and USG, and
in such capacity Equitable Investment Services manages over $8.6 billion
of their general account assets, comprised primarily investment grade
corporate bonds, mortgage backed securities, non-investment grade
corporate bonds, and commercial mortgages.
For a list of the directors and the principal executive officer of
Equitable Investment Services and a list of investment companies with
similar investment objectives see Exhibit N. It is anticipated that
upon consummation of the Transaction, Terry L. Kendall, an interested
person of the Trust, will become a director of Equitable Investment
Services.
THE TRUSTEES' RECOMMENDATION
In determining whether of not it was appropriate to approve the New
Equitable Investment Services Portfolio Management Agreement and to
recommend approval to the Shareholders, the Board of Trustees, including
the Trustees who are not interested persons of the Trust, DSI or
Equitable Investment Services considered several factors, including: (1)
the compensation to be paid by DSI (not the Trust) under the New
Equitable Investment Services Portfolio Management Agreement, and the
fairness and reasonableness of the compensation; (2) the nature and
quality of the portfolio management services expected to be rendered in
the future by Equitable Investment Services; (3) the background, prior
experience and performance of Equitable Investment Services; (4)
performance information of investment accounts; (5) the financial
condition of Equitable Investment Services; (6) the anticipated working
relationship among DSI and Equitable Investment Services.
ACCORDINGLY, THE BOARD OF TRUSTEES, INCLUDING THE TRUSTEES WHO ARE
NOT INTERESTED PERSONS OF ANY PARTY TO THE NEW EQUITABLE INVESTMENT
SERVICES PORTFOLIO MANAGEMENT AGREEMENT, RECOMMENDS THE APPROVAL OF THE
NEW EQUITABLE INVESTMENT SERVICES PORTFOLIO MANAGEMENT AGREEMENT AMONG
THE TRUST, DSI AND EQUITABLE INVESTMENT SERVICES.
ADDITIONAL INFORMATION
OUTSTANDING SHARES.
As of the Record Date, there were the following number of Shares
outstanding for each Series of the Trust: All-Growth Series, __________;
Capital Appreciation Series, __________; Emerging Markets Series,
__________; Fully Managed Series, __________; Limited Maturity Bond
Series, __________; Liquid Asset Series, __________; Market Manager
Series, ________________; Multiple Allocation Series, __________;
Natural Resources Series, __________; Real Estate Series, __________;
Rising Dividends Series, __________; Small Cap Series, _________;
Strategic Equity Series, __________; and Value Equity Series,
__________.
SHAREHOLDERS OF THE TRUST.
As of the Record Date, the following persons were known to the
Trust to be the beneficial owner of more than 5% of the Shares of any
Series of the Trust:
NAME AND ADDRESS %
OF BENEFICIAL OWNER SERIES SHARES HELD OF SHARES
------------------- ------ ----------- ---------
____________________ ___________ ___________ _____
____________________ ___________ ___________ _____
OFFICERS OF THE TRUST.
The principal executive officers of the Trust and his or her age and
principal occupations are set forth below. The executive officers of
the Trust are elected annually and serve until his or her successor
shall have been duly elected and qualified.
NAME AND AGE POSITION WITH THE TRUST AND OTHER PRINCIPAL
OCCUPATIONS
Terry L. Kendall Chairman of the Board and President of the
(49) Trust; Managing Director, Bankers Trust Company;
President, Director, and Chief Executive
Officer, Golden American; President, Director,
and Chief Executive Officer, BTV; Chairman of
the Board and President of Separate Account D of
Golden American Life Insurance Company
("Separate Account D"); formerly, President and
Chief Executive Officer, United Pacific Life
Insurance Company (1983-1993).
Barnett Chernow Vice President of Trust; Executive Vice
(46) President, BTV, October 1993 to present; Senior
Vice President and Chief Financial Officer,
Reliance Insurance Company, August 1977 to July
1993.
Myles R. Tashman Secretary of Trust; Executive Vice President,
(53) Golden American; Executive Vice President, BTV;
Secretary of Separate Account D; formerly,
Senior Vice President and General Counsel,
United Pacific Life Insurance Company (1986-
1993).
Mary Bea Wilkinson Treasurer of Trust; Senior Vice President,
(39) Golden American, November 1993 to present;
Senior Vice President, BTV, November 1993 to
present; Assistant Vice President, CIGNA
Insurance Companies, August 1993 to October
1993; various positions with United Pacific Life
Insurance Company, January 1987 to July 1993,
and was Vice President and Controller upon
leaving.
DISTRIBUTOR.
Shares of the Trust are distributed through Directed Services, Inc.
(the "Distributor"). The Distributor's address is 1001 Jefferson
Street, Suite 400, Wilmington, DE 19801. The Distributor is a
registered broker-dealer and a member of the NASD and acts as
Distributor without remuneration from the Trust.
ADJOURNMENT.
In the event that sufficient votes in favor of any of the proposals
set forth in the Notice of the Meeting are not received by the time
scheduled for Meeting, the persons named as Proxies may propose one or
more adjournments of the Meeting after the date set for the original
Meeting to permit further solicitation of proxies with respect to any
such proposals. In addition, if, in the judgment of the persons named
as Proxies, it is advisable to defer action on one or more proposals,
the persons named as Proxies may propose one or more adjournments of the
Meeting for a reasonable time. Any such adjournments will require the
affirmative vote of a majority of the votes cast on the questions in
person or by proxy at the session of the Meeting to be adjourned, as
required the Trust's Amended and Restated Agreement and Declaration of
Trust and By-Laws. The persons named as Proxies will vote in favor of
such adjournment those Proxies which they are entitled to vote in favor
of such proposals. They will vote against any such adjournment those
Proxies required to be voted against any of such proposals. None of the
costs of any additional solicitation and of any adjourned session will
be borne by the Trust. Any proposals for which sufficient favorable
votes have been received by the time of the Meeting will be acted upon
and such action will be final regardless of whether the Meeting is
adjourned to permit additional solicitation with respect to any other
proposal.
ANNUAL REPORT.
The Trust's 1995 Annual Report to Shareholders was mailed to
shareholders on or about February 26, 1996. IF YOU SHOULD DESIRE AN
ADDITIONAL COPY OF AN ANNUAL REPORT, IT CAN BE OBTAINED, WITHOUT CHARGE,
FROM DSI BY CALLING (800) _________.
COSTS OF SOLICITATION.
The costs associated with the Meeting will be paid by Equitable of
Iowa.
OTHER BUSINESS.
The management of the Trust knows of no other business to be
presented at the meeting other than the matters set forth in this
Statement. If any other business properly comes before the meeting, the
persons designated as proxies will exercise their best judgment in
deciding how to vote on such matters.
SHAREHOLDER PROPOSALS.
Pursuant to the applicable laws of the Commonwealth of
Massachusetts, the Amended and Restated Agreement and Declaration of
Trust and the By-Laws of the Trust, the Trust need not hold annual or
regular shareholder meetings, although special meetings may be called
for a specific Series, or for the Trust as a whole, for purposes such as
electing or removing Trustees, changing fundamental policies or
approving a contract for investment advisory services. Therefore, it is
probable that no annual meeting of shareholders will be held in 1997 or
in subsequent years until so required by the 1940 Act or other
applicable laws. For those years in which annual shareholder meetings
are held, proposals which shareholders of the Trust intend to present
for inclusion in the proxy materials with respect to the annual meeting
of shareholders must be received by the Trust within a reasonable period
of time before the solicitation is made.
Please complete the enclosed authorization card and return it promptly
in the enclosed self-addressed postage-paid envelope. You may revoke
your proxy at any time prior to the meeting by written notice to the
Trust or by submitting an authorization card bearing a later date.
July ___, 1996 Myles R. Tashman
Wilmington, Delaware Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT EXHIBIT DESCRIPTION
A New Management Agreement between The GCG Trust and
Directed Services, Inc.
B New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Warburg, Pincus
Counsellors, Inc.
C New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Chancellor
Trust Company
D New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Bankers Trust
Company
E New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and T. Rowe Price
Associates, Inc.
F New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Zweig Advisors
Inc.
G New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Van Eck
Associates Corporation
H New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and E.I.I. Realty
Securities, Inc.
I New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Kayne,
Anderson Investment Management, L.P.
J New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Fred Alger
Management, Inc.
K New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Eagle Asset
Management, Inc.
L New Portfolio Management Agreement among The GCG
Trust, Directed Services, Inc. and Equitable
Investment Services, Inc.
M Other information regarding Directed Services,
Inc.
N Other information regarding Equitable Investment
Services, Inc.
O Other information regarding Warburg, Pincus
Counsellors, Inc.
P Other information regarding Chancellor Trust
Company
Q Other information regarding Bankers Trust
Company
R Other information regarding T. Rowe Price
Associates, Inc.
S Other information regarding Zweig Advisors Inc.
T Other information regarding Van Eck Associates
Corporation
U Other information regarding E.I.I. Realty
Securities, Inc.
V Other information regarding Kayne, Anderson
Investment Management, L.P.
W Other information regarding Fred Alger
Management, Inc.
X Other information regarding Eagle Asset
Management, Inc.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
ALL-GROWTH SERIES
WARBURG, PINCUS COUNSELLORS, INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the All-Growth Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Warburg, Pincus Counsellors, Inc., the Portfolio Manager
designated in the Proxy Statement, to be effective upon the acquisition
of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the All-Growth Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
CAPITAL APPRECIATION SERIES
CHANCELLOR TRUST COMPANY
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Capital Appreciation Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Chancellor Trust Company, the Portfolio Manager designated in
the Proxy Statement, to be effective upon the acquisition of
BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Capital Appreciation Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated:
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
EMERGING MARKETS SERIES
BANKERS TRUST COMPANY
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Emerging Market Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Bankers Trust Company, the Portfolio Manager designated in the
Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Emerging Market Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
FULLY MANAGED SERIES
T. ROWE PRICE ASSOCIATES, INC
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Fully Managed Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and T. Rowe Price Associates, Inc., the Portfolio Manager
designated in the Proxy Statement, to be effective upon the acquisition
of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Fully Managed Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
MARKET MANAGER SERIES
BANKERS TRUST COMPANY
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Market Manager Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Bankers Trust Company, the Portfolio Manager designated in the
Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Market Manager Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
MULTIPLE ALLOCATION SERIES
ZWEIG ADVISORS INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Multiple Allocation Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Zweig Advisors Inc., the Portfolio Manager designated in the
Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Multiple Allocation Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
NATURAL RESOURCES SERIES
VAN ECK ASSOCIATES CORPORATION
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Natural Resources Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Van Eck Associates Corporation, the Portfolio Manager
designated in the Proxy Statement, to be effective upon the acquisition
of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Natural Resources Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
REAL ESTATE SERIES
E.I.I. REALTY SECURITIES, INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Real Estate Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and E.I.I. Realty Securities, Inc., the Portfolio Manager
designated in the Proxy Statement, to be effective upon the acquisition
of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Real Estate Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
RISING DIVIDENDS SERIES
KAYNE, ANDERSON INVESTMENT MANAGEMENT, L.P.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Rising Dividends Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Kayne, Anderson Investment Management, L.P., the Portfolio
Manager designated in the Proxy Statement, to be effective upon the
acquisition of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Rising Dividends Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
SMALL CAP SERIES
FRED ALGER MANAGEMENT, INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Small Cap Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Fred Alger Management, Inc., the Portfolio Manager designated
in the Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Small Cap Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
STRATEGIC EQUITY SERIES
ZWEIG ADVISORS INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Strategic Equity Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Zweig Advisors Inc., the Portfolio Manager designated in the
Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Strategic Equity Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
VALUE EQUITY SERIES
EAGLE ASSET MANAGEMENT, INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Value Equity Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
2. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Eagle Asset Management, Inc., the Portfolio Manager designated
in the Proxy Statement, to be effective upon the acquisition of BTV by
Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Value Equity Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
LIMITED MATURITY BOND SERIES
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Limited Maturity Bond Series of The GCG Trust (the
"Trust") attributable to his or her Contract at the Meeting of
Shareholders of the Trust to be held on August 12, 1996, at 10:00 a.m.,
local time, 1001 Jefferson Street, Suite 400, Wilmington, Delaware, and
at any adjournment thereof, in the manner directed below with respect to
the matters referred to in the Proxy Statement for the Meeting, receipt
of which is hereby acknowledged, and in Golden American's discretion,
upon such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
3. To approve a new Portfolio Management Agreement among the Trust,
DSI, and the Portfolio Manager designated in the Proxy Statement, to be
effective upon the acquisition of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Limited Maturity Bond Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
LIQUID ASSET SERIES
EQUITABLE INVESTMENT SERVICES, INC.
The Undersigned contract owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company ("Golden American") or a
participating insurance company and funded by a separate account of
Golden American or a participating insurance company hereby instructs
Golden American on behalf of the pertinent separate account to vote the
shares of the Liquid Asset Series of The GCG Trust (the "Trust")
attributable to his or her Contract at the Meeting of Shareholders of
the Trust to be held on August 12, 1996, at 10:00 a.m., local time, 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any
adjournment thereof, in the manner directed below with respect to the
matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, and in Golden American's discretion, upon
such other matters as may properly come before the Meeting or any
adjournment thereof.
This voting instruction is solicited on behalf of the Board of
Trustees of Trust. The Board of Trustees of the Trust recommends that
you vote FOR all of the following proposals.
1. To approve a new Management Agreement between the Trust and
Directed Services, Inc. ("DSI"), to be effective upon the acquisition of
BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("Equitable of
Iowa").
For _____ Against _____ Abstain _____
3. To approve a new Portfolio Management Agreement among the Trust,
DSI, and Equitable Investment Services, Inc., the Portfolio Manager
designated in the Proxy Statement, to be effective upon the acquisition
of BTV by Equitable of Iowa.
For _____ Against _____ Abstain _____
This voting instruction will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL
PROPOSALS. If this voting instruction is not returned properly
executed, such votes will be cast by Golden American on behalf of the
pertinent separate account in the same proportion as it votes shares
held by that separate account for which it has received instructions
from contract owners participating in the Liquid Asset Series.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING
INSTRUCTION AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated: ________________, 1996
____________________________________
____________________________________
Signature(s) of Contract Owner(s)
IMPORTANT: Joint owners must EACH sign. Trustees and others signing in
a representative capacity should so indicate.
Exhibit A
MANAGEMENT AGREEMENT
Agreement made this ____ day of __________, 1996 between The
GCG Trust ("Trust"), a Massachusetts business trust, and Directed
Services, Inc. ("Manager"), a New York corporation (the
"Agreement").
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of
beneficial interest in separate series with each such series
representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future; and
WHEREAS, the Trust desires to avail itself of the services
of the Manager for the provision of advisory, management,
administrative, and other services for the Trust; and
WHEREAS, the Manager is willing to render such services to
the Trust.
Therefore, in consideration of the premises, the promises
and mutual covenants herein contained, it is agreed between the
parties as follows:
1. Appointment. The Trust hereby appoints the Manager,
subject to the direction of the Board of Trustees, for the period
and on the terms set forth in this Agreement, to provide
advisory, management, administrative, and other services, as
described herein, with respect to the Series identified on
Schedule A, such series together with all other series
subsequently established by the Trust with respect to which the
Trust desires to retain the Manager to render advisory,
management, administrative, and other services hereunder and with
respect to which the Manager is willing to do so being herein
collectively referred to as the "Series." The Manager accepts
such appointment and agrees to render the services herein set
forth for the compensation herein provided.
In the event the Trust establishes one or more series other
than the Series with respect to which it desires to retain the
Manager to render advisory, management, administrative, and other
services hereunder, it shall notify the Manager in writing. If
the Manager is willing to render such services it shall notify
the Trust in writing, whereupon such series shall become a Series
hereunder.
2. Services of the Manager. The Manager represents and
warrants that it is registered as an investment adviser under the
Investment Advisers Act of 1940 and in all states where required,
and will maintain such registration for so long as required by
applicable law. Subject to the general supervision of the Board
of Trustees of the Trust, the Manager shall provide the following
advisory, management, administrative, and other services with
respect to the Series:
(a) Provide general, overall advice and guidance with
respect to the Series and provide advice and guidance to the
Trust's Trustees, and oversee the management of the investments
of the Series and the composition of each Series' portfolio of
securities and investments, including cash, and the purchase,
retention and disposition thereof, in accordance with each
Series' investment objective or objectives and policies as stated
in the Trust's current registration statement, which management
shall be provided by others selected by the Manager and approved
by the Board of Trustees as provided below or directly by the
Manager as provided in Section 3 of this Agreement;
(b) Analyze, select and recommend for consideration by
the Trust's Board of Trustees investment advisory firms (however
organized) to provide investment advice to one or more of the
Series, and, at the expense of the Manager, engage (which
engagement may also be by the Trust) such investment advisory
firms to render investment advice and manage the investments of
such Series and the composition of each such Series' portfolio of
securities and investments, including cash, and the purchase,
retention and disposition thereof, in accordance with the Series'
investment objective or objectives and policies as stated in the
Trust's current registration statement (any such firms approved
by the Board of Trustees and engaged by the Trust and/or the
Manager are referred to herein as "Portfolio Managers");
(c) Periodically monitor and evaluate the performance
of the Portfolio Managers with respect to the investment
objectives and policies of the Series;
(d) Monitor the Portfolio Managers for compliance with
the investment objective or objectives, policies and restrictions
of each Series, the 1940 Act, Subchapter M of the Internal
Revenue Code, Section 817(h) of the Internal Revenue Code, and if
applicable, regulations under such provisions, and other
applicable law;
(e) If appropriate, analyze and recommend for
consideration by the Trust's Board of Trustees termination of a
contract with a Portfolio Manager under which the Portfolio
Manager provided investment advisory services to one or more of
the Series;
(f) Supervise Portfolio Managers with respect to the
services that such Portfolio Managers provide under respective
portfolio management agreements ("Portfolio Management
Agreements"), although the Manager is not authorized, except as
provided in Section 3 of the Agreement, directly to make
determinations with respect to the investment of a Series' assets
or the purchase or sale of portfolio securities or other
investments for a Series;
(g) Provide all supervisory, management, and
administrative services reasonably necessary for the operation of
the Series other than the investment advisory services performed
by the Portfolio Managers, including but not limited to, (i)
coordinating all matters relating to the operation of the Series,
including any necessary coordination among the Portfolio
Managers, custodian, transfer agent, dividend disbursing agent,
and portfolio accounting agent (including pricing and valuation
of the Series' portfolios), accountants, attorneys, and other
parties performing services or operational functions for the
Trust, (ii) providing the Trust and the Series, at the Manager's
expense, with the services of a sufficient number of persons
competent to perform such administrative and clerical functions
as are necessary to ensure compliance with federal securities
laws and to provide effective supervision and administration of
the Series; (iii) maintaining or supervising the maintenance by
third parties selected by the Manager of such books and records
of the Trust and the Series as may be required by applicable
federal or state law; (iv) preparing or supervising the
preparation by third parties selected by the Manager of all
federal, state, and local tax returns and reports relating to the
Series required by applicable law; (v) preparing and filing and
arranging for the distribution of proxy materials and periodic
reports to shareholders of the Series as required by applicable
law; (vi) preparing and arranging for the filing of registration
statements and other documents with the Securities and Exchange
Commission (the "SEC") and other federal and state regulatory
authorities as may be required by applicable law; (vii) taking
such other action with respect to the Trust as may be required by
applicable law in connection with the Series, including without
limitation the rules and regulations of the SEC and other
regulatory agencies; and (viii) providing the Trust, at the
Manager's expense, with adequate personnel, office space,
communications facilities, and other facilities necessary for
operation of the Series as contemplated in this Agreement;
(h) Provide or procure on behalf of the Trust and the
Series, and at the expense of the Manager, the following services
for the Series: (i) custodian services to provide for the
safekeeping of the Series' assets; (ii) portfolio accounting
services to maintain the portfolio accounting records for the
Series; (iii) transfer agency services for the Series; (iv)
dividend disbursing services for the Series, and (v) other
services necessary for the ordinary operation of the Series. The
Trust may, but is not required to, be a party to any agreement
with any third person contracted to provide the services referred
to in this Section 2(h);
(i) Render to the Board of Trustees of the Trust such
periodic and special reports as the Board may reasonably request;
and
(j) Make available its officers and employees to the
Board of Trustees and officers of the Trust for consultation and
discussions regarding the administration and management of the
Series and services provided to the Trust under this Agreement.
3. Investment Management Authority. In the event that a
Portfolio Management Agreement pertaining to a Series is
terminated or if, at any time, no Portfolio Manager is engaged to
manage the assets of a Series of the Trust, then with respect to
any such Series, the Manager, subject to the supervision of the
Trust's Board of Trustees, will provide a continuous investment
program for the Series' portfolio and determine the composition
of the assets of the Series' portfolio, including determination
of the purchase, retention, or sale of the securities, cash, and
other investments contained in the portfolio. The Manager will
provide investment research and conduct a continuous program of
evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Manager is hereby authorized to execute and perform such services
on behalf of the Series. To the extent permitted by the
investment policies of the Series, the Manager shall make
decisions for the Series as to foreign currency matters and make
determinations as to, and execute and perform, foreign currency
exchange contracts on behalf of the Series. The Manager will
provide the services under this Agreement in accordance with the
Series' investment objective or objectives, policies, and
restrictions as stated in the Trust's Registration Statement
filed with the SEC, as amended. Furthermore:
(a) The Manager will (1) take all steps necessary to
manage the Series so that it will qualify as a regulated
investment company under Subchapter M of the Internal Revenue
Code, (2) take all steps necessary to manage the Series so as to
ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by the Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
In managing the Series in accordance with these requirements, the
Manager shall be entitled to receive and act upon advice of
counsel to the Trust or counsel to the Manager.
(b) The Manager will conform with the 1940 Act and all
rules and regulations thereunder, all other applicable federal
and state laws and regulations, with any applicable procedures
adopted by the Trust's Board of Trustees, and the provisions of
the Registration Statement of the Trust under the Securities Act
of 1933 and the 1940 Act, as supplemented or amended.
(c) On occasions when the Manager deems the purchase
or sale of a security to be in the best interest of the Series as
well as any other investment advisory clients, the Manager may,
to the extent permitted by applicable laws and regulations, but
shall not be obligated to, aggregate the securities to be so sold
or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Manager in a manner that
is fair and equitable in the judgment of the Manager in the
exercise of its fiduciary obligations to the Trust and to such
other clients.
(d) In connection with the purchase and sale of
securities of the Series, the Manager will arrange for the
transmission to the custodian for the Trust on a daily basis, of
such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or
other numbers that identify securities to be purchased or sold on
behalf of the Series, as may be reasonably necessary to enable
the custodian to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Manager will arrange for the
automatic transmission of the confirmation of such trades to the
Trust's custodian.
(e) The Manager will assist the custodian or portfolio
accounting agent for the Trust in determining, consistent with
the procedures and policies stated in the Registration Statement
for the Trust, the value of any portfolio securities or other
assets of the Series for which the custodian or portfolio
accounting agent seeks assistance or review from the Manager.
The Manager will monitor on a daily basis the determination by
the custodian or portfolio accounting agent for the Trust of the
value of portfolio securities and other assets of the Series and
the determination of net asset value of the Series.
(f) The Manager will make available to the Trust,
promptly upon request, all of the Series' investment records and
ledgers as are necessary to assist the Trust to comply with
requirements of the 1940 Act and the Investment Advisers Act of
1940, as well as other applicable laws. The Manager will furnish
to regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Manager will regularly report to the Trust's
Board of Trustees on the investment program for the Series and
the issuers and securities represented in the Series' portfolio,
and will furnish the Trust's Board of Trustees with respect to
the Series such periodic and special reports as the Trustees may
reasonably request.
(h) The Manager will not disclose or use any records
or information obtained pursuant to this Agreement (excluding
investment research and investment advice) in any manner
whatsoever except as required to carry out its duties as
investment manager and administrator pursuant to this Section 3
or in the ordinary course of business in connection with placing
orders for the purchase and sale of securities, and will keep
confidential any information obtained pursuant to this Agreement,
and disclose such information only if the Board of Trustees of
the Trust has authorized such disclosure, or if such disclosure
is expressly required by applicable federal or state law or
regulations or regulatory authorities having the requisite
authority.
(i) In rendering the services required under this
Section of this Agreement, the Manager may, from time to time,
employ or associate with itself such person or persons as it
believes necessary to assist it in carrying out its obligations
under this Agreement. The Manager shall be responsible for
making reasonable inquires and for reasonably ensuring that any
employee of the Manager, any person or firm that the Manager has
employed or with which it has associated, or any employee thereof
has not, to the best of the Manager's knowledge, in any material
connection with the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provisions of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
(j) In connection with its responsibilities under this
Section 3, the Manager is responsible for decisions to buy and
sell securities and other investments for the Series' portfolio,
broker-dealer selection, and negotiation of brokerage commission
rates. The Manager's primary consideration in effecting a
security transaction will be to obtain the best execution for the
Series, taking into account the factors specified in the
Prospectus and/or Statement of Additional Information for the
Trust, which include price (including the applicable brokerage
commission or dollar spread), the size of the order, the nature
of the market for the security, the timing of the transaction,
the reputation, experience and financial stability of the broker-
dealer involved, the quality of the service, the difficulty of
execution, execution capabilities and operational facilities of
the firms involved, and the firm's risk in positioning a block of
securities. Accordingly, the price to the Series in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified,
in the judgment of the Manager in the exercise of its fiduciary
obligations to the Trust, by other aspects of the portfolio
execution services offered. Subject to such policies as the
Board of Trustees may determine and consistent with Section 28(e)
of the Securities Exchange Act of 1934, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its
having caused the Series to pay a broker-dealer 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 Manager or its affiliate determines in
good faith that such amount of commission was 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 Manager's or its affiliate's
overall responsibilities with respect to the Series and to their
other clients as to which they exercise investment discretion.
To the extent consistent with these standards and in accordance
with Section 11(a) of the Securities and Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, the Manager is further authorized to
allocate the orders placed by it on behalf of the Series to the
Manager if it is registered as a broker-dealer with the SEC, to
its affiliated broker-dealer, or to such brokers and dealers who
also provide research or statistical material or other services
to the Series, the Manager or an affiliate of the Manager. Such
allocation shall be in such amounts and proportions as the
Manager shall determine consistent with the above standards, and
the Manager will report on said allocation regularly to the Board
of Trustees of the Trust indicating the broker-dealers to which
such allocations have been made and the basis therefor.
4. Conformity with Applicable Law. The Manager, in the
performance of its duties and obligations under this Agreement,
shall act in conformity with the Registration Statement of the
Trust and with the instructions and directions of the Board of
Trustees of the Trust and will conform to, and comply with, the
requirements of the 1940 Act and all other applicable federal and
state laws and regulations.
5. Exclusivity. The services of the Manager to the Trust
under this Agreement are not to be deemed exclusive, and the
Manager, or any affiliate thereof, shall be free to render
similar services to other investment companies and other clients
(whether or not their investment objectives and policies are
similar to those of any of the Series) and to engage in other
activities, so long as its services hereunder are not impaired
thereby.
6. Documents. The Trust has delivered properly certified
or authenticated copies of each of the following documents to the
Manager and will deliver to it all future amendments and
supplements thereto, if any:
(a) certified resolution of the Board of Trustees of
the Trust authorizing the appointment of the Manager and
approving the form of this Agreement;
(b) the Registration Statement as filed with the SEC
and any amendments thereto; and
(c) exhibits, powers of attorney, certificates and any
and all other documents relating to or filed in connection with
the Registration Statement described above.
7. Records. The Manager agrees to maintain and to
preserve for the periods prescribed under the 1940 Act any such
records as are required to be maintained by the Manager with
respect to the Series by the 1940 Act. The Manager further
agrees that all records which it maintains for the Series are the
property of the Trust and it will promptly surrender any of such
records upon request.
8. Expenses. During the term of this Agreement, the
Manager will pay all expenses incurred by it in connection with
its activities under this Agreement, except such expenses as are
assumed by the Trust under this Agreement and such expenses as
are assumed by a Portfolio Manager under its Portfolio Management
Agreement. The Manager further agrees to pay all salaries, fees
and expenses of any officer or trustee of the Trust who is an
officer, director or employee of the Manager or any of its
affiliates. The Manager shall be responsible for all of the
expenses of its operations and for the following expenses:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Trust's transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Trust's custodial services,
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence and qualification to do business, and the
registration of shares with federal and state securities or
insurance authorities;
(h) The Trust's ordinary legal fees, including the
legal fees related to the registration and continued
qualification of the Trust's shares for sale;
(i) Costs of printing stock certificates representing
shares of the Trust;
(j) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(k) Association membership dues; and
(l) Organizational and offering expenses and, if
applicable, reimbursement (with interest) of underwriting
discounts and commissions. Commencing with the date of this
Agreement, the Manager is responsible for any remaining
unamortized organizational expenses of the Series as of the date
of this Agreement.
The Trust shall be responsible for the following expenses:
(a) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Manager or
an affiliate of the Manager;
(b) Taxes levied against the Trust;
(c) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Trust;
(d) Costs, including the interest expense, of
borrowing money;
(e) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Manager, any
Portfolio Manager, or any affiliates of either; and
(f) Extraordinary expenses as may arise, including
extraordinary consulting expenses and extraordinary legal
expenses incurred in connection with litigation, proceedings,
other claims (unless the Manager is responsible for such expenses
under Section 10 of this Agreement or a Portfolio Manager is
responsible for such expenses under the Section entitled
"Liability" of a Portfolio Management Agreement), and the legal
obligations of the Trust to indemnify its trustees, officers,
employees, shareholders, distributors, and agents with respect
thereto.
9. Compensation. For the services provided by the Manager
pursuant to this Agreement, the Trust will pay to the Manager a
fee at an annual rate equal to a percentage of the average daily
net assets of each Series as shown on Schedule B to this
Agreement. This fee shall be computed and accrued daily and
payable as shown on Schedule B.
10. Liability of the Manager. The Manager may rely on
information reasonably believed by it to be accurate and
reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither the Manager nor its stockholders,
officers, directors, employees, or agents shall be subject to,
and the Trust will indemnify such persons from and against, any
liability for, or any damages, expenses, or losses incurred in
connection with, any act or omission connected with or arising
out of any services rendered under this Agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in
the performance of the Manager's duties, or by reason of reckless
disregard of the Manager's obligations and duties under this
Agreement. Except as may otherwise be required by the 1940 Act
or the rules thereunder, neither the Manager nor its stock
holders, officers, directors, employees, or agents shall be
subject to, and the Trust will indemnify such persons from and
against, any liability for, or any damages, expenses, or losses
incurred in connection with, any act or omission by a Portfolio
Manager or any of the Portfolio Manager's stockholders or
partners, officers, directors, employees, or agents connected
with or arising out of any services rendered under a Portfolio
Management Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the
Manager's duties under this Agreement, or by reason of reckless
disregard of the Manager's obligations and duties under this
Agreement.
11. Continuation and Termination. This Agreement shall
become effective on the date first written above. Unless
terminated as provided herein, the Agreement shall continue in
full force and effect for two (2) years from the effective date
of this Agreement, and shall continue from year to year there
after with respect to each Series so long as such continuance is
specifically approved at least annually (i) by the vote of a
majority of the Board of Trustees of the Trust, or (ii) by vote
of a majority of the outstanding voting shares of the Trust, and
provided continuance is also approved by the vote of a majority
of the Board of Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of
the Trust or the Manager, cast in person at a meeting called for
the purpose of voting on such approval. This Agreement may not
be amended in any material respect without a majority vote of the
outstanding voting shares (as defined in the 1940 Act).
However, any approval of this Agreement by the holders of a
majority of the outstanding shares (as defined in the 1940 Act)
of a Series shall be effective to continue this Agreement with
respect to such Series notwithstanding (i) that this Agreement
has not been approved by the holders of a majority of the
outstanding shares of any other Series or (ii) that this
Agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. This
Agreement may be terminated by the Trust at any time, without the
payment of any penalty, by vote of a majority of the entire Board
of Trustees of the Trust or by a vote of a majority of the
outstanding voting shares of the Trust, or with respect to a
Series, by vote of a majority of the outstanding voting shares of
such Series, on sixty (60) days' written notice to the Manager,
or by the Manager at any time, without the payment of any
penalty, on sixty (60) days' written notice to the Trust. This
Agreement will automatically and immediately terminate in the
event of its "assignment" (as described in the 1940 Act).
12. Use of Name. It is understood that the name or any
derivative thereof or logo associated with the name Directed
Services, Inc. is the valuable property of the Manager, and that
the Trust and/or the Series have the right to use such name (or
derivative or logo) only so long as this Agreement shall continue
with respect to such Trust and/or Series. Upon termination of
this Agreement, the Trust (or Series) shall forthwith cease to
use such name (or derivative or logo) and, in the case of the
Trust, shall promptly amend its Agreement and Declaration of
Trust to change its name (if such name is included therein).
13. Notice. Notices of any kind to be given to the Manager
by the Trust shall be in writing and shall be duly given if
mailed or delivered to the Manager at 1001 Jefferson Street,
Suite 400, Wilmington, Delaware 19801, or at such other address
or to such individual as shall be specified by the Manager to the
Trust. Notices of any kind to be given to the Trust by the
Manager shall be in writing and shall be duly given if mailed or
delivered to 1001 Jefferson Street, Suite 400, Wilmington,
Delaware 19801, or at such other address or to such individual as
shall be specified by the Trust to the Manager.
14. Trust Obligation. A copy of the Trust's Amended and
Restated Agreement and Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts and notice is
hereby given that the Agreement has been executed on behalf of
the Trust by the Trustees of the Trust in their capacity as
trustees and not individually. The obligations of this Agreement
shall only be binding upon the assets and property of the Trust
and shall not be binding upon any trustee, officer, or
shareholder of the Trust individually.
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original.
16. Applicable Law.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Investment Advisers Act of 1940, or any rules or order of the SEC
thereunder.
(b) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby
and, to this extent, the provisions of this Agreement shall be
deemed to be severable.
(c) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
The GCG Trust
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
Directed Services, Inc.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in the attached
Management Agreement, to which Directed Services, Inc. shall act
as Manager are as follows:
Multiple Allocation Series
Fully Managed Series
Limited Maturity Bond Series
Natural Resources Series
Real Estate Series
All-Growth Series
Liquid Asset Series
Capital Appreciation Series
Rising Dividends Series
Emerging Markets Series
Market Manager Series
Value Equity Series
Strategic Equity Series
Small Cap Series
Managed Global Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Directed Services, Inc. (the
"Manager") to the following Series of The GCG Trust (the
"Trust"), pursuant to the attached Management Agreement, the
Trust will pay the Manager a fee, payable monthly for each Series
except the Market Manager Series, which will be payable
quarterly, based on the average daily net assets of the Series at
the following annual rates of the average daily net assets of the
Series.
Series Rate
Multiple Allocation, Fully 1.00% of first $750 million;
Managed, Natural Resources, 0.95% of next $1.250 billion;
Real Estate, All-Growth, 0.90% of next $1.5 billion;
Capital Appreciation, Rising and
Dividends, Value Equity, 0.85% of amount in excess of
Strategic Equity, and Small $3.5 billion
Cap Series:
Limited Maturity Bond and 0.60% of first $200 million;
Liquid Asset Series: 0.55% of next $300 million;
and
0.50% of amount in excess of
$500 million
Emerging Markets Series: 1.50%
Market Manager Series: 1.0%
Managed Global Series: 1.25% of first $500 million;
1.05% of amount in excess of
$500 million
Exhibit B
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ___ day of ___________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and Warburg,
Pincus Counsellors, Inc. ("Portfolio Manager"), a Delaware
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
_________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Warburg, Pincus Counsellors, Inc. to act as Portfolio
Manager to the Series designated on Schedule A of this Agreement
(the "Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for the Series' portfolio and determine the composition of the
assets of the Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform
such services on behalf of the Series. To the extent permitted
by the investment policies of the Series, the Portfolio Manager
shall make decisions for the Series as to foreign currency
matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent to
the Portfolio Manager by the Manager. The Portfolio Manager
further agrees as follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage the Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) take all steps necessary to manage the Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by the Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of the
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the portfolio accounting agent for the
Trust of the valuation of portfolio securities and other
investments of the Series. The Portfolio Manager will assist the
custodian and portfolio accounting agent for the Trust in
determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for the Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the Securities
and Exchange Commission that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect
to the disclosure about the Portfolio Manager or information
relating, directly or indirectly, to the Portfolio Manager, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of
a material fact which was required to be stated therein or
necessary to make the statements contained therein not
misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under
the Advisers Act and a duly registered investment adviser in all
states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of the Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for the Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly, as
described on Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result
in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder. The Portfolio
Manager further agrees to notify the Manager and the Trust
immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not
contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval and the Portfolio Manager has not commented
within 30 days, the Manager and its affiliated persons may use
and distribute such sales literature or other promotional
material, although, in such event, the Portfolio Manager shall
not be deemed to have approved of the contents of such sales
literature or other promotional material.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
15. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a failure
to comply with Section 2, Paragraph (a) of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from the date first indicated
above and continue on an annual basis thereafter with respect to
the Series; provided that such annual continuance is specifically
approved each year by (a) the vote of a majority of the entire
Board of Trustees of the Trust, or by the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of
the Series, and (b) the vote of a majority of those Trustees who
are not parties to this Agreement or interested persons (as such
term is defined in the 1940 Act) of any such party to this
Agreement cast in person at a meeting called for the purpose of
voting on such approval. The Portfolio Manager shall not provide
any services for a Series or receive any fees on account of such
Series with respect to which this Agreement is not approved as
described in the preceding sentence. However, any approval of
this Agreement by the holders of a majority of the outstanding
shares (as defined in the 1940 Act) of a Series shall be
effective to continue this Agreement with respect to the Series
notwithstanding (i) that this Agreement has not been approved by
the holders of a majority of the outstanding shares of any other
Series or (ii) that this agreement has not been approved by the
vote of a majority of the outstanding shares of the Trust, unless
such approval shall be required by any other applicable law or
otherwise. Notwithstanding the foregoing, this Agreement may be
terminated for each or any Series hereunder: (a) by the Manager
at any time without penalty, upon sixty (60) days' written notice
to the Portfolio Manager and the Trust, (b) at any time without
payment of any penalty by the Trust, upon the vote of a majority
of the Trust's Board of Trustees or a majority of the outstanding
voting securities of each Series, upon sixty (60) days' written
notice to the Manager and the Portfolio Manager, or (c) by the
Portfolio Manager at any time without penalty, upon sixty (60)
days' written notice to the Manager and the Trust. In the event
of termination for any reason, all records of each Series for
which the Agreement is terminated shall promptly be returned to
the Manager or the Trust, free from any claim or retention of
rights in such record by the Portfolio Manager, although the
Portfolio Manager may, at its own expense, make and retain a copy
of such records. The Agreement shall automatically terminate in
the event of its assignment (as such term is described in the
1940 Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Warburg, Pincus
Counsellors, Inc." or any derivative thereof or logo associated
with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the
right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Portfolio Manager
and for so long as the Portfolio Manager is a portfolio manager
to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio
Manager, the Trust shall forthwith cease to use such name (or
derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
WARBURG, PINCUS COUNSELLORS, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of
the attached Portfolio Management Agreement, to which Warburg,
Pincus Counsellors, Inc. shall act as Portfolio Manager are as
follows:
All-Growth Series
Managed Global Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Warburg, Pincus Counsellors,
Inc. ("Portfolio Manager") to the following Series of The GCG
Trust, pursuant to the attached Portfolio Management Agreement,
the Manager will pay the Portfolio Manager a fee, payable
monthly, based on the average daily net assets of the Series at
the following annual rates of the average daily net assets of the
Series:
Series Rate
All-Growth Series 0.50%
Managed Global Series 0.60% of the first $500 million;
0.50% of the amount over $500
million
Exhibit C
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _____________, 1996 among
The GCG Trust (the "Trust"), a Massachusetts business trust,
Directed Services, Inc. ("Manager"), a New York corporation, and
Chancellor Trust Company ("Portfolio Manager"), a Delaware
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
_____________ __, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Chancellor Trust Company to act as Portfolio Manager to
the Series designated on Schedule A of this Agreement (each a
"Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for the Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with the Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as amended, copies of which shall be
sent to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage each Series
so that it will qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, (2) manage each Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by each Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for a Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the custodian and portfolio accounting
agent for the Trust of the valuation of portfolio securities and
other investments of the Series. The Portfolio Manager will
assist the custodian and portfolio accounting agent for the Trust
in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the Securities
and Exchange Commission that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect
to the disclosure about the Portfolio Manager or information
relating, directly or indirectly, to the Portfolio Manager, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of
a material fact which was required to be stated therein or
necessary to make the statements contained therein not
misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under
the Advisers Act and a duly registered investment adviser in all
states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series's net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 15 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly as
described in Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result
in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder. The Portfolio
Manager further agrees to notify the Manager and the Trust
immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not
contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Insurance Company Offerees. All parties
acknowledge that the Trust will offer its shares so that it may
serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies.
The Trust and the Manager agree that shares of the Series may be
offered only to the separate accounts and general account of
insurance companies that are approved in writing by the Portfolio
Manager. The Portfolio Manager agrees that shares of this Series
may be offered to separate accounts and the general account of
Golden American Variable Life Insurance Company and to the
general and separate accounts of any insurance companies that are
or become affiliated with Golden American Life Insurance Company.
The Manager and Trust agree that the Portfolio Manager shall be
under no obligation to investigate insurance companies to which
the Trust offers or proposes to offer its shares.
10. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
11. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
12. Representations respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval and the Portfolio Manager has not commented
within 30 days, the Manager and its affiliated persons may use
and distribute such sales literature or other promotional
material, although, in such event, the Portfolio Manager shall
not be deemed to have approved of the contents of such sales
literature or other promotional material.
13. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
14. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
15. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
16. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 15 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a failure
to comply with Section 2, Paragraph (a) of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 16 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 16. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 16 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
16. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
17. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to each Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for such
Series or receive any fees on account of such Series with respect
to which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to such Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated
for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the
Portfolio Manager and the Trust, (b) at any time without payment
of any penalty by the Trust, upon the vote of a majority of the
Trust's Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days'
written notice to the Manager and the Trust. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such record by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 10, 11, 12, 15, 16, and 19 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 17.
18. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
19. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Chancellor Trust
Company" or any derivative thereof or logo associated with that
name is the valuable property of the Portfolio Manager and its
affiliates and that the Trust and/or the Series have the right to
use such name (or derivative or logo) in offering materials of
the Trust with the approval of the Portfolio Manager and for so
long as the Portfolio Manager is a portfolio manager to the Trust
and/or the Series. Upon termination of this Agreement between
the Trust, the Manager, and the Portfolio Manager, the Trust
shall forthwith cease to use such name (or derivative or logo).
20. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
21. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 17 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
CHANCELLOR TRUST COMPANY
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Chancellor Trust
Company shall act as Portfolio Manager is as follows:
Capital Appreciation Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Chancellor Trust Company ("Portfolio
Manager") to the following Series of The GCG Trust, pursuant to the
attached Portfolio Management Agreement, the Manager will pay the
Portfolio Manager a fee, payable monthly, based on the average daily
net assets of the Series at the following annual rates of the average
daily net assets of the Series.
Series Rate
Capital Appreciation 0.50%
Exhibit D
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 1996, among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. (the "Manager"), a New York corporation, and
Bankers Trust Company ("Portfolio Manager"), a New York banking
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
__________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Bankers Trust Company to act as Portfolio Manager to the
Series designated on Schedule A of this Agreement (each a
"Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall promptly notify the
Portfolio Manager in writing. If the Portfolio Manager is
willing to render such services, it shall so notify the Trust and
Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for the Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with the Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities and
Exchange Commission (the "SEC"), as from time to time amended,
copies of which shall be sent to the Portfolio Manager by the
Manager upon filing with the SEC. The Portfolio Manager further
agrees as follows:
(a) The Portfolio Manager will (1) manage each Series
so that no action or omission on the part of the Portfolio
Manager will cause a Series to fail to meet the requirements to
qualify as a regulated investment company specified in Section
851 of the Internal Revenue Code (other than the requirements for
the Trust to register under the 1940 Act and to file with its tax
return an election to be a regulated investment company, both of
which shall not be the responsibility of the Portfolio Manager),
(2) manage each Series so that no action or omission on the part
of the Portfolio Manager shall cause a Series to fail to comply
with the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and (3)
use reasonable efforts to manage the Series so that no action or
omission on the part of the Portfolio Manager shall cause a
Series to fail to comply with any other rules and regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies. The Manager will notify the
Portfolio Manager promptly if the Manager believes that a Series
is in violation of any requirement specified in the first
sentence of this paragraph. The Manager or the Trust will notify
the Portfolio Manager of any pertinent changes, modifications to,
or interpretations of Section 817(h) of the Internal Revenue Code
and regulations issued thereunder and of rules or regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies.
(b) The Portfolio Manager will perform its duties
hereunder pursuant to the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Trust's Board of Trustees of which the Portfolio Manager has been
notified in writing, and the provisions of the Registration
Statement of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 1940 Act, as supplemented or amended, of
which the Portfolio Manager has received a copy ("Registration
Statement"). The Manager or the Trust will notify the Portfolio
Manager of pertinent provisions of applicable state insurance law
with which the Portfolio Manager must comply under this Paragraph
2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for a Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will assist the portfolio
accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the
Registration Statement for the Trust, the value of any portfolio
securities or other assets of the Series for which the portfolio
accounting agent seeks assistance from or identifies for review
by the Portfolio Manager, and the parties agree that the
Portfolio Manager shall not bear responsibility or liability for
the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent
that the Portfolio Manager exercises judgment with respect to any
such valuation.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian and portfolio accounting agent for
the Trust) as are necessary to assist the Trust and the Manager
to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firms involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the SEC that
contains disclosure about the Portfolio Manager, and represents
and warrants that, with respect to the disclosure about or
information relating, directly or indirectly, to the Portfolio
Manager, to the Portfolio Manager's knowledge, such Registration
Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make
the statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act, or
alternatively that it is not required to be a registered
investment adviser under the Advisers Act to perform the duties
described in this Agreement, and that it is a duly registered
investment adviser in all states in which the Portfolio Manager
is required to be registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable as
described in Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
promptly notify the Manager and the Trust (1) in the event that
the SEC or other governmental authority has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration,
if any, as an investment adviser; or has commenced proceedings or
an investigation that may result in any of these actions, (2)
upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, or (3)
upon having a reasonable basis for believing that the Series has
ceased to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the regulations
thereunder. The Portfolio Manager further agrees to notify the
Manager and the Trust promptly of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement or prospectus
for the Trust, or any amendment or supplement thereto, and is
required to be stated therein or necessary to make the statements
therein not misleading, or of any statement contained therein
that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the SEC and state insurance
regulators) in connection with any investigation or inquiry
relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager.
(a) During the term of this Agreement, the Trust and
the Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all Registration
Statements and amendments thereto, prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Trust
or any Series or to the public that refer or relate in any way to
the Portfolio Manager, Bankers Trust Company or any of its
affiliates (other than the Manager), or that use any derivative
of the name Bankers Trust Company or any logo associated
therewith. The Trust and the Manager agree that they will not
use any such material without the prior consent of the Portfolio
Manager, which consent shall not be unreasonably withheld. In
the event of the termination of this Agreement, the Trust and the
Manager will furnish to the Portfolio Manager copies of any of
the above-mentioned materials that refer or relate in any way to
the Portfolio Manager;
(b) the Trust and the Manager will furnish to the
Portfolio Manager such information relating to either of them or
the business affairs of the Trust as the Portfolio Manager shall
from time to time reasonably request in order to discharge its
obligations hereunder;
(c) the Manager and the Trust agree that neither the
Trust, the Manager, nor affiliated persons of the Trust or the
Manager shall give any information or make any representations or
statements in connection with the sale of shares of the Series
concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration
Statement, prospectus, or statement of additional information for
the Trust, as they may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior
permission of the Portfolio Manager.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act,
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
15. Indemnification.
(a) Notwithstanding Section 14 of this Agreement, the
Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager (other
than the Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls ("controlling
person") the Portfolio Manager (all of such persons being
referred to as "Portfolio Manager Indemnified Persons") against
any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager (other than the
Portfolio Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to as
"Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and
other expenses) to which a Manager Indemnified Person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, the
Internal Revenue Code, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's responsibili
ties as Portfolio Manager of the Series which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Portfolio
Manager, (2) may be based upon a failure to comply with Section
2, Paragraph (a) of this Agreement, or (3) may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus covering
the shares of the Trust or a Series, or any amendment or
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information
furnished to the Manager, the Trust, or any affiliated person of
the Manager or Trust by the Portfolio Manager or any affiliated
person of the Portfolio Manager; provided, however, that in no
case shall the indemnity in favor of a Manager Indemnified Person
be deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of
its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
(e) The Manager shall not be liable under this Section 15
to indemnify and hold harmless the Portfolio Manager and the
Portfolio Manager shall not be liable under this Section 15 to
indemnify and hold harmless the Manager with respect to any
losses, claims, damages, liabilities, or litigation that first
become known to the party seeking indemnification during any
period that the Portfolio Manager is, within the meaning of
Section 15 of the 1933 Act, a controlling person of the Manager.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to each Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for such
Series or receive any fees on account of such Series with respect
to which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to such Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. Notwith-
standing the foregoing, this Agreement may be terminated for each
or any Series hereunder: (a) by the Manager at any time without
penalty, upon sixty (60) days' written notice to the Portfolio
Manager and the Trust, (b) at any time without payment of any
penalty by the Trust, upon the vote of a majority of the Trust's
Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) day's written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days written
notice to the Manager and the Trust. In addition, this Agreement
shall terminate with respect to a Series in the event that it is
not initially approved by the vote of a majority of the
outstanding voting securities of that Series at a meeting of
shareholders at which approval of the Agreement shall be
considered by shareholders of the Series. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such records by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Bankers Trust
Company" or any derivative thereof or logo associated with that
name is the valuable property of the Portfolio Manager and its
affiliates and that the Trust and/or the Series have the right to
use such name (or derivative or logo) in offering materials of
the Trust with the approval of the Portfolio Manager and for so
long as the Portfolio Manager is a portfolio manager to the Trust
and/or the Series. Upon termination of this Agreement between
the Trust, the Manager, and the Portfolio Manager, the Trust
shall forthwith cease to use such name (or derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
________________________ By:____________________________
Attest:
________________________ ____________________________
Title: Title:
BANKERS TRUST COMPANY
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Bankers Trust
Company shall act as Portfolio Manager are as follows:
Emerging Markets Series
Market Manager Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Bankers Trust Company
("Portfolio Manager") to the following Series of The GCG Trust,
pursuant to the attached Portfolio Management Agreement, the
Manager will pay the Portfolio Manager a fee, payable monthly for
all Series except the Market Manager Series, which will be
payable quarterly, based on the average daily net assets of the
Series at the following annual rates of the average daily net
assets of the Series:
Series Rate
Emerging Markets Series 0.75% of average daily
net assets of the Series.
Market Manager Series 0.50% of average daily
net assets of the Series.
Exhibit E
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _____ day of ___________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and T. Rowe
Price Associates, Inc. ("Portfolio Manager"), a Maryland
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
_________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint the Portfolio Manager to render investment advisory
services to the Series designated on Schedule A of this Agreement
(the "Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for the Series' portfolio and determine the composition of the
assets of the Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform
such services on behalf of the Series. To the extent permitted
by the investment policies of the Series, the Portfolio Manager
shall make decisions for the Series as to foreign currency
matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, and provided to the Portfolio
Manager by the Manager. The Portfolio Manager further agrees as
follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage the Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) take all steps necessary to manage the Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by the Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder. In managing the Series in accordance with
these requirements, the Portfolio Manager shall be entitled to
act and rely upon advice of counsel to the Trust, counsel to the
Manager, or counsel to the Portfolio Manager, such counsel to be
reasonably acceptable to the Manager.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of the
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to reasonable review
by the Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will assist the custodian
and portfolio accounting agent for the Trust in determining or
confirming, consistent with the procedures and policies stated in
the Registration Statement for the Trust, the value of any
portfolio securities or other assets of the Series for which the
custodian and portfolio accounting agent reasonably seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as shall be agreed upon by the
Trustees, the Manager, and the Portfolio Manager, which agreement
shall not be unreasonably withheld.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for the Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed or will review the post-effective amendment
to the Registration Statement for the Trust filed or to be filed
with the Securities and Exchange Commission that contains or will
contain disclosure about the Portfolio Manager that has been
provided by the Portfolio Manager, and represents and warrants
that, with respect to the disclosure about the Portfolio Manager
or information relating, directly or indirectly, to the Portfolio
Manager, such Registration Statement, to the extent it contains
information provided by or respecting the Portfolio Manager,
contains or will contain, as of the date of filing with the
Securities and Exchange Commission, no untrue statement of any
material fact and does not omit any statement of a material fact
which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and a duly
registered investment adviser in all states in which the
Portfolio Manager is required to be registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of the Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for the Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 or Section 15 of
this Agreement), and the legal obligations of the Trust to
indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly, as
described on Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result
in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply or might not
comply with the diversification provisions of Section 817(h) of
the Internal Revenue Code or the Regulations thereunder. The
Portfolio Manager further agrees to notify the Manager and the
Trust immediately of any material fact known to the Portfolio
Manager respecting or relating to the Portfolio Manager that is
not contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect (provided such Registration Statement or a prospectus for
the Trust is provided to the Portfolio Manager).
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-1 under the 1940 Act.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval, the Portfolio Manager will use its best efforts
to comment within 30 days.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. Liability. The Portfolio Manager may rely upon
information reasonably believed by it to be accurate and
reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder or other applicable law, the Trust and the
Manager agree that the Portfolio Manager, any affiliated person
of the Portfolio Manager, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls the Portfolio
Manager shall not be liable for, or subject to any damages,
expenses, or losses in connection with, any act or omission
connected with or arising out of any services rendered under this
Agreement, except by reason of willful misfeasance, bad faith, or
gross negligence in the performance of the Portfolio Manager's
duties, or by reason of reckless disregard of the Portfolio
Manager's obligations and duties under this Agreement.
15. Liability Respecting Tax Compliance
Notwithstanding Section 14, the Portfolio Manager shall
be liable for all losses, claims, damages, liabilities, or
litigation (including reasonable legal and other expenses)
incurred by the Trust or the Manager, any affiliated person of
the Manager,and each person, if any, who, within the meaning of
Section 15 of the 1933 Act, controls the Manager, arising out of
the Portfolio Manager's responsibilities as Portfolio Manager of
the Series which are based upon a failure to comply with Section
2, Paragraph (a)(1) or (2) of this Agreement.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
sooner terminated as provided herein, the Agreement shall remain
in full force and effect for two (2) years from the date first
indicated above and continue on an annual basis thereafter with
respect to the Series; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of
the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities (as defined in the
1940 Act) of the Series, and (b) the vote of a majority of those
Trustees who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act) of any such
party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. The Portfolio Manager
shall not provide any services for a Series or receive any fees
on account of such Series with respect to which this Agreement is
not approved as described in the preceding sentence. However,
any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of a Series
shall be effective to continue this Agreement with respect to the
Series notwithstanding (i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares
of any other Series or (ii) that this agreement has not been
approved by the vote of a majority of the outstanding shares of
the Trust, unless such approval shall be required by any other
applicable law or otherwise. Notwithstanding the foregoing, this
Agreement may be terminated for each or any Series hereunder:
(a) by the Manager at any time without penalty, upon sixty (60)
days' written notice to the Portfolio Manager and the Trust, (b)
at any time without payment of any penalty by the Trust, upon the
vote of a majority of the Trust's Board of Trustees or a majority
of the outstanding voting securities of each Series, upon sixty
(60) days' written notice to the Manager and the Portfolio
Manager, or (c) by the Portfolio Manager at any time without
penalty, upon sixty (60) days' written notice to the Manager and
the Trust. In the event of termination for any reason, all
records of each Series for which the Agreement is terminated
shall promptly be returned to the Manager or the Trust, free from
any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense,
make and retain a copy of such records. The Agreement shall
automatically terminate in the event of its assignment (as such
term is described in the 1940 Act). In the event this Agreement
is terminated or is not approved in the manner described above,
the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and
18 of this Agreement shall remain in effect, as well as any
applicable provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "T. Rowe Price
Associates, Inc." or any derivative thereof or logo associated
with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the
right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Portfolio Manager
and for so long as the Portfolio Manager is a portfolio manager
to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio
Manager, the Trust shall forthwith cease to use such name (or
derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
T. ROWE PRICE ASSOCIATES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of
the attached Portfolio Management Agreement, to which T. Rowe
Price Associates, Inc. shall act as Portfolio Manager is as
follows:
Fully Managed Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by T. Rowe Price Associates, Inc.
("Portfolio Manager") to the following Series of The GCG Trust,
pursuant to the attached Portfolio Management Agreement, the
Manager will pay the Portfolio Manager a fee, payable monthly,
based on the average daily net assets of the Series at the
following annual rate of the average daily net assets of the
Series:
Series Rate
Fully Managed Series 0.50%
Exhibit F
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of ____________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and Zweig
Advisors Inc. ("Portfolio Manager"), a Delaware corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
____________ __, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
1. Appointment. The Trust and the Manager hereby
appoint Zweig Advisors Inc. to act as Portfolio Manager to the
Series designed on Schedule A of this Agreement (each a "Series")
for the periods and on the terms set forth in this Agreement.
The Portfolio Manager accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein
provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for each Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of each Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with each Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as amended, copies of which shall be
sent to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) use reasonable
efforts to manage each Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) manage each Series so as to ensure compliance
by the Series with the diversification requirements of Section
817(h) of the Internal Revenue Code and regulations issued
thereunder, and (3) use reasonable efforts to manage each Series
so as to ensure compliance by each Series with any other rules
and regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies. The
Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder. In managing each Series in accordance with
these requirements, the Portfolio Manager shall be entitled to
receive and act upon advice of counsel to the Trust, counsel to
the Manager, or counsel to the Portfolio Manager that is also
acceptable to the Manager.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
including but not limited to Section 17(d) of the 1940 Act, but
shall not be obligated to, aggregate the securities to be so sold
or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Trust on a daily basis, such confirmation, trade tickets,
and other documents and information, including, but not limited
to, Cusip, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of each Series, as may be reasonably
necessary to enable the custodian and portfolio accounting agent
to perform its administrative and recordkeeping responsibilities
with respect to the Series. With respect to portfolio securities
to be purchased or sold through the Depository Trust Company, the
Portfolio Manager will arrange for the automatic transmission of
the confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the custodian and portfolio accounting
agent for the Trust of the valuation of portfolio securities and
other investments of the Series. The Portfolio Manager will
assist the custodian and portfolio accounting agent for the Trust
in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of each Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Adviser Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for each Series and the issuers
and securities represented in each Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to each Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) The Portfolio Manager will not disclose or use any
records or information obtained pursuant to this Agreement
(excluding investment research and investment advice) in any
manner whatsoever except as expressly authorized in this
Agreement or in the ordinary course of business in connection
with placing orders for the purchase and sale of securities, and
will keep confidential any information obtained pursuant to this
Agreement, and disclose such information only if the Board of
Trustees of the Trust has authorized such disclosure, or if such
disclosure is required by applicable federal or state law or
regulations or regulatory authorities having the requisite
authority. The Trust and the Manager will not disclose or use
any records or information respecting the Portfolio Manager
obtained pursuant to this Agreement in any manner whatsoever
except as expressly authorized in this Agreement, and will keep
confidential any information obtained pursuant to this Agreement,
and disclose such information only as expressly authorized in
this Agreement, if the Board of Trustees of the Trust has
authorized such disclosure, or if such disclosure is required by
applicable federal or state law or regulations or regulatory
authorities having the requisite authority.
(i) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years, of
any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory authority,
within the last ten (10) years, to have violated or to
have acknowledged violation of any provision of any
state insurance law involving fraud, deceit, or knowing
misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for a Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to a
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused a Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the initial Registration Statement for the
Trust filed with the Securities and Exchange Commission and
represents and warrants that, with respect to the disclosure
about the Portfolio Manager or information relating, directly or
indirectly, to the Portfolio Manager, such Registration Statement
contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact
which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Investment Advisers Act
of 1940, as amended ("Advisers Act") and a duly registered
investment adviser in all states in which the Portfolio Manager
is required to be registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management under this Agreement. The Manager or the Trust shall
be responsible for all the expenses of the Trust's operations
including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Trust's transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Trust's custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of maintaining the Trust's tax records;
(e) Salaries and other compensation of any of the
trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(f) Taxes levied against the Trust;
(g) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(h) Costs, including the interest expense, of
borrowing money;
(i) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(j) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(k) Costs of printing stock certificates representing
shares of the Trust;
(l) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(m) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(n) Association membership dues;
(o) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 15 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(p) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly, as
described in Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Trust or the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the Securities and Exchange Commission has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as
an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon
having a reasonable basis for believing that a Series has ceased
to qualify or might not qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, or (3) upon
having a reasonable basis for believing that a Series has ceased
to comply with the diversification provisions of Section 817(h)
of the Internal Revenue Code or the Regulations thereunder. The
Portfolio Manager further agrees to notify the Manager and the
Trust immediately of any material fact known to the Portfolio
Manager respecting or relating to the Portfolio Manager that is
not contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the Securities
and Exchange Commission has censured the Manager or the Trust;
placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Manager's registration as an
investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon
having a reasonable basis for believing that a Series has ceased
to qualify or might not qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, or (3) upon
having a reasonable basis for believing that a Series has ceased
to comply with the diversification provisions of Section 817(h)
of the Internal Revenue Code or the Regulations thereunder.
9. Insurance Company Offerees. All parties
acknowledge that the Trust will offer its shares so that it may
serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies.
The Trust and the Manager agree that shares of the Series may be
offered only to the separate accounts and general account of
insurance companies that are approved in writing by the Portfolio
Manager. The Portfolio Manager agrees that shares of the Series
may be offered to separate accounts and the general account of
Golden American Life Insurance Company and to separate accounts
and the general accounts of any insurance companies that are
affiliated with Golden American Life Insurance Company. The
Manager and Trust agree that the Portfolio Manager shall be under
no obligation to investigate insurance companies to which the
Trust offers or proposes to offer its shares.
10. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
11. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
12. Representations respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in writing in
advance by the Portfolio Manager, except with the prior written
permission of the Portfolio Manager. The parties agree that in
the event that the Manager or an affiliated person of the Manager
sends sales literature or other promotional material to the
Portfolio Manager for its written approval and the Portfolio
Manager has not commented within 30 days, the Manager and its
affiliated persons may use and distribute such sales literature
or other promotional material, although, in such event, the
Portfolio Manager shall not be deemed to have consented to such
use and distribution.
13. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
14. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of a Series) or from
engaging in other activities.
15. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
16. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, under any other statute, at common
law or otherwise, arising out of the Manager's responsibilities
to the Trust which (1) may be based upon any misfeasance,
malfeasance, or nonfeasance by the Manager, any of its employees
or representatives or any affiliate of the Manager, any portfolio
manager of any other series of the Trust, or person acting on
behalf of the Manager or (2) may be based upon any untrue
statement or alleged untrue statement of a material fact supplied
by, or which is the responsibility of, the Manager and contained
in the Registration Statement or prospectus covering shares of
the Trust or any Series, or any amendment thereof or any
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Manager and was required to be stated therein or necessary to
make the statements therein not misleading, unless such statement
or omission was made in reliance upon information furnished to
the Manager or the Trust or to any affiliated person of the
Manager by a Portfolio Manager Indemnified Person; provided
however, that in no case shall the indemnity in favor of the
Portfolio Manager Indemnified Person be deemed to protect such
person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or by
reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 15 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's
responsibilities as Portfolio Manager of the Series which (1) may
be based upon any misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Portfolio
Manager, or (2) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or any
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 16 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Portfolio Manager Indemnified Person
(or after such Portfolio Manager Indemnified Person shall have
received notice of such service on any designated agent), but
failure to notify the Manager of any such claim shall not relieve
the Manager from any liability which it may have to the Portfolio
Manager Indemnified Person against whom such action is brought
otherwise than on account of this Section 16. In case any such
action is brought against the Portfolio Manager Indemnified
Person, the Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Portfolio
Manager Indemnified Person, to assume the defense thereof, with
counsel satisfactory to the Portfolio Manager Indemnified Person.
If the Manager assumes the defense and the selection of counsel
by the Manager to represent both the Manager and the Portfolio
Manager Indemnified Person would result in a conflict of
interests and therefore, would not, in the reasonable judgment of
the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person which counsel
shall be satisfactory to the Manager and to the Portfolio Manager
Indemnified Person. The Portfolio Manager Indemnified Person
shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 16 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Manager Indemnified Person (or after
such Manager Indemnified Person shall have received notice of
such service on any designated agent), but failure to notify the
Portfolio Manager of any such claim shall not relieve the
Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought
otherwise than on account of this Section 16. In case any such
action is brought against the Manager Indemnified Person, the
Portfolio Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Manager
Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the Portfolio
Manager assumes the defense and the selection of counsel by the
Portfolio Manager to represent both the Portfolio Manager and the
Manager Indemnified Person would result in a conflict of
interests and therefore, would not, in the reasonable judgment of
the Manager Indemnified Person, adequately represent the
interests of the Manager Indemnified Person, the Portfolio
Manager will, at its own expense, assume the defense with counsel
to the Portfolio Manager and, also at its own expense, with
separate counsel to the Manager Indemnified Person which counsel
shall be satisfactory to the Portfolio Manager and to the Manager
Indemnified Person. The Manager Indemnified Person shall bear
the fees and expenses of any additional counsel retained by it,
and the Portfolio Manager shall not be liable to the Manager
Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Manager Indemnified Person
independently in connection with the defense thereof other than
reasonable costs of investigation. The Portfolio Manager shall
not have the right to compromise on or settle the litigation
without the prior written consent of the Manager Indemnified
Person if the compromise or settlement results, or may result in
a finding of wrongdoing on the part of the Manager Indemnified
Person.
17. Duration and Termination. This Agreement shall
become effective on the date of its execution. Unless terminated
as provided herein, the Agreement shall remain in full force and
effect for two (2) years from such date and continue on an annual
basis with respect to each Series unless terminated as provided
in this Section; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of
the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities (as defined in the
1940 Act) of each Series, and (b) the vote of a majority of those
Trustees who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act) of any such
party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. The Portfolio Manager
shall not provide any services for such Series or receive any
fees on account of such Series with respect to which this
Agreement is not approved as described in the preceding sentence.
Notwithstanding the foregoing, this Agreement may be terminated:
(a) by the Manager at any time without penalty, upon sixty (60)
days' written notice to the Portfolio Manager and the Trust, (b)
at any time without payment of any penalty by the Trust, upon the
vote of a majority of the Trust's Board of Trustees or a majority
of the outstanding voting securities of each Series, upon sixty
(60) days' written notice to the Manager and the Portfolio
Manager, or (c) by the Portfolio Manager at any time without
penalty, upon sixty (60) days' written notice to the Manager and
the Trust. In the event of termination for any reason, all
records of each Series for which the Agreement is terminated
shall promptly be returned to the Manager or the Trust, free from
any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense,
make and retain a copy of such records. The Agreement shall
automatically terminate in the event of its assignment (as such
term is defined in the 1940 Act). In the event this Agreement is
terminated or is not approved in the manner described above, the
Sections or Paragraphs numbered 2(f), 2(h), 10, 11, 12, 15, 16,
and 19 of this Agreement as well as any applicable provision of
this Paragraph numbered 17 shall remain in effect.
18. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
19. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and its affiliates, and
that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the word Zweig or any
derivative thereof or logo associated with that word is the
property right of Martin E. Zweig, and that the Trust and/or the
Series have the right to use such word (or derivative or logo) in
offering materials of the Trust only with the approval of the
Portfolio Manager and only so long as the Portfolio Manager is a
portfolio manager to the Trust and/or the Series. Upon
termination of this Agreement between the Trust, the Manager, and
the Portfolio Manager, the Trust shall forthwith cease to use
such word (or derivative or logo).
20. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
21. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 17 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
The GCG Trust
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
Directed Services, Inc.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
Zweig Advisors Inc.
______________________ By:____________________________
Attest:
______________________ _______________________________
Title: Title:
Martin E. Zweig hereby consents and agrees to the use of the word
"Zweig" upon the terms and conditions set forth in Section 19 of
the foregoing Agreement.
_____________________________
Martin E. Zweig
<PAGE>
SCHEDULE A
The Series of the GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Zweig Advisors
Inc. shall act as Portfolio Manager are as follows:
Multiple Allocation Series
Strategic Equity Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Zweig Advisors Inc. ("Portfolio
Manager") to the following Series of The GCG Trust, pursuant to
the attached Portfolio Management Agreement, the Manager will pay
the Portfolio Manager a fee, payable monthly, based on the average
daily net assets of the Series at the following annual rates of
the average daily net assets of the Series:
Series Rate
Multiple Allocation Series 0.50%
Strategic Equity Series 0.50%
Exhibit G
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of ____________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and Van Eck
Associates Corporation ("Portfolio Manager"), a Delaware
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
____________ __, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
1. Appointment. The Trust and the Manager hereby
appoint Van Eck Associates Corporation to act as Portfolio
Manager to the Natural Resources Series (the "Series") for the
periods and on the terms set forth in this Agreement. The
Portfolio Manager accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein
provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for the Series' portfolio and determine the composition of the
assets of the Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform
such services on behalf of the Series. To the extent permitted
by the investment policies of the Series, the Portfolio Manager
shall make decisions for the Series as to foreign currency
matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent to
the Portfolio Manager by the Manager. The Portfolio Manager
further agrees as follows:
(a) The Portfolio Manager will (1) use reasonable
efforts to manage the Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) manage the Series so as to ensure compliance by
the Series with the diversification requirements of Section
817(h) of the Internal Revenue Code and regulations issued
thereunder, and (3) use reasonable efforts to manage the Series
so as to ensure compliance by the Series with any other rules and
regulations pertaining to investment vehicles underlying variable
annuity or variable life insurance policies. The Manager or the
Trust will notify the Portfolio Manager of any pertinent changes,
modifications to, or interpretations of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of the
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
including but not limited to Section 17(d) of the 1940 Act, but
shall not be obligated to, aggregate the securities to be so sold
or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Trust on a daily basis, such confirmation, trade tickets,
and other documents and information, including, but not limited
to, Cusip, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of the Series, as may be reasonably
necessary to enable the custodian and portfolio accounting agent
to perform its administrative and recordkeeping responsibilities
with respect to the Series. With respect to portfolio securities
to be purchased or sold through the Depository Trust Company, the
Portfolio Manager will arrange for the automatic transmission of
the confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the custodian and portfolio accounting
agent for the Trust of the valuation of portfolio securities and
other investments of the Series. The Portfolio Manager will
assist the custodian and portfolio accounting agent for the Trust
in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) The Portfolio Manager will not disclose or use any
records or information obtained pursuant to this Agreement
(excluding investment research and investment advice) in any
manner whatsoever except as expressly authorized in this
Agreement or in the ordinary course of business in connection
with placing orders for the purchase and sale of securities, and
will keep confidential any information obtained pursuant to this
Agreement, and disclose such information only if the Board of
Trustees of the Trust has authorized such disclosure, or if such
disclosure is required by applicable federal or state law or
regulations or regulatory authorities having the requisite
authority. The Trust and the Manager will not disclose or use
any records or information respecting the Portfolio Manager
obtained pursuant to this Agreement in any manner whatsoever
except as expressly authorized in this Agreement, and will keep
confidential any information obtained pursuant to this Agreement,
and disclose such information only as expressly authorized in
this Agreement, if the Board of Trustees of the Trust has
authorized such disclosure, or if such disclosure is required by
applicable federal or state law or regulations or regulatory
authorities having the requisite authority.
(i) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years, of
any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory authority,
within the last ten (10) years, to have violated or to
have acknowledged violation of any provision of any
state insurance law involving fraud, deceit, or knowing
misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for the Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the initial Registration Statement for the
Trust filed with the Securities and Exchange Commission and
represents and warrants that, with respect to the disclosure
about the Portfolio Manager or information relating, directly or
indirectly, to the Portfolio Manager, such Registration Statement
contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact
which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Investment Advisers Act
of 1940, as amended ("Advisers Act") and a duly registered
investment adviser in all states in which the Portfolio Manager
is required to be registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management under this Agreement. The Manager or the Trust shall
be responsible for all the expenses of the Trust's operations
including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Trust's transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Trust's custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of maintaining the Trust's tax records;
(e) Salaries and other compensation of any of the
trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(f) Taxes levied against the Trust;
(g) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(h) Costs, including the interest expense, of
borrowing money;
(i) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(j) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(k) Costs of printing stock certificates representing
shares of the Trust;
(l) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(m) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(n) Association membership dues;
(o) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 15 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(p) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly,
based on the average daily net assets of the Series at the annual
rate of .50% of the average daily net assets of the Series.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Trust or the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the Securities and Exchange Commission has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as
an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon
having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, or (3)
upon having a reasonable basis for believing that the Series has
ceased to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the Regulations
thereunder. The Portfolio Manager further agrees to notify the
Manager and the Trust immediately of any material fact known to
the Portfolio Manager respecting or relating to the Portfolio
Manager that is not contained in the Registration Statement or
prospectus for the Trust, or any amendment or supplement thereto,
or of any statement contained therein that becomes untrue in any
material respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the Securities
and Exchange Commission has censured the Manager or the Trust;
placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Manager's registration as an
investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon
having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, or (3)
upon having a reasonable basis for believing that the Series has
ceased to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the Regulations
thereunder.
9. Insurance Company Offerees. All parties
acknowledge that the Trust will offer its shares so that it may
serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies.
The Trust and the Manager agree that shares of the Series may be
offered only to the separate accounts and general account of
insurance companies that are approved in writing by the Portfolio
Manager. The Portfolio Manager agrees that shares of this Series
may be offered to separate accounts and the general account of
Golden American Life Insurance Company and to separate accounts
and the general accounts of any insurance companies that are
affiliated with Golden American Life Insurance Company. The
Manager and Trust agree that the Portfolio Manager shall be under
no obligation to investigate insurance companies to which the
Trust offers or proposes to offer its shares.
10. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
11. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
12. Representations respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in writing in
advance by the Portfolio Manager, except with the prior written
permission of the Portfolio Manager. The parties agree that in
the event that the Manager or an affiliated person of the Manager
sends sales literature or other promotional material to the
Portfolio Manager for its written approval and the Portfolio
Manager has not commented within 30 days, the Manager and its
affiliated persons may use and distribute such sales literature
or other promotional material, although, in such event, the
Portfolio Manager shall not be deemed to have consented to such
use and distribution.
13. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
14. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
15. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
16. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, under any other statute, at common
law or otherwise, arising out of the Manager's responsibilities
to the Trust which (1) may be based upon any misfeasance,
malfeasance, or nonfeasance by the Manager, any of its employees
or representatives or any affiliate of or any person acting on
behalf of the Manager or (2) may be based upon any untrue
statement or alleged untrue statement of a material fact supplied
by, or which is the responsibility of, the Manager and contained
in the Registration Statement or prospectus covering shares of
the Trust or any Series, or any amendment thereof or any
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Manager and was required to be stated therein or necessary to
make the statements therein not misleading, unless such statement
or omission was made in reliance upon information furnished to
the Manager or the Trust or to any affiliated person of the
Manager by a Portfolio Manager Indemnified Person; provided
however, that in no case shall the indemnity in favor of the
Portfolio Manager Indemnified Person be deemed to protect such
person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or by
reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 15 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's
responsibilities as Portfolio Manager of the Series which (1) may
be based upon any misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Portfolio
Manager, (2) may be based upon a failure to comply with Section
2, Paragraph (a) of this Agreement, or (3) may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus covering
the shares of the Trust or any Series, or any amendment or
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information
furnished to the Manager, the Trust, or any affiliated person of
the Manager or Trust by the Portfolio Manager or any affiliated
person of the Portfolio Manager; provided, however, that in no
case shall the indemnity in favor of a Manager Indemnified Person
be deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of
its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 16 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Portfolio Manager Indemnified Person
(or after such Portfolio Manager Indemnified Person shall have
received notice of such service on any designated agent), but
failure to notify the Manager of any such claim shall not relieve
the Manager from any liability which it may have to the Portfolio
Manager Indemnified Person against whom such action is brought
otherwise than on account of this Section 16. In case any such
action is brought against the Portfolio Manager Indemnified
Person, the Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Portfolio
Manager Indemnified Person, to assume the defense thereof, with
counsel satisfactory to the Portfolio Manager Indemnified Person.
If the Manager assumes the defense and the selection of counsel
by the Manager to represent both the Manager and the Portfolio
Manager Indemnified Person would result in a conflict of
interests and therefore, would not, in the reasonable judgment of
the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person which counsel
shall be satisfactory to the Manager and to the Portfolio Manager
Indemnified Person. The Portfolio Manager Indemnified Person
shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 16 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Manager Indemnified Person (or after
such Manager Indemnified Person shall have received notice of
such service on any designated agent), but failure to notify the
Portfolio Manager of any such claim shall not relieve the
Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought
otherwise than on account of this Section 16. In case any such
action is brought against the Manager Indemnified Person, the
Portfolio Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Manager
Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the Portfolio
Manager assumes the defense and the selection of counsel by the
Portfolio Manager to represent both the Portfolio Manager and the
Manager Indemnified Person would result in a conflict of interest
and therefore, would not, in the reasonable judgment of the
Manager Indemnified Person, adequately represent the interests of
the Manager Indemnified Person, the Portfolio Manager will, at
its own expense, assume the defense with counsel to the Portfolio
Manager and, also at its own expense, with separate counsel to
the Manager Indemnified Person which counsel shall be
satisfactory to the Portfolio Manager and to the Manager
Indemnified Person. The Manager Indemnified Person shall bear
the fees and expenses of any additional counsel retained by it,
and the Portfolio Manager shall not be liable to the Manager
Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Manager Indemnified Person
independently in connection with the defense thereof other than
reasonable costs of investigation. The Portfolio Manager shall
not have the right to compromise on or settle the litigation
without the prior written consent of the Manager Indemnified
Person if the compromise or settlement results, or may result in
a finding of wrongdoing on the part of the Manager Indemnified
Person.
17. Duration and Termination. This Agreement shall
become effective on the date of its execution. Unless terminated
as provided herein, the Agreement shall remain in full force and
effect for two (2) years from such date and continue on an annual
basis with respect to each Series unless terminated as provided
in this Section; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of
the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities (as defined in the
1940 Act) of each Series, and (b) the vote of a majority of those
Trustees who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act) of any such
party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. The Portfolio Manager
shall not provide any services for such Series or receive any
fees on account of such Series with respect to which this
Agreement is not approved as described in the preceding sentence.
Notwithstanding the foregoing, this Agreement may be terminated:
(a) by the Manager at any time without penalty, upon sixty (60)
days' written notice to the Portfolio Manager and the Trust, (b)
at any time without payment of any penalty by the Trust, upon the
vote of a majority of the Trust's Board of Trustees or a majority
of the outstanding voting securities of each Series, upon sixty
(60) days' written notice to the Manager and the Portfolio
Manager, or (c) by the Portfolio Manager at any time without
penalty, upon sixty (60) days' written notice to the Manager and
the Trust. In the event of termination for any reason, all
records of each Series for which the Agreement is terminated
shall promptly be returned to the Manager or the Trust, free from
any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense,
make and retain a copy of such records. The Agreement shall
automatically terminate in the event of its assignment (as such
term is defined in the 1940 Act). In the event this Agreement is
terminated or is not approved in the manner described above, the
Sections or Paragraphs numbered 2(f), 2(h), 10, 11, 12, 15, 16,
and 19 of this Agreement shall remain in effect, as well as any
applicable provision of this Paragraph numbered 17.
18. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
19. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and its affiliates, and
that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name Van Eck or any
derivative thereof or logo associated with that name is the
valuable property of the Portfolio Manager and its affiliates and
that the Trust and/or the Series have the right to use such name
(or derivative or logo) in offering materials of the Trust with
the approval of the Portfolio Manager and for so long as the
Portfolio Manager is a portfolio manager to the Trust and/or the
Series. Upon termination of this Agreement between the Trust,
the Manager, and the Portfolio Manager, the Trust shall forthwith
cease to use such name (or derivative or logo).
20. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
21. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 17 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
The GCG Trust
______________________ By:____________________________
Attest:
______________________ _______________________________
Title: Title:
Directed Services, Inc.
______________________ By:____________________________
Attest:
______________________ _______________________________
Title: Title:
Van Eck Associates Corporation
______________________ By:____________________________
Attest:
______________________ _______________________________
Title: Title:
Exhibit H
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _____ day of ___________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and E.I.I.
Realty Securities, Inc. ("Portfolio Manager"), a New York
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
__________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint E.I.I. Realty Securities, Inc. to act as Portfolio
Manager to the Series designated on Schedule A of this Agreement
(the "Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for the Series' portfolio and determine the composition of the
assets of the Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform
such services on behalf of the Series. To the extent permitted
by the investment policies of the Series, the Portfolio Manager
shall make decisions for the Series as to foreign currency
matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent to
the Portfolio Manager by the Manager. The Portfolio Manager
further agrees as follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage the Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) take all steps necessary to manage the Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by the Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of the
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the portfolio accounting agent for the
Trust of the valuation of portfolio securities and other
investments of the Series. The Portfolio Manager will assist the
custodian and portfolio accounting agent for the Trust in
determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for the Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the Securities
and Exchange Commission that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect
to the disclosure about the Portfolio Manager or information
relating, directly or indirectly, to the Portfolio Manager, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of
a material fact which was required to be stated therein or
necessary to make the statements contained therein not
misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under
the Advisers Act and a duly registered investment adviser in all
states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of the Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for the Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly, as
described on Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result
in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder. The Portfolio
Manager further agrees to notify the Manager and the Trust
immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not
contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval and the Portfolio Manager has not commented
within 30 days, the Manager and its affiliated persons may use
and distribute such sales literature or other promotional
material, although, in such event, the Portfolio Manager shall
not be deemed to have approved of the contents of such sales
literature or other promotional material.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
15. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a failure
to comply with Section 2, Paragraph (a) of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to the Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for a Series
or receive any fees on account of such Series with respect to
which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to the Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated
for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the
Portfolio Manager and the Trust, (b) at any time without payment
of any penalty by the Trust, upon the vote of a majority of the
Trust's Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days'
written notice to the Manager and the Trust. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such record by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "E.I.I. Realty
Securities, Inc." or any derivative thereof or logo associated
with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the
right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Portfolio Manager
and for so long as the Portfolio Manager is a portfolio manager
to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio
Manager, the Trust shall forthwith cease to use such name (or
derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
E.I.I. REALTY SECURITIES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of
the attached Portfolio Management Agreement, to which E.I.I.
Realty Securities, Inc. shall act as Portfolio Manager is as
follows:
Real Estate Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by E.I.I. Realty Securities, Inc.
("Portfolio Manager") to the following Series of The GCG Trust,
pursuant to the attached Portfolio Management Agreement, the
Manager will pay the Portfolio Manager a fee, payable monthly,
based on the average daily net assets of the Series at the
following annual rate of the average daily net assets of the
Series:
Series Rate
Real Estate Series 0.50% of net assets
Exhibit I
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _____ day of ___________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and Kayne,
Anderson Investment Management, L.P. ("Portfolio Manager"), a
California limited partnership.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
____________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Kayne, Anderson Investment Management, L.P. to act as
Portfolio Manager to the Rising Dividends Series (the "Series")
for the periods and on the terms set forth in this Agreement.
The Portfolio Manager accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein
provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for the Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with the Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as amended, copies of which shall be
sent to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage each Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) take all steps necessary to manage each Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by each Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for a Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the portfolio accounting agent for the
Trust of the valuation of portfolio securities and other
investments of the Series. The Portfolio Manager will assist the
custodian and portfolio accounting agent for the Trust in
determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the Securities
and Exchange Commission that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect
to the disclosure about the Portfolio Manager or information
relating, directly or indirectly, to the Portfolio Manager, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of
a material fact which was required to be stated therein or
necessary to make the statements contained therein not
misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under
the Advisers Act and a duly registered investment adviser in all
states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series's net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 15 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly,
based on the average daily net assets of the Series at the annual
rate of 0.50% of the average daily net assets of the Series.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
immediately notify the Manager and the Trust (1) in the event
that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result
in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder. The Portfolio
Manager further agrees to notify the Manager and the Trust
immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not
contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material
respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Insurance Company Offerees. All parties
acknowledge that the Trust will offer its shares so that it may
serve as an investment vehicle for variable annuity contracts and
variable life insurance policies issued by insurance companies.
The Trust and the Manager agree that shares of the Series may be
offered only to the separate accounts and general account of
insurance companies that are approved in writing by the Portfolio
Manager. The Portfolio Manager agrees that shares of this Series
may be offered to separate accounts and the general account of
Golden American Life Insurance Company and to the general and
separate accounts of any insurance companies that are or become
affiliated with Golden American Life Insurance Company. The
Manager and Trust agree that the Portfolio Manager shall be under
no obligation to investigate insurance companies to which the
Trust offers or proposes to offer its shares.
10. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
11. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
12. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval and the Portfolio Manager has not commented
within 30 days, the Manager and its affiliated persons may use
and distribute such sales literature or other promotional
material, although, in such event, the Portfolio Manager shall
not be deemed to have approved of the contents of such sales
literature or other promotional material.
13. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
14. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
15. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
16. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 15 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a failure
to comply with Section 2, Paragraph (a) of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 16 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 16. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 16 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
16. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
17. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to each Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for such
Series or receive any fees on account of such Series with respect
to which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to such Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated
for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the
Portfolio Manager and the Trust, (b) at any time without payment
of any penalty by the Trust, upon the vote of a majority of the
Trust's Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days'
written notice to the Manager and the Trust. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such record by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 10, 11, 12, 15, 16, and 19 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 17.
18. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
19. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Kayne, Anderson
Investment Management, L.P." or any derivative thereof or logo
associated with that name is the valuable property of the
Portfolio Manager and its affiliates and that the Trust and/or
the Series have the right to use such name (or derivative or
logo) in offering materials of the Trust with the approval of the
Portfolio Manager and for so long as the Portfolio Manager is a
portfolio manager to the Trust and/or the Series. Upon
termination of this Agreement between the Trust, the Manager, and
the Portfolio Manager, the Trust shall forthwith cease to use
such name (or derivative or logo).
20. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
21. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 17 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
KAYNE, ANDERSON INVESTMENT MANAGEMENT, L.P.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
Exhibit J
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ______ of _____________, 1996 among
The GCG Trust (the "Trust"), a Massachusetts business trust,
Directed Services, Inc. ("Manager"), a New York corporation,
and Fred Alger Management, Inc. ("Portfolio Manager"), a New
York corporation.
WHEREAS, the Trust is registered under the
Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, management investment company;
WHEREAS, the Trust is authorized to issue separate
series, each of which will offer a separate class of
shares of beneficial interest, each series having its
own investment objective or objectives, policies, and
limitations;
WHEREAS, the Trust currently offers shares in
multiple series, may offer shares of additional series
in the future, and intends to offer shares of additional
series in the future;
WHEREAS, pursuant to a Management Agreement,
effective as of ___________, 1996, a copy of which has
been provided to the Portfolio Manager, the Trust has
retained the Manager to render advisory, management, and
administrative services to many of the Trust's series;
and
WHEREAS, the Trust and the Manager wish to retain
the Portfolio Manager to furnish investment advisory
services to one or more of the series of the Trust, and
the Portfolio Manager is willing to furnish such
services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
1. Appointment. The Trust and the Manager hereby
appoint Fred Alger Management, Inc. to act as Portfolio
Manager to the Series designated on Schedule A of this
Agreement (the "Series") for the periods and on the terms set
forth in this Agreement. The Portfolio Manager accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager,
the Portfolio Manager will provide a continuous investment
program for the Series' portfolio and determine the
composition of the assets of the Series' portfolio, including
determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the
portfolio. The Portfolio Manager will provide investment
research and conduct a continuous program of evaluation,
investment, sales, and reinvestment of the Series' assets by
determining the securities and other investments that shall
be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and
what portion of the assets of the Series should be held in
the various securities and other investments in which it may
invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of the Series.
To the extent permitted by the investment policies of the
Series, the Portfolio Manager shall make decisions for the
Series as to foreign currency matters and make determinations
as to and execute and perform foreign currency exchange
contracts on behalf of the Series. The Portfolio Manager
will provide the services under this Agreement in accordance
with the Series' investment objective or objectives,
policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent
to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage the Series so that it will qualify
as a regulated investment company under Subchapter M of
the Internal Revenue Code, (2) take all steps necessary
to manage the Series so that the Series will comply with
the diversification requirements of Section 817(h) of
the Internal Revenue Code and regulations issued
thereunder, and (3) use reasonable efforts to manage the
Series so that the Series will comply with any other
rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance
policies. The Manager or the Trust will notify the
Portfolio Manager of any pertinent changes,
modifications to, or interpretations of Section 817(h)
of the Internal Revenue Code and regulations issued
thereunder.
(b) In performing its services hereunder, the
Portfolio Manager will conform with the 1940 Act and all
rules and regulations thereunder, all other applicable
federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of
Trustees of which the Portfolio Manager has been sent a
copy, and all applicable provisions of the Registration
Statement of the Trust under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as supplemented or
amended, of which the Portfolio Manager has received a
copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable
state insurance law with which the Portfolio Manager
must comply under this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems
the purchase or sale of a security to be in the best
interest of the Series as well as of other investment
advisory clients of the Portfolio Manager or any of its
affiliates, the Portfolio Manager may, to the extent
permitted by applicable laws and regulations, but shall
not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where
such aggregation is not inconsistent with the policies
set forth in the Registration Statement. In such event,
allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will
be made by the Portfolio Manager in a manner that is
fair and equitable in the judgment of the Portfolio
Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review
by the Manager, who will be promptly notified, and the
Board of Trustees.
(d) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will
arrange for the transmission to the custodian and
portfolio accounting agent for the Series on a daily
basis, such confirmation, trade tickets, and other
documents and information, including, but not limited
to, CUSIP, SEDOL, or other numbers that identify
securities to be purchased or sold on behalf of the
Series, as may be reasonably necessary to enable the
custodian and portfolio accounting agent to perform its
administrative and recordkeeping responsibilities with
respect to the Series. With respect to portfolio
securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will
arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily
basis the determination by the portfolio accounting
agent for the Trust of the valuation of portfolio
securities and other investments of the Series. The
Portfolio Manager will assist the Manager, custodian and
portfolio accounting agent for the Trust in determining
or confirming, consistent with the procedures and
policies stated in the Registration Statement for the
Trust, the value and liquidity of any portfolio
securities or other assets of the Series for which the
custodian and portfolio accounting agent seeks
assistance from or identifies for review by the
Portfolio Manager. The Portfolio Manager will be
responsible for monitoring and maintaining industry
classifications for purposes of compliance with
investment concentration requirements under the 1940
Act.
(f) The Portfolio Manager will make available to
the Trust and the Manager, promptly upon request, all of
the Series' investment records and ledgers maintained by
the Portfolio Manager (which shall not include the
records and ledgers maintained by the custodian or
portfolio accounting agent for the Trust) as are
necessary to assist the Trust and the Manager to comply
with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as
other applicable laws. The Portfolio Manager will
furnish to regulatory authorities having the requisite
authority any information or reports in connection with
such services which may be requested in order to
ascertain whether the operations of the Trust are being
conducted in a manner consistent with applicable laws
and regulations.
(g) The Portfolio Manager will provide reports to
the Trust's Board of Trustees for consideration at
meetings of the Board on the investment program for the
Series and the issuers and securities represented in the
Series' portfolio, will furnish the Trust's Board of
Trustees with respect to the Series such periodic and
special reports as the Trustees and the Manager may
reasonably request, and will attend Board meetings upon
the request of the Board of Trustees.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time,
employ or associate with itself such person or persons
as it believes necessary to assist it in carrying out
its obligations under this Agreement. However, the
Portfolio Manager may not retain as subadviser any
company that would be an "investment adviser," as that
term is defined in the 1940 Act, to the Series unless
the contract with such company is approved by a majority
of the Trust's Board of Trustees and a majority of
Trustees who are not parties to any agreement or
contract with such company and who are not "interested
persons," as defined in the 1940 Act, of the Trust, the
Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the
vote of a majority of the outstanding voting securities
of the applicable Series of the Trust to the extent
required by the 1940 Act. The Portfolio Manager shall
be responsible for making reasonable inquiries and for
reasonably ensuring that any employee of the Portfolio
Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to
the Series, or any employee thereof has not, to the best
of the Portfolio Manager's knowledge, in any material
connection with the handling of Trust assets:
(i) been convicted, in the last ten (10)
years, of any felony or misdemeanor arising out of
conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or
securities, involving violations of Sections 1341,
1342, or 1343 of Title 18, United States Code, or
involving the purchase or sale of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving
fraud, deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10)
years, to have violated or to have acknowledged
violation of any provision of federal or state
securities laws involving fraud, deceit, or knowing
misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and
other investments for the Series' portfolio, broker-dealer
selection, and negotiation of brokerage commission rates.
The Portfolio Manager's primary consideration in effecting a
security transaction will be to obtain the best execution for
the Series, taking into account the factors specified in the
prospectus and/or statement of additional information for the
Trust, which include price (including the applicable
brokerage commission or dollar spread), the size of the
order, the nature of the market for the security, the timing
of the transaction, the reputation, the experience and
financial stability of the broker-dealer involved, the
quality of the service, the difficulty of execution, the
execution capabilities and operational facilities of the firm
involved, and the firm's risk in positioning a block of
securities. Accordingly, the price to the Series in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably
justified, in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject
to such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act
of 1934, the Portfolio Manager shall not be deemed to have
acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused
the Series to pay a broker-dealer 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 Portfolio Manager or its affiliate
determines in good faith that such amount of commission was
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 Portfolio
Manager's or its affiliate's overall responsibilities with
respect to the Series and to their other clients as to which
they exercise investment discretion. To the extent
consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on
behalf of the Series to the Portfolio Manager if it is
registered as a broker-dealer with the SEC, to its affiliated
broker-dealer, or to such brokers and dealers who also
provide research or statistical material, or other services
to the Series, the Portfolio Manager, or an affiliate of the
Portfolio Manager. Such allocation shall be in such amounts
and proportions as the Portfolio Manager shall determine
consistent with the above standards, and the Portfolio
Manager will report on said allocation regularly to the Board
of Trustees of the Trust indicating the broker-dealers to
which such allocations have been made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the
Securities and Exchange Commission and provided to the
Portfolio Manager that contains disclosure about the
Portfolio Manager, and represents and warrants that, with
respect to the disclosure about the Portfolio Manager or
information relating, directly or indirectly, to the
Portfolio Manager, such Registration Statement contains, as
of the date hereof, no untrue statement of any material fact
and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the
statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and a
duly registered investment adviser in all states in which the
Portfolio Manager is required to be registered for purposes
of this Agreement.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and
its staff and for their activities in connection with its
portfolio management duties under this Agreement. The
Manager or the Trust shall be responsible for all the
expenses of the Trust's operations including, but not limited
to:
(a) Expenses of all audits by the Trust's
independent public accountants;
(b) Expenses of the Series' transfer agent,
registrar, dividend disbursing agent, and shareholder
recordkeeping services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the
custodian;
(d) Expenses of obtaining quotations for
calculating the value of the Series' net assets;
(e) Expenses of obtaining daily pricing reports
(as appropriate) for the Series;
(f) Expenses of maintaining the Trust's tax
records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who
are not officers, directors, stockholders, or employees
of the Portfolio Manager or an affiliate of the
Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection
with the purchase and sale of portfolio securities for
the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its
shareholders, the filing of reports with regulatory
bodies, the maintenance of the Trust's existence, and
the regulation of shares with federal and state
securities or insurance authorities;
(l) The Trust's legal fees, including the legal
fees related to the registration and continued
qualification of the Trust's shares for sale;
(m) Costs of printing stock certificates
representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who
are not officers, employees, or stockholders of the
Portfolio Manager or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity
bond required by Section 17(g) of the 1940 Act, or other
insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may
arise including expenses incurred in connection with
litigation, proceedings, and other claims (unless the
Portfolio Manager is responsible for such expenses under
Section 14 of this Agreement), and the legal obligations
of the Trust to indemnify its Trustees, officers,
employees, shareholders, distributors, and agents with
respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable as
described on Schedule B.
7. Seed Money. The Trust and the Manager agree that
the Portfolio Manager shall not be responsible for providing
money for the initial capitalization of the Series.
8. Compliance. The Portfolio Manager agrees that it
shall immediately notify the Manager and the Trust (1) in the
event that the SEC has censured the Portfolio Manager; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment
adviser; or has commenced proceedings or an investigation
that may result in any of these actions, (2) upon having a
reasonable basis for believing that the Series has ceased to
qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, (3)
upon having a reasonable basis for believing that the Series
has ceased to comply with the diversification provisions of
Section 817(h) of the Internal Revenue Code or the
Regulations thereunder, or (4) upon discovery of any error in
the pricing, trading, or maintenance of the Series. The
Portfolio Manager further agrees to notify the Manager and
the Trust immediately of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio
Manager that is not contained in the Registration Statement
or prospectus for the Trust provided to the Portfolio Manager
by the Manager, or any amendment or supplement thereto, or of
any statement contained therein that becomes untrue in any
material respect.
The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured
the Manager or the Trust; placed limitations upon either of
their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser;
or has commenced proceedings or an investigation that may
result in any of these actions, (2) upon having a reasonable
basis for believing that the Series has ceased to qualify or
might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, (3) upon having a
reasonable basis for believing that the Series has ceased to
comply with the diversification provisions of Section 817(h)
of the Internal Revenue Code or the Regulations thereunder,
or (4) upon discovery of any error in the pricing, trading,
or maintenance of the Series.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for
the Series are the property of the Trust and further agrees
to surrender promptly to the Trust any of such records upon
the Trust's or the Manager's request, although the Portfolio
Manager may, at its own expense, make and retain a copy of
such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained with respect
to the management of the Series' portfolio by Rule 31a-l(b)
and (f) under the 1940 Act and to preserve the records with
respect to the management of the Series' portfolio required
by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with
any investigation or inquiry relating to this Agreement or
the Trust.
11. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the
Manager, nor affiliated persons of the Trust or the Manager
shall give any information or make any representations or
statements in connection with the sale of shares of the
Series concerning the Portfolio Manager, its affiliates, or
the Series other than the information or representations
contained in the Registration Statement, prospectus, or
statement of additional information for the Trust shares, as
they may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust (which information
and representations, insofar as they pertain to the Portfolio
Manager and its affiliates, shall have been made only in
reliance on and in conformity with information supplied by
the Portfolio Manager or an affiliate), or in sales
literature or other promotional material approved in advance
by the Portfolio Manager, except with the prior permission of
the Portfolio Manager. The parties agree that in the event
that the Manager or an affiliated person of the Manager sends
sales literature or other promotional material to the
Portfolio Manager for its approval and the Portfolio Manager
has not commented within 7 days, the Manager and its
affiliated persons may use and distribute such sales
literature or other promotional material, and the Portfolio
Manager shall be deemed to have approved of the contents of
such sales literature or other promotional material.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust
shall at all times retain the ultimate responsibility for and
control of all functions performed pursuant to this Agreement
and reserve the right to direct, approve, or disapprove any
action hereunder taken on its behalf by the Portfolio
Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and
nothing in this Agreement shall prevent the Portfolio Manager
(or its affiliates) from providing similar services to other
clients, including investment companies (whether or not their
investment objectives and policies are similar to those of
the Series) or from engaging in other activities.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law,
the Trust and the Manager agree that the Portfolio Manager,
any affiliated person of the Portfolio Manager, and each
person, if any, who, within the meaning of Section 15 of the
1933 Act controls the Portfolio Manager shall not be liable
for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or
arising out of any services rendered under this Agreement,
except by reason of the Portfolio Manager's negligent
performance of its duties, or by reason of any violation of
the Portfolio Manager's obligations and duties under this
Agreement.
15. Indemnification.
(a) The Manager agrees to indemnify and hold
harmless the Portfolio Manager, any affiliated person of
the Portfolio Manager, and each person, if any, who,
within the meaning of Section 15 of the 1933 Act
controls ("controlling person") the Portfolio Manager
(all of such persons being referred to as "Portfolio
Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a
Portfolio Manager Indemnified Person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, the
Internal Revenue Code, under any other statute, at
common law or otherwise, arising out of the Manager's
responsibilities to the Trust which (1) may be based
upon any willful misfeasance, bad faith, or gross
negligence in the performance of duties under this
Agreement or reckless disregard of obligations and
duties under this Agreement by the Manager, any of its
employees or representatives or any affiliate of or any
person acting on behalf of the Manager or (2) may be
based upon any untrue statement or alleged untrue
statement of a material fact supplied by, or which is
the responsibility of, the Manager or the Trust and
contained in the Registration Statement or prospectus
covering shares of the Trust or the Series, or any
amendment thereof or any supplement thereto, or the
omission or alleged omission to state therein a material
fact known or which should have been known to the
Manager or the Trust and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made
in reliance upon information furnished to the Manager or
the Trust or to any affiliated person of the Manager by
a Portfolio Manager Indemnified Person; provided
however, that in no case shall the indemnity in favor of
the Portfolio Manager Indemnified Person be deemed to
protect such person against any liability to which any
such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in
the performance of its duties, or by reason of its
reckless disregard of obligations and duties under this
Agreement.
(b) Notwithstanding Section 14 of this Agreement,
the Portfolio Manager agrees to indemnify and hold
harmless the Manager, any affiliated person of the
Manager, and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls
("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons")
against any and all losses, claims, damages,
liabilities, or litigation (including legal and other
expenses) to which a Manager Indemnified Person may
become subject under the 1933 Act, 1940 Act, the
Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the
Portfolio Manager's responsibilities under this
Agreement which (1) may be based upon any willful
misfeasance, bad faith, or gross negligence in the
performance of duties under this Agreement or reckless
disregard of obligations and duties under this Agreement
by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person
acting on behalf of the Portfolio Manager, (2) may be
based upon any negligence in the performance of its
obligations under Section 2, Paragraph (a) of this
Agreement, or (3) may be based upon any untrue statement
or alleged untrue statement of a material fact contained
in the Registration Statement or prospectus covering the
shares of the Trust or a Series, or any amendment or
supplement thereto, or the omission or alleged omission
to state therein a material fact known or which should
have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the
statements therein not misleading, if such a statement
or omission was made in reliance upon information
furnished to the Manager, the Trust, or any affiliated
person of the Manager or Trust by the Portfolio Manager
or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity
in favor of a Manager Indemnified Person be deemed to
protect such person against any liability to which any
such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence in the
performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under
Paragraph (a) of this Section 15 with respect to any
claim made against a Portfolio Manager Indemnified
Person unless such Portfolio Manager Indemnified Person
shall have notified the Manager in writing within a
reasonable time after the summons, notice, or other
first legal process or notice giving information of the
nature of the claim shall have been served upon such
Portfolio Manager Indemnified Person (or after such
Portfolio Manager Indemnified Person shall have received
notice of such service on any designated agent), but
failure to notify the Manager of any such claim shall
not relieve the Manager from any liability which it may
have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of
this Section 15. In case any such action is brought
against the Portfolio Manager Indemnified Person, the
Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the
Portfolio Manager Indemnified Person, to assume the
defense thereof, with counsel satisfactory to the
Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection
of counsel by the Manager to represent both the Manager
and the Portfolio Manager Indemnified Person would
result in a conflict of interests and therefore, would
not, in the reasonable judgment of the Portfolio Manager
Indemnified Person, adequately represent the interests
of the Portfolio Manager Indemnified Person, the Manager
will, at its own expense, assume the defense with
counsel to the Manager and, also at its own expense,
with separate counsel to the Portfolio Manager
Indemnified Person, which counsel shall be satisfactory
to the Manager and to the Portfolio Manager Indemnified
Person. The Portfolio Manager Indemnified Person shall
bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to
the Portfolio Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently
incurred by the Portfolio Manager Indemnified Person
independently in connection with the defense thereof
other than reasonable costs of investigation. The
Manager shall not have the right to compromise on or
settle the litigation without the prior written consent
of the Portfolio Manager Indemnified Person if the
compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Portfolio
Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable
under Paragraph (b) of this Section 15 with respect to
any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have
notified the Portfolio Manager in writing within a
reasonable time after the summons, notice, or other
first legal process or notice giving information of the
nature of the claim shall have been served upon such
Manager Indemnified Person (or after such Manager
Indemnified Person shall have received notice of such
service on any designated agent), but failure to notify
the Portfolio Manager of any such claim shall not
relieve the Portfolio Manager from any liability which
it may have to the Manager Indemnified Person against
whom such action is brought otherwise than on account of
this Section 15. In case any such action is brought
against the Manager Indemnified Person, the Portfolio
Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the
Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager
Indemnified Person. If the Portfolio Manager assumes
the defense of any such action and the selection of
counsel by the Portfolio Manager to represent both the
Portfolio Manager and the Manager Indemnified Person
would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager
Indemnified Person, adequately represent the interests
of the Manager Indemnified Person, the Portfolio Manager
will, at its own expense, assume the defense with
counsel to the Portfolio Manager and, also at its own
expense, with separate counsel to the Manager
Indemnified Person which counsel shall be satisfactory
to the Portfolio Manager and to the Manager Indemnified
Person. The Manager Indemnified Person shall bear the
fees and expenses of any additional counsel retained by
it, and the Portfolio Manager shall not be liable to the
Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the
Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the
right to compromise on or settle the litigation without
the prior written consent of the Manager Indemnified
Person if the compromise or settlement results, or may
result in a finding of wrongdoing on the part of the
Manager Indemnified Person.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above, unless
terminated as provided herein, and the Agreement shall remain
in full force and effect for two (2) years from the date
first indicated above and continue on an annual basis
thereafter with respect to the Series; provided that such
annual continuance is specifically approved each year by (a)
the vote of a majority of the entire Board of Trustees of the
Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Series, and
(b) the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons (as such term
is defined in the 1940 Act) of any such party to this
Agreement cast in person at a meeting called for the purpose
of voting on such approval. Any approval of this Agreement by
the holders of a majority of the outstanding shares (as
defined in the 1940 Act) of the Series shall be effective to
continue this Agreement with respect to the Series
notwithstanding (i) that this Agreement has not been approved
by the holders of a majority of the outstanding shares of any
other Series or (ii) that this agreement has not been
approved by the vote of a majority of the outstanding shares
of the Trust, unless such approval shall be required by any
other applicable law or otherwise. Notwithstanding the
foregoing, this Agreement may be terminated: (a) by the
Manager at any time without penalty, upon sixty (60) days'
written notice to the Portfolio Manager and the Trust, (b) at
any time without payment of any penalty by the Trust, upon
the vote of a majority of the Trust's Board of Trustees or a
majority of the outstanding voting securities of the Series,
upon sixty (60) days' written notice to the Manager and the
Portfolio Manager, or (c) by the Portfolio Manager at any
time without penalty, upon sixty (60) days' written notice to
the Manager and the Trust. In the event of termination for
any reason, all records of the Series for which the Agreement
is terminated shall promptly be returned to the Manager or
the Trust, free from any claim or retention of rights in such
record by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of
such records. This Agreement shall automatically terminate
in the event of its assignment (as such term is described in
the 1940 Act). In the event this Agreement is terminated or
is not approved in the manner described above, the Sections
or Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of
this Agreement shall remain in effect, as well as any
applicable provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination
is sought, and no amendment of this Agreement shall be
effective until approved by an affirmative vote of (i) the
holders of a majority of the outstanding voting securities of
the Series, and (ii) the Trustees of the Trust, including a
majority of the Trustees of the Trust who are not interested
persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed
Services, Inc." or any derivative thereof or logo
associated with that name is the valuable property of
the Manager and/or its affiliates, and that the
Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the
Manager and only so long as the Manager is Manager to
the Trust and/or the Series. Upon termination of the
Management Agreement between the Trust and the Manager,
the Portfolio Manager shall forthwith cease to use such
name (or derivative or logo).
(b) It is understood that the name "Fred Alger
Management, Inc." or any derivative thereof or logo
associated with that name is the valuable property of
the Portfolio Manager and its affiliates and that the
Trust and/or the Series have the right to use such name
(or derivative or logo) in offering materials of the
Trust only with the approval of the Portfolio Manager
and only for so long as the Portfolio Manager is a
portfolio manager to the Trust and/or the Series. Upon
termination of this Agreement between the Trust, the
Manager, and the Portfolio Manager, the Trust shall
forthwith cease to use such name (or derivative or
logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the
Secretary of the Commonwealth of Massachusetts. The Amended
and Restated Agreement and Declaration of Trust has been
executed on behalf of the Trust by Trustees of the Trust in
their capacity as Trustees of the Trust and not individually.
The obligations of this Agreement shall be binding upon the
assets and property of the Trust and shall not be binding
upon any Trustee, officer, or shareholder of the Trust
individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws
of the State of Delaware, without giving effect to any
provisions relating to conflict of laws, provided that
nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or
rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this
Agreement shall mean "affiliated person" as defined in
Section 2(a)(3) of the 1940 Act.
(b) The captions of this Agreement are included
for convenience only and in no way define or limit any
of the provisions hereof or otherwise affect their
construction or effect.
(c) To the extent permitted under Section 16 of
this Agreement, this Agreement may only be assigned by
any party with the prior written consent of the other
parties.
(d) If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not
be affected thereby, and to this extent, the provisions
of this Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as
constituting the Portfolio Manager as an agent of the
Manager, or constituting the Manager as an agent of the
Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
FRED ALGER MANAGEMENT, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1
of the attached Portfolio Management Agreement to which Fred
Alger Management, Inc. shall act as Portfolio Manager are as
follows:
Small Cap Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Fred Alger Management, Inc.
("Portfolio Manager") to the following Series of The GCG
Trust, pursuant to the attached Portfolio Management
Agreement, the Manager will pay the Portfolio Manager a fee,
payable monthly, based on the average daily net assets of the
Series at the following annual rates of the average daily net
assets of the Series:
Series Rate
Small Cap Series 0.50% of net assets
Exhibit K
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _____ day of ___________, 1996 among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. ("Manager"), a New York corporation, and Eagle
Asset Management, Inc. ("Portfolio Manager"), a Florida
corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
_________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Eagle Asset Management, Inc. to act as Portfolio Manager
to the Series designated on Schedule A of this Agreement (the
"Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to
render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for the Series' portfolio and determine the composition of the
assets of the Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of the Series'
assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for
the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various
securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform
such services on behalf of the Series. To the extent permitted
by the investment policies of the Series, the Portfolio Manager
shall make decisions for the Series as to foreign currency
matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent to
the Portfolio Manager by the Manager. The Portfolio Manager
further agrees as follows:
(a) The Portfolio Manager will (1) take all steps
necessary to manage the Series so that it will qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, (2) take all steps necessary to manage the Series
so as to ensure compliance by the Series with the diversification
requirements of Section 817(h) of the Internal Revenue Code and
regulations issued thereunder, and (3) use reasonable efforts to
manage the Series so as to ensure compliance by the Series with
any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations
issued thereunder.
(b) The Portfolio Manager will conform with the 1940
Act and all rules and regulations thereunder, all other
applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of
which the Portfolio Manager has been sent a copy, and the
provisions of the Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has
received a copy. The Manager or the Trust will notify the
Portfolio Manager of pertinent provisions of applicable state
insurance law with which the Portfolio Manager must comply under
this Paragraph 2(b).
(c) In connection with the purchase and sale of
securities for the Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(d) The Portfolio Manager will monitor on a daily
basis the determination by the portfolio accounting agent for the
Trust of the valuation of portfolio securities and other
investments of the Series. The Portfolio Manager will assist the
custodian and portfolio accounting agent for the Trust in
determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the
value of any portfolio securities or other assets of the Series
for which the custodian and portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio
Manager.
(e) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to
comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(f) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(g) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for the Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the Securities
and Exchange Commission that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect
to the disclosure about the Portfolio Manager or information
relating, directly or indirectly, to the Portfolio Manager, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of
a material fact which was required to be stated therein or
necessary to make the statements contained therein not
misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under
the Advisers Act and a duly registered investment adviser in all
states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of the Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for the Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly, as
described on Schedule B. Such fee shall be paid without regard
to any reduction in the fee paid to the Manager as a result of
any statutory or regulatory limitation on investment company
expenses.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall immediately
notify the Manager and the Trust (1) in the event that the SEC
has censured the Portfolio Manager; placed limitations upon its
activities, functions or operations; suspended or revoked its
registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these
actions, (2) upon having a reasonable basis for believing that
the Series has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code, or (3) upon having a reasonable basis for believing
that the Series has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or the
Regulations thereunder. The Portfolio Manager further agrees to
notify the Manager and the Trust immediately of any material fact
known to the Portfolio Manager respecting or relating to the
Portfolio Manager that is not contained in the Registration
Statement or prospectus for the Trust, or any amendment or
supplement thereto, or of any statement contained therein that
becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the Securities and Exchange
Commission and state insurance regulators) in connection with any
investigation or inquiry relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager. The
Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in
connection with the sale of shares of the Series concerning the
Portfolio Manager or the Series other than the information or
representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust
shares, as they may be amended or supplemented from time to time,
or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by
the Portfolio Manager, except with the prior permission of the
Portfolio Manager. The parties agree that in the event that the
Manager or an affiliated person of the Manager sends sales
literature or other promotional material to the Portfolio Manager
for its approval and the Portfolio Manager has not commented
within 30 days, the Manager and its affiliated persons may use
and distribute such sales literature or other promotional
material, although, in such event, the Portfolio Manager shall
not be deemed to have approved of the contents of such sales
literature or other promotional material.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Other Activities of Portfolio Manager. The
Manager agrees that the Portfolio Manager and any of its
officers, directors or employees, and persons affiliated with it
or with any such partner or employee may render investment
management or advisory services to other investors and
institutions, and such investors and institutions may own,
purchase or sell, securities or other interests in property the
same as or similar to those which are selected for purchase,
holding or sale for the Series, and the Portfolio Manager shall
be in all respects free to take action with respect to
investments in securities or other interests in property the same
as or similar to those selected for purchase, holding or sale for
the Series. On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interests of the
Series, as well as other clients of the Portfolio Manager, the
Portfolio Manager, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate
the securities to be sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Portfolio Manager in the manner
the Portfolio Manager considers to be most equitable and
consistent with its fiduciary obligations to the Series and to
such other clients. Nothing in this agreement shall impose upon
the Portfolio Manager any obligation to purchase or sell or
recommend for purchase or sale, for the Series any security which
it, its officers, directors, affiliates or employees may purchase
or sell for the Portfolio Manager or such partner's, affiliate's
or employee's own accounts or for the account of any other
client, advisory or otherwise.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act
controls the Portfolio Manager shall not be liable to the Trust
or its shareholders for, or subject to any damages, expenses, or
losses in connection with, any act or omission connected with or
arising out of any services rendered under this Agreement, except
by reason of willful misfeasance, bad faith, or gross negligence
in the performance of the Portfolio Manager's duties, or by
reason of reckless disregard of the Portfolio Manager's
obligations and duties under this Agreement.
15. Indemnification.
(a) The Manager agrees to indemnify and hold harmless
the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as
"Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons
being referred to as "Manager Indemnified Persons") against any
and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager
Indemnified Person may become subject under the 1933 Act, 1940
Act, the Advisers Act, the Internal Revenue Code, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a failure
to comply with Section 2, Paragraph (a) of this Agreement, or (3)
may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a
Series, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Portfolio Manager and was
required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made
in reliance upon information furnished to the Manager, the Trust,
or any affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor
of a Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to the Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for a Series
or receive any fees on account of such Series with respect to
which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to the Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated
for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the
Portfolio Manager and the Trust, (b) at any time without payment
of any penalty by the Trust, upon the vote of a majority of the
Trust's Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days'
written notice to the Manager and the Trust. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such record by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(e), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Eagle Asset
Management, Inc." or any derivative thereof or logo associated
with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the
right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Portfolio Manager
and for so long as the Portfolio Manager is a portfolio manager
to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio
Manager, the Trust shall forthwith cease to use such name (or
derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
EAGLE ASSET MANAGEMENT, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of
the attached Portfolio Management Agreement, to which Eagle Asset
Management, Inc. shall act as Portfolio Manager is as follows:
Value Equity Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Eagle Asset Management, Inc.
("Portfolio Manager") to the following Series of The GCG Trust,
pursuant to the attached Portfolio Management Agreement, the
Manager will pay the Portfolio Manager a fee, payable monthly,
based on the average daily net assets of the Series at the
following annual rate of the average daily net assets of the
Series:
Series Rate
Value Equity Series 0.50% of net assets
Exhibit L
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 1996, among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. (the "Manager"), a New York corporation, and
Equitable Investment Services, Inc. ("Portfolio Manager"), an
Iowa corporation.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
__________ ___, 1996, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render
advisory, management, and administrative services to many of the
Trust's series;
WHEREAS, the Trust and the Manager wish to retain the
Portfolio Manager to furnish investment advisory services to one
or more of the series of the Trust, and the Portfolio Manager is
willing to furnish such services to the Trust and the Manager;
NOW THEREFORE, in consideration of the premises and the
promises and mutual covenants herein contained, it is agreed
between the Trust, the Manager, and the Portfolio Manager as
follows:
I. Appointment. The Trust and the Manager hereby
appoint Equitable Investment Services, Inc. to act as Portfolio
Manager to the Series designated on Schedule A of this Agreement
(each a "Series") for the periods and on the terms set forth in
this Agreement. The Portfolio Manager accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall promptly notify the
Portfolio Manager in writing. If the Portfolio Manager is
willing to render such services, it shall so notify the Trust and
Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for the Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with the Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities and
Exchange Commission (the "SEC"), as from time to time amended,
copies of which shall be sent to the Portfolio Manager by the
Manager upon filing with the SEC. The Portfolio Manager further
agrees as follows:
(a) The Portfolio Manager will (1) manage each Series
so that no action or omission on the part of the Portfolio
Manager will cause a Series to fail to meet the requirements to
qualify as a regulated investment company specified in Section
851 of the Internal Revenue Code (other than the requirements for
the Trust to register under the 1940 Act and to file with its tax
return an election to be a regulated investment company, both of
which shall not be the responsibility of the Portfolio Manager),
(2) manage each Series so that no action or omission on the part
of the Portfolio Manager shall cause a Series to fail to comply
with the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and (3)
use reasonable efforts to manage the Series so that no action or
omission on the part of the Portfolio Manager shall cause a
Series to fail to comply with any other rules and regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies. The Manager will notify the
Portfolio Manager promptly if the Manager believes that a Series
is in violation of any requirement specified in the first
sentence of this paragraph. The Manager or the Trust will notify
the Portfolio Manager of any pertinent changes, modifications to,
or interpretations of Section 817(h) of the Internal Revenue Code
and regulations issued thereunder and of rules or regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies.
(b) The Portfolio Manager will perform its duties
hereunder pursuant to the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Trust's Board of Trustees of which the Portfolio Manager has been
notified in writing, and the provisions of the Registration
Statement of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 1940 Act, as supplemented or amended, of
which the Portfolio Manager has received a copy ("Registration
Statement"). The Manager or the Trust will notify the Portfolio
Manager of pertinent provisions of applicable state insurance law
with which the Portfolio Manager must comply under this Paragraph
2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for a Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will assist the portfolio
accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the
Registration Statement for the Trust, the value of any portfolio
securities or other assets of the Series for which the portfolio
accounting agent seeks assistance from or identifies for review
by the Portfolio Manager, and the parties agree that the
Portfolio Manager shall not bear responsibility or liability for
the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent
that the Portfolio Manager exercises judgment with respect to any
such valuation.
(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian and portfolio accounting agent for
the Trust) as are necessary to assist the Trust and the Manager
to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation,
the experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational
facilities of the firms involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the
Series in any transaction may be less favorable than that
available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust, by other
aspects of the portfolio execution services offered. Subject to
such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of
1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer 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
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was 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 Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the SEC that
contains disclosure about the Portfolio Manager, and represents
and warrants that, with respect to the disclosure about or
information relating, directly or indirectly, to the Portfolio
Manager, to the Portfolio Manager's knowledge, such Registration
Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make
the statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act, or
alternatively that it is not required to be a registered
investment adviser under the Advisers Act to perform the duties
described in this Agreement, and that it is a duly registered
investment adviser in all states in which the Portfolio Manager
is required to be registered.
5. Expenses. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable monthly as
described in Schedule B.
7. Seed Money. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. Compliance.
(a) The Portfolio Manager agrees that it shall
promptly notify the Manager and the Trust (1) in the event that
the SEC or other governmental authority has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration,
if any, as an investment adviser; or has commenced proceedings or
an investigation that may result in any of these actions, (2)
upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, or (3)
upon having a reasonable basis for believing that the Series has
ceased to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the regulations
thereunder. The Portfolio Manager further agrees to notify the
Manager and the Trust promptly of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement or prospectus
for the Trust, or any amendment or supplement thereto, and is
required to be stated therein or necessary to make the statements
therein not misleading, or of any statement contained therein
that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the SEC and state insurance
regulators) in connection with any investigation or inquiry
relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager.
(a) During the term of this Agreement, the Trust and
the Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all Registration
Statements and amendments thereto, prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Trust
or any Series or to the public that refer or relate in any way to
the Portfolio Manager, Equitable Investment Services, Inc. or any
of its affiliates (other than the Manager), or that use any
derivative of the name Equitable Investment Services, Inc. or any
logo associated therewith. The Trust and the Manager agree that
they will not use any such material without the prior consent of
the Portfolio Manager, which consent shall not be unreasonably
withheld. In the event of the termination of this Agreement, the
Trust and the Manager will furnish to the Portfolio Manager
copies of any of the above-mentioned materials that refer or
relate in any way to the Portfolio Manager;
(b) the Trust and the Manager will furnish to the
Portfolio Manager such information relating to either of them or
the business affairs of the Trust as the Portfolio Manager shall
from time to time reasonably request in order to discharge its
obligations hereunder;
(c) the Manager and the Trust agree that neither the
Trust, the Manager, nor affiliated persons of the Trust or the
Manager shall give any information or make any representations or
statements in connection with the sale of shares of the Series
concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration
Statement, prospectus, or statement of additional information for
the Trust, as they may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior
permission of the Portfolio Manager.
12. Control. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. Liability. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act,
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
15. Indemnification.
(a) Notwithstanding Section 14 of this Agreement, the
Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager (other
than the Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls ("controlling
person") the Portfolio Manager (all of such persons being
referred to as "Portfolio Manager Indemnified Persons") against
any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust
or to any affiliated person of the Manager by a Portfolio Manager
Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Portfolio Manager Indemnified Person be
deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager (other than the
Portfolio Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to as
"Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and
other expenses) to which a Manager Indemnified Person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, the
Internal Revenue Code, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's responsibili
ties as Portfolio Manager of the Series which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Portfolio
Manager, (2) may be based upon a failure to comply with Section
2, Paragraph (a) of this Agreement, or (3) may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus covering
the shares of the Trust or a Series, or any amendment or
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information
furnished to the Manager, the Trust, or any affiliated person of
the Manager or Trust by the Portfolio Manager or any affiliated
person of the Portfolio Manager; provided, however, that in no
case shall the indemnity in favor of a Manager Indemnified Person
be deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of
its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of
the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
(e) The Manager shall not be liable under this Section
15 to indemnify and hold harmless the Portfolio Manager and the
Portfolio Manager shall not be liable under this Section 15 to
indemnify and hold harmless the Manager with respect to any
losses, claims, damages, liabilities, or litigation that first
become known to the party seeking indemnification during any
period that the Portfolio Manager is, within the meaning of
Section 15 of the 1933 Act, a controlling person of the Manager.
16. Duration and Termination. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to each Series; provided
that such annual continuance is specifically approved each year
by (a) the vote of a majority of the entire Board of Trustees of
the Trust, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Series, and (b)
the vote of a majority of those Trustees who are not parties to
this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person
at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for such
Series or receive any fees on account of such Series with respect
to which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined
in the 1940 Act) of a Series shall be effective to continue this
Agreement with respect to such Series notwithstanding (i) that
this Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. Notwith-
standing the foregoing, this Agreement may be terminated for each
or any Series hereunder: (a) by the Manager at any time without
penalty, upon sixty (60) days' written notice to the Portfolio
Manager and the Trust, (b) at any time without payment of any
penalty by the Trust, upon the vote of a majority of the Trust's
Board of Trustees or a majority of the outstanding voting
securities of each Series, upon sixty (60) day's written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days written
notice to the Manager and the Trust. In addition, this Agreement
shall terminate with respect to a Series in the event that it is
not initially approved by the vote of a majority of the
outstanding voting securities of that Series at a meeting of
shareholders at which approval of the Agreement shall be
considered by shareholders of the Series. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such records by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. Amendments. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. Use of Name.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "Equitable
Investment Services, Inc." or any derivative thereof or logo
associated with that name is the valuable property of the
Portfolio Manager and its affiliates and that the Trust and/or
the Series have the right to use such name (or derivative or
logo) in offering materials of the Trust with the approval of the
Portfolio Manager and for so long as the Portfolio Manager is a
portfolio manager to the Trust and/or the Series. Upon
termination of this Agreement between the Trust, the Manager, and
the Portfolio Manager, the Trust shall forthwith cease to use
such name (or derivative or logo).
19. Amended and Restated Agreement and Declaration of
Trust. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party with
the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting
the Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE GCG TRUST
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
DIRECTED SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
EQUITABLE INVESTMENT SERVICES, INC.
_________________________ By:_____________________________
Attest
_________________________ ______________________________
Title Title
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Equitable
Investment Services, Inc. shall act as Portfolio Manager are as
follows:
Limited Maturity Bond Series
Liquid Asset Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Equitable Investment Services,
Inc. ("Portfolio Manager") to the following Series of The GCG
Trust, pursuant to the attached Portfolio Management Agreement,
the Manager will pay the Portfolio Manager a fee, payable
monthly, based on the average daily net assets of the Series at
the following annual rates of the average daily net assets of the
Series:
Series Rate
Limited Maturity Bond Series 0.30% of the first $25 million
0.25% of the next $50 million
0.20% of the next $75 million
0.15% of the amount over $150 million;
subject to a minimum annual fee of
$35,000 (payable at the end of each
calendar year) starting from the time
that the Portfolio Manager renders
investment management services for the
assets of the Series, and this amount
shall be pro-rated for any portion of
a year in which the Portfolio
Management Agreement is not in effect or
during which the obligation to pay this
minimum fee has not commenced.
Liquid Asset Series 0.20% of the first $25 million
0.15% of the next $50 million
0.10% of the amount over $75 million;
subject to a minimum annual fee of $35,000
(payable at the end of each calendar year)
starting from the time that the Portfolio
Manager renders active investment
management services for the assets of the
Series, and this amount shall be pro-rated
for any portion of a year in which the
Portfolio Management Agreement is not in
effect or during which the obligation to
pay this minimum fee has not commenced.
EXHIBIT M
OTHER INFORMATION REGARDING DIRECTED SERVICES, INC.
The directors and the principal executive officer of DSI and their
principal occupations are as shown below. Unless otherwise indicated,
each individual's principal business address is 1001 Jefferson Street,
Suite 400, Wilmington, Delaware 19801.
Name and
Position with DSI Principal Occupation
- ----------------- --------------------
Paul Daniel Borge, Jr. Managing Director, Bankers Trust
Director Company; Director, Golden American Life
Insurance Company, Whitewood Properties
Corp. and BT Variable, Inc.
Richard A. Marin Managing Director, Bankers Trust
Director Company; Director, Whitewood Properties
Corp., BT Variable, Inc., and Golden
American Life Insurance Company.
Terry L. Kendall Managing Director, Bankers Trust
Director and Chief Company; President, Director, and Chief
Executive Officer Executive Officer, Golden American Life
Insurance Company; President, Director,
and Chief Executive Officer, BT Variable,
Inc.; and Director, Whitewood Properties
Corp.
DSI does not act as investment adviser to any other registered
investment companies with investment objectives and policies similar to
those of the Series of the Trust.
EXHIBIT N
OTHER INFORMATION ABOUT
EQUITABLE INVESTMENT SERVICES, INC.
The directors and principal executive officer of Equitable
Investment Services, Inc. and their principal occupations are as shown
below. The business address of each such person is 699 Walnut Street,
Des Moines, Iowa 50309.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
Lawrence V. Durland, Jr. Senior Vice President of
Director Equitable of Iowa Companies
and affiliates.
Susan M. Jordan Vice President and Chief
Director Information Officer of
Equitable of Iowa Companies
and affiliates.
Paul E. Larson Executive Vice President,
Director Treasurer and Chief Financial
Officer of Equitable of Iowa
Companies and affiliates.
Thomas L. May Senior Vice President of
Equitable Life Insurance
Company of Iowa and USG
Annuity & Life Company
John A. Merriman Secretary and General Counsel
Director of Equitable of Iowa
Companies.
Beth B. Neppl Vice President--Human
Director Resources of Equitable of Iowa
Companies and affiliates.
Paul R. Schlaack President, Chief Executive
President, Chief Executive Officer and Director of
Officer and Director Equitable Investment Services,
Inc.
Frederick S. Hubbell Chairman, President and Chief
Director and Chairman of Executive Officer of Equitable
the Board of Directors of Iowa Companies; Chairman
and President of Equitable
Life Insurance Co. of Iowa;
and Chairman of USG Annuity &
Life Company.
Equitable Investment Services, Inc. also acts as investment adviser
to the following registered investment companies having investment
objectives and policies similar to those of the Limited Maturity Bond
Series and Liquid Asset Series. The following table sets forth the name
of each such investment company, its approximate net assets as of
May 31, 1996, and the annual advisory fee charged by Equitable
Investment Services, Inc. (as a percentage of average daily net assets).
Name of Investment Company Net Assets Advisory Fee
- -------------------------- ---------- ------------
Equi-Select Series Trust
-- Money Market Portfolio $10.0 0.375% of first $50 million;
Million 0.35% of amount over $50 million
-- Advantage Portfolio $7.7 0.50% of first $100 million
Million 0.35% of amount over $100 million
EXHIBIT O
OTHER INFORMATION REGARDING WARBURG, PINCUS COUNSELLORS, INC.
The directors and principal executive officer of Warburg, Pincus
and their principal occupations are as shown below. The business
address of each such person is 466 Lexington Avenue, New York, New York
10017.
Name and Position
with Warburg, Pincus Principal Occupation
- -------------------- --------------------
Lionel I. Pincus Chief Executive Officer and
Chief Executive Officer Director of Warburg, Pincus and its
and Director affiliates.
John L. Firth Chairman of the Board of Directors
Chairman of the Board of of Warburg, Pincus and its
Directors affiliates.
John L. Vogelstein Director of Warburg, Pincus and its
Director affiliates.
Warburg, Pincus also serves as adviser or sub-adviser to other
investment companies. The following table lists the other investment
companies for which Warburg, Pincus serves as adviser or sub-adviser,
the approximate net assets of each investment company at April 30, 1996,
and the annual advisory fee charged by Warburg, Pincus (as a percentage
of average daily net assets).
Net Assets Investment
Name of Fund ($ Millions) Adviser Fee
- ------------ ------------ -----------
Warburg, Pincus Growth $1,133,950 0.75%
& Income Fund
Variable Investors Series
Trust--Growth & Income Portfolio
(Sub-Adviser) $ 6,230 0.50%
Alexander Hamilton Variable
Insurance Trust--Growth &
Income Fund (sub-adviser) $ 5,441 0.50%
Warburg, Pincus and its affiliates and the co-administrator have
undertaken to waive their respective fees as necessary to limit the
total operating expenses of the Warburg Pincus Growth & Income Fund to
1.26% (for common shares) through May 3, 1997.
EXHIBIT P
OTHER INFORMATION REGARDING
CHANCELLOR TRUST COMPANY
The principal executive officer and the directors of Chancellor
Trust Company and their principal occupations are as shown below. The
business address of each such person, unless otherwise indicated, is
1166 Avenue of the Americas, New York, New York 10036.
Name and Position
with Portfolio Manager Principal Occupation
- ---------------------- --------------------
Robert G. Wade, Jr. Chairman of the Board,
Chairman of the Board and Chancellor Capital
Director Management, Inc. ("Chancellor
Capital").
Warren Shaw Chief Executive Officer and
Chief Executive Officer, Chief Investment Officer,
Chief Investment Officer Chancellor Capital.
and Director
Penny Zuckerwise President, Chief Operating
President, Chief Operating Officer and Director,
Officer and Director Chancellor Capital.
Richard Collins Managing Director, Chancellor
Managing Director Capital.
John Ivers Managing Director, Chancellor
Managing Director and Capital.
Director
Margaret Riley Managing Director, Chancellor
Managing Director and Capital.
Director
Edward Smith Managing Director, Chancellor
Managing Director and Capital.
Director
Karen Southard Managing Director, Chancellor
Managing Director and Capital.
Director
Ted Ujazdowski Managing Director, Chancellor
Managing Director Capital.
Charles Wetzel Managing Director, Chancellor
Managing Director and Capital.
Director
John Sweeney Chief Investment Officer,
Director USF&G Corporation.
100 Light Street
Baltimore, MD 21202
Dan Hale Executive Vice President,
Director USF&G Corporation.
100 Light Street
Baltimore, MD 21202
Chancellor Trust Company does not act as investment adviser to any
other investment companies with investment objectives and policies
similar to those of the Capital Appreciation Series.
EXHIBIT Q
OTHER INFORMATION REGARDING
BANKERS TRUST COMPANY
The directors and principal executive officer of Bankers Trust
Company and their principal occupation and business address are as shown
below.
Name and Position with
Portfolio Manager Principal Occupation
- ----------------- --------------------
George B. Beitzel Retired Senior Vice President and
Old Orchard Road Director, International Business
Armonk, NY 10504 Machines Corporation.
Director
Philip A. Griffiths Director, Institute for Advanced
Olden Lane Study.
Princeton, NJ 08540
Director
William R. Howell Chairman of the Board, J.C. Penney
P.O. Box 10001 Company, Inc.
Plano, Texas 75301-0001
Director
Jon M. Huntsman Chairman of the Board and Chief
2000 Eagle Gate Tower Executive Officer, Huntsman
Salt Lake City, UT 84111 Chemical Corporation; Chairman of
Director the Board and Chief Executive
Officer, Huntsman Corporation,
Huntsman Petrochemical
Corporation; and chairman of the
board, Huntsman Packaging
Corporation.
Vernon E. Jordan, Jr. Senior Partner, Akin, Gump,
1333 New Hampshire Ave., NW Strauss, Hayer & Feld, LLP,
Washington, DC 20036 Attorneys-at-law, Washington D.C.
Director and Dallas, Texas.
Hamish Maxwell Retired Chairman and Chief
100 Park Avenue Executive officer, Phillip Morris
New York, NY 10017 Companies, Inc.
Director
Frank H. Newman President and Chief Executive
280 Park Avenue Officer of Bankers Trust New York
New York, NY 10017 Corporation and Bankers Trust
Chief Executive Officer Company.
and Director
N.J. Nicholas, Jr. Investor.
745 Fifth Avenue
New York, NY 10020
Director
Russell E. Palmer Chairman and Chief Executive
3600 Market Street Officer, The Palmer Group.
Suite 530
Philadelphia, PA 19104
Director
Patricia Carry Stewart Former Vice President, The Edna
280 Park Avenue McConnell Clark Foundation (a
New York, NY 10017 charitable foundation).
Director
George J. Vojta Vice Chairman of the Bankers Trust
280 Park Avenue New York Corporation and Bankers
New York, NY 10017 Trust Company.
Director
The table below sets forth the name of each such investment
company, its approximate net assets as of the date set forth below, and
the annual advisory fee charged by Bankers Trust Company (as a
percentage of average daily net assets). Bankers Trust Company also
acts as investment adviser to the following registered investment
companies having similar investment objectives and policies to those of
the Emerging Markets Series.
Name of Investment Annual Investment
- ------------------ -----------------
Company Net Assets Advisory Fee
- ------- ---------- -------------
Hercules Latin American $15,305,742 1.00%
Value Fund (5-30-96)
Latin American Equity $19,165,579 0.41%
Portfolio (5-30-96)
Pacific Basin Equity $31,563,207 0.74%
Portfolio (6-5-96)
EXHIBIT R
OTHER INFORMATION REGARDING
T. ROWE PRICE ASSOCIATES, INC.
The directors and principal executive officer of T. Rowe Price
Associates, Inc. and their principal occupations are as shown below.
The business address of each such person, unless otherwise indicated, is
100 East Pratt Street, Baltimore, Maryland 21202.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
George J. Collins Vice President and Director of
Chief Executive Officer and Rowe Price-Fleming
Managing Director International, Inc. ("Price-
Fleming").
James E. Halbkat President of U.S. Monitor
Director Corporation.
P.O. Box 23109
Hilton Head Island, SC 29925
Richard L. Menchel Limited Partner of the Goldman
Director Sachs Group L.P.
85 Broad Street
2nd Floor
New York, NY 10004
John W. Rosenblum Tayloe Murphy Professor at the
Director University of Virginia;
P.O. Box 6550 Director of Chesapeake
Charlottesville, VA 22906 Corporation, Camdus
Communications Corp., Comdial
Corporation, and Cone Mills
Corporation.
Robert L. Stickland Chairman of Loew's Companies,
Director Inc.; Director of Hannaford
604 Two Piedmont Plaza Building Bros., Co.
Winston-Salem, NC 27104
Philip C. Walsh Consultant to Cyprus Annex
Director Minerals Company; Director of
200 East 66th Street Piedmont Mining Company, Inc.
Apt. A-1005
New York, NY 10021
Anne Marie Whittemore Partner of the law firm of
Director McGuire, Woods, Battle &
One James Center Boothe; Director of Owens and
Richmond, VA 23219 Minor, Inc., USF&G
Corporation, and the James
River Corporation.
George A. Roche Vice President and Director of
Chief Financial Officer and Price-Fleming.
Managing Director
M. David Testa Chairman of the Board of Price-
Managing Director Fleming.
Carter O. Hoffman Director of TRP Finance, Inc.
Managing Director
Henry H. Hopkins Vice President of Price-
Managing Director Fleming.
Charles P. Smith Vice President of Price-
Managing Director Fleming.
Peter Van Dyke Vice President of Price-
Managing Director Fleming.
Alvin M. Younger, Jr. Secretary and Treasurer of
Managing Director, Price-Fleming.
Secretary and Treasurer
T. Rowe Price Associates, Inc. also acts as investment adviser to
several registered investment companies having similar investment
objectives and policies to those of the Fully Managed Series. For its
services to each such investment company, T. Rowe Price Associates, Inc.
is paid a management fee consisting of two elements: a "group" fee and
an "individual" fund fee. The "group" fee varies and is based on the
combined net assets of certain funds distributed by T. Rowe Price
Investment Services, Inc., other than institutional or "private label"
products, and funds managed and sponsored by T. Rowe Price Associates,
Inc. (excluding T. Rowe Price Index Trust, Inc.) or by Rowe Price-
Fleming International, Inc. (excluding Institutional International
Funds, Inc.) (the "Combined Price Funds"). Each such investment company
pays, as its portion of the "group" fee, an amount equal to the ratio of
its daily net assets to the daily net assets of all the Combined Price
Funds. Each investment company pays a flat "individual" fund fee based
on its net assets. The table below set forth the current "group" fee
rate schedule at various asset levels of the Combined Price Funds:
0.480% of the first $1 billion
0.450% of the next $1 billion
0.420% of the next $1 billion
0.390% of the next $1 billion
0.370% of the next $1 billion
0.360% of the next $2 billion
0.350% of the next $2 billion
0.340% of the next $5 billion
0.330% of the next $10 billion
0.320% of the next $10 billion
0.310% of the next $16 billion
0.305% thereafter
The table below sets forth the name of each investment company
having similar investment objectives and policies to The Fully Managed
Series, its approximate net assets, and the "individual" fee charged by
T. Rowe Price Associates, Inc. (as a percentage of average daily net
assets). The table also sets forth certain expense ratio limitations
and the periods for which they are effective. For each investment
company, T. Rowe Price Associates, Inc. has agreed to bear any fund
expenses which would cause the fund's ratio of expenses to average net
assets to exceed the indicated percentage limitations. The expenses
borne by T. Rowe Price are subject to reimbursement by each fund through
the indicated reimbursement date, provided no reimbursement will be made
if it would result in the fund's expense ratio exceeding its applicable
limitation.
<TABLE>
<CAPTION>
APPROXIMATE INDIVIDUAL LIMITATION REIMBURSE-
NAME OF INVESTMENT COMPANY NET ASSETS FUND FEE PERIOD LIMITATION MENT DATE
- -------------------------- ---------- -------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C>
T. Rowe Price Capital $ 895,040,412 0.30%(1) 1/1/90- 1.25% 12/31/95
Appreciation Fund 12/31/93
T. Rowe Price New America $1,184,869,292 0.35% 1/1/90- 1.25% 12/31/95
Growth Fund 12/31/93
T. Rowe Price Small-Cap $1,112,318,750 0.35% 1/1/92- 1.25% 12/31/95
Value Fund 12/31/93
T. Rowe Price Mid-Cap $ 419,323,081 0.35% 1/1/94- 1.25% 12/31/95
Growth Fund 12/31/95
</TABLE>
(1) The management fee for T. Rowe Price Capital Appreciation Fund is
subject to an upward or downward adjustment depending upon whether,
and to what extent, the investment performance of the Fund for a
specified performance period exceeds, or is exceeded by the
investment performance of the Standard & Poor's Index of 500 common
stocks (S & P 500) over the same period. The annual performance
adjustment will equal .02% for each percentage point the Fund's
performance is above or below that of the S&P 500 during the
measurement period up to a maximum annual adjustment of plus or
minus .30%.
One or more additional expense limitation periods may be
implemented after the expiration of the current expense limitation.
With respect to any such additional limitation period, the fund may
reimburse T. Rowe Price Associates, Inc., provided the reimbursement
does not result in the fund's aggregate expenses exceeding the
additional expense limitation.
EXHIBIT S
OTHER INFORMATION ABOUT
ZWEIG ADVISORS INC.
The directors and principal executive officers of Zweig Advisors
Inc. and their principal occupations are as shown below. The business
address of each such person is 900 Third Avenue, New York, New York
10022.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
Martin E. Zweig Chairman of the Board and
President and Director President of The Zweig Fund,
Inc.; Chairman of the Board
and President of The Zweig
Total Return Fund, Inc.;
President and Director of
Zweig Total Return Advisors,
Inc.; President and Director
of Zweig Securities Advisory
Service, Inc.; Co-Chairman of
Research of Avatar Investors
Associates Corp.; Managing
Director of the Managing
General Partner of Zweig-
DiMenna Partners, L.P. and
Zweig-DiMenna Special
Opportunities, L.P.; President
and Director of Zweig-DiMenna
International Managers, Inc.;
Chairman of Zweig/Glaser
Advisers; President of Zweig
Series Trust; President and
Director of Gotham Advisors,
Inc. and Euclid Advisors, Inc.
Jeffrey Lazar Vice President and Treasurer
Vice President, Treasurer of The Zweig Fund, Inc. and
and Secretary The Zweig Total Return Fund,
Inc.; Vice President,
Treasurer and Secretary of
Zweig Total Return Advisors,
Inc.; Vice President of Zweig
Series Trust.
David Katzen Senior Vice President of
Vice President Zweig/Glaser Advisers and
Zweig Series Trust; Executive
Vice President of Euclid
Advisors, Inc.
Zweig Advisors Inc. does not act as investment adviser to any other
registered investment companies with investment objectives and policies
similar to those of the Multiple Allocation Series or the Strategic
Equity Series.
EXHIBIT T
OTHER INFORMATION REGARDING
VAN ECK ASSOCIATES CORPORATION
The directors and principal executive officer of Van Eck Associates
Corporation and their principal occupations are as shown below. The
business address of each such person is 99 Park Avenue, New York, New
York 10016.
Name and Position
- -----------------
With PortfolioManager Principal Occupation
- --------------------- --------------------
John C. van Eck, CFA Chairman of the Board and
President, Chief Executive Officer, President, Van Eck Funds and
Chairman of the Van Eck Worldwide Insurance
Board and Director Trust; President, Chief
Executive Officer, Chairman
of the Board and Director,
Van Eck Securities
Corporation.
Fred M. van Eck Trustee, Van Eck Funds and
Director Van Eck Worldwide Insurance
Trust; Director, Van Eck
Securities Corporation;
Private Investor.
Sigrid S. van Eck Vice President, Assistant
Director, Vice President Treasurer and Director, Van
and Assistant Treasurer Eck Securities Corporation.
Derek S. van Eck, CFA Director, Van Eck Securities
Director, Executive Vice President Corporation; Executive Vice
and Director of Global Investments President of Van Eck Funds;
President of Global Hard
Assets Fund series of Van Eck
Funds and Worldwide Hard
Assets Fund series of Van Eck
Worldwide Insurance Trust;
Vice President of Global
Balanced Fund, Gold
Opportunity Fund and Asia
Infrastructure Fund series of
Van Eck Funds.
Jan F. van Eck Director and Executive Vice
Director President, Van Eck Securities
Corporation.
Henry J. Bingham Executive Vice President, Van
Executive Managing Eck Funds and Van Eck
Director Worldwide Insurance Trust;
President, International
Investors Gold Fund series of
Van Eck Funds.
Bruce J. Smith Senior Managing Director,
Senior Managing Director, Portfolio Portfolio Accounting, Van Eck
Accounting Securities Corporation; Vice
President and Treasurer, Van
Eck Funds and Van Eck
Worldwide Insurance Trust.
Van Eck Associates Corporation also acts as investment adviser or
sub-adviser (in the case of PIMCO) to the following registered
investment companies having similar investment objectives and policies
to those of the Natural Resources Series. The table below sets forth
the name of each such investment company, its approximate net assets as
of May 29, 1996 and the annual advisory fee charged by Van Eck
Associates Corporation (as a percentage of average daily net assets).
Name of Investment Annual Investment
- ------------------ -----------------
Company Net Assets Advisory Fee
- ------- ---------- ------------
Van Eck Funds:
Gold/Resources Fund $175,235,000 0.75% on first $500
million; 0.65% on next
$250 million and 0.50%
on assets above $750
million.
Gold Opportunity Fund $9,854,000 1.00% of average daily
net assets.
Van Eck Worldwide Insurance
Trust: $183,177,000 1.00% on first $500
Gold and Natural Resources million; 0.90% on next
Fund $250 million and 0.70%
on assets above $750
million.
PIMCO Precious Metals Fund $60,363,000 0.375% on first $200
million and .35% on
assets above $200
million.
EXHIBIT U
OTHER INFORMATION REGARDING
E.I.I. REALTY SECURITIES, INC.
The principal executive officer of E.I.I. Realty Securities, Inc.
and the directors of European Investors Holding Company, Inc., the
parent of European Invest
ors Incorporated, and their principal occupations are as shown below.
The business address of each such person, unless otherwise indicated, is
667 Madison Avenue, New York, New York 10021.
Name and Position Principal Occupation
- ----------------- --------------------
Christian Andre Lange President, European Investors,
President, Director Inc. and affiliated companies.
Cydney Collier Donnell Managing Director, E.I.I. Realty
Vice President, Director Securities, Inc. and Vice
President, E.I.I. Realty Corp.
Richard John Adler Vice President, European
Vice President, Director Investors Inc. and Managing
Director of E.I.I. Realty
Securities, Inc.
David John Strupp Partner, Davis Polk & Wardwell.
Director
450 Lexington Avenue
New York, NY 10017
Horace Corbin Day Director, American Heritage Life,
Director Blount, Inc., Altec Industries,
85 Broad Street Jenison Investment Company.
New York, NY 10004
Hanns Arnt Vogels President, European Environmental
Director Systems Corporation, Thuringer
Officia I Roheisen GmbH, and Trading
2nd Floor International GmbH; partner,
De Boelelaan 7 Rohstoffgewinnungs und
1083 HJ Amsterdam Aufbereltungs GmbH & Co. KG;
Chairman of the Board, Stahlwerk
Thuringen GmbH; Deputy Chairman
of the Board, Spezial Technik
Dresden; Member of the Board,
Daimier-Benz Aerospace AG, DALURA
AG and Interturbine Group of
Companies; Member of the
Supervisory Board, MAAG Holding
AG Zurich; Member of the Advisory
Board, Thuringer
Industriebeteiligungs GmbH;
Proudfoot Europe; President,
Forum fur Zukunftsenergien e.V.;
Member of the Executive Board,
Association of Industrial Energy-
Economy.
J. Stuart Mackintosh Vice President, European
Director Investors Corporate Finance, Inc.
E.I.I. Realty Securities, Inc. does not act as investment adviser
to any other investment companies with investment objectives and
policies similar to those of the Real Estate Series.
EXHIBIT V
OTHER INFORMATION ABOUT
KAYNE, ANDERSON INVESTMENT MANAGEMENT, L.P.
The principal executive officer of Kayne, Anderson Investment
Management, L.P. and the sole stockholders of Kayne, Anderson Investment
Management, Inc., the corporate general partner and a limited partner of
Kayne, Anderson Investment Management, L.P., and their principal
occupations are as shown below. The business address of each such
person is 1800 Avenue of the Stars, Suite 1425, Los Angeles, California
90067.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
Allan Rudnick Chief Investment Officer,
Chief Investment Officer Kayne, Anderson Investment
and Limited Partner Management, L.P.
Richard Kayne Chief Executive Officer,
Stockholder of Kayne, Kayne, Anderson Investment
Anderson Investment Management, L.P.
Management, Inc.
John Anderson Chairman, TOPA Equities
Stockholder of Kayne,
Anderson Investment
Management, Inc.
Kayne, Anderson Investment Management, L.P. does not presently act
as investment adviser to any other registered investment companies with
investment objectives and policies similar to those of the Rising
Dividends Series.
EXHIBIT W
OTHER INFORMATION REGARDING
FRED ALGER MANAGEMENT, INC.
The directors and principal executive officer of Fred Alger
Management, Inc. and their principal occupations are as shown below.
The business address of each such person, unless otherwise indicated, is
75 Maiden Lane, New York, New York 10038.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
David D. Alger President and Director of Fred
President and Director Alger Management, Inc.
Fred M. Alger Chairman of the Board of Fred
Chairman of the Board Alger Management, Inc.
Gregory S. Duch Treasurer and Director of Fred
Treasurer and Director Alger Management, Inc.
Fred Alger Management, Inc. also acts as adviser or sub-advisor to
several registered investment companies having similar investment
objectives and policies to those of the Small Cap Series. The table
below sets forth the name of each such investment company, its
approximate net assets, and the annual advisory fee (as a percentage of
average daily net assets).
Name of Company Net Assets Advisory Fee
- --------------- ---------- ------------
As Sub-advisor:
Provident Mutual Growth $21 million 0.50%
Fund
Mutual of America $62 million 0.45%
All-American Fund
As Advisor:
The Alger Fund--Alger $590 million 0.85%
Small Capitalization
Portfolio
The Alger American $1.3 billion 0.85%
Fund--Alger American
Small Capitalization
Portfolio
The Alger Retirement Fund-- $30 million 0.85%
Alger Small Cap Retirement
Portfolio
EXHIBIT X
OTHER INFORMATION ABOUT
EAGLE ASSET MANAGEMENT, INC.
The directors and the principal executive officer of Eagle Asset
Management, Inc., and their principal occupations are as shown below.
The business address of each such person is 880 Carillon Parkway, St.
Petersburg, Florida 33716.
Name and Position
With Portfolio Manager Principal Occupation
- ---------------------- --------------------
Thomas A. James Chief Executive Officer of
Chief Executive Officer Eagle Asset Management, Inc.;
and Chairman of the Board Chairman of the Board of
Trustees of the Heritage
Family of Mutual Funds.
Richard K. Riess Director, President and Chief
President, Chief Operating Operating Officer of Eagle
Officer, and Director Asset Management, Inc.;
Director of Heritage Asset
Management, Inc.; and Trustee
for the Heritage Capital
Appreciation Trust, Heritage
Cash Trust, Heritage Income-
Growth Trust, Heritage Income
Trust, Heritage Series Trust,
and Heritage U.S. Government
Income Fund.
Eagle Asset Management, Inc. does not presently act as investment
adviser to any other registered investment companies with investment
objectives and policies similar to those of the Value Equity Series.
