The GCG Trust
1001 Jefferson Street, Wilmington, DE 19801
Tel: (800) 366-0066
Fax: (302) 576-3430
October [14], 1996
Dear Shareholders of the Capital Appreciation Series of The
GCG Trust:
I am writing to share with you some very exciting changes
concerning Chancellor Trust Company ("Chancellor"), which is
the investment adviser of your Capital Appreciation fund
within your GoldenSelect Variable Annuity Contract or Life
Insurance Policy. Enclosed are proxy materials for your
approval of a new Portfolio Management Agreement. The new
agreement is needed because Chancellor Trust Company will
soon be purchased by Liechtenstein Global Trust, AG. This
new Portfolio Management Agreement would be the same as the
current Portfolio Management Agreement and would become
effective at the time of the acquisition.
Management of the Trust recommends that you cast your vote
"FOR" the approval of the new Portfolio Management
Agreement. I urge you to review the enclosed proxy
statement to cast your vote, and return promptly the
enclosed proxy in the postage prepaid envelope provided.
If you sign, date and return the proxy but give no voting
instructions, your shares will be voted at the Meeting in
favor of the proposal.
Thank you for your attention to this matter. Should you
have any questions, feel free to contact your Golden
American Life Insurance Company customer service
representative at (800) 366-0066.
Sincerely,
Terry L. Kendall
President
Chairman of the Board of
Trustees
<PAGE>
THE GCG TRUST
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
800-366-0066
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
CAPITAL APPRECIATION SERIES
October 29, 1996
To the Shareholders of the Capital Appreciation Series of The
GCG Trust:
Notice is hereby given to the holders of shares of
beneficial interest (the "Shares") of the Capital
Appreciation Series 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 October 29, 1996, at 10:00 a.m., local time, for
the following purposes:
1.To approve a new Portfolio Management Agreement
(the "New Portfolio Management Agreement") among
the Trust, Directed Services, Inc. and Chancellor
LGT Asset Management, Inc., which New Portfolio
Management Agreement would be substantively
identical to the Portfolio Management Agreement
presently in effect, to be effective upon the
acquisition by a wholly owned subsidiary of
Liechtenstein Global Trust, AG of Chancellor
Capital Management, Inc. and its subsidiaries
including Chancellor Trust Company, the current
Portfolio Manager to the Series; and
2.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
September 30, 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
_________________________________
Myles R. Tashman, Secretary
October [14], 1996.
MANAGEMENT OF THE TRUST RECOMMENDS THAT YOU CAST YOUR VOTE
FOR THE APPROVAL OF THE NEW PORTFOLIO MANAGEMENT AGREEMENT.
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 THE
PROPOSAL NOTICED ABOVE.
<PAGE>
THE GCG TRUST
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
800-366-0066
PROXY STATEMENT
Special Meeting of Shareholders of the
Capital Appreciation Series
October 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 October 29, 1996, at 10:00
a.m. local time. The approximate mailing date of this Proxy
Statement and accompanying form of proxy is October [14],
1996.
The Board has fixed the close of business on September
30, 1996, as the record date (the "Record Date") for the
determination of holders of shares of beneficial interest
("Shares") of the Capital Appreciation Series 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 a proposal affecting only one
portfolio, the Capital Appreciation Series (the "Series").
Shareholders of the Series only are being requested to vote
on this proposal to approve a new Portfolio Management
Agreement (the "New Portfolio Management Agreement") among
the Trust, Directed Services, Inc. ("DSI") and Chancellor
LGT Asset Management, Inc. ("Chancellor LGT"), which New
Portfolio Management Agreement would be substantively
identical to the current portfolio management agreement
presently in effect (the "current Portfolio Management
Agreement"), to be effective upon the acquisition by a
wholly owned subsidiary of Liechtenstein Global Trust, AG
("LGT") of Chancellor Capital Management, Inc. ("CCMI") and
its subsidiaries including Chancellor Trust Company
("Chancellor"), the current Portfolio Manager to the Series
(the "Transaction").
The Series is one of fifteen (15) operational portfolios
of the Trust. The Shares of the Series currently are offered
to separate accounts of an affiliated insurance company,
Golden American Life Insurance Company ("Golden American"),
to serve as an investment medium for variable annuity
contracts and variable life insurance policies
(collectively, "Variable Contracts") issued by Golden
American. 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 Golden American, 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. Golden American is
required to vote Shares of the Series held by its registered
separate accounts in accordance with instructions received
from Variable Contract Owners. Golden American 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 Golden American 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. 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 Golden
American or their agents or affiliates personally or by
telephone. All expenses in connection with the solicitation
of the proxies will be borne by CCMI.
Voting. Shares which represent interests in the Series
are being asked to vote on a matter, which pertains only to
that Series, identified as the Proposal, and as appropriate,
any other business which may properly come before the
Meeting. The voting requirement for approval of this and
any other proposal requires a vote of the "majority of the
outstanding voting securities" of the Series which means the
lesser of: (i) 67% or more of the shares of the 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 New Portfolio Management Agreement is approved by
a majority vote of the outstanding shares of the Series, it
will take effect concurrently with the completion of the
Transaction. If the Transaction is not completed,
Chancellor will continue to serve as Portfolio Manager to
the Series under the terms of the current Portfolio
Management Agreement. If the Shareholders of the Series
should fail to approve the New Portfolio Management
Agreement, the Board of Trustees determine the appropriate
action to take.
In the event that a quorum is present at the Meeting but
sufficient votes to approve the Proposal 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 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 the Proposal 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 (30%) of the outstanding Shares is required
to constitute a quorum at the Meeting. As of the Record
Date, the sole shareholders of the Series were participating
insurance companies. Since participating insurance
companies are the legal owners 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 the
Proposal mentioned in 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
Pursuant to a Stock Purchase Agreement, dated as of July
23, 1996 (the "Stock Purchase Agreement"), Chancellor
Partners, L.P. and United States Fidelity and Guaranty
Company have agreed to sell all of the equity securities of
CCMI to a wholly owned subsidiary of LGT (the
"Transaction"). CCMI is the corporate parent of Chancellor.
Immediately after the closing under the Stock Purchase
Agreement, CCMI will merge with LGT Asset Management, Inc.
("LGTAM"), another wholly owned subsidiary of LGT. The
surviving company of that merger will operate under the name
of Chancellor LGT Asset Management ("Chancellor LGT") and
will serve as the North American institutional investment
management adviser of LGT. It is also contemplated that on
or prior to the closing under the Stock Purchase Agreement,
Chancellor will adopt a plan of liquidation pursuant to
which accounts previously managed by Chancellor, including
the Series, will be transitioned to Chancellor LGT.
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.
Accordingly, Shareholders of the Series are being asked
to approve the New Portfolio Management Agreement to take
effect following the closing under the Stock Purchase
Agreement and the completion of the related transactions
described previously. The closing under the Stock Purchase
Agreement is scheduled to occur on or about October 31,
1996. The New Portfolio Management Agreement will not be
executed and the current Portfolio Management Agreement will
remain in effect, unless and until the closing occurs under
the Stock Purchase Agreement.
Chancellor has advised DSI and DSI has advised the Board
of Trustees that no material changes in the investment
philosophy, policies or strategies are contemplated and that
the consummation of the Transaction will not materially
affect the level or quality of advisory services provided to
the Series. After the consummation of the Transaction,
Chancellor LGT will operate Chancellor's office in New York,
New York. Chancellor has advised DSI, and DSI has advised
the Board of Trustees, that the same persons who are
presently responsible for the investment strategies of the
Series are expected to continue to direct the investment
strategies of the Series following the consummation of the
Transaction.
It is contemplated that following the completion of the
Transaction, CCMI's senior management team will continue to
have key roles in Chancellor LGT. Specifically, Warren
Shaw, Chief Executive Officer and Chief Investment Officer,
will continue to serve in that capacity at Chancellor LGT.
Penny Zuckerwise, CCMI's President and Chief Operating
Officer, will continue in that role with Chancellor LGT.
One change that will be made upon completion of the
Transaction is that David Minella, President of LGTAM, will
be named Chairman of Chancellor LGT, succeeding Robert Wade,
who has led CCMI for over 11 years. Mr. Wade will continue
to play a significant role in the organization going
forward, serving as an ongoing advisor to the senior
management team at Chancellor LGT.
Information about LGTAM and LGT
LGTAM and its worldwide asset management affiliates have
provided investment management and/or administration
services to institutional, corporate and individual clients
around the world since 1969. The U.S. offices of LGTAM are
located at 50 California Street, 27th Floor, San Francisco,
California 94111. In addition to the resources of its San
Francisco office, LGTAM uses the expertise, personnel, data
and systems of other offices of LGT, including investment
offices in London, Hong Kong, Tokyo, Singapore, Sydney and
Frankfurt.
LGTAM and its worldwide affiliates, including LGT Bank
in Liechtenstein, formerly Bank of Liechtenstein, comprise
LGT. LGT is a provider of global asset management and
private banking products and services to individual and
institutional investors. LGT is controlled by the Prince of
Liechtenstein Foundation, which serves as the parent
organization for the various business enterprises of the
Princely Family of Liechtenstein. The principal business
address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of June 1, 1996, LGTAM and its worldwide asset
management affiliates managed or administered approximately
$27 billion, of which approximately $17 billion consisted of
GT Global Mutual Funds. As of June 1, 1996, assets under
management by LGT Bank in Liechtenstein exceeded $20
billion. As of June 1, 1996, assets entrusted to LGT
totaled approximately $47 billion.
The principal executive officers and directors of LGTAM
are listed following. The business address of each such
person is 50 California Street, 27th Floor, San Francisco,
California 94111.
David A. Minella, age 43, has been a director and
President of LGTAM since 1989. In addition, Mr. Minella has
been a director of LGT (holding company of the various
international LGT companies) since 1990; President of the
LGT Asset Management Division ("AMD"), a division of LGT
since 1995; Director and President of LGT Asset Management
Holdings, Inc. since 1988; Director of GT Global, Inc. ("GT
Global") since 1987 and President of GT Global from 1987 to
1995; Director of GT Global Investor Services, Inc. ("GT
Services") since 1990; President of GT Services from 1990 to
1995; Director of G.T. Global Insurance Agency, Inc. ("G.T.
Insurance") since 1992; and President of G.T. Insurance from
1992 to 1995. Mr. Minella is also a director or Trustee of
each investment company registered under the 1940 Act that
is managed or administered by LGTAM.
Helge K. Lee, age 50, has been Senior Vice President,
General Counsel and Secretary of LGT Asset Management
Holdings, Inc., LGTAM, GT Global, GT Services and G.T.
Insurance since 1996. Mr. Lee was the Senior Vice
President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of each of
the Strong Funds from October, 1991 through May, 1994. For
more than five years prior to October 1991, he was a
shareholder in the law firm of Godfrey & Kahn, S.C.,
Milwaukee, WI.
F. Christian Wignall, age 40, has been a Director of LGT
Asset Management Holdings, Inc. since 1989; Senior Vice
President, Chief Investment Officer - Global Equities and a
Director of LGTAM since 1987; and Chairman of the Investment
Policy Committee of the affiliated international G.T.
companies since 1990.
James R. Tufts, age 38, has been President of GT
Services since 1995. From 1994 to 1995, he was Senior Vice
President - Finance and Administration of GT Global, GT
Services and G.T. Insurance. He has also served as Senior
Vice President - Finance and Administration of LGT Asset
Management Holdings, Inc. and LGTAM since 1994. From 1990 to
1994, Mr. Tufts was Senior Vice President - Finance of
LGTAM, GT Global and GT Services. Mr. Tufts was Vice
President - Finance of G.T. Insurance from 1992 to 1994. He
has served as a Director of LGTAM, GT Global and GT Services
since 1991.
John G. Greenwood, age 49, has been a Director, Chairman
and Chief Economist of LGTAM since 1994. For more than five
years prior to 1994, Mr. Greenwood was Chief Economist at
LGT Asset Management Ltd. (Hong Kong).
Earle A. Malm II, age 47, has been a Director of LGTAM
since 1994 and a Senior Vice President - Institutional
Marketing of LGTAM since 1990.
Soraya M. Betterton, age 34, has been a Director of
LGTAM since 1994. Ms. Betterton also has been a portfolio
manager of LGTAM since 1986, and an investment analyst from
1984 to 1986.
Kenneth R. Chancey, age 50, has been Vice President -
Mutual Fund Accounting at LGTAM since 1992. Mr. Chancey was
Vice President of Putnam Fiduciary Trust Company from 1989
to 1992.
Peter R. Guarino, age 38, has been Secretary of LGT
Asset Management Holdings, Inc., LGTAM, GT Global, GT
Services and G.T. Insurance since February, 1996. Mr.
Guarino has been Assistant General Counsel of LGTAM, GT
Global and GT Services since 1991, and Assistant General
Counsel of G.T. Insurance since 1992. From 1989 to 1991,
Mr. Guarino was an attorney at The Dreyfus Corporation.
David J. Thelander, age 40, has been Vice President of
LGT Asset Management Holdings, Inc., LGTAM, GT Global, GT
Services, and G.T. Insurance since February, 1996. Mr.
Thelander has been an Assistant General Counsel of LGTAM
since January, 1995. Mr. Thelander was an associate at the
law firm of Kirkpatrick & Lockhart LLP from 1993 to 1994.
Prior to that, he was an attorney with the U.S. Securities
and Exchange Commission.
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 CCMI, which is owned 55.5% 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 CCMI 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 CCMI, representing the
remaining 44.5% ownership interest on a fully diluted basis.
Chancellor does not serve as investment adviser to any
other investment companies with investment objectives and
policies similar to those of the Series. Nevertheless, in
addition to advising the Series, Chancellor has provided
investment advisory services to CIM High Yield Securities,
PACE Large Company Growth Investments Portfolio and 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 Series. As of August
31, 1996, Chancellor and its affiliates had approximately
$32.5 billion in assets under management.
Upon completion of the Transaction, Chancellor will be a
wholly owned subsidiary of Chancellor LGT. As noted
previously, it is contemplated that on or prior to the
closing under the Stock Purchase Agreement, Chancellor will
adopt a plan of liquidation pursuant to which accounts
managed by it, including the Series, will be transitioned to
Chancellor LGT. Accordingly, as further described
previously, it is proposed that Chancellor LGT will serve as
Portfolio Manager under the New Portfolio Management
Agreement.
The principal executive officer and directors of
Chancellor are listed following. The business address of
each such person, unless otherwise indicated, is 1166 Avenue
of the Americas, New York, New York 10036.
<TABLE>
<CAPTION>
Name and Position with
Chancellor Principal Occupation
---------------------- --------------------
<S> <C>
Robert G. Wade, Jr. Chairman of the Board, CCMI
Chairman of the Board and Director
Warren Shaw Chief Executive Officer, Chief Investment
Chief Executive Officer, Chief Officer and Director, CCMI
Investment Officer and Director
Penny Zuckerwise President, Chief Operating Officer and
President, Chief Operating Officer Director, CCMI
and Director
Richard Collins Managing Director, CCMI
Managing Director
John Ivers Managing Director, CCMI
Managing Director and Director
Margaret Riley Managing Director, CCMI
Managing Director and Director
Edward Smith Managing Director, CCMI
Managing Director and Director
Karen Southard Managing Director, CCMI
Managing Director and Director
Ted Ujazdowski Managing Director, CCMI
Managing Director
Charles Wetzel Managing Director, CCMI
Managing Director and Director
John Sweeney Chief Investment Officer, USF&G Corporation,
Director 100 Light Street, Baltimore, MD 21202
Dan Hale Executive Vice President, USF&G Corporation,
Director 100 Light Street, Baltimore, MD 21202
</TABLE>
Chancellor manages the assets of the Series pursuant to
the current Portfolio Management Agreement dated August 13,
1996, among the Trust, DSI, and Chancellor. Prior to August
13, 1996, Chancellor managed the assets of the Series
pursuant to a previous Portfolio Management Agreement dated
September 30, 1992, and Addenda dated October 1, 1993, and
April 30, 1995, among the Trust, DSI, and Chancellor. The
current Portfolio Management Agreement was last approved by
the Board of Trustees on June 10, 1996. The current
Portfolio Management Agreement is substantively identical to
the previous Portfolio Management Agreement, together with
its Addenda, and was approved by Shareholders of the Series
at a meeting held on August 29, 1996, and was submitted to
Shareholders for the sole purpose of requesting approval of
a change in control of DSI.
PROPOSAL
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DIRECTED SERVICES, INC. AND
CHANCELLOR LGT ASSET MANAGEMENT, INC.
Consummation of the Transaction will result in a change
of control of Chancellor and may operate to terminate
automatically the current Portfolio Management Agreement.
In order for the management of the Series to continue
uninterrupted after the Transaction, Shareholder approval of
the New Portfolio Management Agreement is being sought.
The current Portfolio Management Agreement requires
Chancellor to provide, subject to supervision of the 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. The current Portfolio Management Agreement
requires Chancellor 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 Agreement, all
services and responsibilities of the Portfolio Manager would
continue.
Pursuant to the current Portfolio Management Agreement,
Chancellor 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 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 Agreement, the same
responsibilities will be imposed on the Portfolio Manager.
The current Portfolio Management Agreement provides that
it will terminate automatically in the event of its
"assignment," as that term is described in the 1940 Act. In
addition, the agreement may be terminated by DSI or by
Chancellor 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 Series, upon 60 days' written notice to DSI or
the Portfolio Manager.
For the services provided by Chancellor pursuant to the
current Portfolio Management Agreement, DSI, and not the
Trust, pays a monthly fee at an annual rate of 0.50%, which
is expressed as a percentage of the value of the average
daily net assets of the Series. Under the New Portfolio
Management Agreement, the schedule of compensation payable
to the Portfolio Manager will not change.
For the year ended December 31, 1995, fees paid by DSI
to Chancellor for its services to the Series under the
previous portfolio management agreement, which was in effect
through August 13, 1996, and was substantively identical to
the current Portfolio Management Agreement, were $559,368.
For the period from January 1, 1996 through [August 31],
1996, fees paid by DSI to Chancellor for its services to the
Series under the previous and current portfolio management
agreements were $[___________].
The New Portfolio Management Agreement will be among the
Trust, DSI and Chancellor LGT. At the September 17, 1996
meeting of the Board of Trustees, the New Portfolio
Management Agreement was approved by the Board of Trustees,
including a majority of the Trustees who are not interested
parties to the New Portfolio Management Agreement or
interested persons of DSI or Chancellor. The New Portfolio
Management Agreement with Chancellor LGT is included as
Exhibit A.
The New Portfolio Management Agreement for the Series as
approved by the Board of Trustees is submitted for approval
by the Shareholders of the Series. If approved by the vote
of a majority of the outstanding shares of the Series, the
New Portfolio Management Agreement 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.
The terms of the New Portfolio Management Agreement are
identical in all material respects, including the rate of
fees payable to Chancellor LGT, to the terms of the current
Portfolio Management Agreement.
The Trustees' Evaluation and Recommendation
The Board of Trustees, including the Trustees who are
not interested persons of DSI or Chancellor, has determined
that, by approving the New Portfolio Management Agreement on
behalf of the Trust, the Trust can best assure itself that
the services currently provided by Chancellor will continue
after the Transaction without interruption. The Board has
determined that, as with the current Portfolio Management
Agreement, the New Portfolio 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 Portfolio Management Agreement,
the Board considered the terms of the New Portfolio
Management Agreement and took into account that, except for
the name and corporate structure of the Portfolio Manager
and the dates of execution, effectiveness and termination,
there are no differences between the terms and conditions of
the Trust's current Portfolio Management Agreement and the
New Portfolio Management Agreement, including the terms
relating to the services to be provided thereunder and the
fees payable by DSI (not the Trust).
In determining whether or not it was appropriate to
approve the New Portfolio Management Agreement for the
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 from DSI (not
the Trust) by Chancellor LGT for its investment advisory
services and the fairness and reasonableness 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 expected to be
rendered under the New Portfolio Management Agreement; (3)
the possible effects of the Transaction upon the Series and
Chancellor's organization, and upon the ability of
Chancellor LGT to provide advisory services to the Series;
(4) the background and prior experience of LGTAM; (5) the
financial condition of Chancellor and LGT.
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 Portfolio 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 Portfolio Management Agreement, recommends the approval
of the New Portfolio Management Agreement among the Trust,
DSI and Chancellor LGT.
ADDITIONAL INFORMATION
Outstanding Shares
As of the Record Date, there were the 9,191,494.715
Shares of the Series outstanding.
Shareholders of the Series
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 the Series:
Name and Address %
of Beneficial Owner Shares of Shares
Held
Officers of the Trust
The principal executive officers of the Trust and their
ages and principal occupations are set forth following. The
executive officers of the Trust are elected annually and
each serves until his or her successor shall have been duly
elected and qualified.
Terry L. Kendall, age 50, serves as Chairman of the
Board and President of the Trust. Additionally, Mr. Kendall
is Director, President and Chief Executive Officer, Golden
American since 1993; President, Director, and Chief
Executive Officer, EIC Variable, Inc. since 1993; Chairman
of the Board and President of Separate Account D of Golden
American ("Separate Account D") since 1993; Executive Vice
President, Equitable Life Insurance Company of Iowa
("Equitable Life"); formerly Managing Director, Bankers
Trust Company (1993-1996); and President and Chief Executive
Officer, United Pacific Life Insurance Company (1983-1993).
Barnett Chernow, age 46, serves as Vice President of the
Trust. Additionally, Mr. Chernow is Executive Vice
President, Golden American, October 1993 to present;
Executive Vice President, Directed Services, Inc., October
1993 to present; Executive Vice President, EIC Variable,
Inc., October 1993 to present; Vice President, Equitable
Life; formerly, Senior Vice President and Chief Financial
Officer, Reliance Insurance Company, August 1977 to July
1993.
Myles R. Tashman, age 53, serves as Secretary of the
Trust. Additionally, he is Executive Vice President and
Secretary, Golden American since 1993 and General Counsel
since July, 1996; Executive Vice President and Secretary,
DSI since 1993 and General Counsel since July, 1996;
Executive Vice President, EIC Variable; Secretary of
Separate Account D; Assistant Secretary, Equitable Life;
formerly, Senior Vice President and General Counsel, United
Pacific Life Insurance Company (1986-1993).
Mary Bea Wilkinson, age 40, serves as Treasurer of the
Trust. Additionally, she is Senior Vice President, Golden
American, November 1993 to present; President, DSI, January
1995 to present; Senior Vice President, EIC Variable,
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 the
proposal 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 the
proposal. In addition, if, in the judgment of the persons
named as Proxies, it is advisable to defer action the
proposal, 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 question in person or by
proxy at the session of the Meeting to be adjourned, as
required by 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 the proposal. They
will vote against any such adjournment those Proxies
required to be voted against the proposal. None of the
costs of any additional solicitation and of any adjourned
session will be borne by the Trust. If the proposal
receives sufficient favorable votes by the time of the
Meeting, the proposal will be acted upon and such action
will be final.
Annual Report
The Trust's 1995 Annual Report to Shareholders was
mailed on or about February 26, 1996, and the Trust's 1996
SemiAnnual Report to Shareholders was mailed on or about
August [23], 1996. IF YOU SHOULD DESIRE AN ADDITIONAL COPY
OF THE ANNUAL OR SEMIANNUAL REPORT, EACH CAN BE OBTAINED,
WITHOUT CHARGE, FROM DSI BY CALLING (800) 366-0066.
Costs of Solicitation
The costs associated with the Meeting will be paid by
CCMI. Neither the Trust nor its Shareholders will bear any
costs associated with this meeting.
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.
By Order of the Board of Trustees
October [14], 1996
____________________________
Myles R. Tashman, Secretary
Wilmington, Delaware
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1
of the attached Portfolio Management Agreement, to which
Chancellor LGT Asset Management, Inc. 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 LGT 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 rates of
the average daily net assets of the Series.
Series Rate
------ ----
Capital Appreciation 0.50%
<PAGE>
VOTING INSTRUCTION/PROXY
THE GCG TRUST
The Undersigned Contract Owner of a variable annuity contract or
variable life insurance policy (each referred to as a "Contract")
issued by Golden American Life Insurance Company ("Golden American")
and funded by a separate account of Golden American 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 October [29], 1996, at 10:00
a.m., EDT, at 1001 Jefferson Street, Suite 400, Wilmington, Delaware,
and at any adjournment thereof, in the manner directed below with
respect to the matter 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 proxy is solicited on behalf of the Board of Trustees of
the Trust. The Board of Trustees of the Trust recommends that you
vote FOR the following proposal. The costs associated with the
Meeting will be paid by Chancellor Capital Management, Inc. ("CCMI").
Neither the Trust nor its Shareholders will bear any costs associated
with this Meeting.
To approve a new Portfolio For Again Abstain
Management Agreement among the
Trust on behalf of the Capital
Appreciation Series, Directed
Services, Inc. and Chancellor LGT
Asset Management, Inc., to be
effective upon the acquisition by --- --- ---
a wholly owned subsidiary of
Liechtenstein Global Trust, AG of
CCMI and its subsidiaries
including Chancellor Trust
Company.
This voting instruction will be voted as specified. If NO
SPECIFICATION IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR THE
PROPOSAL. 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 the 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.
IMPORTANT:
Joint Owners must EACH sign. Trustees and others signing in a
representative capacity should so indicate.
Dated: _________________, 1996
_________________________________
_________________________________
Signature(s) of Contract Owner(s)
<PAGE>
Exhibit A
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 LGT Asset Management, 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 August 13, 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 Chancellor LGT Asset Management, 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 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 LGT
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).
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 LGT ASSET MANAGEMENT, INC.
______________________________ By: _____________________________
Attest
______________________________ _________________________________
Title Title
