<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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Sec. 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 Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:_________________________________________________________
<PAGE>
The GCG Trust
1001 Jefferson Street, Wilmington, DE 19801
Tel: (800) 366-0066
Fax: (302) 576-3430
April 6, 1998
Dear Shareholders of the Capital Appreciation Series of The GCG Trust:
I am writing to share with you some very exciting changes concerning Chancellor
LGT Asset Management, Inc., ("Chancellor") 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
will soon be acquired by AMVESCAP PLC. AMVESCAP PLC was created in 1996 when
INVESCO Group Services, Inc., a subsidiary of INVESCO PLC merged with A I M
Management Group, Inc., the investment advisor and administrator to the AIM
Family of Funds/R/. 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,
/s/Terry L. Kendall
Terry L. Kendall
President
<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
April 28, 1998
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 April 28, 1998, at 10:00 a.m., local time, for
the following purpose:
To approve a new Portfolio Management Agreement
(the "New Portfolio Management Agreement") among
the Trust, Directed Services, Inc. and Chancellor
LGT Asset Management, Inc., ("Chancellor"), which
New Portfolio Management Agreement would be
substantively identical to the Portfolio Management
Agreement presently in effect, to be effective
upon the acquisition by AMVESCAP PLC of the LGT
Asset Management Division of Liechtenstein Global
Trust, AG which includes Chancellor, the current
Portfolio Manager to the Series;
and 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
March 31, 1998, 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
/s/Myles R. Tashman
_________________________________
Myles R. Tashman, Secretary
April 6, 1998.
- ------------------------------------------------------------
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
APRIL 28, 1998
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 April 28, 1998, at
10:00 a.m. local time. The approximate mailing date of this Proxy
Statement and accompanying form of proxy is April 6, 1998.
The Board has fixed the close of business on March 31, 1998, 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"), 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 AMVESCAP PLC ("AMVESCAP") of the
Asset Management Division of Liechtenstein Global Trust, AG ("LGT")
which includes Chancellor, the current Portfolio Manager to the Series
(the "Transaction").
The Series is one of sixteen (16) 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 Instrucions 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
1
<PAGE>
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 Chancellor or DSI, the manager of the Trust.
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 will 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 Purchase Agreement, dated as of January 31, 1998 (the
"Purchase Agreement"), LGT has agreed to sell all of the equity securities of
LGT Holding Luxembourg SA (UK Holdings) PLC and LGT Bank in Liechtenstein Ltd.
and equity interests in LGT Verwaltungs GmbH to AMVESCAP (the "Transaction").
Chancellor is an indirect subsidiary of LGT Holding Luxembourg (UK Holdings).
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 certain conditions are
satisfied. Specifically, 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
2
<PAGE>
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
Purchase Agreement and the completion of the related transactions described
previously. The closing under the Purchase agreement is scheduled to occur on or
about May 28, 1998. 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 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 will continue to operate its
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.
INFORMATION ABOUT AMVESCAP PLC
AMVESCAP is one of the world's largest independent investment companies.
Prior to the merger in 1996 of INVESCO Group Services, Inc., a subsidiary of
INVESCO PLC with A I M Management Group, Inc., the investment manager or the AIM
Family of Fundsr, the company was know as INVESCO PLC. AMVESCAP meets all the
criteria for the new owner as outlined by LGT Asset Management's current board
of directors. AMVESCAP is focused solely on institutional and retail investment
management, has demonstrated understanding and commitment to managing client
portfolios, and features a strong record of success in both investment
performance and growth in assets. Under the leadership of Charles Brady, the
company embodies four basic principles: no micro management; autonomous units;
local culture; and employee partnership. These principles are responsible for
AMVESCAP's well deserved reputation as a firm which creates an entreprenurial
culture that puts employees and clients first. This is best exemplified by its
substantial employee ownership, a key contributor to AMVESCAP's long-term
stability and success. AMVESCAP has a strong track record of aquiring companies
and allowing the investment capabilities of the companies to operate in
parallel.
As of December 31, 1997, AMVESCAP and its worldwide asset management
affiliates managed or administered approximately $192 billion, of which
approximately $105 billion consisted of investment company assets. The principal
executive officers and directors of AMVESCAP are listed following. The business
addresses of each such person employed by AMVESCAP or an affiliate are 1315
Peachtree Street, N.E., GA 30309; 11 Greenway Plaza, Houston, TX 77046; or
11 Devonshire Square, London, England EC2 M4YR, unless otherwise noted.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH AMVESCAP PRINCIPAL OCCUPATION
- --------------------------- ------------------------------------ ------------------------------
Charles W. Brady Chairman and Chief Executive Officer
Georgia
Charles T. Bauer Vice Chairman Chairman, AIM Management Group Inc.
Texas
The Hon. Michael D. Benson Director Chief Exective Offcier, INVESCO Global
England
Joseph Canion Director Chairman, Insource Technology Corp.
Insource Technology Corp.
5 Post Oak Park
Houston, TX 77027
Michael J. Cemo Director President, AIM Distributors, Inc. and Senior
Texas Vice President, AIM Management Group Inc
Gary Crum Director Director of Investments, AIM Management Group Inc.
Texas
</TABLE>
3
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH AMVESCAP PRINCIPAL OCCUPATION
- --------------------------- ------------------------------------ ------------------------------
A.D. Frazier Director Chief Executive Officer, INVESCO
Georgia Institutional Advisors Group
Robert Graham Director and Executive Vice President Chief Exective Offcier and President,
Texas AIM Management Group Inc.
Robert de Guardiola Director Managing Director, Putnam, Lovell
Putnam, Lovell & de Guardiola & de Guardiola
19 Fulton Street
New York, NY 10038
Bevis Longstreth Director Partner, Debevoise & Plimpton
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Robert F. McCullogh Director and Chief Financial Officer
Georgia
Wendell M. Starke Director Chief Investment Officer, INVESCO
Georgia
Sir William R. Stuttaford Director Retired
England
Stephen K. West Director Partner, Sullivan & Cromwell
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Alexander M. White Director Retired
Pitt Hall Road
Old Chatham, NY 12136
</TABLE>
INFORMATION ABOUT CHANCELLOR
Chancellor, with offices at 1166 Avenue of the Americas, New York, New York
10036, is a California corporation. Chancellor is a wholly owned subsidiary of
Liechtenstein Global Trust, AG.
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 the GT Family of Mutual Funds, CIM
High Yield Securities 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 December 31, 1997, Chancellor and its affiliates had approximately
$55 billion in assets under management.
Upon completion of the Transaction, Chancellor will be a subsidiary of
AMVESCAP.
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>
<S> <C> <C>
NAME POSITION WITH CHANCELLOR PRINCIPAL OCCUPATION
- ---- ------------------------ --------------------
HSH Prince Phillipp Director Chairman of the Board and
von und zu Liechtenstein Chief Executive of Liechtenstein
Herrengasse 12, FL-9490 Global Trust, AG
Vaduz, Liechtenstein
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH CHANCELLOR PRINCIPAL OCCUPATION
- ---- ------------------------ --------------------
John Greenwood Director Chief Economist, Chancellor
50 California Street
San Francisco, CA 94111
Nina Lesavoy Director Head of North American Institutional
Distribution, Chancellor
Paul Loach Director Chairman of the Board, Chancellor
Donald H. Young Director Head of Products Group, Chancellor
</TABLE>
Chancellor and its predecessors have served as Portfolio Manager to the
Series since September 30, 1992. Chancellor presently manages the assets of the
Series pursuant to the current Portfolio Management Agreement dated October 24,
1997, among the Trust, DSI, and Chancellor. Prior to October 24, 1997,
Chancellor managed the assets of the Series pursuant to a previous Portfolio
Management Agreement dated August 13, 1996, among the Trust, DSI, and
Chancellor. The current Portfolio Management Agreement was last approved by the
Board of Trustees on August 19, 1997. 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 October 9, 1997, and was submitted to Shareholders for the sol
purpose of requesting approval of a change in control of DSI.
PROPOSAL
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND CHANCELLOR
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 theNew 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.
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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, 1997, fees paid by DSI to Chancellor for
its services to the Series under the current Portfolio Management Agreement,
were $845,622.
The New Portfolio Management Agreement will be among the Trust, DSI and
Chancellor. At the February 14, 1998 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 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, 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 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 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 to provide advisory services
to the Series; (4) the expectation that the investment management expertise of
Chancellor will be enhanced by the affiliation with AMVESCAP and its team of
investment prefessionals; and (5) the anticipated financial condition of
Chancellor and AMVESCAP.
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.
6
<PAGE>
ADDITIONAL INFORMATION
OUTSTANDING SHARES
As of the Record Date, there were 11,412,797.727 Shares of the Series
outstanding. As of the Record Date, no person was known to the Trust to be the
beneficial owner of more than 5% of the Shares of the Series.
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 51, serves as a Trustee and President of the Trust.
Additionally, Mr. Kendall is Director, President and Chief Executive Officer,
Golden American since 1993; Director, First Golden American Insurance Company
of New York ("First Golden") since 1996; formerly Managing Director, Bankers
Trust Company (1993-1996); and President and Chief Executive Officer, United
Pacific Life Insurance Company (1983-1993).
Barnett Chernow, age 48, 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, First Golden, October 1993 to present;
Vice President, Equitable Life, 1996 to present; formerly, Senior Vice President
and Chief Financial Officer, Reliance Insurance Company, August 1977 to July
1993.
Myles R. Tashman, age 55 serves as Secretary of the Trust. Additionally, he
is Executive Vice President and Secretary, Golden American since 1993, General
Counsel since July 1996 and Director since January 1998; Executive Vice
President and Secretary, DSI since 1993, General Counsel since July 1996 and
Director since January 1998; Assistant Secretary, Equitable Life since 1996,
Executive Vice President, Secretary, General Counsel and Director since 1996;
formerly, Senior Vice President and General Counsel, United Pacific Life
Insurance Company (1986-1993).
Mary Bea Wilkinson, age 41, serves as Treasurer of the Trust. Additionally,
she is President of First Golden American Life Insurance Company of New York.
Formerly, she was Senior Vice President, Golden American, November 1993 to
December 1996; President, DSI, January 1995 to December 1996; Assistant Vice
President, CIGNA Insurance Companies, August 1993 to October1993; 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 National Association of Securities Dealers, Inc. (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 Meeting are not received by the time scheduled for the 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 on 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
7
<PAGE>
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 1997 Annual Report to Shareholders was mailed on or about
February 27, 1998. IF YOU SHOULD DESIRE AN ADDITIONAL COPY OF THE ANNUAL 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 Chancellor or DSI.
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 1998 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
/s/Myles R. Tashman
____________________________
Myles R. Tashman, Secretary
April 6, 1998
Wilmington, Delaware
<PAGE>
VOTING INSTRUCTION/PROXY [Contract Number]
THE GCG TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE GCG
TRUST (THE "TRUST"). The Board of Trustees of the Trust recommends that you
vote FOR the following proposal. Chancellor LGT Asset Management, Inc.
("Chancellor") or Directed Services, Inc. ("DSI") will pay for the costs of the
Meeting of Shareholders of the Trust (the "Meeting"). Neither the Trust nor its
Shareholders will bear any costs associated with this Meeting.
[Name of Contract Owner]
[Name of Joint Owner] PLEASE VOTE BY MARKING ONE BOX NEXT TO
[Address 1] THE PROPOSAL. SIGN BELOW EXACTLY
[Address 2] LISTED HERE AND DATE THIS VOTING
[Address 3] INSTRUCTION, THEN RETURN IT PROMPTLY IN
[City], [State] [Zip Code] THE ENCLOSED ENVELOPE
The Undersigned Contract Owner of a variable annuity contract or variable
life insurance policy (each referred to as a "Contract") issued by participating
insurance companies and funded by separate accounts of participating insurance
companies instructs that the shares of the Series of Trust attributable to his
or her Contract be voted at the Meeting to be held on April 28, 1998, at 10:00
a.m., local time, at 1001 Jefferson Street, Suite 400, Wilmington, Delaware, and
at any adjournment thereof, as directed below with respect to the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, and in participating insurance companies' discretion, upon other
matters as may properly come before the Meeting or any adjournment thereof.
UNITS PROPOSAL FOR AGAINST ABSTAIN
To approve a new Managment Agreement
among the Trust on behalf of the
Capital Appreciation Series, DSI and
Chancellor to be effective upon the / / / / / /
acquisition by AMVESCAP PLC of LGT
Investment Division of the Liechtenstein
Global Trust, AG, including Chancellor.
This voting instruction will be voted as specified. If this voting
instruction is signed, but 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 the participating insurance
companies 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.
IMPORTANT: Joint Owners must EACH sign. Trustees and others signing in a
representative capacity should so indicate.
Date:__________, 1998 __________________________ __________________________
Contract Owner Joint Owner (If Any)
<PAGE>
Exhibit A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _____________, 1998
among The GCG Trust (the "Trust"), a Massachusetts business
trust, Directed Services, Inc. ("Manager"), a New York
corporation, and ________________________________________
("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 October 24, 1997, 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
among the Trust, the Manager, and the Portfolio Manager as
follows:
1. Appointment. The Trust and the Manager hereby
appoint ______________________________________ 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
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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
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<PAGE>
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
SECommission 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
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<PAGE>
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.
A-4
<PAGE>
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 SEC 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
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<PAGE>
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
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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
A-7
<PAGE>
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 "______________
________________________" 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).
A-8
<PAGE>
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
_____________________________________
______________________________ By: _____________________________
Attest
______________________________ _________________________________
Title Title
A-9
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1
of the attached Portfolio Management Agreement, to which
_____________________________________ shall act as Portfolio
Manager is as follows:
Capital Appreciation Series
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by ______________________
__________________ ("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%
A-10
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> GCG Trust Capital Apprec Series
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 149,615,210
<INVESTMENTS-AT-VALUE> 194,073,126
<RECEIVABLES> 251,114
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 944
<TOTAL-ASSETS> 194,325,184
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 339,576
<TOTAL-LIABILITIES> 339,576
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 137,305,962
<SHARES-COMMON-STOCK> 10,988,655
<SHARES-COMMON-PRIOR> 9,879,660
<ACCUMULATED-NII-CURRENT> 336,095
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,885,635
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,457,916
<NET-ASSETS> 193,985,608
<DIVIDEND-INCOME> 2,701,921
<INTEREST-INCOME> 578,587
<OTHER-INCOME> 0
<EXPENSES-NET> 1,678,069
<NET-INVESTMENT-INCOME> 1,602,439
<REALIZED-GAINS-CURRENT> 25,886,926
<APPREC-INCREASE-CURRENT> 15,156,059
<NET-CHANGE-FROM-OPS> 42,645,424
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,586,754)
<DISTRIBUTIONS-OF-GAINS> (16,079,375)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,584,454
<NUMBER-OF-SHARES-REDEEMED> (1,472,937)
<SHARES-REINVESTED> 997,478
<NET-CHANGE-IN-ASSETS> 45,233,110
<ACCUMULATED-NII-PRIOR> 334,278
<ACCUMULATED-GAINS-PRIOR> 2,064,216
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,678,069
<AVERAGE-NET-ASSETS> 169,249,186
<PER-SHARE-NAV-BEGIN> 15.06
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 4.19
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> (1.60)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.65
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
