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THE GCG TRUST
1475 Dunwoody Drive Tel: (800) 366-0066
West Chester, PA 19380 Fax: (610) 425-3450
April 3, 1999
Dear Variable Contract or Policy Holder:
I am writing to share with you some very exciting changes
concerning the investment advisement of your funds within your
Variable Annuity Contract or Life Insurance Policy. Enclosed are
proxy materials for your approval of these changes.
Directed Services, Inc. ("DSI"), the manager of the GCG Trust
(the "Trust"), has recommended and the Trust 's Board of Trustees
has approved new portfolio management agreements among the
Trust, DSI and:
O AIM Capital Management, Inc. on behalf of the Capital
Appreciation and Strategic Equity Series;
O Baring International Investment Limited, an affiliate of DSI,
on behalf of the Developing World and Hard Asset Series;
O Alliance Capital Management LP on behalf of the Growth &
Income Series;
O T. Rowe Price Associates, Inc. on behalf of the Equity Income
Series; and
O Janus Capital Corporation on behalf of the Growth Series.
Additionally, the Trust's manager has recommended and the
Board of Trustees has approved a change in the statement of the
Equity Income investment objective.
The Trust's management is proposing these changes in order
to make the GCG Trust an extremely attractive choice for your
investment dollars. Therefore I and management recommend that
you cast your vote FOR the approval of the changes. I urge you
to review the enclosed proxy statement, and return promptly the
enclosed proxy in the postage prepaid envelope provided.
Thank you for your attention to this matter. Should you have
any questions, feel free to contact your customer service
representative at (800) 366-0066.
Sincerely,
/s/ Barnett Chernow
Barnett Chernow
Vice President
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THE GCG TRUST
1475 Dunwoody Drive
West Chester, Pa 19380
800-366-0066
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE CAPITAL APPRECIATION
SERIES, DEVELOPING WORLD SERIES, EQUITY INCOME SERIES (FORMERLY THE
MULTIPLE ALLOCATION SERIES), GROWTH & INCOME SERIES, HARD ASSETS
SERIES, STRATEGIC EQUITY SERIES, AND GROWTH SERIES (FORMERLY THE
VALUE + GROWTH SERIES)
APRIL 27, 1999
To the Shareholders of the Capital Appreciation Series, Developing
World Series, Equity Income Series, Growth & Income Series, Hard
Assets Series, Strategic Equity Series and Growth Series of The GCG
Trust:
Notice is hereby given to the holders of shares of beneficial
interest (the "Shares") of the Capital Appreciation Series,
Developing World Series, Equity Income Series, Growth & Income
Series, Hard Assets Series, Strategic Equity Series and Growth 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 1475 Dunwoody Drive, West Chester, PA 19380, on April
27,1999, at 10:00 a.m., local time, for the following purposes:
1. To approve a new Portfolio Management Agreement among
the Trust, Directed Services, Inc. ("DSI") and AIM
Capital Management, Inc. on behalf of the Capital
Appreciation Series and Strategic Equity Series;
2. To approve a new Portfolio Management Agreement among
the Trust, DSI and Baring International Investment
Limited on behalf of the Developing World Series and
Hard Assets Series;
3. To approve a new Portfolio Management Agreement among
the Trust, DSI and Alliance Capital Management LP on
behalf of the Growth & Income Series;
4. To approve a new Portfolio Management Agreement among
the Trust, DSI and T. Rowe Price Associates, Inc. on
behalf of the Equity Income Series;
5. To approve a change in the statement of the Equity
Income Series' investment objective from "seeking the
highest total return, consisting of capital
appreciation and current income, consistent with
preservation of capital" to "providing substantial
dividend income and also long-term capital
appreciation";
6. To approve a new Portfolio Management Agreement among
the Trust, DSI and Janus Capital Corporation on
behalf of the Growth 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 February 26,
1999, 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 3, 1999
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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(S)
NOTICED ABOVE.
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THE GCG TRUST
1475 DUNWOODY DRIVE
WEST CHESTER, PA 19380
800-366-0066
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS OF THE
CAPITAL APPRECIATION SERIES
DEVELOPING WORLD SERIES
GROWTH & INCOME SERIES
HARD ASSETS SERIES
EQUITY INCOME SERIES (FORMERLY THE MULTIPLE ALLOCATION SERIES)
STRATEGIC EQUITY SERIES
GROWTH SERIES (FORMERLY THE VALUE + GROWTH SERIES)
APRIL 27, 1999
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 1475 Dunwoody
Drive, West Chester, PA 19380, on April 27, 1999, at 10:00 a.m. local
time. The approximate mailing date of this Proxy Statement and
accompanying form of proxy is April 13, 1999.
The Board has fixed the close of business on February 26, 1999, as
the record date (the "Record Date") for the determination of holders
of shares of beneficial interest ("Shares") of the 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
proposals affecting seven portfolios; the Capital Appreciation
Series, Developing World Series, Growth & Income Series, Hard Assets
Series, Equity Income Series (formerly the Multiple Allocation
Series), Strategic Equity Series, and Growth Series (formerly the
Value + Growth Series) (the "Series"). Shareholders of the Series
only are being requested to vote on the following proposals:
1. To approve a new Portfolio Management Agreement among
the Trust, Directed Services, Inc. ("DSI") and AIM
Capital Management, Inc. ("AIM") on behalf of the
Capital Appreciation Series and Strategic Equity
Series;
2. To approve a new Portfolio Management Agreement among
the Trust, DSI and Baring International Investment
Limited ("BIIL") on behalf of the Developing World
Series and Hard Assets Series;
3. To approve a new Portfolio Management Agreement among
the Trust, DSI and Alliance Capital Management LP
("Alliance") on behalf of the Growth & Income Series;
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4. To approve a new Portfolio Management Agreement among
the Trust, DSI and T. Rowe Price Associates, Inc.
("T. Rowe") on behalf of the Equity Income Series;
5. To approve a change in the statement of the Equity
Income Series' investment objective from "seeking the
highest total return, consisting of capital
appreciation and current income, consistent with
preservation of capital" to "providing substantial
dividend income and also long-term capital
appreciation" and;
6. To approve a new Portfolio Management Agreement among
the Trust, DSI and Janus Capital Corporation
("Janus") on behalf of the Growth Series.
The terms and conditions of the new Portfolio Management Agreements
(the "New Portfolio Management Agreements") listed are substantively
identical to the prior portfolio management agreements, except that
the fees paid to the portfolio managers are lower than under the
prior Portfolio Management Agreements. Although such fees are lower,
fees for each individual Series are not lower and thus, will not
lower costs to investors. Therefore, DSI will receive a larger
portion of the fees in an arrangement that better reflects the
allocation of responsibilities between DSI and the Portfolio
Managers.
The Series represented by this proxy statement involves seven (7) of
twenty-four (24) operational portfolios of the Trust. The Shares of
the Series currently are offered to separate accounts of affiliated
insurance companies; Golden American Life Insurance Company ("Golden
American"), First Golden American Life Insurance Company of New York
("First Golden") and Equitable Life Insurance Company of Iowa
("Equitable Life") (collectively, the "participating insurance
companies") to serve as an investment medium for variable annuity
contracts and variable life insurance policies (collectively,
"Variable Contracts") issued by the participating insurance
companies. 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 each participating insurance company, issuing a
Variable Contract funded by a registered separate account that
participates in the Trust, will request voting instructions from the
owners of the Variable Contracts ("Variable Contract Owners") and
will vote Shares or other voting interests in the separate account in
proportion to the voting instructions received. The participating
insurance companies are required to vote Shares of the Series held by
its registered separate accounts in accordance with instructions
received from Variable Contract Owners. The participating insurance
companies are 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 each participating insurance company in its general account, if
any, must be voted in the same proportion as the votes cast with
respect to Shares held in all of the insurer's separate accounts, in
the aggregate. The Shares for any proxy received signed and dated
for which no voting instructions are given will be voted in favor of
the proposals. 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 the
participating insurance companies or their agents or affiliates
personally or by telephone. All expenses in connection with the
solicitation of the proxies will be borne by DSI, the manager of the
Trust.
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The following tables summarize the proposals and indicate which
shareholders are being requested to vote on each proposal:
<TABLE>
<CAPTION>
SERIES
CAPITAL STRATEGIC DEVELOPING HARD GROWTH & EQUITY
APPRECIATION EQUITY WORLD ASSETS INCOME INCOME GROWTH
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROPOSAL 1
Approve a
New Portfolio X X
Management
Agreement
- ---------------------------------------------------------------------------------------------------------
PROPOSAL 2
Approve a
New Portfolio X X
Management
Agreement
- ---------------------------------------------------------------------------------------------------------
PROPOSAL 3
Approve a
New Portfolio X
Management
Agreement
- ---------------------------------------------------------------------------------------------------------
PROPOSAL 4
Approve a
New Portfolio X
Management
Agreement
- ---------------------------------------------------------------------------------------------------------
PROPOSAL 5
Approve a
Change in
Objective X
- ---------------------------------------------------------------------------------------------------------
PROPOSAL 6
Approve a
New Portfolio X
Management
Agreement
</TABLE>
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 Agreements are approved by a majority
vote of the outstanding shares of the Series affected, they will
remain in effect, having already been approved by the Board of
Trustees (the "Board"). If the Shareholders of the Series should
fail to approve any New Portfolio Management Agreements, the Board
will determine the appropriate action to take.
In the event that a quorum is present at the Meeting but sufficient
votes to approve any 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. Such action should be 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
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such solicitation. A
vote may be taken on any 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 Proposals
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.
INTRODUCTION
As described in the Trust's prospectus, investment management
services are provided to the Trust and each of its several Series by
Directed Services, Inc. ("DSI" or the "Manager"). Subject to the
supervision and approval of the Board and approval of the
shareholders of the respective Series, DSI is responsible for
engaging various investment advisory organizations (each, a
"Portfolio Manager") to provide portfolio management services to the
respective Series. DSI is also responsible for monitoring and
evaluating the performance of the various Portfolio Managers. DSI
has formulated a portfolio management strategy for the Trust that
would encourage the Trust's growth and provide a range of investment
opportunities for the participating insurance companies and their
Variable Contract Owners. DSI has come to believe that the Trust's
interest - and those of its shareholders - would best be served by
creating, through the medium of the Trust's several series, a matrix
of diverse but complimentary investment portfolios. As the Trust's
Manager, DSI believes that the best way to accomplish this goal is to
employ Portfolio Managers whose differing styles cover the investment
spectrum, from those that favor value oriented investing to
aggressive growth. DSI believes that the proposals set forth in this
Proxy Statement represent several steps in a continuous effort toward
making this goal a reality. These proposals would, if approved by
shareholders, ratify investment advisory organizations recently
engaged to serve the Trust's Series. Each proposal in this Proxy
Statement was presented to a meeting of the Trust's Board of Trustees
with the recommendation of DSI, and each has been considered and
approved by the Board members who are not "interested persons" of the
Trust within the meaning of the Investment Company Act of 1940 (the
"1940 Act").
PROPOSALS RELATING TO INVESTMENT ADVISORY ARRANGEMENTS
At the meeting, shareholders are being asked to approve investment
advisory contracts with certain investment advisory organizations.
Although agreements with each of these organizations are already
effective, the shareholders of each affected Series must ratify the
Portfolio Manager selected by the Board within 120 days of the
effective date of a new Portfolio Manager's agreement (each, a
Portfolio Management Agreement"). Information about each of the new
Portfolio Managers, as well as the text of the separate Portfolio
Management Agreements, requires the approval of "a majority of the
outstanding voting securities" of the Series to which it relates, as
noted above.
CHANGES IN INVESTMENT POLICIES
DSI, together with the Portfolio Managers, have proposed that certain
of the non-fundamental policies of the Equity Income Series
(formerly, the Multiple Allocation Series) and the Strategic Equity
Series be modified. As permitted by the 1940 Act, these changes were
implemented by the Board at a meeting held on February 16, 1999
without specific shareholder approval. Details regarding the scope
of the changes to the Equity Income Series and Strategic Equity
Series and their impact appears under the headings "Additional
Information" and "Proposal 5," respectively.
CHANGE IN THE INVESTMENT OBJECTIVE
At the same meeting, DSI also requested that the Trustees approve
certain changes in the investment objective of the Equity Income
Series. Such a change must be approved by the Series' shareholders
before it may be implemented. The recommendation was approved
unanimously by the Trustees and is included in this Proxy Statement
as "Proposal 5."
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PROPOSAL 1
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND AIM CAPITAL MANAGEMENT, INC.
BACKGROUND INFORMATION FOR NEW PORTFOLIO MANAGEMENT AGREEMENTS
From October 5, 1995, Zweig Advisors, Inc. served as the portfolio
manager of Strategic Equity Series, and from August 15, 1998, INVESCO
(NY), Inc. (collectively the "Prior Managers") served as the
portfolio manager of the Capital Appreciation Series, each pursuant
to the terms of a separate agreement ("Prior Agreements"). As more
fully described below, the Board determined that it would be in the
best interests of the Series to replace the Prior Managers with
another investment management organization. Accordingly, at a
meeting of the Board held on February 16, 1999, the Board approved
the termination of the Prior Agreements and the engagement of AIM
Capital Management, Inc. ("AIM") pursuant to a New Portfolio
Management Agreement among DSI, AIM and the Trust (the "AIM
Agreement") on behalf of the Capital Appreciation Series and the
Strategic Equity Series. The AIM Agreement became effective, on
March 1, 1999 with respect to the Strategic Equity Series and on
April 1, 1999 with respect to the Capital Appreciation Series. The
Prior Agreements terminated on the same dates as the New Portfolio
Management Agreements became effective. The terms and conditions of
the AIM Agreement are substantially the same as those of the Prior
Agreements with the exception of the advisory fee schedule which
lowers the advisory fee to be paid by DSI (not the Series) to AIM.
The fees paid by DSI have no effect upon the expenses paid by the
Series. As noted above, under the 1940 Act, if shareholder
ratification of the AIM Agreement, with respect to each Series is not
obtained within 120 days of the date on which it became effective, it
will terminate with respect to any affected Series. The new fee
arrangement is included as part of the AIM Agreement, which is
attached as Exhibit A.
The New Portfolio Management Agreement for each Series as approved by
the Board is submitted for approval by the shareholders of the Series
to which the New Portfolio Management Agreement applies and must be
voted upon separately by the shareholders of the Series to which it
pertains. If the AIM Agreement is approved by the shareholders of
both the Strategic Equity Series and Capital Appreciation Series, it
will continue in effect. The agreement will remain in force for two
years from its effective date and will then continue in effect from
year to year thereafter in accordance with the terms of the 1940 Act.
INFORMATION ABOUT AIM CAPITAL MANAGEMENT, INC.
AIM, is a wholly owned subsidiary of AIM Advisors, Inc., a registered
investment advisor. INVESCO (NY), Inc., an affiliate of AIM,
previously served as Portfolio Manager of the Capital Appreciation
Series of the Trust.
As of December 31, 1998, AIM and AIM Advisors, Inc. together managed
or administered approximately $109 billion in assets. AIM has acted
as an investment advisor since its organization in 1986. AIM and AIM
Advisors, Inc. collectively manage or advise over 100 investment
portfolios encompassing a broad range of investment objectives. The
principal executive officers and directors of AIM are listed in
Appendix 1. The business addresses of AIM is 11 Greenway Plaza,
Suite 100, Houston, TX 77046.
The New Portfolio Management Agreement is included as Exhibit A. See
Appendix 1 for a list of the directors and the principal executive
officers of AIM, a table setting forth the other investment companies
managed by AIM with similar investment policies and objectives to
those of the Capital Appreciation Series and Strategic Equity Series,
and other information about AIM.
TRUSTEES' RECOMMENDATION - PROPOSAL 1
In determining whether it was appropriate to approve the New
Portfolio Management Agreement for each of the Series and to
recommend approval to Shareholders, the Board of Trustees, including
the Trustees who are not interested persons of DSI or AIM, considered
various matters and materials provided by DSI and AIM. Information
considered by the Trustees included, among other things, the
following: (1) the compensation to be received from DSI (not the
Trust) by AIM for its investment advisory services and the fairness
and reasonableness of such compensation, and that the fee under the
New Portfolio Management Agreement is lower than under the previous
Portfolio Management Agreements; (2) the nature and the quality of
the
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investment advisory services expected to be rendered under the
New Portfolio Management Agreement; (3) the background and prior
experience of AIM and its team of investment professionals; and (4)
the financial condition of AIM and its ultimate parent AMVESCAP PLC.
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 AIM.
PROPOSAL 2
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND BARING INTERNATIONAL INVESTMENT LIMITED
BACKGROUND INFORMATION FOR NEW PORTFOLIO MANAGEMENT AGREEMENTS
From February 18, 1998, Montgomery Asset Management, LLC has served
as the portfolio manager of the Developing World Series, and from
January 24, 1989, Van Eck Associates Corporation (collectively the
"Prior Managers") has served as the portfolio manager of the Hard
Assets Series, each pursuant to the terms of a separate agreement
("Prior Agreements"). As more fully described below, the Board
determined that it would be in the best interests of the Series to
replace the Prior Managers with another investment management
organization. Accordingly, at a meeting of the Board held on
February 16, 1999, the Board approved the termination of the Prior
Agreements and the engagement of Baring International Investment
Limited ("BIIL") pursuant to a New Portfolio Management Agreement
among DSI, BIIL and the Trust (the "BIIL Agreement") on behalf of the
Developing World Series and the Hard Assets Series. The BIIL
Agreement became effective on March 1, 1999, with respect to the
Developing World Series and the Hard Assets Series. The Prior
Agreements terminated on the same date that the New Portfolio
Management Agreement became effective. The terms and conditions of
the BIIL Agreement, is substantially the same as those of the Prior
Agreements, with the exception of the advisory fee schedule which
lowers the advisory fee to be paid by DSI (not the Series) to Baring
International with respect to the Hard Assets Series only. Fees paid
by DSI have no effect upon the expenses paid by the Series. Under
the 1940 Act, if shareholder approval of the BIIL Agreement, with
respect to each Series is not obtained within 120 days of the date on
which it became effective, it will terminate with respect to any
affected Series. The new fee arrangement for the Hard Assets Series
is included as part of the BIIL Agreement, which is attached as
Exhibit B.
The New Portfolio Management Agreement for each Series as approved by
the Board is submitted for approval by the shareholders of the Series
to which the New Portfolio Management Agreement applies and must be
voted upon separately by the Series to which it pertains. If the
BIIL Agreement is approved by the shareholders of the Strategic
Equity Series, and separately by shareholders of the Capital
Appreciation Series, it will continue in effect and will remain in
force for two years from its effective date and will then continue in
effect from year to year thereafter in accordance with the terms of
the 1940 Act.
INFORMATION ABOUT BARING INTERNATIONAL INVESTMENT LIMITED
BIIL, located at 155 Bishopgate, London, England, is registered under
the Investment Advisors Act of 1940 and provides investment
management services. BIIL is a wholly owned subsidiary of Baring
Asset Management Holdings Limited ("BAMHL"), also located at 155
Bishopgate, London, England and registered in England and Wales.
BAMHL, an affiliate of DSI, is also a wholly owned subsidiary of ING.
ING is the parent of the worldwide group of investment management
companies that operate under the collective name Baring Asset
Management ("BAM").
BAM provides global investment management services to U.S. investment
companies and maintains major investment offices in Boston, London,
Hong Kong and Tokyo. BAM's predecessor corporation was founded in
1762. BAM provides advisory services to institutional investors,
offshore investment companies, insurance companies and private
clients. As of December 31, 1998, BAM managed approximately $45.6
billion in assets.
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BIIL does not act as investment advisor to any other U.S. registered
investment companies with strategies, objectives and policies similar
to those of either Series. BIIL serves as advisor to individuals,
banks, non-U.S. registered investment companies, pension and profit
sharing plans, estates or charitable organizations, corporations or
other business entities. BIIL currently acts as investment advisor
to the Global Fixed Income Series of the Trust.
The New Portfolio Management Agreement is included as Exhibit B. See
Appendix 2 for a list of the directors and the principal executive
officers of BIIL.
TRUSTEES' RECOMMENDATION - PROPOSAL 2
In determining whether it was appropriate to approve the New
Portfolio Management Agreements for each of the Series and to
recommend approval to Shareholders, the Board of Trustees, including
the Trustees who are not interested persons of DSI or BIIL,
considered various matters and materials provided by DSI and BIIL.
Information considered by the Trustees included, among other things,
the following: (1) the compensation to be received from DSI (not the
Trust) by BIIL for its investment advisory services and the fairness
and reasonableness of such compensation, and that the fee under the
New Portfolio Management Agreement is lower than under the previous
Portfolio Management Agreement; (2) the nature and the quality of the
investment advisory services expected to be rendered under the New
Portfolio Management Agreements; (3) the background and prior
experience of BIIL and its team of investment professionals; (4) the
financial condition of BIIL and its parent BAMHL and; (5) the working
relationship between DSI and BIIL who are affiliates.
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 BIIL.
PROPOSAL 3
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND ALLIANCE CAPITAL MANAGEMENT L.P.
BACKGROUND INFORMATION FOR NEW PORTFOLIO MANAGEMENT AGREEMENT
From April 1, 1996, Robertson, Stephens & Company Investment
Management, LP served as the portfolio manager of Growth & Income
Series ("Robertson" or "Prior Manager") pursuant to the terms of a
separate agreement ("Prior Agreement"). As more fully described
below, the Board determined that it would be in the best interests of
the Series to replace the Prior Manager with another investment
management organization. Accordingly, at a meeting of the Board held
on February 16, 1999, the Board approved the termination of the Prior
Agreement and the engagement of Alliance Capital Management L.P.
("Alliance") pursuant to an agreement among DSI, Alliance and the
Trust ("Alliance Agreement"). The Alliance Agreement first became
effective on March 1, 1999 and the Prior Agreement terminated on the
same date. The terms and conditions of the Alliance Agreement, are
substantially the same as those of the Prior Agreement with the
exception of the advisory fee schedule which lowers the advisory fee
to be paid by DSI (not the Series) to Alliance. The fees paid to DSI
have no effect upon the expense paid by the Series. Under the 1940
Act, if shareholder ratification of the Alliance Agreement is not
obtained within 120 days of the date on which it became effective, it
will terminate. The new fee schedule is included as a part of the
Alliance Agreement, which is included as Exhibit C.
The New Portfolio Management Agreement for the Growth & Income Series
as approved by the Board is submitted for approval by the
shareholders of the Series and must be voted upon separately by the
Series. If the Alliance Agreement is approved by the shareholders of
the Growth & Income Series, it will continue in effect and will
remain in force for two years from its effective date and will then
continue in effect from year to year thereafter in accordance with
the terms of the 1940 Act.
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INFORMATION ABOUT ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance, with principle offices at 1345 Avenue of the Americas, New
York, New York 10105, is a major international investment manager,
supervising client accounts with assets totaling over $286 billion as
of December 31, 1998. Alliance was founded in 1987 as a Delaware
limited partnership. Alliance Capital Management Corporation, an
indirect wholly owned subsidiary of the Equitable Life Assurance
Society of the United States, is the general partner of Alliance.
Alliance is a professional investment management firm that provides
advisory services to pension and profit sharing plans, charitable
institutions, corporations, individual investors, trust and estates,
and other investment companies.
As a full-service investment management firm, Alliance's record as an
investment manager for the past 27 years is based on its in-depth
research capabilities. Combined, Alliance's research, portfolio
management and trading staff includes more than 230 experienced
professionals whose expertise encompasses stock and bond markets
worldwide, including emerging markets.
The New Portfolio Management Agreement is included as Exhibit C. See
Appendix 3 for a list of the directors and the principal executive
officer of Alliance, a table setting forth the other investment
companies managed by Alliance with similar investment policies and
objectives to those of the Growth & Income Series, and other
information about Alliance.
TRUSTEES' RECOMMENDATION - PROPOSAL 3
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 Alliance,
considered various matters and materials provided by DSI and
Alliance. Information considered by the Trustees included, among
other things, the following: (1) the compensation to be received from
DSI (not the Trust) by Alliance for its investment advisory services
and the fairness and reasonableness of such compensation, and that
the fee under the New Portfolio Management Agreement is lower than
under the Prior 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
background and prior experience of Alliance and its team of
investment professionals; and (4) the financial condition of Alliance
and its general partner Alliance Capital Management Corporation.
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 Alliance.
PROPOSAL 4
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND T. ROWE PRICE ASSOCIATES, INC.
BACKGROUND INFORMATION FOR NEW PORTFOLIO MANAGEMENT AGREEMENT
From January 24, 1989, Zweig Advisors, Inc. served as the portfolio
manager of Equity Income Series (formerly the Multiple Allocation
Series) ("Zweig" or "Prior Manager") pursuant to the terms of a
separate agreement ("Prior Agreement"). As more fully described
below, the Board determined that it would be in the best interests of
the Series to replace the Prior Manager with another investment
management organization. Accordingly, at a meeting of the Board held
on February 16, 1999, the Board approved the termination of the Prior
Agreement and the engagement of T. Rowe pursuant to an agreement
among DSI, T. Rowe and the Trust ("T. Rowe Agreement"). The T. Rowe
Agreement first became effective on March 1, 1999, and the Prior
Agreement terminated on the same date. The terms and conditions of
the T. Rowe Agreement, are substantially the same as those of the
Prior Agreement with the exception of the advisory fee schedule which
lowers the advisory fee to be paid by DSI (not the Series) to T.
Rowe. The fees paid by DSI have no effect upon the expenses paid by
the Series. Under the 1940 Act, if shareholder ratification of the
T. Rowe Agreement is not
8
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obtained within 120 days of the date on
which it became effective, the T. Rowe Agreement will terminate. The
new fee arrangement is included as part of the T. Rowe Agreement,
which is attached as Exhibit D.
The New Portfolio Management Agreement for the Equity Income Series
as approved by the Board is submitted for approval by the
shareholders of the Series and must be voted upon separately by the
Series. If the T. Rowe Agreement is approved by the shareholders of
the Equity Income Series it will continue in effect and will remain
in force for two years from its effective date and will continue in
effect from year to year thereafter in accordance with the terms of
the 1940 Act.
INFORMATION ABOUT T. ROWE PRICE ASSOCIATES, INC.
T. Rowe currently manages the assets of the Fully Managed Series of
the Trust pursuant to a Portfolio Management Agreement dated October
24, 1997. T. Rowe Price, with offices at 100 Pratt Street,
Baltimore, Maryland 21202, was founded 1937 by the late Thomas Rowe
Price, Jr. As of December 31, 1998, T. Rowe and its affiliates
managed over $147.8 billion in assets.
The New Portfolio Management Agreement is included as Exhibit D. See
Appendix 4 for a list of the directors and the principal executive
officer of T. Rowe, a table setting forth the other investment
companies managed by T. Rowe with similar investment policies and
objectives to those of the Equity Income Series, and other
information about T. Rowe.
TRUSTEES' RECOMMENDATION - PROPOSAL 4
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 T. Rowe,
considered various matters and materials provided by DSI and T.
Rowe. Information considered by the Trustees included, among other
things, the following: (1) the compensation to be received from DSI
(not the Trust) by T. Rowe for its investment advisory services and
the fairness and reasonableness of such compensation, and that the
fee under the New Portfolio Management Agreement is lower than 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 background and
prior experience of T. Rowe and its team of investment professionals;
(4) the financial condition of T. Rowe; and (5) the current working
relationship between DSI and T. Rowe.
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 T. Rowe.
PROPOSAL 5
APPROVAL OF CHANGES TO THE INVESTMENT OBJECTIVE AND CERTAIN
POLICIES OF THE EQUITY INCOME SERIES (FORMERLY, THE MULTIPLE
ALLOCATION SERIES) OF THE GCG TRUST
BACKGROUND INFORMATION
As currently in effect, the Series' investment objective is to "seek
the highest total return, consisting of capital appreciation and
current income, consistent with the preservation of capital." The
Series seeks to achieve this objective through investment in debt and
equity securities and the use of certain sophisticated investment
strategies and techniques. The proposed modification in the Series'
objective, which was approved by the Trustees at a meeting held on
February 16, 1999, entails restating the Series objective to "provide
substantial dividend income as well as long-term capital appreciation
through investments in common stocks of established companies." At
the February 16, 1999 meeting, the Board also approved the adoption
of two other modifications to the Series. In addition to the change
in investment objective, the other modifications entailed changing
the name of the Series from "Multiple Allocation Series" to "Equity
Income Series" and changing the investment policies of the Series.
The change in the name of the Series is intended to reflect
9
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more
accurately the Series' new objective, and the change in investment
policies is intended to provide the new Portfolio Manager with
policies more suited to the Portfolio Manager's investment style in
an effort to enhance the Series' ability to achieve its investment
objective. Overall, these changes are intended to permit T. Rowe
more flexibility to manage the Series according to its equity income
strategy. These two modifications, each of which was approved by the
Trustees, do not require specific shareholder approval and have
already been implemented. The change in investment objective,
however, will only be implemented after shareholder approval. A
description of these changes is set forth below under the heading
"Changes in the Investment Objective and Non-fundamental Investment
Policies of the Equity Income Series."
CHANGES IN THE NON-FUNDAMENTAL POLICIES AND INVESTMENT OBJECTIVE OF
THE EQUITY INCOME SERIES.
The current investment objective of the Series is to "seek the
highest total return." The proposed objective, as approved by the
Board, provides that the Series will seek substantial income and
long-term capital appreciation. If approved by shareholders, this
proposal would be implemented on May 1, 1999.
In addition to the modifications in the investment objective
described above, the Trustees have approved changes in certain of the
non-fundamental investment policies of the Series. Under the former
policies, the Series provided that in seeking its objective, it would
employ an asset allocation strategy involving shifts among a wide
range of investments, market sectors and cash and cash equivalents.
The policies further provided that the extent of the Series'
investment in debt and equity securities will be determined primarily
on the basis of certain market-timing techniques. Under the revised
policies, the Series will no longer be required to utilize
market-timing techniques, but will instead emphasize stock selection
based on a predetermined set of criteria as enumerated below.
Generally, the revised policies focus to a greater degree in equity
securities and stock selection rather than a debt and equity asset
allocation strategy. The Series will continue, however, to utilize
debt investments in pursuit of its objective. Equity securities
include common and preferred stock and rights and warrants to
purchase other equity securities. In general, investments in equity
securities are subject to market risk that may cause their prices to
fluctuate over time, and may be more suitable for long-term investors
who can bear the risk of short-term principal fluctuations.
In seeking long-term capital appreciation, it is anticipated that the
Series will continue to employ the wide range of investment
techniques currently permitted under the Series' existing investment
policies. The Series will continue, under normal market conditions,
to invest a major portion of its assets in U.S. common stocks and
fixed income securities. In selecting investments, the Series will
generally consider companies with 1) an established operating
history; 2) above average current dividend yield relative to the
average yield of the S&P 500; 3) low price/earnings ratios relative
to the S&P 500, 4); a sound balance sheet and other financial
characteristics and; 5) low stock price relative to a company's
underlying value as measured by assets, earnings, cash flow, or
business franchises. The Series will not limit its investments to
any particular type of company and may invest in, as it is currently
permitted to do, the stocks of established, high dividend paying
companies whose earnings are believed to be in a relatively strong
growth trend, or in companies whose value may not be reflected in its
stock price.
The Series' emphasis on such stocks, as well as its possible exposure
to fixed income securities could limit its potential for capital
appreciation. Sharply rising interest rates could also decrease the
appeal of stocks purchased by the Series, further restraining total
return. In addition, the value approach includes risks that 1) the
market will not recognize a security's intrinsic value for an
unexpectedly long time; and 2) a stock that is judged to be
undervalued is actually appropriately priced due to intractable or
fundamental problems that are not yet apparent. These policy changes
which do not require shareholder approval will be implemented on May
1, 1999.
During the course of deliberations, the Trustees considered views
expressed by DSI and T. Rowe that the recommended investment policy
change is intended to afford T. Rowe sufficient flexibility to
invest, under normal circumstances, at least 65% of total assets in
the common stocks of established companies paying above average
dividends. These companies are expected to have favorable prospects
for dividend growth and capital appreciation, as determined by T.
Rowe. Under the current policies, the Series invests no more than
50% of its assets in equity securities and is largely dependent upon
its asset allocation to achieve its objective. The changes are
designed to permit T. Rowe to manage in a fashion believed to be
consistent with its investment approach and will allow the manager to
manage the Series according to the Series' new objectives.
10
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Common stocks, in general, offer a way to invest for long-term growth
of capital. As the U.S. economy has expanded, corporate profits have
grown and share prices have risen. Nevertheless, economic growth has
been punctuated by periods of stagnation and recession. Share prices
of all companies, even the best managed and most profitable, can fall
for any number of reasons, ranging from lower-than-expected earnings
to changes in investor psychology. Significant trading by large
institutional investors also can lead to price declines. In
addition, if T. Rowe's assessment of company prospects proves
incorrect, companies that T. Rowe's managers and analysts expect to
do well may perform poorly. Since 1950, the U.S. stock market has
experienced 10 negative years as well as steep drops of shorter
duration. Its worst calendar quarter return in recent years was a
negative 22.5% in 1987's fourth quarter.
TRUSTEES' RECOMMENDATION - PROPOSAL 5
In light of the above, the Trustees concluded that the changes to the
investment objective and policies of the Equity Income Series are in
the best interest of the Series' shareholders. Accordingly, the
Board of Trustees, including the Trustees who are not interested
persons of any party involved with the changes, recommends the
approval of Proposal 5.
PROPOSAL 6
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND JANUS CAPITAL CORPORATION
BACKGROUND INFORMATION
From April 1, 1996, Robertson, Stephens & Company Investment
Management, LP served as the portfolio manager of Growth Series ("the
"Prior Manager"), pursuant to the terms of a separate agreement
("Prior Agreement"). As more fully described below, the Board
determined that it would be in the best interests of the Series to
replace the Prior Manager with another investment management
organization. Accordingly, at a meeting of the Board held on
February 16, 1999, the Board approved the termination of the Prior
Agreement and the engagement of Janus Capital Corporation ("Janus")
pursuant to an agreement among DSI, Janus and the Trust ("Janus
Agreement"). The Janus Agreement first became effective on March 1,
1999, and the Prior Agreement terminated on the same date. The terms
and conditions of the Janus Agreement, are substantially the same as
those of the Prior Agreement with the exception of the advisory fee
schedule which lowers the advisory fee to be paid by DSI (not the
Series) to Janus. The fees paid by DSI have no effect upon the
expenses paid by the Series. Under the 1940 Act, if shareholder
ratification of the Janus Agreement is not obtained within 120 days
of the date on which it became effective, it will terminate. The new
fee arrangement is included as part of the Janus Agreement, attached
as Exhibit E.
The New Portfolio Management Agreement for the Growth Series as
approved by the Board is submitted for approval by the shareholders
of the Series must be voted upon separately by the Series. If the
Janus Agreement is approved by the shareholders of the Growth Series,
it will continue in effect and will remain in force for two years
from its effective date and will continue in effect from year to year
thereafter in accordance with the terms of the 1940 Act.
INFORMATION ABOUT JANUS CAPITAL CORPORATION
Janus, a Colorado Corporation founded in 1978, with principal offices
at 100 Fillmore Street, Denver, Colorado 80206, is an investment
adviser with approximately $108 billion in assets under management as
of December 31, 1998. Kansas City Southern Industries, Inc. ("KCSI")
owns approximately 83% of the outstanding voting stock of Janus, most
of which was acquired in 1984. KCSI is a publicly traded holding
company whose primary subsidiaries are engaged in transportation and
financial services. Thomas H. Baily, President and Chairman of the
Board of Janus, owns approximately 12% of its voting stock and, by
agreement with KCSI, selects a majority of Janus' Board.
The New Portfolio Management Agreement is included as Exhibit E. See
Appendix 5 for a list of the directors and the principal executive
officer of Janus Capital Corporation, a table setting forth the other
11
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investment companies managed by Janus with similar investment
policies and objectives to those of the Growth Series and other
information about Janus.
TRUSTEES' RECOMMENDATION - PROPOSAL 6
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 Janus, considered
various matters and materials provided by DSI and Janus. Information
considered by the Trustees included, among other things, the
following: (1) the compensation to be received from DSI (not the
Trust) by Janus for its investment advisory services and the fairness
and reasonableness of such compensation, and that the fee under the
New Portfolio Management Agreement is lower than 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 background and prior
experience of Janus and its team of investment professionals; and (4)
the financial condition of Janus.
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 Janus.
CHANGE IN NAME
Also at the February 16, 1999 meeting, the Board of Trustees approved
the adoption of a change in the name of the Value + Growth Series
from "Value + Growth" to "Growth Series." The Trustees concluded
that "Growth Series" adequately reflects the objectives of the
Series. This modification does not require specific shareholder
approval and has already been implemented.
ADDITIONAL INFORMATION
CHANGES TO THE INVESTMENT POLICIES
OF THE STRATEGIC EQUITY SERIES OF THE GCG TRUST
BACKGROUND INFORMATION
The Series' investment objective is "to achieve capital
appreciation." Pursuant to the current investment policies, the
Series seeks to achieve this objective primarily through investment
in equity securities. The Series' investments in equities include
both stocks that the Portfolio Manager selects for its "growth"
characteristics and stocks that the Portfolio Manager selects for its
"income" characteristics. The extent of the of the Series'
investment in equity securities are based primarily on various market
timing techniques. The Portfolio Manager expects that the equity
portion of the Series' portfolio will generally be divided equally
between "growth" stocks and "income" stocks. While the Series'
objective will remain unchanged, the revised policy will allow the
Series to achieve its objective by "aggressively seeking to increase
shareholder capital by investing principally in common stocks with an
emphasis on medium-sized and smaller emerging growth companies." At
the February 16, 1999 meeting, the Trustees approved the adoption of
these modifications in the Series' investment policies. These
modifications do not require specific shareholder approval and will
be implemented May 1, 1999. A description of these changes is set
forth below under the heading "Changes in the Non-fundamental
Investment Policies of the Strategic Equity Series."
CHANGES IN THE NON-FUNDAMENTAL INVESTMENT POLICIES OF THE
STRATEGIC EQUITY SERIES
During the course of deliberations, the Trustees considered views
expressed by DSI and AIM, to the effect that the recommended
investment policy changes are intended to afford AIM sufficient
flexibility to invest in companies that are likely to benefit from
new or innovative products, services or processes that should enhance
such companies' prospects for future growth in earnings. It is
intended that the Series not be restricted to the "growth" and
"income" balancing policy, which existed under the policies of the
former policies.
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The Trustees have approved changes in certain non-fundamental
investment policies of the Strategic Equity Series. The former
policies provided that in seeking its objective, the Series would
employ market timing techniques developed by Dr. Martin Zweig and his
staff. The equity market-timing techniques incorporate general
market indicators, including interest rate and monetary analysis,
market sentiment indicators, price and trading volume statistics, and
measures of valuation, as well as other market indicators and
statistics which Dr. Zweig believed tended to point to significant
trends in the overall performance and the risk of the stock market.
Under the revised policies, the Series will no longer be required to
emphasis a market-timing technique but will instead emphasize the
purchase of securities of two basic categories: (a) "core" companies,
which the Series Management considers to have experienced
above-average and consistent long-term growth in earnings and to have
excellent prospects for outstanding future growth, and (b) "earnings
acceleration" companies which the Series' management believes are
currently enjoying a dramatic increase in profits. As a result of
the revised policy, the market prices of many of the securities
purchased and held by the Series may fluctuate widely. Any income
received from securities held by the Series will be incidental, and
an investor should not consider a purchase of shares of the Series as
equivalent to a complete investment program.
OUTSTANDING SHARES
As of the Record Date, there were the following number of Shares
outstanding for each Series of the Trust whose shareholders are asked
to vote for change(s):
SERIES SHARES OUTSTANDING
Capital Appreciation 14,660,685.440
Equity Income 21,351,226.192
Hard Assets 3,126,653.804
Strategic Equity 5,409,163.412
Growth & Income 20,217,272.096
Growth 15,933,800.056
Developing World 1,060,239.529
As of the Record Date, no persons were known to the Trust to be the
beneficial owner of more than 5% of the Shares of any Series of the
Trust subject to this proxy statement.
For the fiscal year ending December 1998, the Portfolio Managers to
the Capital Appreciation Series, Equity Income Series, Strategic
Equity Series, Growth & Income Series and Growth Series paid $9,600,
$31,496, $1,032, $75,075 and $11,587, respectively, in commissions to
affiliated brokers. This represented 2.63%, 11.96%, 0.09%, 12.26%
and 2.00% of total Series commissions, respectively.
For the fiscal year ending December 1998, DSI paid on behalf of the
Capital Appreciation Series, Equity Income Series, Hard Assets
Series, Strategic Equity Series, Developing World Series, Growth &
Income Series and Growth Series, a total of $1,113,876, $1,349,052,
$189,949, $315,395, $47,417, $490,723 and $371,191 in Portfolio
Management fees. Had the proposed fee been in effect, the Portfolio
Managers would have received the same fee for the Capital
Appreciation, Strategic Equity and Developing World Series and
$1,079,242 for the Equity Income Series, $151,959 for the Hard Asset
Series, $290,546 for the Growth & Income Series and $354,076 for the
Growth Series. The proposed fees would have represented a .10%
decline for each of the Equity Income Series and Hard Asset Series, a
.23% decline for the Growth & Income Series and a .03% decline for
the Growth Series.
Although the fees would be lower under the new portfolio management
agreements, fees for each individual Series are not being lowered and
thus, will not lower costs to investors. Therefore, DSI will receive
a larger portion of the Series' management fees in an arrangement
that better reflects the allocation of responsibilities between DSI
and the Portfolio Managers.
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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.
R. Brock Armstrong, age 52, serves as President and Chairman of the
GCG Trust since February 1999, Director and Chairman of the Board of
First Golden American Life Insurance Company of New York, since
December 1998, and as Group Executive of ING Group since October
1998. Mr. Armstrong was Senior Vice President, The Prudential
Insurance Company of America, April 1997 to October 1998; Executive
Vice President, London Insurance Group, August 1994 to April 1997;
President and Chief Financial Officer of Security First Group,
August 1991 to August 1994; Executive Vice President, of London
Insurance Group, November 1988 to August 1991.
Barnett Chernow, age 49, serves as Vice President of the Trust.
Additionally, Mr. Chernow is President, Golden American and First
Golden, April 1998 to present; Executive Vice President, Directed
Services, Inc., 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 56 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 42, 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 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 1475 Dunwoody
Drive, West Chester, Pennsylvania 19380. 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 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 1998 Annual Report to Shareholders was mailed to record
holders on or about March 1, 1999. IF YOU SHOULD DESIRE AN
ADDITIONAL COPY OF THE ANNUAL REPORT, IT CAN BE OBTAINED, WITHOUT
CHARGE, FROM DSI BY CALLING (800) 366-0066.
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COSTS OF SOLICITATION
The costs associated with the Meeting will be paid by 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
1999 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 3, 1999
West Chester, PA
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APPENDIX 1
OTHER INFORMATION REGARDING AIM
DIRECTORS AND EXECUTIVE OFFICERS OF AIM
The business address of each person is 11 Greenway Plaza, Suite 100,
Houston, TX 77046.
<TABLE>
<CAPTION>
NAME POSITION WITH AIM OTHER AFFILIATIONS
- ---- ----------------- ------------------
<S> <C> <C>
Charles T. Bauer Chairman and Director Chairman of the Board of Directors of
AIM Management Group, Inc., AIM
Advisors, Inc., AIM Distributors, Inc.,
AIM Fund Services, Inc. and Fund
Management Company; and Vice
Chairman and Director, AMVESCAP
PLC
Gary T. Crum President and Director Director and Senior Vice President of
AIM Management Group Inc., AIM
Advisors, Inc.; and Director, AIM
Distributors, Inc. and AMVESCAP PLC
Robert H. Graham Senior Vice President and Director, President and Chief Executive
Director Officer, AIM Management Group Inc.;
Director and President, AIM Advisors,
Inc.; Director and Senior Vice President,
AIM Distributors, Inc., AIM Fund
Services, Inc. and Fund Management
Company; Director, AMVESCAP PLC
Robert G. Alley Senior Vice President Vice President, AIM Advisors, Inc.
Stuart W. Coco Senior Vice President Vice President, AIM Advisors, Inc.
Karen Dunn Kelley Senior Vice President Vice President, AIM Advisors, Inc.
Jonathan C. Schoolar Senior Vice President Vice President, AIM Advisors, Inc.
Ronald P. Stein Senior Vice President Vice President, AIM Advisors, Inc.
</TABLE>
AIM manages the following portfolio with a similar investment style
as that of the Strategic Equity Series:
<TABLE>
<CAPTION>
FUND NET ASSETS (AS OF 02/26/99) FEE SCHEDULE
- ---- --------------------------- ------------
<S> <C> <C>
AIM Equity Funds, Inc. - $13,765,813,387 1.0% of first $30 million
AIM Constellation Fund* 0.75% in excess of $30 million to and
including $150 million
0.625% in excess of $150 million
AIM has agreed to voluntarily reduce fees
at higher asset levels.
</TABLE>
i APPENDIX 1
<PAGE>
<PAGE>
AIM manages the following porfolio with a similar investment style as
that of the Capital Appreciation Series:
<TABLE>
<CAPTION>
FUND NET ASSETS (AS OF 02/26/99) FEE SCHEDULE
- ---- --------------------------- ------------
<S> <C> <C>
Travelers Series Fund Inc. - $252,479,554 0.325% of average daily net assets
AIM Capital Appreciation
Portfolio
</TABLE>
* The Fee Schedule indicated is the investment advisory fee paid to
AIM Advisors, Inc., the fund's investment advisor. AIM Capital
Management, Inc. serves as sub-advisor to the fund and receives 50%
of the investment advisory fee.
ii APPENDIX 1
<PAGE>
<PAGE>
APPENDIX 2
OTHER INFORMATION REGARDING BARING INTERNATIONAL ASSET MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF BIIL
The business address of each person, except as noted following, is
155 Bishopsgate, London, England.
<TABLE>
<CAPTION>
NAME POSITION WITH BIIL OTHER AFFILIATIONS
- ---- ------------------ ------------------
<S> <C> <C>
John Bolsover Chairman of the Board Chairman, Baring Asset Management
Inc.; Chairman and Chief Executive
Officer, Baring Asset Management
Holdings Limited as Successor Co.
David J. Brennan Director and Chief Chairman and Chief Executive Officer,
Executive Officer Baring Asset Management Limited;
Director, Chairman and Chief Executive
Officer, Baring International Investment
(Far East) Limited, and Baring Asset
Management (Asia) Limited
William L. Braman Director and Chief Director and Group Chief Investment,
Investment Officer Officer Baring Asset Management Ltd.
Julian T. Swayne Chief Financial Officer Controller and Chief Financial Officer,
Baring Asset Management Ltd.
Toby H. Acton Chief Compliance Officer
Michael D. Clegg Director and Head of Director, Baring Asset Management, Ltd.
Investment Operations
Mala S. Dhillon Director and Group Head
of Legal Compliance
John E. Heskett Director and Group Head
of Sales, Business Development
and Client Service
Mark W. Weber Director and Group Head
125 High Street of Marketing
Suite 2700
High Street Tower
Boston, MA 02110-2723
</TABLE>
BIIL serves as advisor to individuals, banks, non-U.S. registered
investment companies, pension and profit sharing plans, trusts,
estates or charitable organizations, corporations or other business
entities.
i APPENDIX 2
<PAGE>
<PAGE>
APPENDIX 3
OTHER INFORMATION REGARDING ALLIANCE CAPITAL MANAGEMENT LP
DIRECTORS AND EXECUTIVE OFFICERS OF ALLIANCE
The business address of each person, except as noted following, is
1345 Avenue of the Americas, New York, NY 10105
<TABLE>
<CAPTION>
NAME POSITION WITH ALLIANCE OTHER AFFILIATIONS
- ---- ---------------------- ------------------
<S> <C> <C>
Dave H. Williams Chairman
Bruce W. Calvert Vice Chairman and Chief Director, Vice Chairman & Chief
Executive Officer & Director Executive Officer, Alliance Capital
Management Corporation
Alfred Harrison Vice Chairman & Director Director & Vice Chairman, Alliance
601 Second Avenue South Capital Management Corporation
Suite 5000
Minneapolis, MN 55402
John D. Carifa President and Chief Operating President, Chief Operating Officer and
Officer & Director Director, Alliance Capital
Management Corporation
David Brewer, Jr. Senior Vice President and Senior Vice President, General Counsel,
General Counsel and Secretary Alliance Capital Management
Corporation
Robert Joseph Senior Vice President and Senior Vice President and Chief
Chief Financial Officer Financial Officer, Alliance Capital
Corporation
Kathleen Ann Corbet Executive Vice President and Executive Vice President and Chief of
Chief of Investment Operations Investment Operations, Alliance
Capital Management
John L Blundin Executive Vice President Executive Vice President, Alliance
Capital Management Corporation
Robert Gene Hersterberg Senior Vice President Senior Vice President, Alliance Capital
Management Corporation
Welson Rudolph Jantzen Senior Vice President Senior Vice President, Alliance Capital
Management Corporation
Wayne D. Lysri Executive Vice President Executive Vice President, Alliance
Capital Management Corporation
Joseph E. Potter Senior Vice President Senior Vice President, Alliance Capital
Management Corporation
Alden Merle Stewart Executive Vice President
Benjamin Duke Holloway Director Director of Alliance Capital
Management Corporation
Denis Duverne Director Senior Vice President of AXA-VAP
Frank Savage Director Senior Vice President of the Equitable
Life Assurance Society of the United
States; Director of Alliance Capital
Management Corporation
</TABLE>
i APPENDIX 3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION WITH ALLIANCE OTHER AFFILIATIONS
- ---- ---------------------- ------------------
<S> <C> <C>
Louis Javier Bastida Director CFO & Member of the Executive
Committee of Banco Bilbao Vizcaya;
Director Alliance Capital Management
Corporation
Henri de la Croix de Castrus Director Senior Executive Vice President of
AXA-VAP; Director of Alliance Capital
Management Corporation; Director of the
Equitable Life Assurance Society of the
United States; Treasury Director, the
Treasury, Paris France
Kevin C. Dolan Director Director of Alliance Capital Management
Corporation; Senior Vice President of
AXA-VAP Chief Executive Officer of
AXA Investment Managers, S.A.
Herre Hatt Director Director of Alliance Capital Management
Corporation; Executive AXA-VAP
Reba White Director Director, Alliance Capital Management
Corporation
Peter D. Noris Director Director, Alliance Capital Management
Corporation; Executive Vice President and
Chief Investment Officer of the Equitable
Life Assurance Society of the U.S.
Robert Zoellick Director Director of Alliance Capital Management
Corporation; Professor, United States
Naval Academy
Donald Hood Brydon Director Director of Alliance Capital Management
Corporation; Chairman & CEO, AXA
Investment Managers, S.A.
Edward Miller Director Director of Alliance Capital Management
Corporation; President & CEO of the
Equitable Companies Incorporated;
Chairman & CEO, The Equitable Life
Assurance Society of the United States;
Senior Executive Vice President, AXA-VAP
Stanley B. Tulin Director Director of Alliance Capital Management
Corporation; Executive Vice President &
Chief Financial Officer of The Equitable
Companies Incorporated; Vice Chairman
& CFO of The Equitable life Assurance
Society of the U.S.
Michael Hegarty Director Director, Alliance Capital Management
Corporation, Vice Chairman & COO &
Director, The Equitable Companies
Incorporated; President, COO & Director,
The Equitable life Assurance Society of the
United States
</TABLE>
ii APPENDIX 3
<PAGE>
<PAGE>
Alliance also manages the Pacific Select Portfolio with the same
investment style as that of the Growth & Income Series. The Pacific
Select Portfolio has $240,000,000 in net assets. Alliance charges an
investment advisors fee based on the following schedule:
.60% on the first 10,000,000
.45% on assets over 100,000,000
.40% on assets over 500,000,000
iii APPENDIX 3
<PAGE>
<PAGE>
APPENDIX 4
Other Information Regarding T. Rowe Price Associates, Inc.
The directors and principal executive officer of T. Rowe Price
Associates, Inc. and their principal occupations are as shown below.
The business address of each such person, unless otherwise indicated,
is 100 East Pratt Street, Baltimore, Maryland 21202.
<TABLE>
<CAPTION>
NAME POSITION WITH T. ROWE OTHER AFFILIATIONS
- ---- --------------------- ------------------
<S> <C> <C>
James E. Halbkat, Jr. Director President of U.S. Monitor Corporation
P.O. Box 23109
Hilton Head Island, SC
29925
Richard L. Menchel Director Limited Partner of the Goldman Sachs
85 Broad Street Group L.P.
2nd Floor
New York, NY 10004
Robert L. Stickland Director Director of Loew's Companies, Inc.;
604 Two Piedmont Director of Hannaford Bros., Co.
Plaza Building
Winston-Salem, NC 27104
Philip C. Walsh Director
Pleasant Valley
Peapack, NJ 07977
Anne Marie Whittemore Director Partner of the law firm of McGuire,
One James Center Woods, Battle & Booth; Director of:
Richmond, VA 23219 Owens and Minor, Inc., Fort James
Corporation, the James River
Corporation and Albemarle Corporation
James S. Riepe Vice-Chairman of the Board, Director of Price-Fleming, Chairman of
Director and Managing the Board and President of T. Rowe
Director Price Trust Company, Chairman of the
Board of T. Rowe Price (Canada), Inc. T.
Rowe Price Investment Services, Inc., T.
Rowe Price Investment Technologies,
Inc. T. Rowe Price Retirement Plan
Services, Inc. and T. Rowe Price
Services, Director of Price - Fleming, T.
Rowe Price Insurance Agency, Inc. and
TRPH Corporation; Director and
President of TRP Distribution, Inc. TRP
Suburban Second, Inc. and TRP
Suburban , Inc; and Director and Vice
President of T. Rowe Price Stable Asset
Management
George A. Roche Chairman of the Board, Director of the Board of TRP Finance,
President and Director Inc.; Director of Price-Fleming, T. Rowe
Price Retirement Plans Services, Inc.
and T. Rowe Price Strategic Partners,
Inc., and Director and Vice President of
T. Rowe Price Threshold Fund
Associates, Inc., TRP Suburban Second,
Inc., and TRP Suburban , Inc.
</TABLE>
i APPENDIX 4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION WITH T. ROWE OTHER AFFILIATIONS
- ---- --------------------- ------------------
<S> <C> <C>
M. David Testa Vice-Chairman of the Board, Chairman of the Board of Price-Fleming
Director and Managing
Director
Henry H. Hopkins Director and Managing Vice President of Price-Fleming
Director
James A. C. Kennedy III Director and Managing
Director
John H. Laport, Jr. Director and Managing
Director
William T. Reynolds Director and Managing
Director
Brian C. Rogers Director and Managing
Director
Alvin M. Younger, Jr. Chief Financial Officer, Secretary and Treasurer of Price-
Managing Director, Secretary Fleming
and Treasurer
Edward C. Bernard Managing Director
Michael A. Goff Managing Director
Charles E. Vieth Managing Director
</TABLE>
T. Rowe Price manages the following portfolios with a similar
investment style as that of the Equity Income Series:
<TABLE>
<CAPTION>
NET ASSETS AS
INVESTMENT ANNUAL RATE OF OF 12/31/98
INVESTMENT COMPANY NAME OBJECTIVE COMPENSATION (IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUBADVISER:
T. Rowe Price Associate, Inc. N/A N/A $148 billion in assets
under management
T. ROWE PRICE
MUTUAL FUNDS:
T. Rowe Price Dividend Income . 25% (Individual fee) $13,495.1
Equity Income Fund Capital Growth .32% (group fee)
T. Rowe Price Dividend Income .85% (Covers both $527.0
Equity Income Portfolio Capital Growth investment management
and operating expenses)
SUBADVISED
MUTUAL FUNDS:
Endeavor Series Trust Dividend Income .40% $262.4
Equity Income Portfolio Capital Growth
EQ Advisors Trust
T. Rowe Price Equity Dividend Income .40% $244.4
Income Portfolio Capital Growth
</TABLE>
ii APPENDIX 4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS AS
INVESTMENT ANNUAL RATE OF OF 12/31/98
INVESTMENT COMPANY NAME OBJECTIVE COMPENSATION (IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John Hancock Variable Series
Trust I: Dividend Income .50% $123.3
Large Cap Value Portfolio Capital Growth
Maxim Series Trust Dividend Income .50% on first $20 million $209.7
Maxim T. Rowe Price Capital Growth .40% on next $30 million
Equity Income .40% on all assets once
assets exceed
$50 million
Manufacturers Investment Dividend Income .40% on first $50 million $1,088.3
Trust Capital Growth .30% between $50-$200 million
Equity - Income Trust .20% between $200-$500 million
.20% on all assets over $500
million
Note: This will be changed
starting 5/1/99
North American Funds Dividend Income .40% $176.1
Equity - Income Fund Capital Growth
SBL Fund Dividend Income .50% on first $20 million $204.0
Series O Capital Growth .40% on next $30 million
(Equity Income Series) .40% on all assets above $50
million
Security First Trust Growth and Income .35% $313.9
Growth and Income Series
</TABLE>
iii APPENDIX 4
<PAGE>
<PAGE>
APPENDIX 5
OTHER INFORMATION REGARDING JANUS CAPITAL CORPORATION
DIRECTORS AND EXECUTIVE OFFICERS OF JANUS
The business address of each person, except as noted following, is
100 Fillmore, Denver, CO 80206.
<TABLE>
<CAPTION>
NAME POSITION WITH JANUS OTHER AFFILIATIONS
- ---- ------------------- ------------------
<S> <C> <C>
Thomas H. Bailey President, Director, President and Chairman of Trustees,
Chairman, CEO Janus Investment Fund and Janus
Aspen Series
James P. Craig III Director, Vice Chairman Trustee and Exec. V.P., Janus
Chief Investment Officer Investment Fund and Janus Aspen
Series
Michael E. Herman Director President, Kansas City Royals Baseball
Team; Chairman Finance Committee,
Ewing Marion Kauffman Foundation
Thomas A. McDonnell Director President, DST Technologies Inc.;
President, Director and CEO, DST
Systems Inc.
Landon H. Rowland Director President and CEO, Kansas City
Southern Industries Inc.
Michael Stolper Director President, Stolper & Company
</TABLE>
The following portfolios are managed with a similar investment style
as that of the Growth Series:
<TABLE>
<CAPTION>
FUND NET ASSETS (AS OF 02/28/99) FEE SCHEDULE
---- --------------------------- ------------
<S> <C> <C>
Janus Investment Fund $3,797,382,762 .75% of first $300 million
Janus Mercury Fund* .70% of next $200 million
.65% on assets over $500 million
JNL Series Trust $188,728,690 .55% on first $100 million, .50% on
JNL Aggressive Growth Series $100 - 500 million, .45% over $500
million
New England Funds Trust I - $355,573,324 .55% on first $50 million, .50% over
New England Star Advisers Fund $50 million
Pacific Select Fund - $1,437,786,353 .60% on first $100 million, .55% over
Growth LT Portfolio $100 million
Sun America - Seasons Series Trust $67,897,288 .60% on first $200 million, .55% over
4 Multi-Managed Portfolios $200 million
Large Cap Growth Portfolio
WM Trust II - $393,428,994 .55% on first $100 million, .50% over
Growth Fund $100 million
WM Variable Trust - $178,386,644 .55% on first $25 million, .50% over
Growth Fund $25 million
</TABLE>
* This is the only fund listed for which Janus serves directly
as adviser. Janus serves as sub-adviser to the other funds listed.
i APPENDIX 5
<PAGE>
<PAGE>
EXHIBIT A
SUBADVISORY AGREEMENT
GCG TRUST
THIS AGREEMENT is made this 26th day of February, 1999, by
and between GCG Trust (the "Trust"), a Massachusetts business
trust, on behalf of the portfolios listed on Schedule A hereto
(the "Portfolios"), Directed Services, Inc. (the "Manager") a New
York corporation and AIM Capital Management, Inc. (the "Sub-
Adviser") a Delaware corporation.
WHEREAS, the Trust represents that it is registered under
the Investment Company Act of 1940, as amended (the A1940 Act")
as an open-end, diversified management investment company,
consisting of multiple series of investment portfolios;
WHEREAS, the Manager represents that it is registered under
the Investment Advisers Act of 1940, as amended (the "Advisers
Act") as an investment adviser and engages in the business of
acting as an investment adviser;
WHEREAS, the Sub-Adviser represents that it is registered
under the Advisers Act as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Trust represents that the Board of Trustees of
the Trust is authorized to classify or reclassify authorized but
unissued shares of the Trust, and as of the date of this
Agreement the Trust's Board of Trustees has authorized the
issuance of series of shares representing interests in investment
portfolios; and
WHEREAS, the Manager represents that it has entered into a
management agreement dated as of October 24, 1997 with the Trust
(the "Management Agreement"), pursuant to which the Manager shall
act as manager with respect to the Portfolios;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties hereto agree
as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Trust desires to employ its capital relating to the
Portfolios by investing and reinvesting in investments of the
kind and in accordance with the investment objective(s), policies
and limitations specified in the prospectuses (the "Prospectus")
and the statements of additional information (the "Statement")
filed with the Securities and Exchange Commission as part of the
Trust's Registration Statement on Form N-1A, as amended or
supplemented from time to time, and in the manner and to the
extent as may from time to time be approved by the Board of
Trustees of the Trust (the "Board"). Copies of the Registration
Statement, Prospectus and the Statement have been or will be
provided to the Sub-Adviser. The Trust agrees promptly to
provide copies of all amendments and supplements to the current
Registration Statement, Prospectus and the Statement to the Sub-
Adviser on or before the effective date thereof on an on-going
basis. Until the Trust delivers any such amendment or supplement
to the Sub-Adviser, the Sub-Adviser shall be fully protected in
relying on the Prospectus and Statement as previously furnished
to the Sub-Adviser. The Trust employs the Manager as the manager
to the Portfolios pursuant to the Management Agreement, and the
Trust and the Manager desire to employ and hereby appoint the
Sub-Adviser to act as the sub-investment adviser to the
Portfolios. The Sub-Adviser accepts the appointment and agrees
to furnish the services for the compensation set forth below.
2. SERVICES AS SUB-ADVISER
Subject to the supervision, direction and approval of the
Board and the Manager, the Sub-Adviser shall conduct a continual
program of investment, evaluation and, if appropriate in the view
of the Sub-Adviser, sale and reinvestment of the Portfolios'
assets. The Sub-Adviser is authorized, in its sole discretion
and without prior consultation with the Manager, to: (a) manage
the Portfolios' assets in accordance with each Portfolio's
investment objective(s) and policies as stated in the
A - 1
<PAGE>
<PAGE>
Prospectus
and the Statement; (b) make investment decisions for the
Portfolios; (c) place purchase and sale orders for portfolio
transactions on behalf of the Portfolios; and (d) employ
professional portfolio managers and securities analysts who
provide research services to the Portfolios.
In addition, (i) the Sub-Adviser shall furnish the Manager
daily information concerning portfolio transactions and quarterly
and annual reports concerning transactions and performance of the
Portfolios in such form as may be mutually agreed by the Manager
and the Sub-Adviser, and the Sub-Adviser agrees to review the
Portfolio and discuss the management thereof with the Manager and
the Board.
(ii) Unless the Manager gives the Sub-Adviser written
instructions to the contrary, the Sub-Adviser shall use its good
faith judgment in a manner which it reasonably believes best
serves the interests of the Portfolios' shareholders to vote or
abstain from voting all proxies solicited by or with respect to
the issuers of securities in which assets of the Portfolios may
be invested.
(iii) The Sub-Adviser shall maintain and preserve such
records related to the Portfolios' transactions as required under
the 1940 Act. The Manager shall maintain and preserve all books
and other records not related to the Portfolios= transactions as
required under the 1940 Act. The Sub-Adviser shall timely
furnish to the Manager all information relating to the Sub-
Adviser's services hereunder reasonably requested by the Manager
to keep and preserve the books and records of the Portfolios.
The Sub-Adviser agrees that all records which it maintains for
the Portfolios are the property of the Trust and the Sub-Adviser
will surrender promptly to the Trust copies of any of such
records.
(iv) The Sub-Adviser shall maintain compliance procedures
for the Portfolios that it reasonably believes are adequate to
ensure the Portfolios' compliance with (A) the 1940 Act and the
rules and regulations promulgated thereunder and (B) each
Portfolio's investment objective(s) and policies as stated in the
Prospectus and Statement. The Sub-Adviser shall maintain
compliance procedures that it reasonably believes are adequate to
ensure its compliance with the Advisers Act.
(v) The Sub-Adviser has adopted a written code of ethics
that it reasonably believes complies with the requirements of
Rule 17j-1 under the 1940 Act, which it will provide to the
Trust. The Sub-Adviser has policies and procedures regarding the
detection and prevention and the misuse of material, nonpublic
information by the Sub-Adviser and its employees as required by
the Insider Trading and Securities Fraud Enforcement Act of 1988.
3. BROKERAGE
The Sub-Adviser is responsible for decisions to buy and sell
securities for the Portfolios, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's
primary consideration in effecting a security transaction will be
executed at the most favorable price. In selecting a broker-
dealer to execute each particular transaction, the Sub-Adviser
will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of
the broker-dealer, the size of and difficulty in executing the
order; and the value of the expected contribution of the broker-
dealer to the investment performance of the Portfolio on a
continuing basis. Accordingly, the price to a Portfolio in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board may from time to time
determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused a Portfolio to
pay a broker or dealer that provides brokerage and research
services to the Sub-Adviser an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser 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 or dealer, viewed in terms of either that particular
transaction of the Sub-Adviser's overall responsibilities with
respect to a particular Portfolio, and to the other clients of
the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion. The Sub-Adviser is further authorized to allocate
A - 2
<PAGE>
<PAGE>
the orders placed by it on behalf of the Portfolios to such
brokers and dealers who also provide research or statistical
material, or other services to the Portfolios or to the
Sub-Adviser. Such allocation shall be in such amounts and
proportions as the Sub-Adviser shall determine and the Sub-
Adviser will report on said allocations regularly to the Board
indicating the brokers to whom such allocations have been made
and the basis therefor.
4. INFORMATION PROVIDED TO THE COMPANY AND THE MANAGER
The Sub-Adviser shall keep the Trust and the Manager
informed of developments materially affecting the Portfolios'
holdings, and shall, on its own initiative, furnish the Trust and
the Manager from time to time with whatever information the Sub-
Adviser believes is appropriate for this purpose.
5. COMPENSATION
In consideration of the services rendered pursuant to this
Agreement, the Manager will pay the Sub-Adviser an annual fee
calculated at the rate specified in Schedule B hereto. The fee
is calculated daily and paid monthly. The fee for the period
from the Effective Date (defined below) of the Agreement to the
end of the month during which the Effective Date occurs shall be
prorated according to the proportion that such period bears to the
full monthly period. Upon any termination of this Agreement before
the end of a month, the fee for such part of that month shall be
prorated according to the proportion that such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees
payable to the Sub-Adviser, the value of each Portfolio's net assets
shall be computed at the times and in the manner specified in the
Prospectus and/or the Statement.
6. EXPENSES
The Sub-Adviser shall bear all expenses incurred by it in
connection with the performance of its services under this
Agreement. Each Portfolio will bear certain other expenses to be
incurred in its operation, including, but not limited to,
investment advisory fees, sub-advisory fees (other than sub-
advisory fees paid pursuant to this Agreement) and administration
fees; fees for necessary professional and brokerage services;
costs relating to local administration of securities; fees for
any pricing service; the costs of regulatory compliance; and pro
rata costs associated with maintaining the Trust's legal
existence and shareholder relations. All other expenses not
specifically assumed by the Sub-Adviser hereunder or by the
Manager under the Management Agreement are borne by the
Portfolios or the Trust.
7. STANDARD OF CARE
The Sub-Adviser shall exercise its best judgment and shall
act in good faith in rendering the services listed in paragraphs
2 and 3 above. The Sub-Adviser, its officers, directors and
employees shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolios, any
shareholder of the Portfolios or the Manager in connection with
the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport
to protect the Sub-Adviser against any liability to the Manager,
the Trust or to the shareholders of the Portfolios to which the
Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Adviser's
reckless disregard of its obligations and duties under this
Agreement.
8. TERM OF AGREEMENT
This Agreement shall become effective with respect to each
Portfolio as of March 1, 1999 (the "Effective Date") and shall
continue for an initial two-year term and shall continue
thereafter so long as such continuance is specifically approved
at least annually as required by the 1940 Act. This Agreement is
terminable with respect to any Portfolio, without penalty, on 60
days' written notice, by the Board or by vote of holders of a
majority (as defined in the 1940 Act and the rules thereunder) of
the outstanding voting securities of the Portfolio, or upon 60
days' written notice, by the Sub-Adviser. This Agreement will
also terminate automatically in the event of its assignment (the
term Aassignment@ having the meaning defined in Section 2(a)(4)
of the 1940 Act and the rules thereunder).
A - 3
<PAGE>
<PAGE>
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Trust understands that the Sub-Adviser now acts, will
continue to act and may act in the future as investment manager
or adviser to fiduciary and other managed accounts, and as
investment manager or adviser to other investment companies,
including any offshore entities, or accounts, and the Trust has
no objection to the Sub-Adviser's so acting, provided that
whenever the Portfolios and one or more other investment
companies or accounts managed or advised by the Sub-Adviser have
available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a
formula believed to be equitable to each company and account.
The Trust recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for the
Portfolios. In addition, the Trust understands that the persons
employed by the Sub-Adviser to assist in the performance of the
Sub-Adviser's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement
shall be deemed to limit or restrict the right of the Sub-Adviser
or any affiliate of the Sub-Adviser to engage in and devote time
and attention to other businesses or to render services of
whatever kind or nature.
10. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other
parties at such address as such other parties may designate for
the receipt of such notice. Until further notice to the other
parties, it is agreed that the address of each party is as
follows:
(a) To the Trust:
Prior to March 19, 1999 After March 19, 1999
Myles R. Tashman Myles R. Tashman
GCG Trust
The GCG Trust The GCG Trust
1001 Jefferson Street 1463 Dunwoody Road
Suite 400 West Chester, PA 19380
Wilmington, DE 19801
(b) To the Manager:
Prior to March 19, 1999 After March 19, 1999
Myles R. Tashman Myles R. Tashman
Directed Services, Inc.
The GCG Trust The GCG Trust
1001 Jefferson Street 1463 Dunwoody Road
Suite 400 West Chester, PA 19380
Wilmington, DE 19801
(c) To the Sub-Adviser:
AIM Capital Management, Inc.
President
11 Greenway Plaza, Suite 1919
Houston, TX 77046
cc: General Counsel
A - 4
<PAGE>
<PAGE>
11. REPRESENTATIONS
The Trust represents that a copy of the Agreement and
Declaration of Trust together with all amendments thereto, is on
file with the Secretary of the Commonwealth of Massachusetts.
Each of the parties hereto represents that the Agreement has
been duly authorized, executed and delivered by all required
action.
12. USE OF NAME
The Trust may use the names "AIM Capital Management,
Inc.", "AIM Capital Management", or "AIM Capital" (collectively
the AIM Names) only for so long as this Agreement or any
extension, renewal, or amendment hereof remains in effect. At
such times as this Agreement shall no longer be in effect, the
Trust shall cease to use such names or any other name indicating
that it is advised by or otherwise connected with the Sub-Adviser
and shall promptly change its name accordingly. The Trust
acknowledges that it has authority to use the AIM Names through
permission of the Sub-Adviser, and agrees that the Sub-Adviser
reserves to itself and any successor to its business the right to
grant the non-exclusive right to use the aformentioned names or
any similar names to any other corporation or entity, including
but not limited to any investment company of which the Sub-
Adviser or any subsidiary or affiliate thereof or any successor
to the business of any thereof shall be the investment adviser.
13. SEVERABILITY
If any provision of this Agreement is found to be
unenforceable, then this Agreement shall be deemed to be amended
by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent. The remainder
of this Agreement shall not be affected by such modification.
14. QUESTIONS OF INTERPRETATION
Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such term or provision of the 1940 Act
or the Advisers Act and to interpretations thereof, if any, by
the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission issued pursuant to said
Acts. In addition, where the effect of a requirement of the 1940
Act or the Advisers Act reflected in any provision of this
Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in triplicated by their respective
officers on the day and year first written above.
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GCG TRUST
Attest: /s/ Marilyn Talman By: /s/ Myles R. Tashman
------------------ --------------------
Name: Myles R. Tashman
----------------
Title: Secretary
---------
DIRECTED SERVICES, INC.
Attest: /s/ Marilyn Talman By: /s/ Myles R. Tashman
------------------ --------------------
Name: Myles R. Tashman
----------------
Title: Secretary
---------
AIM CAPITAL MANAGEMENT, INC.
Attest: /s/ Nancy L. Martin By: /s/ Gary T. Crum
------------------- ----------------
Name: Gary T. Crum
------------
Title: President
---------
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SCHEDULE A
Portfolios
Capital Appreciation Portfolio
Strategic Equity Portfolio
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<PAGE>
SCHEDULE B
Fee Schedule
Pursuant to Section 5 of the Sub-Advisory Agreement among GCG
Trust, Directed Services, Inc. and AIM Capital Management,
Inc. (the ASub-Adviser@), the fees payable to the Sub-Adviser
shall be calculated by applying the following rates to the
average daily net assets of the Portfolios as indicated
below:
Portfolio Net Assets Annual Rate
Capital Appreciation Portofolio First $250 million 0.50%
Next $250 million 0.45%
Over $500 million 0.40%
Strategic Equity Portfolio First $250 million 0.50%
Next $250 million 0.45%
Over $500 million 0.40%
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EXHIBIT B
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 24th day of October, 1997, among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. (the "Manager"), a New York corporation, and
Baring International Investment Limited ("Portfolio Manager"), a
limited liability company organized under the laws of the United
Kingdom.
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
between the Trust, the Manager, and the Portfolio Manager as
follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint
Baring International Investment Limited to act as Portfolio
Manager to the Series designated on Schedule A of this Agreement
(each a "Series") for the periods and on the terms set forth in
this Agreement. The Portfolio Manager accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series other
than the Series with respect to which the Trust and the Manager
wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall promptly notify the
Portfolio Manager in writing. If the Portfolio Manager is
willing to render such services, it shall so notify the Trust and
Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. PORTFOLIO MANAGEMENT DUTIES AND AUTHORITY. 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. In
accordance with the forgoing duties, the Portfolio Manager is
hereby authorized to act as agent for the portfolio to order
deposits and the investment of cash and purchases and sales of
securities for the Series account and risk and in the name of the
Trust. This authorization shall be continuing one and shall
remain in full force and effect until this Agreement is
terminated in accordance with the provisions of Section 15
hereof. To the extent permitted by the investment policies of
the Series, the Portfolio Manager
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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 and shall have the authority to act in such
capacity as the Portfolio Manager deems necessary or desirable in
order to carry out its duties hereunder for the protection of the
Series so long as not expressly prohibited by the terms of this
Agreement, the 1940 Act or other securities laws or regulations.
The Portfolio Manager will provide the services under this
Agreement in accordance with the Series' investment objective or
objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange
Commission (the "SEC"), as from time to time amended (the
"Registration Statement"), copies of which shall be sent to the
Portfolio Manager by the Manager upon filing with the SEC. The
Portfolio Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage each Series so
that no action or omission on the part of the Portfolio Manager
will cause a Series to fail to meet the requirements to qualify
as a regulated investment company specified in Section 851 of the
Internal Revenue Code (other than the requirements for the Trust
to register under the 1940 Act and to file with its tax return an
election to be a regulated investment company, both of which
shall not be the responsibility of the Portfolio Manager), (2)
manage each Series so that no action or omission on the part of
the Portfolio Manager shall cause a Series to fail to comply with
the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and (3)
use reasonable efforts to manage the Series so that no action or
omission on the part of the Portfolio Manager shall cause a
Series to fail to comply with any other rules and regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies. The Manager
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will notify the Portfolio Manager promptly if the Manager believes
that a Series is in violation of any requirement specified
in the first sentence of this paragraph. The Manager or the Trust
will notify the Portfolio Manager of any pertinent changes,
modifications to, or interpretations of Section 817(h) of the Internal
Revenue Code and regulations issued thereunder and of rules or
regulations pertaining to investment vehicles underlying variable
annuity or variable life insurance policies.
(b) The Portfolio Manager will perform its duties hereunder
pursuant to the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Trust's Board of Trustees (the "Board") of which the Portfolio
Manager has been notified in writing, and the provisions of the
Registration Statement of the Trust under the Securities Act of
1933 (the "1933 Act") and the 1940 Act, as supplemented or
amended, (provided that the Manager on behalf of the Board has
delivered copies of any such supplement or amendments to the
Portfolio Manager).
(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, provided, however that the
Manager and the Board shall have the right to renew and amend,
from time the Portfolio Manager's manner of allocation, provided
further that any requested changes to such manner of allocation
shall be implemented on a prospective basis only.
(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
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responsibilities
with respect to the Series. With respect to portfolio securities
to be purchased or sold through the Depository Trust Company, the
Portfolio Manager will arrange for the automatic transmission of
the confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will assist the portfolio
accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the
Registration Statement, the value of any portfolio securities or
other assets of the Series for which the portfolio accounting
agent seeks assistance from or identifies for review by the
Portfolio Manager, and the parties agree that the Portfolio
Manager shall not bear responsibility or liability for the
determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent
that the Portfolio Manager exercises judgment with respect to any
such valuation.
(f) The Portfolio Manager will make available to the Trust
and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian and portfolio accounting agent for
the Trust) as are necessary to assist the Trust and the Manager
to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
(i) In using spot and forward foreign exchange contracts
for the Series as an investment the parties represent the
following:
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(i) That the Manager is properly and lawfully established with
full power and authority to enter into spot and forward foreign
exchange contracts, to perform its obligations under such foreign
exchange contracts and to procure the Portfolio Manager to enter
into such foreign exchange contracts on its behalf.
(ii) That the Manager may not, except for purposes of
redemptions, expenses, and other costs of doing business,
encumber funds which the Portfolio Manager has under the
Portfolio Manager's management or which benefit from the
Portfolio Manager's investment advice. If the Manager requires
funds for any redemptions, expenses, and other costs of doing
business, the Portfolio Manager will make funds available in a
timely manner for Manager to meet such obligations. The Manager
reserves the right to segregate assets upon notice to the
Portfolio Manager and provide different arrangements for
investment management with respect to those assets.
(iii) That the Portfolio Manager has been granted full power
and authority to enter into foreign exchange contracts as agent
on the Manager's behalf and to give instructions for settlement
for the same.
(iv) That the Portfolio Manager has full authority to instruct
Manager's custodian in conformity with its mandate.
(v) That in the event of the termination of this Agreement, the
Portfolio Manager may offer its counterparty the ability to leave
open any existing foreign exchange contracts or to close them out
at prevailing market rates.
3. BROKER-DEALER SELECTION. The Portfolio Manager is
hereby authorized to place orders for the purchase and sale of
securities and other investments for each Series' portfolio, with
or through such persons, brokers or dealers and to negotiate
commissions to be paid on such transactions and to supervise the
execution thereof. The Portfolio Manager's primary consideration
in effecting any such transaction will be to obtain the best
execution for the Series, taking into account the factors
specified in the Registration Statement, which include price
(including the applicable brokerage commission or dollar spread),
the size of the order, the nature of the market for the security,
the timing of the transaction, the reputation, the experience and
financial stability of the broker-dealer involved, the quality of
the service, the difficulty of execution, and the execution
capabilities and operational facilities of the firms involved,
and the firm's risk in positioning a block of securities.
Accordingly, the price to the Series in any transaction may be
less favorable than that available from another broker-dealer if
the difference is reasonably justified, in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust, by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Trustees may
determine and consistent with Section 28(e) of the Securities
Exchange Act of 1934, the Portfolio Manager may effect a
transaction on behalf of the Series with a broker-dealer who
provides brokerage and research services to the Portfolio Manager
notwithstanding the fact that the commissions payable with
respect to any such transaction may be greater than the amount of
any commission another broker-dealer might have charged for
effecting that transaction, if the Portfolio Manager 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 any of 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 indicating the broker-
dealers to which such allocations have been made and the basis
therefor.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the SEC that
contains disclosure
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about the Portfolio Manager, and represents
and warrants that, with respect to the disclosure about or
information concerning the Portfolio Manager, to the Portfolio
Manager's knowledge, such Registration Statement contains, as of
the date hereof, no untrue statement of any material fact and
does not omit any statement of a material fact which was required
to be stated therein or necessary to make the statements
contained therein not misleading. The Portfolio Manager further
represents and warrants that it is a duly registered investment
adviser under the Advisers Act, or alternatively that it is not
required to be a registered investment adviser under the Advisers
Act to perform the duties described in this Agreement, and that
it is a duly registered investment adviser in all states in which
the Portfolio Manager is required to be registered.
5. EXPENSES. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the
value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and
Analyses of International Management Reports (as appropriate) for
each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's
executive officers and employees, if any, who are not officers,
directors, stockholders, or employees of the Portfolio Manager or
an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions, transfer fees,
registration fees, taxes and similar liabilities and costs
properly payable or incurred 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 13 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.
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6. COMPENSATION. For the services provided, the Manager
will pay the Portfolio Manager a fee, payable as described in
Schedule B.
7. SEED MONEY. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. COMPLIANCE.
(a) The Portfolio Manager agrees that it shall promptly
notify the Manager and the Trust (1) in the event that the SEC or
other governmental authority has censured the Portfolio Manager;
placed limitations upon its activities, functions or operations;
suspended or revoked its registration, if any, as an investment
adviser; or has commenced proceedings or an investigation that
may result in any of these actions, (2) upon having a reasonable
basis for believing that the Series has ceased to qualify or
might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "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 Code or the regulations
thereunder. The Portfolio Manager further agrees to notify the
Manager and the Trust promptly of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement as then in
effect, and is required to be stated therein or necessary to make
the statements therein not misleading, or of any statement
contained therein that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured the
Manager or the Trust; placed limitations upon either of their
activities, functions, or operations; suspended or revoked the
Manager's registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these
actions, (2) upon having a reasonable basis for believing that
the Series has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the 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 Code or the regulations thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements
of Rule 31a-3 under the 1940 Act, the Portfolio Manager hereby
agrees that all records which it maintains for the Series are the
property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's or the Manager's
request, although the Portfolio Manager may, at its own expense,
make and retain a copy of such records. The Portfolio Manager
further agrees to preserve for the periods prescribed by Rule 31a-
2 under the 1940 Act the records required to be maintained by
Rule 31a-l under the 1940 Act and to preserve the records
required by Rule 204-2 under the Advisers Act for the period
specified in such rules.
10. COOPERATION. Each party to this Agreement agrees to
cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the SEC and state insurance
regulators) in connection with any investigation or inquiry
relating to this Agreement or the Trust.
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER.
(a) During the term of this Agreement, the Trust and the
Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all Registration
Statements and amendments thereto, prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Trust
or any Series or to the public that refer or relate in any way to
the Portfolio Manager, Baring Asset Management, Inc. or any of
its affiliates (other than the Manager), or that use any
derivative of the name Baring Asset Management or any logo
associated therewith. The Trust and the Manager agree that they
will not use any such material without the prior consent of the
Portfolio Manager, which consent shall not be unreasonably
withheld. In the event of the termination of this Agreement, the
Trust and the Manager will furnish to the Portfolio Manager
copies of any of the above-mentioned materials that refer or
relate in any way to the Portfolio Manager;
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(b) the Trust and the Manager will furnish to the Portfolio
Manager such information relating to either of them or the
business affairs of the Trust as the Portfolio Manager shall from
time to time reasonably request in order to discharge its
obligations hereunder;
(c) the Manager and the Trust agree that neither the Trust,
the Manager, nor affiliated persons of the Trust or the Manager
shall give any information or make any representations or
statements in connection with the sale of shares of the Series
concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration
Statement, prospectus, or statement of additional information for
the Trust, as they may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior
permission of the Portfolio Manager.
12. 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.
13. 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 any error
of judgment, mistake of law, any diminution in value of the
investment portfolio of the Series, 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 by the Portfolio Manager of
its duties, or by reason of reckless disregard by the Portfolio
Manager of its obligations and duties under this Agreement.
14. INDEMNIFICATION.
(a) Notwithstanding Section 13 of this Agreement, the
Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager (other
than the Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls ("controlling
person") the Portfolio Manager (all of such persons being
referred to as "Portfolio Manager Indemnified Persons") against
any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the 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
violations of willful misconduct, malfeasance, bad faith or gross
negligence 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 13 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager (other than the
Portfolio Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to as
"Manager
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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 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 violations of
willful misconduct, malfeasance, bad faith or gross negligence 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) any breach of
any representations or warranties contained in Section 4;
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 14 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 14. 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 14 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
14. 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
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to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
(e) The Manager shall not be liable under this Section 14
to indemnify and hold harmless the Portfolio Manager and the
Portfolio Manager shall not be liable under this Section 14 to
indemnify and hold harmless the Manager with respect to any
losses, claims, damages, liabilities, or litigation that first
become known to the party seeking indemnification during any
period that the Portfolio Manager is, within the meaning of
Section 15 of the 1933 Act, a controlling person of the Manager.
15. 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) day's written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days written
notice to the Manager and the Trust. In addition, this Agreement
shall terminate with respect to a Series in the event that it is
not initially approved by the vote of a majority of the
outstanding voting securities of that Series at a meeting of
shareholders at which approval of the Agreement shall be
considered by shareholders of the Series. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such records by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described
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above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 13, 14, and 17 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 15.
16. 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 Trustees of the
Trust, including a majority of the Trustees of the Trust who are
not interested persons of any party to this Agreement, and (ii)
the holders of a majority of the outstanding voting securities of
the Series, cast in person at a meeting called for the purpose of
voting on such approval, if such approval is required by
applicable law.
17. 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 as soon as is
reasonably possible cease to use such name (or derivative or
logo).
(b) It is understood that the name "Baring International
Investment Limited" 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 as soon as is reasonably possible cease
to use such name (or derivative or logo).
18. 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.
19. INVESTMENT MANAGEMENT REGULATORY ORGANIZATION.
(a) Under the rules of the Investment Management Regulatory
Organization ("IMRO"), clients must be placed in specific
categories which are dictated by different considerations
including the nature and financial description of the client, the
experience of the client in certain investments and other
factors. On the basis of the information given by the Manager,
it is categorized as a Non-Private Customer in relation to the
services to be provided in accordance with the Agreement.
(b) The Portfolio Manager has written procedures in
operation in accordance with IMRO rules for the effective
consideration and proper handling of client complaints. Any
complaint by the Manager should be sent in writing to the
Compliance Officer of the Portfolio Manager. The Manager and the
Trust may make any complaint about the Portfolio Manager to IMRO.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the
State of Delaware, without giving effect to the provisions,
policies or principals thereof relating to choice or conflict of
laws, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or
orders of the SEC thereunder. The term "affiliate" or
"affiliated person" as used in this Agreement shall mean
"affiliated person" as defined in Section 2(a)(3) of the 1940
Act.
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(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 15 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
Attest /s/Marilyn Talman By: Myles R. Tashman
----------------- ----------------
Title: Assistant Secretary Title: Secretary
------------------- --------------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: David L. Jacobson
------------------ ------------------
Title: Vice President Title: Senior Vice President
--------------- ---------------------
BARING INTERNATIONAL INVESTMENT
LIMITED
Attest /s/ A.H. Routledge By: /s/ Mala S. Dhillon
------------------- --------------------
Title: Company Solicitor Title: Director
------------------- ---------
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AMENDED SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of
the attached Portfolio Management Agreement, to which Baring
International Investment Limited shall act as Portfolio Manager
are as follows:
Global Fixed Income Series
Developing World Series
Hard Asset Series
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the 26th day February, 1999.
THE GCG TRUST
Attest /s/Marilyn Talman By: /s/Myles R. Tashman
----------------- -------------------
Title: Vice President Title: Secretary
----------------- ---------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: /s/Myles R. Tashman
----------------- -------------------
Title: Vice President Title: Executive Vice President
----------------- ------------------------
and Assistant Secretary
BARING INTERNATIONAL
INVESTMENT LIMITED
Attest Michael T. Brown By: /s/Mala S. Dhillon
---------------- ------------------
Title: Vice President Title: Director
-------------- --------
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AMENDED SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Baring International Investment Limited
("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, computed daily and 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
Global Fixed Income Series 0.45% of first $200 million,
0.30% of next $500 million,
0.25% of next $1 billion,
0.10% in excess of $2 billion
Developing World Series 0.90%
Hard Asset Series 0.40%
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the 26th day February, 1999.
THE GCG TRUST
Attest /s/Marilyn Talman By: /s/Myles R. Tashman
----------------- -------------------
Title: Assistant Secretary Title: Secretary
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: /s/Myles R. Tashman
------------------ -------------------
Title: Vice President Title: Executive Vice President
----------------------- ------------------------
and Assistant Secretary
BARING INTERNATIONAL
INVESTMENT LIMITED
Attest Michael T. Brown By: /s/Mala S. Dhillon
---------------- ------------------
Title: Vice President Title: Director
-------------- --------
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<PAGE>
EXHIBIT C
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 26th day of February, 1999, among The
GCG Trust (the "Trust"), a Massachusetts business trust, Directed
Services, Inc. (the "Manager"), a New York corporation, and
Alliance Capital Management L.P. ("Portfolio Manager"), a
Delaware limited partnership.
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Trust is authorized to issue separate series,
each of which will offer a separate class of shares of beneficial
interest, each series having its own investment objective or
objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple
series, may offer shares of additional series in the future, and
intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
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
between the Trust, the Manager, and the Portfolio Manager as
follows:
1. APPOINTMENT. The Trust and the Manager hereby
appoints Alliance Capital Management L.P. as Portfolio Manager to
the Series designated on Schedule A of this Agreement (each a
"Series") for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series
other than the Series with respect to which the Trust and the
Manager wish to retain the Portfolio Manager to render investment
advisory services hereunder, they shall promptly notify the
Portfolio Manager in writing. If the Portfolio Manager is
willing to render such services, it shall so notify the Trust and
Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the
supervision of the Trust's Board of Trustees and the Manager, the
Portfolio Manager will provide a continuous investment program
for each Series' portfolio and determine the composition of the
assets of each Series' portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager
will provide investment research and conduct a continuous program
of evaluation, investment, sales, and reinvestment of each
Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed,
or exchanged for the Series, when these transactions should be
executed, and what portion of the assets of each Series should be
held in the various securities and other investments in which it
may invest, and the Portfolio Manager is hereby authorized to
execute and perform such services on behalf of each Series. To
the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to
foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf
of the Series. The Portfolio Manager will provide the services
under this Agreement in accordance with the Series' investment
objective or objectives, policies, and restrictions as stated in
the Trust's Registration Statement filed with the Securities
and Exchange Commission (the "SEC"), as from time to time
amended, copies of which shall be sent to the Portfolio Manager
by the Manager upon filing with the SEC. The Portfolio Manager
further agrees as follows:
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(a) The Portfolio Manager will (1) manage each Series
so that no action or omission on the part of the Portfolio
Manager will cause a Series to fail to meet the requirements to
qualify as a regulated investment company specified in Section
851 of the Internal Revenue Code (other than the requirements for
the Trust to register under the 1940 Act and to file with its tax
return an election to be a regulated investment company, both of
which shall not be the responsibility of the Portfolio Manager),
(2) manage each Series so that no action or omission on the part
of the Portfolio Manager shall cause a Series to fail to comply
with the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and (3)
use reasonable efforts to manage the Series so that no action or
omission on the part of the Portfolio Manager shall cause a
Series to fail to comply with any other rules and regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies. The Manager will notify the
Portfolio Manager promptly if the Manager believes that a Series
is in violation of any requirement specified in the first
sentence of this paragraph. The Manager or the Trust will notify
the Portfolio Manager of any pertinent changes, modifications to,
or interpretations of Section 817(h) of the Internal Revenue Code
and regulations issued thereunder and of rules or regulations
pertaining to investment vehicles underlying variable annuity or
variable life insurance policies.
(b) The Portfolio Manager will perform its duties
hereunder pursuant to the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Trust's Board of Trustees of which the Portfolio Manager has been
notified in writing, and the provisions of the Registration
Statement of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 1940 Act, as supplemented or amended, of
which the Portfolio Manager has received a copy ("Registration
Statement"). The Manager or the Trust will notify the Portfolio
Manager of pertinent provisions of applicable state insurance law
with which the Portfolio Manager must comply under this Paragraph
2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of a
Series as well as of other investment advisory clients of the
Portfolio Manager or any of its affiliates, the Portfolio Manager
may, to the extent permitted by applicable laws and regulations,
but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to
the Trust and to such other clients, subject to review by the
Manager and the Board of Trustees.
(d) In connection with the purchase and sale of
securities for a Series, the Portfolio Manager will arrange for
the transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for
the automatic transmission of the confirmation of such trades to
the Trust's custodian and portfolio accounting agent.
(e) The Portfolio Manager will assist the portfolio
accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the
Registration Statement for the Trust, the value of any portfolio
securities or other assets of the Series for which the portfolio
accounting agent seeks assistance from or identifies for review
by the Portfolio Manager, and the parties agree that the
Portfolio Manager shall not bear responsibility or liability for
the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent
that the Portfolio Manager exercises judgment with respect to any
such valuation.
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(f) The Portfolio Manager will make available to the
Trust and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian and portfolio accounting agent for
the Trust) as are necessary to assist the Trust and the Manager
to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Portfolio Manager will furnish to
regulatory authorities having the requisite authority any
information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
(g) The Portfolio Manager will provide reports to the
Trust's Board of Trustees for consideration at meetings of the
Board on the investment program for the Series and the issuers
and securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the Series
such periodic and special reports as the Trustees and the Manager
may reasonably request.
(h) In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ
or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this
Agreement. However, the Portfolio Manager may not retain as
subadviser any company that would be an "investment adviser," as
that term is defined in the 1940 Act, to the Series unless the
contract with such company is approved by a majority of the
Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who
are not "interested persons," as defined in the 1940 Act, of the
Trust, the Manager, or the Portfolio Manager, or any such company
that is retained as subadviser, and is approved by the vote of a
majority of the outstanding voting securities of the applicable
Series of the Trust to the extent required by the 1940 Act. The
Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the
Portfolio Manager's knowledge, in any material connection with
the handling of Trust assets:
(i) been convicted, in the last ten (10) years,
of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale
of any security; or
(ii) been found by any state regulatory
authority, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state
regulatory authorities, within the last ten (10) years,
to have violated or to have acknowledged violation of
any provision of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
3. BROKER-DEALER SELECTION. The Portfolio Manager is
responsible for decisions to buy and sell securities and other
investments for each Series' portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Portfolio
Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series,
taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which
include price (including the applicable brokerage commission
or dollar spread), the size of the order, the nature of the
market for the security, the timing of the transaction, the
reputation, the experience and financial stability of the
broker-dealer involved, the quality of the service, the
difficulty of execution, and the execution capabilities
and operational facilities of the firms involved, and the
firm's risk in positioning a block of securities.
Accordingly, the price to the Series in any transaction may
be less favorable than that available from another broker-
dealer if the difference is reasonably justified, in the
judgment of the Portfolio Manager in the exercise of its
fiduciary obligations to the Trust, by other aspects of the
portfolio execution services offered. Subject to such policies
as the Board of Trustees may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, the
Portfolio Manager shall not be deemed to have acted
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unlawfully
or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused the Series to
pay a broker-dealer for effecting a portfolio investment
transaction in excess of the amount of commission another broker-
dealer would have charged for effecting that transaction, if the
Portfolio Manager or its affiliate determines in good faith that
such amount of commission was reasonable in relation to the value
of the brokerage and research services provided by such broker-
dealer, viewed in terms of either that particular transaction or
the Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other
clients as to which they exercise investment discretion. To the
extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf
of the Series to the Portfolio Manager if it is registered as a
broker-dealer with the SEC, to its affiliated broker-dealer, or
to such brokers and dealers who also provide research or
statistical material, or other services to the Series, the
Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above
standards, and the Portfolio Manager will report on said
allocation regularly to the Board of Trustees of the Trust
indicating the broker-dealers to which such allocations have been
made and the basis therefor.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio
Manager has reviewed the post-effective amendment to the
Registration Statement for the Trust filed with the SEC that
contains disclosure about the Portfolio Manager, and represents
and warrants that, with respect to the disclosure about or
information relating, directly or indirectly, to the Portfolio
Manager, to the Portfolio Manager's knowledge, such Registration
Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make
the statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act, or
alternatively that it is not required to be a registered
investment adviser under the Advisers Act to perform the duties
described in this Agreement, and that it is a duly registered
investment adviser in all states in which the Portfolio Manager
is required to be registered.
5. EXPENSES. During the term of this Agreement, the
Portfolio Manager will pay all expenses incurred by it and its
staff and for their activities in connection with its portfolio
management duties under this Agreement. The Manager or the Trust
shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services
including recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating
the value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports
and Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the
Trust's executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the Portfolio
Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with
the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of
borrowing money;
(k) Costs and/or fees incident to meetings of the
Trust's shareholders, the preparation and mailings of
prospectuses and reports of the Trust to its shareholders, the
filing of reports
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with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees
related to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing
shares of the Trust;
(n) Trustees' fees and expenses to trustees who are
not officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify
its Trustees, officers, employees, shareholders, distributors,
and agents with respect thereto; and
(r) Organizational and offering expenses.
6. COMPENSATION. For the services provided, the
Manager will pay the Portfolio Manager a fee, payable as
described in Schedule B.
7. SEED MONEY. The Manager agrees that the Portfolio
Manager shall not be responsible for providing money for the
initial capitalization of the Series.
8. COMPLIANCE.
(a) The Portfolio Manager agrees that it shall
promptly notify the Manager and the Trust (1) in the event that
the SEC or other governmental authority has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration,
if any, as an investment adviser; or has commenced proceedings or
an investigation that may result in any of these actions, (2)
upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, or (3)
upon having a reasonable basis for believing that the Series has
ceased to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the regulations
thereunder. The Portfolio Manager further agrees to notify the
Manager and the Trust promptly of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement or prospectus
for the Trust, or any amendment or supplement thereto, and is
required to be stated therein or necessary to make the statements
therein not misleading, or of any statement contained therein
that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately
notify the Portfolio Manager (1) in the event that the SEC has
censured the Manager or the Trust; placed limitations upon either
of their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser; or
has commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder.
9. BOOKS AND RECORDS. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Portfolio
Manager hereby agrees that all records which it maintains for the
Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records.
The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by
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Rule 31a-l(b)(2)(iii), (5), (6), (7), (9) and
(10) under the 1940 Act and to preserve the records required by
Rule 204-2 under the Advisers Act for the period specified in the
Rule.
10. COOPERATION. Each party to this Agreement agrees
to cooperate with each other party and with all appropriate
governmental authorities having the requisite jurisdiction
(including, but not limited to, the SEC and state insurance
regulators) in connection with any investigation or inquiry
relating to this Agreement or the Trust.
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER.
(a) During the term of this Agreement, the Trust and
the Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all Registration
Statements and amendments thereto, prospectuses, proxy
statements, reports to shareholders, sales literature or other
material prepared for distribution to shareholders of the Trust
or any Series or to the public that refer or relate in any way to
the Portfolio Manager, Alliance Capital Management L.P. or any of
its affiliates (other than the Manager), or that use any
derivative of the name Alliance Capital Management L.P. or any
logo associated therewith. The Trust and the Manager agree that
they will not use any such material without the prior consent of
the Portfolio Manager, which consent shall not be unreasonably
withheld. In the event of the termination of this Agreement, the
Trust and the Manager will furnish to the Portfolio Manager
copies of any of the above-mentioned materials that refer or
relate in any way to the Portfolio Manager;
(b) the Trust and the Manager will furnish to the
Portfolio Manager such information relating to either of them or
the business affairs of the Trust as the Portfolio Manager shall
from time to time reasonably request in order to discharge its
obligations hereunder;
(c) the Manager and the Trust agree that neither the
Trust, the Manager, nor affiliated persons of the Trust or the
Manager shall give any information or make any representations or
statements in connection with the sale of shares of the Series
concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration
Statement, prospectus, or statement of additional information for
the Trust, as they may be amended or supplemented from time to
time, or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior
permission of the Portfolio Manager.
12. CONTROL. Notwithstanding any other provision of
the Agreement, it is understood and agreed that the Trust shall
at all times retain the ultimate responsibility for and control
of all functions performed pursuant to this Agreement and reserve
the right to direct, approve, or disapprove any action hereunder
taken on its behalf by the Portfolio Manager.
13. SERVICES NOT EXCLUSIVE. It is understood that the
services of the Portfolio Manager are not exclusive, and nothing
in this Agreement shall prevent the Portfolio Manager (or its
affiliates) from providing similar services to other clients,
including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or
from engaging in other activities.
14. LIABILITY. Except as may otherwise be required by
the 1940 Act or the rules thereunder or other applicable law, the
Trust and the Manager agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act,
controls the Portfolio Manager shall not be liable for, or
subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under
this Agreement.
15. INDEMNIFICATION.
(a) Notwithstanding Section 14 of this Agreement, the
Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager (other
than the Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls ("controlling
person") the Portfolio Manager (all of such persons being
referred to as
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"Portfolio Manager Indemnified Persons") against
any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, the Internal Revenue Code, under any
other statute, at common law or otherwise, arising out of the
Manager's responsibilities to the Trust which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or
any person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the
Manager and contained in the Registration Statement or prospectus
covering shares of the Trust or a Series, or any amendment
thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should
have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the
Trust or to any affiliated person of the Manager by a Portfolio
Manager Indemnified Person; provided however, that in no case shall
the indemnity in favor of the Portfolio Manager Indemnified Person
be deemed to protect such person against any liability to which any
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager (other than the
Portfolio Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to as
"Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and
other expenses) to which a Manager Indemnified Person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, the
Internal Revenue Code, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's responsibili
ties as Portfolio Manager of the Series which (1) may be based
upon any misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or
any affiliate of or any person acting on behalf of the Portfolio
Manager, (2) may be based upon a failure to comply with Section
2, Paragraph (a) of this Agreement, or (3) may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus covering
the shares of the Trust or a Series, or any amendment or
supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to
the Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information
furnished to the Manager, the Trust, or any affiliated person of
the Manager or Trust by the Portfolio Manager or any affiliated
person of the Portfolio Manager; provided, however, that in no
case shall the indemnity in favor of a Manager Indemnified Person
be deemed to protect such person against any liability to which
any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of
its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph
(a) of this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Portfolio
Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on
any designated agent), but failure to notify the Manager of any
such claim shall not relieve the Manager from any liability which
it may have to the Portfolio Manager Indemnified Person against
whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the
Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense
thereof or, after
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notice to the Portfolio Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory
to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of
counsel by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a conflict
of interests and therefore, would not, in the reasonable judgment
of the Portfolio Manager Indemnified Person, adequately represent
the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel
to the Manager and, also at its own expense, with separate
counsel to the Portfolio Manager Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Portfolio
Manager Indemnified Person. The Portfolio Manager Indemnified
Person shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation.
The Manager shall not have the right to compromise on or settle
the litigation without the prior written consent of the Portfolio
Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under
Paragraph (b) of this Section 15 with respect to any claim made
against a Manager Indemnified Person unless such Manager
Indemnified Person shall have notified the Portfolio Manager in
writing within a reasonable time after the summons, notice, or
other first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such
claim shall not relieve the Portfolio Manager from any liability
which it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section
15. In case any such action is brought against the Manager
Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified
Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager Indemnified
Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified
Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own
expense, assume the defense with counsel to the Portfolio Manager
and, also at its own expense, with separate counsel to the
Manager Indemnified Person which counsel shall be satisfactory to
the Portfolio Manager and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred
by the Manager Indemnified Person independently in connection
with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to
compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
(e) The Manager shall not be liable under this Section
15 to indemnify and hold harmless the Portfolio Manager and the
Portfolio Manager shall not be liable under this Section 15 to
indemnify and hold harmless the Manager with respect to any
losses, claims, damages, liabilities, or litigation that first
become known to the party seeking indemnification during any
period that the Portfolio Manager is, within the meaning of
Section 15 of the 1933 Act, a controlling person of the Manager.
16. DURATION AND TERMINATION. This Agreement shall
become effective on the date first indicated above. Unless
terminated as provided herein, the Agreement shall remain in full
force and effect for two (2) years from such date and continue on
an annual basis thereafter with respect to each
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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) day's written notice
to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days written
notice to the Manager and the Trust. In addition, this Agreement
shall terminate with respect to a Series in the event that it is
not initially approved by the vote of a majority of the
outstanding voting securities of that Series at a meeting of
shareholders at which approval of the Agreement shall be
considered by shareholders of the Series. In the event of
termination for any reason, all records of each Series for which
the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights
in such records by the Portfolio Manager, although the Portfolio
Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the
event of its assignment (as such term is described in the 1940
Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or
Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of this
Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. AMENDMENTS. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Series, and
(ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required
by applicable law.
18. USE OF NAME.
(a) It is understood that the name "Directed Services,
Inc." or any derivative thereof or logo associated with that name
is the valuable property of the Manager and/or its affiliates,
and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Manager and
only so long as the Manager is Manager to the Trust and/or the
Series. Upon termination of the Management Agreement between the
Trust and the Manager, the Portfolio Manager shall as soon as is
reasonably possible cease to use such name (or derivative or
logo).
(b) It is understood that the name "Alliance Capital
Management L.P." or any derivative thereof or logo associated
with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the
right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Portfolio Manager
and for so long as the Portfolio Manager is a portfolio manager
to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio
Manager,
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the Trust shall as soon as is reasonably possible cease
to use such name (or derivative or logo).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF
TRUST. A copy of the Amended and Restated Agreement and
Declaration of Trust for the Trust is on file with the Secretary
of the Commonwealth of Massachusetts. The Amended and Restated
Agreement and Declaration of Trust has been executed on behalf of
the Trust by Trustees of the Trust in their capacity as Trustees
of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the
Trust and shall not be binding upon any Trustee, officer, or
shareholder of the Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of
the State of Delaware, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the
Advisers Act or rules or orders of the SEC thereunder. The term
"affiliate" or "affiliated person" as used in this Agreement
shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned, as that term is
defined in the 1940 Act, by any party with the prior written
consent of the other parties. The Portfolio Manager hereby agrees
to notify the Manager and the Trust of any change in the
membership of its general partners within a reasonable time after
such change.
(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.
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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
Attest /s/ Marilyn Talman By: /s/ Myles R. Tashman
------------------- ---------------------
Title: Assistant Secretary Title: Secretary
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/ Marilyn Talman By: /s/ Myles R. Tashman
------------------- ---------------------
Title: President and Assistant Title: Executive Vice
----------------------- -------------------
Secretary President
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation,
General Partner
Attest /s/ David M. Lesser By: /s/ Mark R. Maley
-------------------- --------------------
Title: Admistrative Officer Title: Assistant Secretary
--------------------- --------------------
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SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Alliance Capital
Management L.P. shall act as Portfolio Manager are as follows:
Growth & Income Series
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Alliance Capital Management
L.P. to the following Series of The GCG Trust, pursuant to the
attached Portfolio Management Agreement, the Manager will pay the
Portfolio Manager a fee, computed daily and 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:
Growth & Income Series 0.75% on first $10 million in assets;
0.625% on next $10 million;
0.50% on next $20 million;
0.375% on next $20 million; and
0.25% on amounts in excess of $60 million.
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EXHIBIT D
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 24th day of October, 1997 among The GCG
Trust (the "Trust"), a Massachusetts business trust, Directed Services,
Inc. ("Manager"), a New York corporation, and T. Rowe Price Associates,
Inc. ("Portfolio Manager"), a Maryland corporation.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, management investment
company;
WHEREAS, the Trust is authorized to issue separate series, each of
which will offer a separate class of shares of beneficial interest, each
series having its own investment objective or objectives, policies, and
limitations;
WHEREAS, the Trust currently offers shares in multiple series, may
offer shares of additional series in the future, and intends to offer
shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of
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 between the Trust, the
Manager, and the Portfolio Manager as follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint the
Portfolio Manager to render investment advisory services to the Series
designated on Schedule A of this Agreement (the "Series") for the periods
and on the terms set forth in this Agreement. The Portfolio Manager
accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided. In the event the Trust
designates one or more series other than the Series with respect to which
the Trust and the Manager wish to retain the Portfolio Manager to render
investment advisory services hereunder, they shall notify the Portfolio
Manager in writing. If the Portfolio Manager is willing to render such
services, it shall notify the Trust and Manager in writing, whereupon such
series shall become a Series hereunder, and be subject to this Agreement.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the supervision of the
Trust's Board of Trustees and the Manager, the Portfolio Manager will
provide a continuous investment program for the Series' portfolio and
determine the composition of the assets of the Series' portfolio,
including determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the portfolio. The
Portfolio Manager will provide investment research and conduct a
continuous program of evaluation, investment, sales, and reinvestment of
the Series' assets by determining the securities and other investments
that shall be purchased, entered into, sold, closed, or exchanged for the
Series, when these transactions should be executed, and what portion of
the assets of the Series should be held in the various securities and
other investments in which it may invest, and the Portfolio Manager is
hereby authorized to execute and perform such services on behalf of the
Series. To the extent permitted by the investment policies of the Series,
the Portfolio Manager shall make decisions for the Series as to foreign
currency matters and make determinations as to and execute and perform
foreign currency exchange contracts on behalf of the Series. The
Portfolio Manager will provide the services under this Agreement in
accordance with the Series' investment objective or objectives, policies,
and restrictions as stated in the Trust's Registration Statement filed
with the Securities and Exchange Commission ("SEC"), as amended, and
provided to the Portfolio Manager by the Manager. The Portfolio Manager
further agrees as follows:
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(a) The Portfolio Manager will (1) take all steps necessary to
manage the Series so that it will qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code, (2) take all
steps necessary to manage the Series so as to ensure compliance by the
Series with the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and (3) use
reasonable efforts to manage the Series so as to ensure compliance by the
Series with any other rules and regulations pertaining to investment
vehicles underlying variable annuity or variable life insurance policies.
The Manager or the Trust will notify the Portfolio Manager of any
pertinent changes, modifications to, or interpretations of Section 817(h)
of the Internal Revenue Code and regulations issued thereunder. In
managing the Series in accordance with these requirements, the Portfolio
Manager shall be entitled to act and rely upon advice of counsel to the
Trust, counsel to the Manager, or counsel to the Portfolio Manager, such
counsel to be reasonably acceptable to the Manager.
(b) The Portfolio Manager will conform with the 1940 Act and
all rules and regulations thereunder, all other applicable federal and
state laws and regulations, with any applicable procedures adopted by the
Trust's Board of Trustees of which the Portfolio Manager has been sent a
copy, and the provisions of the Registration Statement of the Trust under
the Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended, of which the Portfolio Manager has received a
copy. The Manager or the Trust will notify the Portfolio Manager of
pertinent provisions of applicable state insurance law with which the
Portfolio Manager must comply under this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the purchase
or sale of a security to be in the best interest of the Series as well as
of other investment advisory clients of the Portfolio Manager or any of
its affiliates, the Portfolio Manager may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be so sold or purchased with those of its other clients
where such aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Portfolio Manager in a manner that is fair and
equitable in the judgment of the Portfolio Manager in the exercise of its
fiduciary obligations to the Trust and to such other clients, subject to
reasonable review by the Manager and the Board of Trustees.
(d) In connection with the purchase and sale of securities for
the Series, the Portfolio Manager will arrange for the transmission to the
custodian and portfolio accounting agent for the Series on a daily basis,
such confirmation, trade tickets, and other documents and information,
including, but not limited to, Cusip, Sedol, or other numbers that
identify securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and record keeping
responsibilities with respect to the Series. With respect to portfolio
securities to be purchased or sold through the Depository Trust Company,
the Portfolio Manager will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian and portfolio
accounting agent.
(e) The Portfolio Manager will assist the custodian and
portfolio accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the Registration
Statement for the Trust, the value of any portfolio securities or other
assets of the Series for which the custodian and portfolio accounting
agent reasonably seeks assistance from or identifies for review by the
Portfolio Manager.
(f) The Portfolio Manager will make available to the Trust and the
Manager, promptly upon request, all of the Series' investment records and
ledgers maintained by the Portfolio Manager (which shall not include the
records and ledgers maintained by the custodian or portfolio accounting agent
for the Trust) as are necessary to assist the Trust and the Manager to comply
with requirements of the 1940 Act and the Investment Advisers Act of 1940 (the
"Advisers Act"), as well as other applicable laws. The Portfolio Manager will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with such services which may be requested.
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(g) The Portfolio Manager will provide reports to the Trust's
Board of Trustees for consideration at meetings of the Board on the
investment program for the Series and the issuers and securities
represented in the Series' portfolio, and will furnish the Trust's Board
of Trustees with respect to the Series such periodic and special reports
as shall be agreed upon by the Trustees, the Manager, and the Portfolio
Manager, which agreement shall not be unreasonably withheld.
(h) In rendering the services required under this Agreement,
the Portfolio Manager may, from time to time, employ or associate with
itself such person or persons as it believes necessary to assist it in
carrying out its obligations under this Agreement. However, the Portfolio
Manager may not retain as subadviser any company that would be an
"investment adviser," as that term is defined in the 1940 Act, to the
Series unless the contract with such company is approved by a majority of
the Trust's Board of Trustees and a majority of Trustees who are not
parties to any agreement or contract with such company and who are not
"interested persons," as defined in the 1940 Act, of the Trust, the
Manager, or the Portfolio Manager, or any such company that is retained as
subadviser, and is approved by the vote of a majority of the outstanding
voting securities of the applicable Series of the Trust to the extent
required by the 1940 Act. The Portfolio Manager shall be responsible for
making reasonable inquiries and for reasonably ensuring that any employee
of the Portfolio Manager, any subadviser that the Portfolio Manager has
employed or with which it has associated with respect to the Series, or
any employee thereof has not, to the best of the Portfolio Manager's
knowledge, in any material connection with the handling of Trust assets:
(i) been convicted, in the last ten (10) years, of any
felony or misdemeanor arising out of conduct involving embezzlement,
fraudulent conversion, or misappropriation of funds or securities,
involving violations of Sections 1341, 1342, or 1343 of Title 18, United
States Code, or involving the purchase or sale of any security; or
(ii) been found by any state regulatory authority, within
the last ten (10) years, to have violated or to have acknowledged
violation of any provision of any state insurance law involving fraud,
deceit, or knowing misrepresentation; or
(iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have violated or to have
acknowledged violation of any provision of federal or state securities
laws involving fraud, deceit, or knowing misrepresentation.
3. BROKER-DEALER SELECTION. The Portfolio Manager is responsible
for decisions to buy and sell securities and other investments for the
Series' portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in
effecting a security transaction will be to obtain the best execution for
the Series, taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which include
price (including the applicable brokerage commission or dollar spread),
the size of the order, the nature of the market for the security, the timing
of the transaction, the reputation, the experience and financial stability
of the broker-dealer involved, the quality of the service, the difficulty
of execution, and the execution capabilities and operational facilities of
the firm involved, and the firm's risk in positioning a block of securities.
Accordingly, the price to the Series in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified, in the judgment of the Portfolio Manager in the exercise of its
fiduciary obligations to the Trust, by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Trustees may
determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, the Portfolio Manager shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Series to pay a broker-dealer for effecting
a portfolio investment transaction in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction,
if the Portfolio Manager or its affiliate determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker- dealer, viewed in
terms of either that particular transaction or the Portfolio Manager's or
its affiliate's overall responsibilities with respect to the Series and to
their other clients as to which they exercise investment discretion. To
the extent consistent with these
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standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf of the
Series to the Portfolio Manager if it is registered as a broker-dealer
with the SEC, to its affiliated broker-dealer, or to such brokers and
dealers who also provide research or statistical material, or other
services to the Series, the Portfolio Manager, or an affiliate of the
Portfolio Manager. Such allocation shall be in such amounts and
proportions as the Portfolio Manager shall determine consistent with the
above standards, and the Portfolio Manager will report on said allocation
regularly to the Board of Trustees of the Trust indicating the broker-
dealers to which such allocations have been made and the basis therefor.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has
reviewed or will review the post-effective amendment to the Registration
Statement for the Trust filed or to be filed with the Securities and
Exchange Commission that contains or will contain disclosure about the
Portfolio Manager that has been provided by the Portfolio Manager, and
represents and warrants that, with respect to the disclosure about the
Portfolio Manager or information relating, directly or indirectly, to the
Portfolio Manager, such Registration Statement, to the extent it contains
information provided by or respecting the Portfolio Manager, contains or
will contain, as of the date of filing with the Securities and Exchange
Commission, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading. The
Portfolio Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and a duly registered
investment adviser in all states in which the Portfolio Manager is
required to be registered.
5. EXPENSES. During the term of this Agreement, the Portfolio
Manager will pay all expenses incurred by it and its staff and for their
activities in connection with its portfolio management duties under this
Agreement. The Manager or the Trust shall be responsible for all the
expenses of the Trust's operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent public
accountants;
(b) Expenses of the Series' transfer agent, registrar, dividend
disbursing agent, and shareholder record keeping services;
(c) Expenses of the Series' custodial services including record
keeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value
of the Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and
Analyses of International Management Reports (as appropriate) for the
Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's
executive officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Portfolio Manager or an affiliate of the
Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses and reports of
the Trust to its shareholders, the filing of reports with regulatory
bodies, the maintenance of the Trust's existence, and the regulation of
shares with federal and state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to
the registration and continued qualification of the Trust's shares for
sale;
(m) Costs of printing stock certificates representing shares of
the Trust;
(n) Trustees' fees and expenses to Trustees who are not
officers, employees, or stockholders of the Portfolio Manager or any
affiliate thereof;
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(o) The Trust's fidelity bond required by Section 17(g) of the
1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including
expenses incurred in connection with litigation, proceedings, and other
claims (unless the Portfolio Manager is responsible for such expenses
under Section 14 or Section 15 of this Agreement), and the legal
obligations of the Trust to indemnify its Trustees, officers, employees,
shareholders, distributors, and agents with respect thereto; and
(r) Organizational and offering expenses.
6. COMPENSATION. For the services provided, the Manager will pay
the Portfolio Manager a fee, payable monthly, as described on Schedule B.
7. SEED MONEY. The Manager agrees that the Portfolio Manager shall
not be responsible for providing money for the capitalization of the
Series.
8. COMPLIANCE.
(a) The Portfolio Manager agrees that it shall immediately
notify the Manager and the Trust (1) in the event that the SEC has
censured the Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as an
investment adviser; or has commenced proceedings or an investigation that
may result in any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M
of the Internal Revenue Code, or (3) upon having a reasonable basis for
believing that the Series has ceased to comply or might not comply with
the diversification provisions of Section 817(h) of the Internal Revenue
Code or the Regulations thereunder. The Portfolio Manager further agrees
to notify the Manager and the Trust immediately of any material fact known
to the Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, or of any statement contained
therein that becomes untrue in any material respect (provided such
Registration Statement or a prospectus for the Trust is provided to the
Portfolio Manager).
(b) The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured the Manager
or the Trust; placed limitations upon either of their activities,
functions, or operations; suspended or revoked the Manager's registration
as an investment adviser; or has commenced proceedings or an investigation
that may result in any of these actions, (2) upon having a reasonable
basis for believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code, or (3) upon having a reasonable basis for believing
that the Series has ceased to comply with the diversification provisions
of Section 817(h) of the Internal Revenue Code or the Regulations
thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Portfolio Manager hereby agrees that all
records which it maintains for the Series are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records
upon the Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records. The
Portfolio Manager further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by
Rule 31a-1 under the 1940 Act.
10. COOPERATION. Each party to this Agreement agrees to cooperate
with each other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the
Securities and Exchange Commission and state insurance regulators) in
connection with any investigation or inquiry relating to this Agreement or
the Trust.
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER. The Manager and
the Trust agree that neither the Trust, the Manager, nor affiliated
persons of the Trust or the Manager shall give any information or make any
representations or statements in connection with the sale of shares of
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the
Series concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust shares,
as they may be amended or supplemented from time to time, or in reports or
proxy statements for the Trust, or in sales literature or other
promotional material approved in advance by the Portfolio Manager, except
with the prior permission of the Portfolio Manager. The parties agree
that in the event that the Manager or an affiliated person of the Manager
sends sales literature or other promotional material to the Portfolio
Manager for its approval, the Portfolio Manager will use its best efforts
to comment within 30 days.
12. CONTROL. Notwithstanding any other provision of the Agreement,
it is understood and agreed that the Trust shall at all times retain the
ultimate responsibility for and control of all functions performed
pursuant to this Agreement and reserve the right to direct, approve, or
disapprove any action hereunder taken on its behalf by the Portfolio
Manager.
13. SERVICES NOT EXCLUSIVE. It is understood that the services of
the Portfolio Manager are not exclusive, and nothing in this Agreement
shall prevent the Portfolio Manager (or its affiliates) from providing
similar services to other clients, including investment companies (whether
or not their investment objectives and policies are similar to those of
the Series) or from engaging in other activities.
14. LIABILITY. The Portfolio Manager may rely upon information
reasonably believed by it to be accurate and reliable. Except as may
otherwise be required by the 1940 Act or the rules thereunder or other
applicable law, the Trust and the Manager agree that the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act controls the
Portfolio Manager shall not be liable for, or subject to any damages,
expenses, or losses in connection with, any act or omission connected with
or arising out of any services rendered under this Agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under this
Agreement.
15. LIABILITY RESPECTING TAX COMPLIANCE. Notwithstanding Section
14, the Portfolio Manager shall be liable for all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other expenses)
incurred by the Trust or the Manager, any affiliated person of the
Manager, and each person, if any, who, within the meaning of Section 15 of
the 1933 Act, controls the Manager, arising out of the Portfolio Manager's
responsibilities as Portfolio Manager of the Series which are based upon a
failure to comply with Section 2, Paragraph (a)(1) or (2) of this
Agreement.
16. DURATION AND TERMINATION. This Agreement shall become effective
on the date first indicated above. Unless sooner terminated as provided
herein, the Agreement shall remain in full force and effect for two (2)
years from the date first indicated above and continue on an annual basis
thereafter with respect to the Series; provided that such annual
continuance is specifically approved each year by (a) the vote of a
majority of the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities (as defined in the 1940 Act)
of the Series, and (b) the vote of a majority of those Trustees who are
not parties to this Agreement or interested persons (as such term is
defined in the 1940 Act) of any such party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
The Portfolio Manager shall not provide any services for a Series or
receive any fees on account of such Series with respect to which this
Agreement is not approved as described in the preceding sentence.
However, any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of a Series shall be
effective to continue this Agreement with respect to the Series
notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Series or
(ii) that this Agreement has not been approved by the vote of a majority
of the outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. Notwithstanding the
foregoing, this Agreement may be terminated for each or any Series
hereunder: (a) by the Manager at any time without penalty, upon sixty (60)
days' written notice to the Portfolio Manager and the Trust, (b) at any
time without payment of any penalty by the Trust, upon the vote of a
majority of the Trust's Board of Trustees or a majority of the outstanding
voting securities of each Series, upon sixty (60) days' written notice to
the Manager and the Portfolio Manager, or (c) by the Portfolio Manager at
any
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time without penalty, upon sixty (60) days' written notice to the
Manager and the Trust. In the event of termination for any reason, all
records of each Series for which the Agreement is terminated shall
promptly be returned to the Manager or the Trust, free from any claim or
retention of rights in such record by the Portfolio Manager, although the
Portfolio Manager may, at its own expense, make and retain a copy of such
records. The Agreement shall automatically terminate in the event of its
assignment (as such term is described in the 1940 Act). In the event this
Agreement is terminated or is not approved in the manner described above,
the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18 of
this Agreement shall remain in effect, as well as any applicable provision
of this Paragraph numbered 16.
17. AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved by an affirmative vote of (i)
the holders of a majority of the outstanding voting securities of the
Series, and (ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
18. USE OF NAME.
(a) It is understood that the name "Directed Services, Inc." or
any derivative thereof or logo associated with that name is the valuable
property of the Manager and/or its affiliates, and that the Portfolio
Manager has the right to use such name (or derivative or logo) only with
the approval of the Manager and only so long as the Manager is Manager to
the Trust and/or the Series. Upon termination of the Management Agreement
between the Trust and the Manager, the Portfolio Manager shall forthwith
cease to use such name (or derivative or logo).
(b) It is understood that the name "T. Rowe Price Associates,
Inc." or any derivative thereof or logo associated with that name is the
valuable property of the Portfolio Manager and its affiliates and that the
Trust and/or the Series have the right to use such name (or derivative or
logo) in offering materials of the Trust with the approval of the
Portfolio Manager and for so long as the Portfolio Manager is a portfolio
manager to the Trust and/or the Series. Upon termination of this
Agreement between the Trust, the Manager, and the Portfolio Manager, the
Trust shall forthwith cease to use such name (or derivative or logo).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST. A copy
of the Amended and Restated Agreement and Declaration of Trust for the
Trust is on file with the Secretary of the Commonwealth of Massachusetts.
The Amended and Restated Agreement and Declaration of Trust has been
executed on behalf of the Trust by Trustees of the Trust in their capacity
as Trustees of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the Trust and
shall not be binding upon any Trustee, officer, or shareholder of the
Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State
of Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the
SEC thereunder. The term "affiliate" or "affiliated person" as used in
this Agreement shall mean "affiliated person" as defined in Section
2(a)(3) of the 1940 Act.
(b) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) To the extent permitted under Section 16 of this Agreement,
this Agreement may only be assigned by any party with the prior written
consent of the other parties.
(d) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby, and to this extent, the
provisions of this Agreement shall be deemed to be severable.
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(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
Attest /s/Marilyn Talman By: /s/ Terry Kendall
----------------- ------------------
Title: Assistant Secretary Title: President
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: /s/ David L. Jacobson
------------------ ---------------------
Title: Vice President Title: Senior Vice President
-------------- ---------------------
and Assistant Secretary
T. ROWE PRICE ASSOCIATES, INC.
Attest By: /s/ Darrell Braman
---------------- ------------------
Title: Title: Vice President
-------------- --------------
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AMENDED SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which T. Rowe Price
Associates, Inc. shall act as Portfolio Manager is as follows:
Fully Managed Series
Equity Income Series
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the 26th day February, 1999.
THE GCG TRUST
Attest /s/Marilyn Talman By: /s/ Myles R. Tashman
----------------- ---------------------
Title: Assistant Secretary Title: Secretary
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: /s/ Myles R. Tashman
------------------ --------------------
Title: Vice President Title: Executive Vice President
----------------------- ------------------------
and Assistant Secretary
T. ROWE PRICE ASSOCIATES, INC.
Attest /s/ Catherine Berkenkemper By: /s/ Darrell Braman
-------------------------- ------------------
Title: Assistant Vice President Title: Vice President
------------------------ --------------
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AMENDED SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by T. Rowe Price Associates, Inc.
("Portfolio Manager") to the following Series of The GCG Trust, pursuant
to the attached Portfolio Management Agreement, the Manager will pay the
Portfolio Manager a fee, payable monthly, based on the average daily net
assets of the Series at the following annual rate of the average daily net
assets of the Series:
SERIES RATE
------ ----
Fully Managed Series 0.50%
Equity Income Series 0.40%
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the 26th day February, 1999.
THE GCG TRUST
Attest /s/Marilyn Talman By: /s/ Myles R. Tashman
----------------- --------------------
Title: Assistant Secretary Title: Secretary
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/Marilyn Talman By: /s/ Myles R. Tashman
------------------ --------------------
Title: Vice President Title: Executive Vice President
----------------------- ------------------------
and Assistant Secretary
T. ROWE PRICE ASSOCIATES, INC.
Attest /s/ Catherine Berkenkemper By: /s/ Darrell Braman
-------------------------- ------------------
Title: Assistant Vice President Title: Vice President
------------------------ --------------
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EXHIBIT E
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 26th day of February, 1999, among The GCG Trust
(the "Trust"), a Massachusetts business trust, Directed Services, Inc.
(the "Manager"), a New York corporation, and Janus Capital Corporation
("Portfolio Manager"), a Colorado 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 between the Trust, the
Manager, and the Portfolio Manager as follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint Janus
Capital Corporation to act as Portfolio Manager to the Series designated
on Schedule A of this Agreement (each a "Series") for the periods and on
the terms set forth in this Agreement. The Portfolio Manager accepts
such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
In the event the Trust designates one or more series other than the
Series with respect to which the Trust and the Manager wish to retain the
Portfolio Manager to render investment advisory services hereunder, they
shall promptly notify the Portfolio Manager in writing. If the Portfolio
Manager is willing to render such services, it shall so notify the Trust
and Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the supervision of the
Trust's Board of Trustees and the Manager, the Portfolio Manager will
provide a continuous investment program for each Series' portfolio and
determine the composition of the assets of each Series' portfolio,
including determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the portfolio. The
Portfolio Manager will provide investment research and conduct a
continuous program of evaluation, investment, sales, and reinvestment of
each Series' assets by determining the securities and other investments
that shall be purchased, entered into, sold, closed, or exchanged for the
Series, when these transactions should be executed, and what portion of
the assets of each Series should be held in the various securities and
other investments in which it may invest, and the Portfolio Manager is
hereby authorized to execute and perform such services on behalf of each
Series. To the extent permitted by the investment policies of the
Series, the Portfolio Manager shall make decisions for the Series as
to foreign currency matters and make determinations as to and execute
and perform foreign currency exchange contracts on behalf of the Series.
The Portfolio Manager will provide the services under this Agreement
in accordance with the Series' investment objective or objectives,
policies, and restrictions as stated in the Trust's Registration
Statement filed with the Securities and Exchange Commission (the "SEC"),
as from time to time amended, copies of which shall be sent to the
Portfolio Manager by the Manager upon filing with the SEC. Prior to
filing the Manager will provide an opportunity
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for the Portfolio Manager to review the Trust's
prospectus and statement of additional information. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage each Series so that no
action or omission on the part of the Portfolio Manager will cause a
Series to fail to meet the requirements to qualify as a regulated
investment company specified in Section 851 of the Internal Revenue Code
(other than the requirements for the Trust to register under the 1940 Act
and to file with its tax return an election to be a regulated investment
company, both of which shall not be the responsibility of the Portfolio
Manager), (2) manage each Series so that no action or omission on the
part of the Portfolio Manager shall cause a Series to fail to comply with
the diversification requirements of Section 817(h) of the Internal
Revenue Code and regulations issued thereunder, and (3) use reasonable
efforts to manage the Series so that no action or omission on the part of
the Portfolio Manager shall cause a Series to fail to comply with any
other rules and regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies. The Manager will
notify the Portfolio Manager promptly if the Manager believes that a
Series is in violation of any requirement specified in the first sentence
of this paragraph. The Manager or the Trust will notify the Portfolio
Manager of any pertinent changes, modifications to, or interpretations of
Section 817(h) of the Internal Revenue Code and regulations issued
thereunder and of rules or regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies.
Portfolio Manager shall have no responsibility to monitor those
limitations or restrictions, including the 90%-source test, for which the
Portfolio Manager has not been provided sufficient information in
accordance with Section 2(j) of this Agreement or otherwise, provided
Portfolio Manager has notified Manager of its need for such information.
All such monitoring shall be the responsibility of the Manager.
(b) The Portfolio Manager will perform its duties hereunder
pursuant to the 1940 Act and all rules and regulations thereunder, all
other applicable federal and state laws and regulations, with any
applicable procedures adopted by the Trust's Board of Trustees of which
the Portfolio Manager has been notified in writing, and the provisions of
the Registration Statement of the Trust under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as supplemented or amended, of which
the Portfolio Manager has received a copy ("Registration Statement").
The Manager or the Trust will notify the Portfolio Manager of pertinent
provisions of applicable state insurance law with which the Portfolio
Manager must comply under this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the purchase or
sale of a security to be in the best interest of a Series as well as of
other investment advisory clients of the Portfolio Manager or any of its
affiliates, the Portfolio Manager may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be so sold or purchased with those of its other clients
where such aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Portfolio Manager in a manner that is
fair and equitable in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Trust and to such other
clients, subject to review by the Manager and the Board of Trustees.
(d) In connection with the purchase and sale of securities for a
Series, the Portfolio Manager will arrange for the transmission to the
custodian and portfolio accounting agent for the Series on a daily basis,
such confirmation, trade tickets, and other documents and information,
including, but not limited to, Cusip, Sedol, or other numbers that
identify securities to be purchased or sold on behalf of the Series, as
may be reasonably necessary to enable the custodian and portfolio
accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Series. With respect to portfolio
securities to be purchased or sold through the Depository Trust Company,
the Portfolio Manager will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian and portfolio
accounting agent.
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(e) The Portfolio Manager will assist the portfolio accounting
agent for the Trust in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the
Trust, the value of any portfolio securities or other assets of the
Series for which the portfolio accounting agent seeks assistance from or
identifies for review by the Portfolio Manager, and the parties agree
that the Portfolio Manager shall not bear responsibility or liability for
the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent that the
Portfolio Manager exercises judgment with respect to any such valuation.
The Portfolio Manager shall not otherwise be responsible for portfolio
accounting nor shall it be required to generate information derived from
portfolio accounting data.
(f) The Portfolio Manager will make available to the Trust and the
Manager, promptly upon request, all of the Series' investment records and
ledgers maintained by the Portfolio Manager (which shall not include the
records and ledgers maintained by the custodian and portfolio accounting
agent for the Trust) as are necessary to assist the Trust and the Manager
to comply with requirements of the 1940 Act and the Investment Advisers
Act of 1940 (the "Advisers Act"), as well as other applicable laws. The
Portfolio Manager will furnish to regulatory authorities having the
requisite authority any information or reports in connection with such
services which may be requested in order to ascertain whether the
operations of the Trust are being conducted in a manner consistent with
applicable laws and regulations.
(g) The Portfolio Manager will provide reports to the Trust's Board
of Trustees for consideration at meetings of the Board on the investment
program for the Series and the issuers and securities represented in the
Series' portfolio, and will furnish the Trust's Board of Trustees with
respect to the Series such periodic and special reports as the Trustees
and the Manager may reasonably request.
(h) In rendering the services required under this Agreement, the
Portfolio Manager may, from time to time, employ or associate with itself
such person or persons as it believes necessary to assist it in carrying
out its obligations under this Agreement. However, the Portfolio Manager
may not retain as subadviser any company that would be an "investment
adviser," as that term is defined in the 1940 Act, to the Series unless
the contract with such company is approved by a majority of the Trust's
Board of Trustees and a majority of Trustees who are not parties to any
agreement or contract with such company and who are not "interested
persons," as defined in the 1940 Act, of the Trust, the Manager, or the
Portfolio Manager, or any such company that is retained as subadviser,
and is approved by the vote of a majority of the outstanding voting
securities of the applicable Series of the Trust to the extent required
by the 1940 Act. The Portfolio Manager shall be responsible for making
reasonable inquiries and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager has employed
or with which it has associated with respect to the Series, or any
employee thereof has not, to the best of the Portfolio Manager's
knowledge, in any material connection with the handling of Trust assets:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement,
fraudulent conversion, or misappropriation of funds or securities,
involving violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code, or involving the purchase or sale of any
security; or
(ii) been found by any state regulatory authority, within the last
ten (10) years, to have violated or to have acknowledged violation
of any provision of any state insurance law involving fraud, deceit,
or knowing misrepresentation; or
(iii) been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have
acknowledged violation of any provision of federal or state
securities laws involving fraud, deceit, or knowing
misrepresentation.
(i) Portfolio Manager shall be responsible for the preparation and
filing of Schedule 13G and 13F on behalf of the Series. Portfolio
Manager shall not be responsible for preparing or filing of any other
reports required of the Series by any governmental or regulatory agency,
except as may be expressly agreed to in writing. This section shall not
be interpreted to
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relieve Portfolio Manager of its duty to file reports
of it as an investment adviser. Portfolio Manager shall vote proxies
received in connection with securities held by the Series.
(j) Manager shall timely furnish Portfolio Manager with such
information as may be reasonably necessary for or requested by Portfolio
Manager to perform its responsibilities.
(k) The Series assets shall be maintained in the custody of the
Trust's designated custodian. Any assets added to the Series shall be
delivered directly to such custodian. Portfolio Manager shall have no
liability for the acts or omissions of any custodian of the Series'
assets, except for Portfolio Manager's instructions given to any
custodian. Portfolio Manager shall have no responsibility, except for
Portfolio Manager's instructions to custodian, for custodian's compliance
with the segregation requirement of the 1940 Act or other applicable law.
Portfolio Manager shall be subject to a written code of ethics adopted by
it pursuant to Rule 17j-1(b) 0f the 1940 Act, which was adopted by the
Board of Trustees of the Trust as the code of ethics for the Series, and
shall not be subject to any other code of ethics, including Manager's
code of ethics, unless specifically adopted by Portfolio Manager.
3. BROKER-DEALER SELECTION. The Portfolio Manager is responsible
for decisions to buy and sell securities and other investments for each
Series' portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in
effecting a security transaction will be to obtain the best execution for
the Series, taking into account the factors specified in the prospectus
and/or statement of additional information for the Trust, which include
price (including the applicable brokerage commission or dollar spread),
the size of the order, the nature of the market for the security, the
timing of the transaction, the reputation, the experience and financial
stability of the broker-dealer involved, the quality of the service, the
difficulty of execution, and the execution capabilities and operational
facilities of the firms involved, and the firm's risk in positioning a
block of securities. Accordingly, the price to the Series in any
transaction may be less favorable than that available from another broker-
dealer if the difference is reasonably justified, in the judgment of the
Portfolio Manager in the exercise of its fiduciary obligations to the
Trust, by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, the
Portfolio Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Series to pay a broker-dealer for effecting a
portfolio investment transaction in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction,
if the Portfolio Manager or its affiliate determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in
terms of either that particular transaction or the Portfolio Manager's or
its affiliate's overall responsibilities with respect to the Series and
to their other clients as to which they exercise investment discretion.
To the extent consistent with these standards, the Portfolio Manager is
further authorized to allocate the orders placed by it on behalf of the
Series to the Portfolio Manager if it is registered as a broker-dealer
with the SEC, to its affiliated broker-dealer, or to such brokers and
dealers who also provide research or statistical material, or other
services to the Series, the Portfolio Manager, or an affiliate of the
Portfolio Manager. Such allocation shall be in such amounts and
proportions as the Portfolio Manager shall determine consistent with the
above standards, and the Portfolio Manager will report on said allocation
regularly to the Board of Trustees of the Trust indicating the broker-
dealers to which such allocations have been made and the basis therefor.
Pursuant to the Procedures for Opening Brokerage and Other Accounts, the
Portfolio Manager is authorized to open brokerage and other
trading accounts on behalf of the Series in compliance with these
procedures.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has
reviewed the post-effective amendment to the Registration Statement for
the Trust filed with the SEC that contains disclosure about the Portfolio
Manager, and represents and warrants that, with respect to the disclosure
about or information relating, directly or indirectly, to the Portfolio
Manager, to the Portfolio Manager's knowledge, such Registration
Statement contains, as of the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact which
was required to be stated therein or necessary to make the statements
contained therein not misleading.
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The Portfolio Manager further
represents and warrants that it is a duly registered investment adviser
under the Advisers Act, or alternatively that it is not required to be a
registered investment adviser under the Advisers Act to perform the
duties described in this Agreement, and that it is a duly registered
investment adviser in all states in which the Portfolio Manager is
required to be registered.
Manager represents and warrants that: (a) it has complied, in all
material respects, with all registrations required by, and will comply,
in all material respects, with all applicable rules and regulations of,
the SEC, and (b) it has authority under the Management Agreement and
applicable law to execute, deliver and perform this Agreement.
5. EXPENSES. During the term of this Agreement, the Portfolio
Manager will pay all expenses incurred by it and its staff and for their
activities in connection with its portfolio management duties under this
Agreement. The Manager or the Trust shall be responsible for all the
expenses of the Trust's operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent public
accountants;
(b) Expenses of the Series' transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Series' custodial services including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of
each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and Analyses
of International Management Reports (as appropriate) for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Portfolio Manager or an affiliate of
the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses and reports of
the Trust to its shareholders, the filing of reports with regulatory
bodies, the maintenance of the Trust's existence, and the regulation of
shares with federal and state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Costs of printing stock certificates representing shares of the
Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate
thereof;
(o) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including
expenses incurred in connection with litigation, proceedings, and other
claims (unless the Portfolio Manager is responsible for such expenses
under Section 14 of this Agreement), and the legal obligations of the
Trust to indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(r) Organizational and offering expenses.
6. COMPENSATION. For the services provided, the Manager will pay
the Portfolio Manager a fee, payable as described in Schedule B.
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7. SEED MONEY. The Manager agrees that the Portfolio Manager shall
not be responsible for providing money for the initial capitalization of
the Series.
8. COMPLIANCE.
(a) The Portfolio Manager agrees that it shall promptly notify the
Manager and the Trust (1) in the event that the SEC or other governmental
authority has censured the Portfolio Manager; placed limitations upon its
activities, functions or operations; suspended or revoked its
registration, if any, as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions,
(2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, or (3) upon having a
reasonable basis for believing that the Series has ceased to comply with
the diversification provisions of Section 817(h) of the Internal Revenue
Code or the regulations thereunder. The Portfolio Manager further agrees
to notify the Manager and the Trust promptly of any material fact known
to the Portfolio Manager respecting or relating to the Portfolio Manager
that is not contained in the Registration Statement or prospectus for the
Trust, or any amendment or supplement thereto, and is required to be
stated therein or necessary to make the statements therein not
misleading, or of any statement contained therein that becomes untrue in
any material respect.
(b) The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured the Manager
or the Trust; placed limitations upon either of their activities,
functions, or operations; suspended or revoked the Manager's registration
as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon having a
reasonable basis for believing that the Series has ceased to qualify or
might not qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code, or (3) upon having a reasonable basis for
believing that the Series has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or the
Regulations thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Portfolio Manager hereby agrees that all
records which it maintains for the Series are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records
upon the Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records. The
Portfolio Manager further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by
Rule 31a-l under the 1940 Act and to preserve the records required by
Rule 204-2 under the Advisers Act for the period specified in the Rule.
10. COOPERATION. Each party to this Agreement agrees to cooperate
with each other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC
and state insurance regulators) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER.
(a) During the term of this Agreement, the Trust and the Manager
agree to furnish to the Portfolio Manager at its principal offices prior
to use thereof copies of all Registration Statements and amendments
thereto, prospectuses, proxy statements, reports to shareholders, sales
literature or other material prepared for distribution to shareholders of
the Trust or any Series or to the public that refer or relate in any way
to the Portfolio Manager, Janus Capital Corporation or any of its
affiliates (other than the Manager), or that use any derivative of the
name Janus Capital Corporation or any logo associated therewith. The
Trust and the Manager agree that they will not use any such material
without the prior written consent of the Portfolio Manager, which consent
shall not be unreasonably withheld or delayed. The Series' name shall
not include the name Janus without prior written consent of the Portfolio
Manager. In the event of the termination of this Agreement, the Trust
and the Manager will furnish to the Portfolio Manager copies of any of
the above-mentioned materials that refer or relate in any way to the
Portfolio Manager;
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(b) the Trust and the Manager will furnish to the Portfolio Manager
such information relating to either of them or the business affairs of
the Trust as the Portfolio Manager shall from time to time reasonably
request in order to discharge its obligations hereunder;
(c) the Manager and the Trust agree that neither the Trust, the
Manager, nor affiliated persons of the Trust or the Manager shall give
any information or make any representations or statements in connection
with the sale of shares of the Series concerning the Portfolio Manager or
the Series other than the information or representations contained in the
Registration Statement, prospectus, or statement of additional
information for the Trust, as they may be amended or supplemented from
time to time, or in reports or proxy statements for the Trust, or in
sales literature or other promotional material approved in advance by the
Portfolio Manager, except with the prior permission of the Portfolio
Manager.
12. CONTROL. It is understood and agreed that the Trust shall at
all times retain the ultimate responsibility for and control of all
functions performed pursuant to this Agreement and reserve the right to
direct, approve, or disapprove any action hereunder taken on its behalf
by the Portfolio Manager.
13. SERVICES NOT EXCLUSIVE. It is understood that the services of
the Portfolio Manager are not exclusive, and nothing in this Agreement
shall prevent the Portfolio Manager (or its affiliates) from providing
similar services to other clients, including investment companies
(whether or not their investment objectives and policies are similar to
those of the Series) or from engaging in other activities.
14. LIABILITY. Except as may otherwise be required by the 1940 Act
or the rules thereunder or other applicable law, the Trust and the
Manager agree that the Portfolio Manager, any affiliated person of the
Portfolio Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act, controls the Portfolio Manager shall not be
liable for, or subject to any damages, expenses, or losses in connection
with, any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Portfolio
Manager's duties, or by reason of reckless disregard of the Portfolio
Manager's obligations and duties under this Agreement.
15. INDEMNIFICATION.
(a) Notwithstanding Section 14 of this Agreement, the Manager
agrees to indemnify and hold harmless the Portfolio Manager, any
affiliated person of the Portfolio Manager (other than the Manager), and
each person, if any, who, within the meaning of Section 15 of the 1933
Act controls ("controlling person") the Portfolio Manager (all of such
persons being referred to as "Portfolio Manager Indemnified Persons")
against any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the 1940 Act,
the Advisers Act, the Internal Revenue Code, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities to
the Trust which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Manager, any of its employees or representatives or
any affiliate of or any person acting on behalf of the Manager or (2) may
be based upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of, the Manager
and contained in the Registration Statement or prospectus covering shares
of the Trust or a Series, or any amendment thereof or any supplement
thereto, or the omission or alleged omission to state therein a material
fact known or which should have been known to the Manager and was
required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance
upon information furnished to the Manager or the Trust or to any
affiliated person of the Manager by a Portfolio Manager Indemnified
Person; provided however, that in no case shall the indemnity in favor of
the Portfolio Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of its reckless disregard of
obligations and duties under this Agreement.
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(b) Notwithstanding Section 14 of this Agreement, the Portfolio
Manager agrees to indemnify and hold harmless the Manager, any affiliated
person of the Manager (other than the Portfolio Manager), and each
person, if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Manager (all of such persons being
referred to as "Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other
expenses) to which a Manager Indemnified Person may become subject under
the 1933 Act, 1940 Act, the Advisers Act, the Internal Revenue Code,
under any other statute, at common law or otherwise, arising out of the
Portfolio Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or nonfeasance
by the Portfolio Manager, any of its employees or representatives, or any
affiliate of or any person acting on behalf of the Portfolio Manager, (2)
may be based upon a failure to comply with Section 2, Paragraph (a) of
this Agreement, or (3) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or prospectus covering the shares of the Trust or a Series, or
any amendment or supplement thereto, or the omission or alleged omission
to state therein a material fact known or which should have been known to
the Portfolio Manager and was required to be stated therein or necessary
to make the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished to the Manager,
the Trust, or any affiliated person of the Manager or Trust by the
Portfolio Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in favor of a
Manager Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence in the performance of
its duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this
Section 15 with respect to any claim made against a Portfolio Manager
Indemnified Person unless such Portfolio Manager Indemnified Person shall
have notified the Manager in writing within a reasonable time after the
summons, notice, or other first legal process or notice giving
information of the nature of the claim shall have been served upon such
Portfolio Manager Indemnified Person (or after such Portfolio Manager
Indemnified Person shall have received notice of such service on any
designated agent), but failure to notify the Manager of any such claim
shall not relieve the Manager from any liability which it may have to the
Portfolio Manager Indemnified Person against whom such action is brought
otherwise than on account of this Section 15. In case any such action is
brought against the Portfolio Manager Indemnified Person, the Manager
will be entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified Person, to
assume the defense thereof, with counsel satisfactory to the Portfolio
Manager Indemnified Person. If the Manager assumes the defense of any
such action and the selection of counsel by the Manager to represent both
the Manager and the Portfolio Manager Indemnified Person would result in
a conflict of interests and therefore, would not, in the reasonable
judgment of the Portfolio Manager Indemnified Person, adequately
represent the interests of the Portfolio Manager Indemnified Person, the
Manager will, at its own expense, assume the defense with counsel to the
Manager and, also at its own expense, with separate counsel to the
Portfolio Manager Indemnified Person, which counsel shall be satisfactory
to the Manager and to the Portfolio Manager Indemnified Person. The
Portfolio Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Manager shall not be
liable to the Portfolio Manager Indemnified Person under this Agreement
for any legal or other expenses subsequently incurred by the Portfolio
Manager Indemnified Person independently in connection with the defense
thereof other than reasonable costs of investigation. The Manager shall
not have the right to compromise on or settle the litigation without the
prior written consent of the Portfolio Manager Indemnified Person if the
compromise or settlement results, or may result in a finding of
wrongdoing on the part of the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under Paragraph (b)
of this Section 15 with respect to any claim made against a Manager
Indemnified Person unless such Manager Indemnified
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Person shall have
notified the Portfolio Manager in writing within a reasonable time after
the summons, notice, or other first legal process or notice giving
information of the nature of the claim shall have been served upon such
Manager Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated agent), but
failure to notify the Portfolio Manager of any such claim shall not
relieve the Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought otherwise
than on account of this Section 15. In case any such action is brought
against the Manager Indemnified Person, the Portfolio Manager will be
entitled to participate, at its own expense, in the defense thereof or,
after notice to the Manager Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Manager Indemnified Person. If
the Portfolio Manager assumes the defense of any such action and the
selection of counsel by the Portfolio Manager to represent both the
Portfolio Manager and the Manager
Indemnified Person would result in a conflict of interests and
therefore, would not, in the reasonable judgment of the Manager
Indemnified Person, adequately represent the interests of the Manager
Indemnified Person, the Portfolio Manager will, at its own expense,
assume the defense with counsel to the Portfolio Manager and, also
at its own expense, with separate counsel to the Manager Indemnified
Person which counsel shall be satisfactory to the Portfolio Manager
and to the Manager Indemnified Person. The Manager Indemnified Person
shall bear the fees and expenses of any additional counsel retained by
it, and the Portfolio Manager shall not be liable to the Manager
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Manager Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to compromise
on or settle the litigation without the prior written consent of the Manager
Indemnified Person if the compromise or settlement results, or may result
in a finding of wrongdoing on the part of the Manager Indemnified Person.
(e) The Manager shall not be liable under this Section 15 to
indemnify and hold harmless the Portfolio Manager and the Portfolio
Manager shall not be liable under this Section 15 to indemnify and hold
harmless the Manager with respect to any losses, claims, damages,
liabilities, or litigation that first become known to the party seeking
indemnification during any period that the Portfolio Manager is, within
the meaning of Section 15 of the 1933 Act, a controlling person of the
Manager.
16. DURATION AND TERMINATION. This Agreement shall become
effective on the date first indicated above. Unless terminated as
provided herein, the Agreement shall remain in full force and effect for
two (2) years from such date and continue on an annual basis thereafter
with respect to each Series; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of the
entire Board of Trustees of the Trust, or by the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of each
Series, and (b) the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons (as such term is defined
in the 1940 Act) of any such party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The Portfolio
Manager shall not provide any services for such Series or receive any
fees on account of such Series with respect to which this Agreement is
not approved as described in the preceding sentence. However, any
approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a Series shall be
effective to continue this Agreement with respect to such Series
notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Series or
(ii) that this agreement has not been approved by the vote of a majority
of the outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. 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) day's
written notice to the Manager and the Portfolio Manager, or (c) by the
Portfolio Manager at any time without penalty, upon sixty (60) days
written notice to the Manager and the Trust. In
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addition, this Agreement
shall terminate with respect to a Series in the event that it is not
initially approved by the vote of a majority of the outstanding voting
securities of that Series at a meeting of shareholders at which approval
of the Agreement shall be considered by shareholders of the Series. In
the event of termination for any reason, all records of each Series for
which the Agreement is terminated shall promptly be returned to the
Manager or the Trust, free from any claim or retention of rights in such
records by the Portfolio Manager, although the Portfolio Manager may,
at its own expense, make and retain a copy of such records. The
Agreement shall automatically terminate in the event of its assignment
(as such term is described in the 1940 Act). In the event this
Agreement is terminated or is not approved in the manner described
above, the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15,
and 18 of this Agreement shall remain in effect, as well as any
applicable provision of this Paragraph numbered 16.
17. AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved by an affirmative vote of (i)
the holders of a majority of the outstanding voting securities of the
Series, and (ii) the Trustees of the Trust, including a majority of the
Trustees of the Trust who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting
on such approval, if such approval is required by applicable law.
18. USE OF NAME.
(a) It is understood that the name "Directed Services, Inc." or any
derivative thereof or logo associated with that name is the valuable
property of the Manager and/or its affiliates, and that the Portfolio
Manager has the right to use such name (or derivative or logo) only with
the approval of the Manager and only so long as the Manager is Manager to
the Trust and/or the Series. Upon termination of the Management
Agreement between the Trust and the Manager, the Portfolio Manager shall
as soon as is reasonably possible cease to use such name (or derivative
or logo).
(b) It is understood that the name "Janus" 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, only
as stated in Section 11, and only for so long as the Portfolio Manager is
a portfolio manager to the Trust and/or the Series. Upon termination of
this Agreement between the Trust, the Manager, and the Portfolio Manager,
the Trust shall as soon as is reasonably possible cease to use such name
(or derivative or logo).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST. A
copy of the Amended and Restated Agreement and Declaration of Trust for
the Trust is on file with the Secretary of the Commonwealth of
Massachusetts. The Amended and Restated Agreement and Declaration of
Trust has been executed on behalf of the Trust by Trustees of the Trust
in their capacity as Trustees of the Trust and not individually. The
obligations of this Agreement shall be binding upon the assets and
property of the Trust and shall not be binding upon any Trustee, officer,
or shareholder of the Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of
the SEC thereunder. The term "affiliate" or "affiliated person" as used
in this Agreement shall mean "affiliated person" as defined in Section
2(a)(3) of the 1940 Act.
(b) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) To the extent permitted under Section 16 of this Agreement,
this Agreement may only be assigned by any party with the prior written
consent of the other parties.
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(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
Attest /s/ Marilyn Talman By: /s/ Myles R. Tashman
------------------ --------------------
Title: Assistant Secretary Title: Secretary
------------------- ---------
DIRECTED SERVICES, INC.
Attest /s/ Marilyn Talman By: /s/ David L. Jacobson
------------------- ---------------------
Title: Assistant Secretary Title: Senior Vice President
------------------- ---------------------
and Vice President
JANUS CAPITAL CORPORATION
Attest /s/ Verna Morris By: /s/ Bonnie Howe
---------------- ---------------
Title: Legal Secretary Title: Assistant Vice President
--------------- ------------------------
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SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which Janus Capital
Corporation shall act as Portfolio Manager are as follows:
Growth Series
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, computed
daily and 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 FEE
Growth Series 0.55% on first $100 million;
0.50% on next $400 million;
0.45% on amounts in excess of $500 million.
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VOTING INSTRUCTION/PROXY
THE GCG TRUST
This voting instruction 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 all of the following proposals. 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.
[variable name] [variable contract]
[variable joint name]
[variable address line 1]
[variable address line 2]
[variable address line 3]
[variable city, state & zip]
The Undersigned Contract Owner of a variable annuity contract or
variable life insurance policy (each referred to as "Contract") issued
by Golden American Life Insurance Company, First Golden Life Insurance
Company of New York, and Equitable Life Insurance Company of Iowa
(collectively, the "participating insurance companies", individually,
"participating insurance company") and funded by a separate account
of a participating insurance company instructs that the shares of the
Series of the Trust attributable to his or her Contract be voted at the
Meeting to be held on April 27, 1999, at 10:00 a.m., local time, at 1475
Dunwoody Drive, West Chester, Pennsylvania, 19380 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 acknowledged, and in
such participating insurance company's discretion, upon such other matters
as may properly come before the Meeting and any adjournment thereof.
The terms and conditions of the agreements, proposed below, if approved,
will be substantively identical to existing agreements, except that the fees
to be paid to the portfolio managers (by DSI not the Trust) will be lower
than under currently approved Portfolio Management Agreemets.
UNITS PROPOSALS FOR AGAINST ABSTAIN
aaaa 1. To approve a new Portfolio Management
Agreement among the Trust, Directed
Services, Inc. ("DSI") and AIM
Capital Management, Inc on behalf of:
(i) CAPITAL APPRECIATION SERIES [ ] [ ] [ ]
(ii) STRATEGIC EQUITY SERIES [ ] [ ] [ ]
bbbb 2. To approve a new Portfolio Management
Agreement among the Trust, DSI and Baring
International Investment Limited on behalf
of:
(i) DEVELOPING WORLD SERIES [ ] [ ] [ ]
(ii) HARD ASSET SERIES [ ] [ ] [ ]
cccc 3. To approve a new Portfolio Management
Agreement among the Trust, DSI and Alliance
Capital Management L.P. on behalf of:
GROWTH & INCOME SERIES [ ] [ ] [ ]
dddd 4. To approve a new Portfolio Management
Agreement among the Trust, DSI and T. Rowe
Price Associates, Inc. on behalf of:
EQUITY INCOME SERIES [ ] [ ] [ ]
dddd 5. To approve a change in the statement of the
EQUITY INCOME SERIES' investment objective
from "seeking the highest total return,
consisting of capital appreciation and
current income, consistent with the
preservation of capital" to providing
substantial dividend income and also long-
term capital appreciation."
EQUITY INCOME SERIES [ ] [ ] [ ]
eeee 6. To approve a new Portfolio Management
Agreement among the Trust, DSI and Janus
Capital Corporation on behalf of:
GROWTH & SERIES [ ] [ ] [ ]
PLEASE VOTE BY MARKING ONE BOX NEXT TO EACH PROPOSAL. SIGN EXACTLY AS LISTED
ABOVE, AND DATE THIS VOTING INSTRUCTION, THEN RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
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 ALL PROPOSALS. If this voting instruction is not returned
properly executed, such votes will be cast by a participating insurance company
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 above-listed Series.
IMPORTANT: Joint Owners must EACH sign. Trustees and others signing in a
representative capacity should so indicate.
Date:__________, 1999 ________________________ ________________________
Contract Owner Joint Owner (If Any)
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