File Nos. 33-23512, 811-5629
Filed under Rule 497(e)
THE GCG TRUST
PROSPECTUS SUPPLEMENT
FEBRUARY 22, 1999
TO THE
PROSPECTUS DATED MAY 1, 1998, AS SUPPLEMENTED JUNE 8, 1998,
JUNE 24, 1998 AND JANUARY 6, 1999 FOR THE GCG TRUST
Several changes are taking place for certain Series and The GCG
Trust. These changes are listed below:
GROWTH & INCOME SERIES
The Board of Trustees (the "Board" or the "Trustees") of The GCG
Trust (the "Trust"), at a meeting on February 16, 1999, approved a new
portfolio management agreement on behalf of the Growth & Income Series
of the Trust. The parties to this agreement (the "Alliance Agreement")
are the Trust, Directed Services, Inc. ("DSI") and Alliance Capital
Management L.P. ("Alliance"). With the approval of the Alliance
Agreement, the Board appointed Alliance as Portfolio Manager to the
Growth & Income Series to become effective no later than March 1, 1999.
The portfolio management agreement currently in place regarding the
Growth & Income Series (the "current agreement") will terminate upon
either the closing of a sales transaction involving the current
Portfolio Manager, Robertson, Stephens & Company Investment Management,
L.P. ("Robertson, Stephens"), or upon the close of business on February
26, 1999, whichever occurs first.
The Alliance Agreement approved by the Trustees is substantially
similar to the current agreement, except the compensation to be paid to
the new Portfolio Manager will be calculated using a different schedule
of compensation, resulting in overall lower fees. This fee reduction
will have no impact on the total expenses borne by the Series. Under
the Alliance Agreement, DSI (and not the Trust) will pay to Alliance a
monthly fee based on the average daily net assets in the Series at the
following annual rates:
0.75% on the first $10 million of assets;
0.625% on the next $10 million of assets;
0.50% on the next $20 million of assets;
0.375% on the next $20 million of assets; and
0.25% on any additional assets.
Additionally, the Board of Trustees voted to submit the Alliance
Agreement to the shareholders of the Growth & Income Series of the Trust
for their approval.
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance Capital Management L.P., with offices at 1345 Avenue of
the Americas, New York, New York 10105, was formed 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
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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 of December 31, 1998, Alliance managed
approximately $286.7 billion of assets.
Kevin J. O'Brien, Senior Vice President, will be responsible for
the day-to-day management of the Growth & Income Series. Mr. O'Brien
manages mid-cap growth portfolios and a number of separate pension and
pooled accounts. Mr. O'Brien joined Alliance in 1988.
VALUE + GROWTH SERIES
The Trustees, at a meeting on February 16, 1999, also approved a
new portfolio management agreement on behalf of the Value + Growth
Series of the Trust. The parties to this agreement (the "Janus
Agreement") are the Trust, DSI and Janus Capital Corporation ("Janus").
With the approval of the Janus Agreement, the Board appointed Janus as
Portfolio Manager to the Value + Growth Series to become effective no
later than March 1, 1999. The portfolio management agreement currently
in place regarding the Value + Growth Series (the "current agreement")
will terminate upon either the closing of a sales transaction involving
the current Portfolio Manager, Robertson, Stephens, or upon the close of
business on February 26, 1999, whichever occurs first.
The Janus Agreement approved by the Trustees is substantially
similar to the current agreement, except the compensation to be paid to
the new Portfolio Manager will be calculated using a different schedule
of compensation, resulting in overall lower fees. This fee reduction
will have no impact on the total expenses borne by the Series. Under
the Janus Agreement, DSI (and not the Trust) will pay to Janus a monthly
fee based on the average daily net assets in the Series at the following
annual rates:
0.55% on the first $100 million of assets;
0.50% on the next $400 million of assets;
0.45% on any additional assets.
Additionally, the Board of Trustees voted to submit the Janus
Agreement to the shareholders of the Value + Growth Series of the Trust
for their approval.
CHANGES IN THE INVESTMENT MANAGEMENT STRATEGY OF THE VALUE + GROWTH SERIES
The Board also approved certain changes in the investment policies
and procedures to enable Janus to manage the Series in the style they
have requested. These changes which are described below will become
effective with Janus Agreement. In support of the changes in the
investment management strategy, the Board also approved a change in name
of the Series to the "Growth Series" to become effective with the other
changes.
The investment style to be implemented by the Portfolio Manager requires
a change from a value style to a growth style as evidenced by the
following language that will replace the current description of the
Series investment strategy:
"The Portfolio Manager generally takes a "bottom up" approach
of selecting companies. In other words they seek to identify
individual companies with earnings growth potential that may
not be recognized by the market at large. They make this
assessment by looking at companies one at a time, regardless
of size, country of organization, place of principal business
activity, or other similar
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selection criteria. Realization of income is not a significant
consideration when choosing investments for the Series. Income
realized on the Series' investments will be incidental to its
objective."
JANUS CAPITAL CORPORATION
Janus Capital Corporation, with offices at 100 Fillmore Street,
Denver, Colorado 80206-4928, was founded as a Colorado corporation in
1978. The majority stockholder of Janus is Kansas City Southern
Industries, a holding company with diverse interest in transportation
and financial services. Janus is a professional investment management
firm that provides advisory services to separately managed accounts and
investment companies. As of December 31, 1998, Janus managed
approximately $108 billion of assets.
Warren B. Lammert, Executive Vice President of Janus, will be
responsible for the day-to-day management of the Growth Series. Mr.
Lammert joined Janus in 1987.
MULTIPLE ALLOCATION SERIES
The Trustees of the Trust, at a meeting on February 16, 1999, also
approved a new portfolio management agreement on behalf of the Multiple
Allocation Series of the Trust. The parties to this agreement (the "T.
Rowe Price Agreement") are the Trust, DSI and T. Rowe Price Associates,
Inc. ("T. Rowe Price"). With the approval of the T. Rowe Price
Agreement, the Board appointed T. Rowe Price as Portfolio Manager to the
Multiple Allocation Series to become effective no later than March 1,
1999. The portfolio management agreement currently in place regarding
the Multiple Allocation Series (the "current agreement") will terminate
upon either the closing of a sales transaction involving the current
Portfolio Manager, Zweig Advisors Inc. ("Zweig"), or upon the close of
business on February 26, 1999, whichever occurs first.
The T. Rowe Price Agreement approved by the Trustees is
substantially similar to the current agreement, except the compensation
to be paid to the new Portfolio Manager will be calculated using a
different rate of compensation, resulting in overall lower fees. This
fee reduction will have no impact on the total expenses borne by the
Series. Under the T. Rowe Price Agreement, DSI (and not the Trust) will
pay to T. Rowe Price a monthly fee based on an annual rate of 0.40% on
average daily net assets in the Series.
Additionally, the Board voted to submit the T. Rowe Price Agreement
to the shareholders of the Multiple Allocation Series of the Trust for
their approval.
CHANGES IN THE INVESTMENT MANAGEMENT STRATEGY OF THE MULTIPLE ALLOCATION SERIES
The Board also approved certain changes in the investment
objectives, policies and procedures to enable T. Rowe Price to manage
the Series in the style they have requested. These changes which are
described below will become effective with the T. Rowe Price Agreement.
In support of the changes in the investment management strategy, the
Board also approved a change in name of the Series to the "Equity Income
Series" to become effective with the other changes.
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The Board also voted to submit the following replacement of the
investment objective to the shareholders of the Equity Income Series of
the Trust for their approval. This objective would be effective upon
shareholder approval.
"The investment objective of the Equity Income Series is to
provide substantial dividend income as well as long term
growth of capital. The Series seeks to achieve this objective
through investment in common stocks of established companies."
The investment style to be implemented by the Portfolio Manager is
changing as evidenced by the following language that will replace the
current description of the Series investment strategy:
"The Portfolio Manager typically employs a "value" approach in
selecting investments. The Portfolio Manager's in-house
research team seeks companies that appear to be undervalued by
various measures and may be temporarily out of favor, but have
good prospects for capital appreciation and dividend growth.
The Series will normally invest at least 65% of its total
assets in common stocks of well-established companies paying
above-average dividends. The Series may also invest in U.S.
Government securities, including mortgage- and asset-backed
securities, and investment grade debt securities of domestic
and foreign issuers (generally those rated Baa or better by
Moody's Investor Services, Inc. or BBB or better by Standard &
Poor's Ratings Group. If, however, the Portfolio Manager
believes that the stock market investment environment is
uncertain or unfavorable and justifies a defensive position,
then the Series may decrease its investments in equity
securities and increase its investments in debt securities
and/or money market instruments."
In selecting common stock investments, the Portfolio
Manager generally looks for companies with the following:
--An established operating history.
--Above average dividend yield relative to the S&P
500.
--Low price/earnings ratio relative to the S&P 500.
--A sound balance sheet and other positive financial
characteristics.
--Low stock price relative to a company's underlying
value as measured by assets, cash flow or business
franchises.
T. ROWE PRICE ASSOCIATES, INC.
T. Rowe Price Associates, Inc., with offices at 100 East Pratt
Street, Baltimore, Maryland 21202, was founded in 1937 by Thomas Rowe
Price, Jr. T. Rowe Price 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 of December 31, 1998, T.
Rowe Price managed approximately $147.8 billion of assets.
With respect to its investment management of the Equity Income
Series, the Portfolio Manager has an Investment Advisory Committee
composed of the following members: Brian C.
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Rogers, Chairman; Arthur B.
Cecil, III; Charles A. Morris; Charles M. Ober and Richard P. Howard.
Mr. Rogers, Director of T. Rowe Price, has day-to-day responsibility for
managing the Equity Income Series and works with the Committee in
developing and executing the Equity Income Series' investment program.
Mr. Rogers joined T. Rowe Price in 1982.
STRATEGIC EQUITY SERIES
The Trustees, at a meeting on February 16, 1999, also approved a
new portfolio management agreement on behalf of the Strategic Equity
Series of the Trust. The parties to this agreement (the "AIM
Agreement") are the Trust, DSI and A I M Capital Management, Inc.
("AIM"). With the approval of the AIM Agreement, the Board appointed
AIM as Portfolio Manager to the Strategic Equity Series to become
effective no later than March 1, 1999. The portfolio management
agreement currently in place regarding the Strategic Equity Series (the
"current agreement") will terminate upon either the closing of a sales
transaction involving the current Portfolio Manager, Zweig, or upon the
close of business on February 26, 1999, whichever occurs first.
The AIM Agreement approved by the Trustees is substantially similar
to the current agreement, including the fees to be paid to the Portfolio
Manager by DSI (not the Trust). Additionally, the Board of Trustees
voted to submit the AIM Agreement to the shareholders of the Strategic
Equity Series of the Trust for their approval.
CHANGES IN THE INVESTMENT MANAGEMENT STRATEGY OF THE STRATEGIC EQUITY SERIES
The Board also approved certain changes in the investment policies
and procedures to enable AIM to manage the Series in the style they have
requested. These changes which are described below will become
effective with the AIM Agreement.
The investment style to be implemented by the Portfolio Manager is
changing as evidenced by the following language that will replace the
current description of the Series' investment strategy:
"The Series seeks to increase shareholders' capital by
investing principally in common stocks, with an emphasis on
medium-sized and smaller emerging growth companies. The
Portfolio Manager will be particularly interested 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. As a result of this
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. The Series is primarily comprised of securities
of two basic categories of companies: (a) "core" companies,
which the Portfolio Manager 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 that the Portfolio
Manager believes are currently enjoying a dramatic increase in
profits.
The Series may invest in non-equity securities, such as money
market instruments, corporate bonds or U.S. Government
obligations during periods when, in the opinion of the
Portfolio Manager, prevailing market, financial, or economic
conditions warrant, as well as when such holdings are
advisable in light
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of a change in circumstances of a
particular company or within a particular industry."
CAPITAL APPRECIATION SERIES
The Trustees, at a meeting on February 16, 1999, also approved a
new portfolio management agreement on behalf of the Capital Appreciation
Series of the Trust. The parties to this agreement (the "AIM
Agreement") are the Trust, DSI and AIM. With the approval of the AIM
Agreement, the Board appointed AIM as Portfolio Manager to the Capital
Appreciation Series to become effective on April 1, 1999. The portfolio
management agreement currently in place with INVESCO (NY), Inc., an
affiliate of AIM, regarding the Capital Appreciation Series (the
"current agreement") will terminate upon the close of business on March
31, 1999.
The AIM Agreement approved by the Trustees is substantially similar
to the current agreement, including the fees to be paid to the Portfolio
Manager by DSI (not the Trust).
Additionally, the Board voted to submit the AIM Agreement to the
shareholders of the Capital Appreciation Series of the Trust for their
approval.
A I M CAPITAL MANAGEMENT, INC.
A I M Capital Management, Inc. is a subsidiary of A I M Advisors,
Inc., a registered investment advisor. A I M Advisors, Inc. is the
investment manager of the AIM Family of Fundsr. AIM is an indirect
wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in
the United States, Europe and the Pacific Region.
As of December 31, 1998, AIM and A I M Advisors, Inc. managed or
administered approximately $109 billion in assets. The business address
of AIM is 11 Greenway Plaza, Suite 100, Houston, TX 77046.
The Portfolio Manager uses a team approach to investment
management. The individual members of the team who are primarily
responsible for the day-to-day management of the Strategic Equity
Series, all of whom are officers of the Portfolio Manager, are as
follows: Robert M. Kippes, Senior Portfolio Manager, who has been
associated with AIM and/or its affiliates since 1989; Charles D.
Scavone, Senior Portfolio Manager, who has been associated with AIM
and/or its affiliates since 1996. From 1994 to 1996, he was Associate
Portfolio Manager for Van Kampen American Capital Asset Management, Inc;
David P. Barnard, Senior Portfolio Manager, who has been associated with
AIM and/or its affiliates since 1982; and Kenneth A. Zschappel, Senior
Portfolio Manager, who has been associated with AIM and/or its
affiliates since 1990. The individual members of the team who are
primarily responsible for the day-to-day management of the Capital
Appreciation Series, all of whom are officers of the Portfolio Manager,
are as follows: Joel E. Dobberpuhl, Senior Portfolio Manager, who has
been associated with AIM and/or its affiliates since 1990; Robert A.
Shelton, Portfolio Manager, who has been associated with AIM and/or its
affiliates since 1995. Prior to 1995, he was a financial analyst for CS
First Boston; and Evan G. Harrel, Senior Portfolio Manager, who has been
associated with AIM and/or its affiliates since 1998. From 1994 to
1998, he was Vice President of Van Kampen American Asset Management,
Inc. and a portfolio manager of various growth and equity funds.
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DEVELOPING WORLD SERIES AND HARD ASSET SERIES
The Trustees, at a meeting on February 16, 1999, also approved a
new portfolio management agreement on behalf of the Developing World
Series and the Hard Assets Series of the Trust. The parties to this
agreement (the "BIIL Agreement") are the Trust, DSI and Baring
International Investment Limited ("BIIL"). With the approval of the
BIIL Agreement, the Board appointed BIIL as Portfolio Manager to the
Developing World Series and the Hard Assets Series to become effective
on March 1, 1999. The portfolio management agreements currently in
place with Montgomery Asset Management, LLC on behalf of the Developing
World Series and with Van Eck Associate Corp. on behalf of the Hard
Assets Series (the "current agreements") will terminate upon the close
of business on February 26, 1999.
The BIIL Agreement approved by the Trustees is substantially
similar to each current agreement, including the fees to be paid to BIIL
by DSI (not the Trust) on behalf of the Developing World Series;
however, the compensation to be paid to the new Portfolio Manager for
the Hard Asset Series will be calculated using a different schedule of
compensation, resulting in overall lower fees. This fee reduction will
have no impact on the total expenses borne by the Hard Asset Series
Series. Under the BIIL Agreement, DSI (and not the Trust) will pay to
BIIL a monthly fee based on an annual rate of 0.40% on average daily net
assets in the Hard Assets Series.
Additionally, the Board of Trustees voted to submit the BIIL
Agreement to the shareholders of the Developing World Series and Hard
Asset Series of the Trust for their approval.
BARING INTERNATIONAL INVESTMENT LIMITED
Baring International Investment Limited ("BIIL"), located at 155
Bishopsgate, London, England, is registered under the Investment
Advisor's 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 Bishopsgate, London, England and
registered in England and Wales. BAMHL is an affiliate of DSI and also a
wholly owned subsidiary of ING. ING is the parent of the world-wide
group of investment management companies that operate under the
collective name Baring Asset Management ("BAM"). BIIL is currently the
Portfolio Manager for Global Fixed Income Series.
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 of assets.
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Matt Linsey, Investment Manager, will be responsible for the day-to-
day management of the Developing World Series. Mr. Linsey has been an
investment professional with BAM and its ING affiliates since 1994 and
has 15 years of investment experience. He has been Deputy Head of the
Emerging Markets Team since 1997. Mr. Linsey's prior experience
includes ten years at Chase Manhattan Bank in London, New York, Hong
Kong and Madrid, where he managed, advised and marketed equity, fixed
income and currency assets for private and institutional clients.
Mark Latham, Investment Manager, will be responsible for the day-to-
day management of the Hard Assets Series. Mr. Latham has been an
investment professional with BAM since 1987 and has 17 years of
investment experience. He established BAM's Global Resources Sector
Team in 1994 and has been Head of the Latin American Equity Team since
1994. Mr. Latham came to BAM from Chemical Bank.
LIQUID ASSET SERIES
On February 16, 1999, the Board of Trustees approved the purchase
of asset-backed securities by Liquid Assets Series up to 40% of its
total net assets effective March 1, 1999. See "Description of
Securities and Investment Techniques" in the Prospectus for a discussion
of asset-backed securities.
FULLY MANAGED SERIES
On February 16, 1999, the Board of Trustees also approved a
reduction in the fees to be paid by DSI to T. Rowe Price on behalf of
the Fully Managed Series. Effective May 1, 1999, the DSI (and not the
Trust) will pay T. Rowe Price a monthly fee equal to an annual rate of
0.50% of the first $250 million, and 0.40% over $250 million of average
daily net assets of the Fully Managed Series.
REAL ESTATE SERIES
On February 16, 1999, the Board of Trustees also approved a
reduction in the fees to be paid by DSI to EII Realty Securities.
Effective March 1, 1999, the DSI (and not the Trust) pays EII Realty
Securities a monthly fee equal to an annual rate of 0.50% of the first
$70 million, and 0.40% over $70 million of average daily net assets of
the Real Estate Series.
CHANGE OF ADDRESS
Effective March 19, 1999, the address of The GCG Trust and Directed
Services, Inc., the Trust's Manager and Distributor, will be 1475
Dunwoody Drive, West Chester, PA 19380.
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