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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
THE GCG TRUST
------------------------
(Name of Registrant as Specified In Its Charter)
THE GCG TRUST
------------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:_____
(2) Aggregate number of securities to which transaction applies:________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_________________________________
(4) Proposed maximum aggregate value of transaction:____________________
(5) Total fee paid:_____________________________________________________
[ ] Fee paid previously with preliminary materials.__________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
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THE GCG TRUST
1475 Dunwoody Drive Tel: (800) 366-0066
West Chester, PA 19380 Fax: (610) 425-3530
March 24, 2000
Dear Valued Client:
I am writing to share with you proposed changes regarding the
investment advisory of a portfolio within your ING VARIABLE ANNUITIES
contract. Enclosed are proxy materials for your approval to appoint
THE PRUDENTIAL INVESTMENT CORPORATION (PIC) as the new portfolio
manager of the Real Estate Portfolio.
We are confident that the addition of PIC will make ING VARIABLE
ANNUITIES an even more attractive choice for your investment dollars.
Here are some reasons why we are confident:
o EXPERIENCE. PIC is a wholly owned subsidiary of The Prudential
Insurance Company of America (The Prudential), which was founded in
1875. Prudential Real Estate Securities Investors, the specialized
subdivision of PIC that will manage the Real Estate Series, and PIC
manages more than $141 billion in assets on behalf of over 300
institutional clients as of December 31, 1999.
o KNOWLEDGE. PIC has over 25 years experience in core private
real estate investing and understanding relationships between real
estate investments and portfolio performance.
o GLOBAL DEPTH. PIC seeks to utilize The Prudential's expertise
and position in the global capital markets to create opportunities
for its clients. Specialized worldwide investment teams focus on
specific investment strategies while striving to identify capital
market opportunities.
On February 17, 2000, the GCG Trust's Board of Trustees approved this
management change. Therefore, it recommends that you cast your vote
"FOR" the approval of this change. Please review the enclosed proxy
statement to cast your vote and return it promptly in the postage
paid envelope provided.
Thank you for your attention to this matter. Should you have any
questions or concerns, please do not hesitate to contact us at 1-800-
366-0066.
Sincerely,
/s/ Barnett Chernow
Barnett Chernow
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 REAL ESTATE SERIES
APRIL 24, 2000
To the Shareholders of the Real Estate Series of The GCG Trust:
Notice is hereby given to the holders of shares of beneficial
interest (the "Shares") of the Real Estate 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 24, 2000, at 10:00 a.m., local
time, for the following purpose:
To approve a new Portfolio Management Agreement among the
Trust, Directed Services, Inc. ("DSI") and Prudential
Investment Corporation (PIC) on behalf of the Real Estate
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
29, 2000 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
March 23, 2000
- -----------------------------------------------------------------------
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 AUTHORIZATION CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ACCOMPANYING POSTAGE PREPAID ENVELOPE.
IF YOU SIGN, DATE AND RETURN THE PROXY BUT GIVE NO VOTING
INSTRUCTIONS, YOUR SHARES WILL BE VOTED IN FAVOR OF THE PROPOSAL
NOTICED ABOVE
- -----------------------------------------------------------------------
THE GCG TRUST
1475 DUNWOODY DRIVE
WEST CHESTER, PENNSYLVANIA 19380
800-366-0066
- -----------------------------------------------------------------------
PROXY STATEMENT
- -----------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS OF THE
REAL ESTATE SERIES
APRIL 24, 2000
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE
SOLICITATION BY THE BOARD OF TRUSTEES (THE "BOARD" OR "TRUSTEES") 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 24, 2000, AT 10:00 A.M.
LOCAL TIME. The approximate mailing date of this Proxy Statement and
accompanying form of proxy is March 24, 2000.
The Board has fixed the close of business on February 29, 2000, as
the record date (the "Record Date") for the determination of holders of
shares of beneficial interest ("Shares") in the Real Estate 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 is soliciting shareholder votes on the proposal affecting
only one portfolio; the Real Estate Series (the "Series"). Only
shareholders of the Series are being requested to vote on the following
proposal (the "Proposal"):
To approve a new Portfolio Management Agreement among the
Trust, Directed Services, Inc. ("DSI" or the "Manager") and
The Prudential Investment Corporation ("PIC" or "Portfolio
Manager") on behalf of the Real Estate Series; and
To transact such other business as may properly come before
the Meeting.
The new Portfolio Management Agreement (the "New Portfolio
Management Agreement" or sometimes the "PIC Agreement") will not result
in higher shareholder fees.
The Series represented by this proxy statement involves one (1) 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" or individually, "Participating Insurance Company") to serve
as an investment medium for variable annuity contracts and variable life
insurance policies (collectively, "Variable Contracts" or individually,
"Variable Contract") 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 their registered separate accounts in accordance with
instructions received from Variable Contract Owners. Each Participating
Insurance Company is also required to vote Shares of the Series held in
each registered separate account for which it has not received
instructions in the same proportion as it votes Shares held by that
separate account for which it has received instructions. Shares held by
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.
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, will be determined as of the Record
Date for the Meeting. A proxy may be revoked at any time before it is
voted by the furnishing of a written revocation, properly executed, to
the Trust's Secretary before the Meeting or by attending the Meeting. In
addition to the solicitation of proxies by mail, proxies may be
solicited by officers and employees of the Trust or Golden American or
their agents or affiliates personally or by telephone. All expenses in
connection with the solicitation of the proxies will be borne by
Manager.
VOTING. Shares, which represent interests in the Series, are being
asked to vote on the Proposal, and as appropriate, any other business
that may properly come before the Meeting. The voting requirement for
approval of this Proposal 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.
The Board, at a meeting held on February 17, 2000, approved the New
Portfolio Management Agreement and recommended that it be submitted to
the shareholders for their approval. If the New Portfolio Management
Agreement is approved by the shareholders of the Series, it will become
effective with respect to the Series on May 1, 2000. If the
Shareholders of the Series should fail to approve the New Portfolio
Management Agreement, 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 the Proposal are not received, the persons named as
proxies may propose one or more adjournments of such Meeting to permit
further solicitation of proxies for the Proposal, 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 such solicitation. A vote
may be taken on the Proposal prior to any adjournment if sufficient
votes have been received for approval of the 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 the Participating Insurance Companies. Since the 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.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, Shares represented by abstentions will be
counted as present, but not cast, at the Meeting. Under the 1940 Act,
the affirmative vote necessary to approve the matter under consideration
may be determined with reference to a percentage of votes present at the
Meeting or a percentage of the Series' outstanding shares, which would
have the effect of treating abstentions as if they were votes against
the Proposal.
The Trust knows of no items of business other than the Proposal
mentioned in the Notice, which will be presented for consideration at
the Meeting. If any other matters are properly presented, it is the
intention of the persons named as proxies to vote proxies in accordance
with their best judgment.
BACKGROUND
As described in the Trust's prospectus, investment management
services are provided to the Trust and each of its several Series by
DSI, an indirect subsidiary of ING Groep N.V. ("ING"), located at 1475
Dunwoody Drive, West Chester, Pennsylvania 19380, pursuant to an
investment management agreement between DSI and the Trust. 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. The
investment management agreement provides, among other things, that in
carrying out its responsibility to supervise and manage all aspects of
the Series' operations, the Manager may engage, subject to the approval
of the Board and, where required, the shareholders of a Series, a
portfolio manager to provide investment advisory services in relation to
the Series, and delegate to the portfolio manager the duty, among other
things, to implement the Series' investment program as determined by
DSI, including the duty to determine what securities will be purchased
for or sold by the Series. The investment management agreement,
including the fees payable to the Manager thereunder, have not been and
are not proposed to be changed in connection with the portfolio
management agreement change discussed in this proxy statement.
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
Proposal set forth in this Proxy Statement represents a step toward
making this goal a reality. This Proposal would, if approved by
shareholders, appoint PIC, an investment advisory organization to serve
as portfolio manager to the Series. The Proposal in this Proxy
Statement was presented to a meeting of the Trust's Board held on
February 17, 2000 with the recommendation of DSI. The Board considered
the Proposal and it was approved by the Board, including a majority of
the Board members who are not "interested persons" ("Independent
Trustees") of the Trust within the meaning of the 1940 Act.
INFORMATION ABOUT PRUDENTIAL INVESTMENT CORPORATION, PRUDENTIAL REAL
ESTATE INVESTORS AND PRUDENTIAL REAL ESTATE SECURITIES INVESTORS
A unit of PIC, Prudential Real Estate Securities Investors (PRESI),
located at Gateway Center 2, McCarter Highway & Market Street, Newark,
NJ 07102, is a public real estate securities unit of Prudential Real
Estate Investors (PREI), located at the same address. PREI is one of
several specialized investment management groups that operate under PIC,
a registered investment advisor, located at Prudential Plaza, Newark, NJ
07102-4077. PIC is a direct subsidiary of The Prudential Insurance
Company of America ("The Prudential"), located at the same address as
PIC. PIC currently serves as the investment advisor to substantially
all of the funds within the Prudential mutual fund complex. As of
February 29, 2000, PIC served as a investment advisor to approximately
48 of the Prudential Mutual Funds. PRESI, a further specialized
subdivision of PREI that will provide investment advisory services to
the Series, provides both discretionary and non-discretionary investment
advisory services to its clientele, which consists of investment
companies, employee retirement plans and other institutional investors,
including the general account of The Prudential. PRESI specializes in
investing in publicly traded equity securities of Real Estate Investment
Trusts (REITs) and real estate operating companies. The investment
approach, used by PRESI in making investment decisions, is value-
oriented adaptation of economic value added analysis. As of December
31, 1999, PRESI, together with the other investment management PIC
groups, managed over $141 billion in assets.
See the Appendix for a list of the directors and the principal
executive officers of PIC, and a table setting forth the other
investment companies managed by PIC, or any of its units, groups or
subsidiaries, with similar investment policies and objectives to those
of the Real Estate Series, and other information about PIC.
PROPOSAL
APPROVAL OF A NEW PORTFOLIO MANAGEMENT AGREEMENT
AMONG THE TRUST, DSI AND THE PRUDENTIAL INVESTMENT CORPORATION WITH
RESPECT TO THE REAL ESTATE SERIES
THE EII REALTY AGREEMENT WITH RESPECT TO THE REAL ESTATE SERIES
In accordance with provisions for the delegation of authority, DSI
and the Trust entered into a portfolio management agreement with E.I.I.
Realty Securities, Inc. ("EII") for the Real Estate Series pursuant to
which portfolio management duties were delegated by DSI to EII. The
current EII Agreement, dated October 24, 1997, was last approved by the
shareholders of the Real Estate Series on October 9, 1997 for the
purposes of initial approval and has been annually thereafter reapproved
by the Trustees, including a majority of the Independent Trustees. On
February 26, 1999, the Trustees approved a new schedule of compensation,
whereby DSI (not the Series) decreased the portfolio management fees
payable on behalf of the Real Estate Series to EII. This allowed DSI to
retain a larger portion of such fees, in an effort to reflect better the
division of duties and responsibilities between DSI and EII. Prior to
the change, DSI paid, on behalf of the Series, a fee payable monthly,
based on the average daily net assets of the Series at the annual rate
of 0.50%.
The new rate of compensation under the EII Agreement, as paid by DSI
(not the Trust), and based on the average daily net assets is as
follows:
0.50% of first $70 million; and
0.40% on net assets over $70 million.
DSI (not the Series) paid $318,777.90 in investment advisory fees to
EII for the fiscal year ended 1999.
At an in-person meeting held on February 17, 2000, the Board
received a proposal from the Manager to replace EII with PIC as
portfolio manager to the Series and gave formal approval to the new
Portfolio Management Agreement with PIC for the Series. Also at that
meeting, the Board authorized the submission of this matter for
shareholder approval and the preparation of this Proxy Statement. The
PIC Agreement is attached as Exhibit A.
THE PRUDENTIAL INVESTMENT CORPORATION AGREEMENT WITH RESPECT TO THE REAL
ESTATE SERIES
The terms and conditions of the PIC Agreement are substantially the
same as those of the EII Agreement, including the fee schedule. Such
terms and conditions include a provision that specifically requires PIC
to assist with pricing certain portfolio assets; provisions for
participation in the defense of each party by the other party;
limitations on costs associated with investigations, and restrictions on
settlement without prior written consent of the other party in cases
involving findings of "wrongdoing"; provisions to restrict portfolio
managers that may be engaged by PIC to those approved by a majority of
the Trust's Trustees and also approved by a vote of a majority of the
outstanding voting securities of the Series; provisions that allow for
brokerage transactions to be effectuated through a broker-dealer
affiliated with PIC; a general cooperation provision; provisions
providing for representations, such as representations that relevant
licenses have been obtained; a provision for amendments and notices; and
a provision indicating the state under which the portfolio management
agreement is governed.
Note that neither the fees paid by the Trust to DSI on behalf of the
Real Estate Series, nor the fees paid by DSI to PIC, on behalf of the
Real Estate Series, will change as a result of this proxy.
If the PIC Agreement is approved by the shareholders of the Series,
it will become effective with respect to the Series as of April 28,
2000, and will remain in effect for two years and thereafter for
successive annual periods as long as such continuance is approved in
accordance with the 1940 Act. The PIC Agreement may be terminated at
any time without penalty upon 60 days' written notice to the other
parties to the agreement, and will automatically terminate in the event
of its assignment by any party as defined under the 1940 Act.
TRUSTEES' RECOMMENDATION REGARDING THE PROPOSAL
In determining whether it was appropriate to approve the New
Portfolio Management Agreement with PIC for the Real Estate Series and
to recommend approval to shareholders, a majority of the Trustees,
including a majority of the Trustees who also are not interested persons
of the Trust, DSI or PIC, considered various matters and materials
provided by DSI and PIC. Information considered by the Trustees
included, among other things, the following: (1) the compensation to be
received by PIC from DSI (not the Trust) for its portfolio management
services and the fairness and reasonableness of such compensation; (2)
the nature and the quality of the portfolio management services expected
to be rendered under the New Portfolio Management Agreement; (3) the
background and prior experience of PIC and its team of investment
professionals; (4) the financial condition of PIC and its parent, The
Prudential Insurance Company of America; and (5) the assessment of PIC's
operational and compliance capabilities.
In light of the circumstances, a majority of the Trustees, including
a majority of the Independent Trustees, concluded that the terms of the
PIC Agreement are fair and reasonable and in the best interests of the
Series and its shareholders. Also based upon its evaluation, the Board
further concluded that the engagement of PIC as portfolio manager to the
Series would offer the Series access to highly effective management and
advisory services and capabilities. Accordingly, and as required in
accordance with the 1940 Act, a majority of the Trustees, including a
majority of the Independent Trustees, approved, and recommended
submission of, the PIC Agreement to shareholders of the Series for their
approval.
SHAREHOLDER ACTION REQUIRED
The New Portfolio Management Agreement, as approved by the Board, is
being submitted to the shareholders of the Real Estate Series for
approval. If the PIC Agreement is approved by the shareholders of the
Real Estate Series, it will become effective on April 28, 2000 and
remain in force for two years from its effective date and will then
continue in effect with respect to the Series from year to year
thereafter in accordance with the 1940 Act. If the shareholders of the
Series do not approve the PIC Agreement, the Trustees will decide what
action to take.
OUTSTANDING SHARES
As of the Record Date, 4,473,468.524 Shares were outstanding for the
Series, and no Trustee or executive officer of the Trust, or the
Trustees and executive officers as a group beneficially owned more than
one percent (1%) in the Series or the Trust.
As of the Record Date, no Variable Contract Owners were known to the
Trust to be the beneficial owner of 5% or more of Shares of the Series.
For the fiscal year ended December 1999, Real Estate Series paid $84
in commissions to ING Baring Furman Selz, an affiliate of DSI, and an
indirect subsidiary of ING. This represented 0.06% of total commissions
paid on behalf of the Series.
OFFICERS AND DIRECTORS OF THE TRUST
The principal executive officers of the Trust and their ages and
principal occupations are set forth below. The executive officers of
the Trust are elected annually and each serves until his or her
successor shall have been duly elected and qualified. Since January 1,
1999, no Trustee or executive officer of the Trust has had any interest
in the Proposal nor has any Trustee or executive officer of the Trust
purchased or sold any securities of PIC, DSI or their affiliates.
Barnett Chernow, age 49, has served as President of the Trust and
Chairman of the Board of Trustees since December 1999. Additionally,
Mr. Chernow has been Executive Vice President, then President and
Director, Golden American since May 1993; Executive Vice President and
then President, First Golden, since May 1998; Executive Vice President,
Directed Services, Inc., since October 1993; Vice President, Equitable
Life since 1996.
John R. Barmeyer, age 53, serves as Trustee of the Trust.
Additionally, he has served as Senior Vice President, General Counsel
and Secretary of ING American Life Corporation and its subsidiaries
since October 1995.
Myles R. Tashman, age 57, 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; Director, Executive Vice President and Secretary, DSI
since 1993, General Counsel since July 1996; Assistant Secretary,
Equitable Life since 1996.
Mary Bea Wilkinson, age 43, serves as Treasurer of the Trust.
Additionally, she has served as Senior Vice President of DSI and Golden
American from September, 1983 to June, 1997, then Senior Vice President
of First Golden since June 1997.
J. Michael Earley, age 54, serves as Trustee of the Trust. Also, he
has served as President, and Chief Executive Officer, Bankers Trust
Company, Des Moines, Iowa since July 1992.
R. Barbara Gitenstein, age 51, serves as Trustee of the Trust.
Additionally, she has served as President, The College of New Jersey
since January 1999.
Robert A. Grayson, age 72, serves as Trustee of the Trust. He is
also Co-founder, Grayson Associates, Inc., founded in 1970.
Stanley B. Seidler, age 71, serves as Trustee of the Trust. He is
also President, Iowa Periodicals, Inc. since 1990 and President, Excell
Marketing L.C. since 1994.
Roger B. Vincent, age 54, serves as Trustee of the Trust.
Additionally, he has served as President, Springwell Corporation since
1989; Director, AmeriGas Partners, Inc. since 1998; Director, Tatham
Offshore, Inc. since 1996.
Elizabeth J. Newell, age 52, serves as Trustee of the Trust. She is
also President and Chief Executive Officer of KRAGIE/NEWELL, Inc. since
January 1993.
DISTRIBUTOR
Shares of the Trust are distributed through DSI (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.
ADMINISTRATOR
The administrator of the Series, and every other operational series
of the Trust, is DSI. DSI has retained the services of PFPC, Inc., a
Delaware corporation, located at 103 Bellevue Parkway, Wilmington, DE
19809, to perform accounting and other administration functions for each
operational series of the Trust.
ADJOURNMENT
In the event that sufficient votes in favor of the Proposal set
forth in the Notice of Meeting are not received at the close of 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 that they are entitled to vote in favor of 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, it will be acted upon and such action will be final.
ANNUAL REPORT
The Trust's 1999 Annual Report was mailed on or about February 28,
2000. IF YOU SHOULD DESIRE AN ADDITIONAL COPY OF THIS REPORT, IT MAY BE
OBTAINED, WITHOUT CHARGE, FROM DSI BY CALLING (800) 366-0066 OR BY
WRITING DSI AT 1475 DUNWOODY DRIVE, WEST CHESTER, PA 19380.
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 PROPOSAL
Pursuant to the applicable law 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 2000 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
March 23, 2000
West Chester, PA
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APPENDIX
OTHER INFORMATION REGARDINGPIC
DIRECTORS AND EXECUTIVE OFFICERS OF PIC, POSITION WITH PIC AND OTHER
AFFILIATIONS WITH PIC OR AFFILIATES OF PIC
The business address of each person listed is Prudential Plaza, Newark,
NJ 07102-0477
NAME POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ---- ----------------- ---------------------
Jeffrey Hiller Chief Compliance Officer Chief Compliance Officer,
PIC; Chief Compliance Officer,
Prudential Global Asset
Management Group of Prudential
John R. Strangfeld, Chairman of the Board, Chairman of the Board,
Jr. President, Chief President, Chief Executive
Executive Officer and Officer and Director, PIC;
Director President of Prudential Global
Asset Management Group of
Prudential; Senior Vice
President, Prudential
Bernard Winograd Senior Vice President Senior Vice President and
and Director Director, PIC; Chief Executive
Officer, Prudential Real
Estate Investors
The table below sets forth the name of the only investment company
having similar investment objectives and policies to the Real Estate
Series, its approximate net assets, and the fee charged by PIC (as a
percentage of average daily net assets). PIC 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.
FUND: Prudential Real Estate Securities Fund
MANAGER: PIC
NET ASSETS AT
2/29/00: $56,751,000
MANAGEMENT FEE: 0.75 of 1% of average daily net assets
MANAGEMENT FEE
WAIVER: None
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EXHIBIT A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 2000, among The GCG
Trust (the "Trust"), a Massachusetts business trust, Directed Services,
Inc. (the "Manager"), a New York corporation, and Prudential Investment
Corporation. ("Portfolio Manager"), a New Jersey 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
Prudential Investment 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. The
Portfolio Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage each Series so that
no action or omission on the part of the Portfolio Manager
will cause a Series to fail to meet the requirements to
qualify as a regulated investment company specified in
Section 851 of the Internal Revenue Code (other than the
requirements for the Trust to register under the 1940 Act and
to file with its tax return an election to be a regulated
investment company, both of which shall not be the
responsibility of the Portfolio Manager), (2) manage each
Series so that no action or omission on the part of the
Portfolio Manager shall cause a Series to fail to comply with
the diversification requirements of Section 817(h) of the
Internal Revenue Code and regulations issued thereunder, and
(3) use reasonable efforts to manage the Series so that no
action or omission on the part of the Portfolio Manager shall
cause a Series to fail to comply with any other rules and
regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies. The
Manager will notify the Portfolio Manager promptly if the
Manager believes that a Series is in violation of any
requirement specified in the first sentence of this
paragraph. The Manager or the Trust will notify the
Portfolio Manager of any pertinent changes, modifications to,
or interpretations of Section 817(h) of the Internal Revenue
Code and regulations issued thereunder and of rules or
regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies.
(b) The Portfolio Manager will perform its duties hereunder
pursuant to the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Trust's Board of Trustees of which the Portfolio Manager has
been notified in writing, and the provisions of the
Registration Statement of the Trust under the Securities Act
of 1933 (the "1933 Act") and the 1940 Act, as supplemented or
amended, of which the Portfolio Manager has received a copy
("Registration Statement"). The Manager or the Trust will
notify the Portfolio Manager of pertinent provisions of
applicable state law with which the Portfolio Manager must
comply under this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the
purchase or sale of a security to be in the best interest of
a Series as well as of other investment advisory clients of
the Portfolio Manager or any of its affiliates, the Portfolio
Manager may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased with those of its other
clients where such aggregation is not inconsistent with the
policies set forth in the Registration Statement. In such
event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be
made by the Portfolio Manager in a manner that is fair and
equitable in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Trust and to
such other clients, subject to review by the Manager and the
Board of Trustees.
(d) In connection with the purchase and sale of securities
for a Series, the Portfolio Manager will arrange for the
transmission to the custodian and portfolio accounting agent
for the Series on a daily basis, such confirmation, trade
tickets, and other documents and information, including, but
not limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Series,
as may be reasonably necessary to enable the custodian and
portfolio accounting agent to perform its administrative and
recordkeeping responsibilities with respect to the Series.
With respect to portfolio securities to be purchased or sold
through the Depository Trust Company, the Portfolio Manager
will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will assist the portfolio
accounting agent for the Trust in determining or confirming,
consistent with the procedures and policies stated in the
Registration Statement for the Trust, the value of any
portfolio securities or other assets of the Series for which
the portfolio accounting agent seeks assistance from or
identifies for review by the Portfolio Manager, and the
parties agree that the Portfolio Manager shall not bear
responsibility or liability for the determination or accuracy
of the valuation of any portfolio securities and other assets
of the Series except to the extent that the Portfolio Manager
exercises judgment with respect to any such valuation.
(f) The Portfolio Manager will make available to the Trust
and the Manager, promptly upon request, all of the Series'
investment records and ledgers maintained by the Portfolio
Manager (which shall not include the records and ledgers
maintained by the custodian and portfolio accounting agent
for the Trust) as are necessary to assist the Trust and the
Manager to comply with requirements of the 1940 Act and the
Investment Advisers Act of 1940 (the "Advisers Act"), as well
as other applicable laws. The Portfolio Manager will furnish
to regulatory authorities having the requisite authority any
information or reports in connection with such services which
may be requested in order to ascertain whether the operations
of the Trust are being conducted in a manner consistent with
applicable laws and regulations.
(g) The Portfolio Manager will provide reports to the Trust's
Board of Trustees for consideration at meetings of the Board
on the investment program for the Series and the issuers and
securities represented in the Series' portfolio, and will
furnish the Trust's Board of Trustees with respect to the
Series such periodic and special reports as the Trustees and
the Manager may reasonably request.
(h) In rendering the services required under this Agreement,
the Portfolio Manager may, from time to time, employ or
associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under
this Agreement. However, the Portfolio Manager may not
retain as subadviser any company that would be an "investment
adviser," as that term is defined in the 1940 Act, to the
Series unless the contract with such company is approved by a
majority of the Trust's Board of Trustees and a majority of
Trustees who are not parties to any agreement or contract
with such company and who are not "interested persons," as
defined in the 1940 Act, of the Trust, the Manager, or the
Portfolio Manager, or any such company that is retained as
subadviser, and is approved by the vote of a majority of the
outstanding voting securities of the applicable Series of the
Trust to the extent required by the 1940 Act. The Portfolio
Manager shall be responsible for making reasonable inquiries
and for reasonably ensuring that any employee of the
Portfolio Manager, any subadviser that the Portfolio Manager
has employed or with which it has associated with respect to
the Series, or any employee thereof has not, to the best of
the Portfolio Manager's knowledge, in any material connection
with the handling of Trust assets:
(i) been convicted, in the last ten (10) years, of any felony
or misdemeanor arising out of conduct involving
embezzlement, fraudulent conversion, or misappropriation
of funds or securities, involving violations of Sections
1341, 1342, or 1343 of Title 18, United States Code, or
involving the purchase or sale of any security; or
(ii) been found by any state regulatory authority, within
the last ten (10) years, to have violated or to have
acknowledged violation of any provision of any state
insurance law involving fraud, deceit, or knowing
misrepresentation; or
(iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have
violated or to have acknowledged violation of any
provision of federal or state securities laws involving
fraud, deceit, or knowing misrepresentation.
3. BROKER-DEALER SELECTION. The Portfolio Manager is responsible
for decisions to buy and sell securities and other investments for each
Series' portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in
effecting a security transaction will be to obtain the best execution
for the Series, taking into account the factors specified in the
prospectus and/or statement of additional information for the Trust,
which include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market for the
security, the timing of the transaction, the reputation, the experience
and financial stability of the broker-dealer involved, the quality of
the service, the difficulty of execution, and the execution capabilities
and operational facilities of the firms involved, and the firm's risk in
positioning a block of securities. Accordingly, the price to the Series
in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified, in the
judgment of the Portfolio Manager in the exercise of its fiduciary
obligations to the Trust, by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Trustees may
determine and consistent with Section 28(e) of the Securities Exchange
Act of 1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Series to pay a
broker-dealer for effecting a portfolio investment transaction in excess
of the amount of commission another broker-dealer would have charged for
effecting that transaction, if the Portfolio Manager or its affiliate
determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided
by such broker-dealer, viewed in terms of either that particular
transaction or the Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other clients
as to which they exercise investment discretion. To the extent
consistent with these standards, the Portfolio Manager is further
authorized to allocate the orders placed by it on behalf of the Series
to the Portfolio Manager if it is registered as a broker-dealer with the
SEC, to its affiliated broker-dealer, or to such brokers and dealers who
also provide research or statistical material, or other services to the
Series, the Portfolio Manager, or an affiliate of the Portfolio Manager.
Such allocation shall be in such amounts and proportions as the
Portfolio Manager shall determine consistent with the above standards,
and the Portfolio Manager will report on said allocation regularly to
the Board of Trustees of the Trust indicating the broker-dealers to
which such allocations have been made and the basis therefor.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has
reviewed the post-effective amendment to the Registration Statement for
the Trust filed with the SEC that contains disclosure about the
Portfolio Manager, and represents and warrants that, with respect to the
disclosure about or information relating, directly or indirectly, to the
Portfolio Manager, to the Portfolio Manager's knowledge, such
Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of a
material fact which was required to be stated therein or necessary to
make the statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly registered
investment adviser under the Advisers Act, or alternatively that it is
not required to be a registered investment adviser under the Advisers
Act to perform the duties described in this Agreement, and that it is a
duly registered investment adviser in all states in which the Portfolio
Manager is required to be registered.
5. EXPENSES. During the term of this Agreement, the Portfolio
Manager will pay all expenses incurred by it and its staff and for their
activities in connection with its portfolio management duties under this
Agreement. The Manager or the Trust shall be responsible for all the
expenses of the Trust's operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent public
accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c) Expenses of the Series' custodial services including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the
value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and
Analyses of International Management Reports (as appropriate)
for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's
executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the
Portfolio Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of borrowing
money;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses
and reports of the Trust to its shareholders, the filing of
reports with regulatory bodies, the maintenance of the
Trust's existence, and the regulation of shares with federal
and state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related
to the registration and continued qualification of the
Trust's shares for sale;
(m) Costs of printing stock certificates representing shares
of the Trust;
(n) Trustees' fees and expenses to trustees who are not
officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager
is responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to
indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(r) Organizational and offering expenses.
6. COMPENSATION. For the services provided, the Manager will pay
the Portfolio Manager a fee, payable as described in Schedule B.
7. SEED MONEY. The Manager agrees that the Portfolio Manager
shall not be responsible for providing money for the initial
capitalization of the Series.
8. COMPLIANCE.
(a) The Portfolio Manager agrees that it shall promptly
notify the Manager and the Trust (1) in the event that the
SEC or other governmental authority has censured the
Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its
registration, if any, as an investment adviser; or has
commenced proceedings or an investigation that may result in
any of these actions, (2) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code, or (3) upon having a reasonable
basis for believing that the Series has ceased to comply with
the diversification provisions of Section 817(h) of the
Internal Revenue Code or the regulations thereunder. The
Portfolio Manager further agrees to notify the Manager and
the Trust promptly of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio
Manager that is not contained in the Registration Statement
or prospectus for the Trust, or any amendment or supplement
thereto, and is required to be stated therein or necessary to
make the statements therein not misleading, or of any
statement contained therein that becomes untrue in any
material respect.
(b) The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured
the Manager or the Trust; placed limitations upon either of
their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser;
or has commenced proceedings or an investigation that may
result in any of these actions, (2) upon having a reasonable
basis for believing that the Series has ceased to qualify or
might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, or (3) upon having
a reasonable basis for believing that the Series has ceased
to comply with the diversification provisions of Section
817(h) of the Internal Revenue Code or the Regulations
thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Portfolio Manager hereby agrees that all
records which it maintains for the Series are the property of the Trust
and further agrees to surrender promptly to the Trust any of such
records upon the Trust's or the Manager's request, although the
Portfolio Manager may, at its own expense, make and retain a copy of
such records. The Portfolio Manager further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period
specified in the Rule.
10. COOPERATION. Each party to this Agreement agrees to cooperate
with each other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the
SEC and state insurance regulators) in connection with any investigation
or inquiry relating to this Agreement or the Trust.
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER.
(a) During the term of this Agreement, the Trust and the
Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all
Registration Statements and amendments thereto, prospectuses,
proxy statements, reports to shareholders, sales literature
or other material prepared for distribution to shareholders
of the Trust or any Series or to the public that refer or
relate in any way to the Portfolio Manager or any of its
affiliates (other than the Manager), or that use any
derivative of the name of the Portfolio Manager or any of its
affiliates or any logo associated therewith. The Trust and
the Manager agree that they will not use any such material
without the prior consent of the Portfolio Manager, which
consent shall not be unreasonably withheld. In the event of
the termination of this Agreement, the Trust and the Manager
will furnish to the Portfolio Manager copies of any of the
above-mentioned materials that refer or relate in any way to
the Portfolio Manager;
(b) the Trust and the Manager will furnish to the Portfolio
Manager such information relating to either of them or the
business affairs of the Trust as the Portfolio Manager shall
from time to time reasonably request in order to discharge
its obligations hereunder;
(c) the Manager and the Trust agree that neither the Trust,
the Manager, nor affiliated persons of the Trust or the
Manager shall give any information or make any
representations or statements in connection with the sale of
shares of the Series concerning the Portfolio Manager or the
Series other than the information or representations
contained in the Registration Statement, prospectus, or
statement of additional information for the Trust, as they
may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance
by the Portfolio Manager, except with the prior permission of
the Portfolio Manager.
12. CONTROL. Notwithstanding any other provision of the
Agreement, it is understood and agreed that the Trust shall at all times
retain the ultimate responsibility for and control of all functions
performed pursuant to this Agreement and reserve the right to direct,
approve, or disapprove any action hereunder taken on its behalf by the
Portfolio Manager.
13. SERVICES NOT EXCLUSIVE. It is understood that the services of
the Portfolio Manager are not exclusive, and nothing in this Agreement
shall prevent the Portfolio Manager (or its affiliates) from providing
similar services to other clients, including investment companies
(whether or not their investment objectives and policies are similar to
those of the Series) or from engaging in other activities.
14. LIABILITY. Except as may otherwise be required by the 1940
Act or the rules thereunder or other applicable law, the Trust and the
Manager agree that the Portfolio Manager, any affiliated person of the
Portfolio Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act, controls the Portfolio Manager shall not be
liable for, or subject to any damages, expenses, or losses in connection
with, any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Portfolio
Manager's duties, or by reason of reckless disregard of the Portfolio
Manager's obligations and duties under this Agreement.
15. INDEMNIFICATION.
(a) Notwithstanding Section 14 of this Agreement, the Manager
agrees to indemnify and hold harmless the Portfolio Manager,
any affiliated person of the Portfolio Manager (other than
the Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls ("controlling
person") the Portfolio Manager (all of such persons being
referred to as "Portfolio Manager Indemnified Persons")
against any and all losses, claims, damages, liabilities, or
litigation (including legal and other expenses) to which a
Portfolio Manager Indemnified Person may become subject under
the 1933 Act, the 1940 Act, the Advisers Act, the Internal
Revenue Code, under any other statute, at common law or
otherwise, arising out of the Manager's responsibilities to
the Trust which (1) may be based upon any misfeasance,
malfeasance, or nonfeasance by the Manager, any of its
employees or representatives or any affiliate of or any
person acting on behalf of the Manager or (2) may be based
upon any untrue statement or alleged untrue statement of a
material fact supplied by, or which is the responsibility of,
the Manager and contained in the Registration Statement or
prospectus covering shares of the Trust or a Series, or any
amendment thereof or any supplement thereto, or the omission
or alleged omission to state therein a material fact known or
which should have been known to the Manager and was required
to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was
made in reliance upon information furnished to the Manager or
the Trust or to any affiliated person of the Manager by a
Portfolio Manager Indemnified Person; provided however, that
in no case shall the indemnity in favor of the Portfolio
Manager Indemnified Person be deemed to protect such person
against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties,
or by reason of its reckless disregard of obligations and
duties under this Agreement.
(b) Notwithstanding Section 14 of this Agreement, the
Portfolio Manager agrees to indemnify and hold harmless the
Manager, any affiliated person of the Manager (other than the
Portfolio Manager), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to
as "Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal
and other expenses) to which a Manager Indemnified Person may
become subject under the 1933 Act, 1940 Act, the Advisers
Act, the Internal Revenue Code, under any other statute, at
common law or otherwise, arising out of the Portfolio
Manager's responsibilities as Portfolio Manager of the Series
which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on
behalf of the Portfolio Manager, (2) may be based upon a
failure to comply with Section 2, Paragraph (a) of this
Agreement, or (3) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or prospectus covering the shares of
the Trust or a Series, or any amendment or supplement
thereto, or the omission or alleged omission to state therein
a material fact known or which should have been known to the
Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if
such a statement or omission was made in reliance upon
information furnished to the Manager, the Trust, or any
affiliated person of the Manager or Trust by the Portfolio
Manager or any affiliated person of the Portfolio Manager;
provided, however, that in no case shall the indemnity in
favor of a Manager Indemnified Person be deemed to protect
such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of
this Section 15 with respect to any claim made against a
Portfolio Manager Indemnified Person unless such Portfolio
Manager Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons, notice,
or other first legal process or notice giving information of
the nature of the claim shall have been served upon such
Portfolio Manager Indemnified Person (or after such Portfolio
Manager Indemnified Person shall have received notice of such
service on any designated agent), but failure to notify the
Manager of any such claim shall not relieve the Manager from
any liability which it may have to the Portfolio Manager
Indemnified Person against whom such action is brought
otherwise than on account of this Section 15. In case any
such action is brought against the Portfolio Manager
Indemnified Person, the Manager will be entitled to
participate, at its own expense, in the defense thereof or,
after notice to the Portfolio Manager Indemnified Person, to
assume the defense thereof, with counsel satisfactory to the
Portfolio Manager Indemnified Person. If the Manager assumes
the defense of any such action and the selection of counsel
by the Manager to represent both the Manager and the
Portfolio Manager Indemnified Person would result in a
conflict of interests and therefore, would not, in the
reasonable judgment of the Portfolio Manager Indemnified
Person, adequately represent the interests of the Portfolio
Manager Indemnified Person, the Manager will, at its own
expense, assume the defense with counsel to the Manager and,
also at its own expense, with separate counsel to the
Portfolio Manager Indemnified Person, which counsel shall be
satisfactory to the Manager and to the Portfolio Manager
Indemnified Person. The Portfolio Manager Indemnified Person
shall bear the fees and expenses of any additional counsel
retained by it, and the Manager shall not be liable to the
Portfolio Manager Indemnified Person under this Agreement for
any legal or other expenses subsequently incurred by the
Portfolio Manager Indemnified Person independently in
connection with the defense thereof other than reasonable
costs of investigation. The Manager shall not have the right
to compromise on or settle the litigation without the prior
written consent of the Portfolio Manager Indemnified Person
if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Portfolio Manager
Indemnified Person.
(d) The Portfolio Manager shall not be liable under Paragraph
(b) of this Section 15 with respect to any claim made against
a Manager Indemnified Person unless such Manager Indemnified
Person shall have notified the Portfolio Manager in writing
within a reasonable time after the summons, notice, or other
first legal process or notice giving information of the
nature of the claim shall have been served upon such Manager
Indemnified Person (or after such Manager Indemnified Person
shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any
such claim shall not relieve the Portfolio Manager from any
liability which it may have to the Manager Indemnified Person
against whom such action is brought otherwise than on account
of this Section 15. In case any such action is brought
against the Manager Indemnified Person, the Portfolio Manager
will be entitled to participate, at its own expense, in the
defense thereof or, after notice to the Manager Indemnified
Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the
Portfolio Manager assumes the defense of any such action and
the selection of counsel by the Portfolio Manager to
represent both the Portfolio Manager and the Manager
Indemnified Person would result in a conflict of interests
and therefore, would not, in the reasonable judgment of the
Manager Indemnified Person, adequately represent the
interests of the Manager Indemnified Person, the Portfolio
Manager will, at its own expense, assume the defense with
counsel to the Portfolio Manager and, also at its own
expense, with separate counsel to the Manager Indemnified
Person which counsel shall be satisfactory to the Portfolio
Manager and to the Manager Indemnified Person. The Manager
Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Portfolio Manager
shall not be liable to the Manager Indemnified Person under
this Agreement for any legal or other expenses subsequently
incurred by the Manager Indemnified Person independently in
connection with the defense thereof other than reasonable
costs of investigation. The Portfolio Manager shall not have
the right to compromise on or settle the litigation without
the prior written consent of the Manager Indemnified Person
if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Manager Indemnified
Person.
(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 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 "Prudential Investment
Corporation" 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).
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
Commonwealth of Pennsylvania, provided that nothing herein
shall be construed in a manner inconsistent with the 1940
Act, the Advisers Act or rules or orders of the SEC
thereunder. The term "affiliate" or "affiliated person" as
used in this Agreement shall mean "affiliated person" as
defined in Section 2(a)(3) of the 1940 Act.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
(c) To the extent permitted under Section 16 of this
Agreement, this Agreement may only be assigned by any party
with the prior written consent of the other parties.
(d) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby,
and to this extent, the provisions of this Agreement shall be
deemed to be severable.
(e) Nothing herein shall be construed as constituting the
Portfolio Manager as an agent of the Manager, or constituting
the Manager as an agent of the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the day and year first above written.
THE GCG TRUST
Attest By:
---------------------------- ----------------------------
Title Title:
---------------------------- ----------------------------
DIRECTED SERVICES, INC.
Attest By:
---------------------------- ----------------------------
Title Title:
---------------------------- ----------------------------
PRUDENTIAL INVESTMENT
CORPORATION
Attest By:
---------------------------- ----------------------------
Title Title:
---------------------------- ----------------------------
<PAGE>
<PAGE>
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the
attached Portfolio Management Agreement, to which the Prudential
Investment Corporation. shall act as Portfolio Manager are as follows:
Real Estate Series
<PAGE>
<PAGE>
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Prudential Investment Corporation
("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:
0.50% OF FIRST $70 MILLION; AND
0.40% ON NET ASSETS OVER $70 MILLION.
<PAGE>
<PAGE>
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 the following proposal. Directed Services, Inc. ("DSI") will
pay for the costs of the Meeting of Shareholders of the Trust (the "Meeting")
and any adjournment thereof. Neither the Trust nor its Shareholders will pay
for the costs of this Meeting.
[variable name] [variable contract]
[variable joint name]
[variable address line 1]
[variable address line 2] PLEASE VOTE BY MARKING ONE BOX
[variable address line 3] NEXT TO EACH PROPOSAL. SIGN BELOW
[variable city, state & zip] EXACTLY AS LISTED HERE AND DATE
THIS VOTING INSTRUCTION. THEN
RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
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 American Life
Insurance Company of New York, or Equitable Life Insurance Company of Iowa
(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 24, 2000 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 other matters as may properly come before the Meeting and any
adjournment thereof.
UNITS PROPOSAL FOR AGAINST ABSTAIN
aaaa To approve a new Portfolio Management
Agreement among the Trust, DSI and
Prudential Investment Corporation on
behalf of:
REAL ESTATE SERIES [ ] [ ] [ ]
PLEASE VOTE BY MARKING ONE BOX NEXT TO THE PROPOSAL. SIGN BELOW 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 THE PROPOSAL. 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:__________,2000 ________________________ ________________________
Contract Owner Joint Owner (If Any)
<PAGE>
<PAGE>
