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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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
THE GCG TRUST
------------------------
(Name of Registrant as Specified In Its Charter)
THE GCG TRUST
------------------------
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:_____
(2) Aggregate number of securities to which transaction applies:________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_________________________________
(4) Proposed maximum aggregate value of transaction:____________________
(5) Total fee paid:_____________________________________________________
[ ] Fee paid previously with preliminary materials.__________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
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THE GCG TRUST
1475 Dunwoody Drive Tel: (800) 366-0066
West Chester, PA 19380 Fax: (610) 425-3430
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.
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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
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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 the 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 as of the close of business on April
28, 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.
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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
Prudential Real Estate Securities Investors ("PRESI"), located at
Gateway Center 2, McCarter Highway & Market Street, Newark, NJ 07102, is
a unit of Prudential Real Estate Investors ("PREI"), located at the same
address. PREI, a unit of PIC, 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
an investment advisor to approximately 48 of the Prudential Mutual Funds.
PRESI, a 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.
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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 EII
Realty Securities, Inc. ("EII") for the Real Estate Series pursuant to
which portfolio management duties were delegated by DSI to EII (the "EII
Agreement"). 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 $318,778 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.
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If the PIC Agreement is approved by the shareholders of the Series,
it will become effective with respect to the Series as of the close of
business on 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 as of the close of business
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, 4,473,469 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 Furman Selz LLC, 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.
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Barnett Chernow, age 50, 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, DSI,
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.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 certain other administrative 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
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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 REGARDING PIC
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 Chief Compliance
Officer Officer, PIC; Chief
Compliance Officer;
Prudential Global Asset
Management Group of
Prudential
John R. Chairman of the Chairman of the Board,
Strangfeld, Jr. Board, President, President, Chief
Chief Executive Executive Officer and
Officer and Director Director, PIC; President
of Prudential Global
Asset Management Group
of Prudential; Senior
Vice President,
Prudential
Bernard Winograd Senior Vice Senior Vice President
President and and Director, PIC; Chief
Director 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
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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
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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
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(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
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under this Agreement. The Manager or the Trust shall be responsible
for all the expenses of the Trust's operations including, but not
limited to:
(a)Expenses of all audits by the Trust's independent public
accountants;
(b)Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping
services;
(c)Expenses of the Series' custodial services including
recordkeeping services provided by the custodian;
(d)Expenses of obtaining quotations for calculating the
value of each Series' net assets;
(e)Expenses of obtaining Portfolio Activity Reports and
Analyses of International Management Reports (as appropriate)
for each Series;
(f)Expenses of maintaining the Trust's tax records;
(g)Salaries and other compensation of any of the Trust's
executive officers and employees, if any, who are not
officers, directors, stockholders, or employees of the
Portfolio Manager or an affiliate of the Portfolio Manager;
(h)Taxes levied against the Trust;
(i)Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for the Series;
(j)Costs, including the interest expense, of borrowing
money;
(k)Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses and
reports of the Trust to its shareholders, the filing of
reports with regulatory bodies, the maintenance of the Trust's
existence, and the regulation of shares with federal and state
securities or insurance authorities;
(l)The Trust's legal fees, including the legal fees related
to the registration and continued qualification of the Trust's
shares for sale;
(m)Costs of printing stock certificates representing shares
of the Trust;
(n)Trustees' fees and expenses to trustees who are not
officers, employees, or stockholders of the Portfolio Manager
or any affiliate thereof;
(o)The Trust's pro rata portion of the fidelity bond
required by Section 17(g) of the 1940 Act, or other insurance
premiums;
(p)Association membership dues;
(q)Extraordinary expenses of the Trust as may arise
including expenses incurred in connection with litigation,
proceedings, and other claims (unless the Portfolio Manager is
responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to
indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(r)Organizational and offering expenses.
6. Compensation. For the services provided, the Manager will pay
the Portfolio Manager a fee, payable as described in Schedule B.
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7. Seed Money. The Manager agrees that the Portfolio Manager shall
not be responsible for providing money for the initial capitalization of
the Series.
8. Compliance.
(a)The Portfolio Manager agrees that it shall promptly
notify the Manager and the Trust (1) in the event that the SEC
or other governmental authority has censured the Portfolio
Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration, if any, as
an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2)
upon having a reasonable basis for believing that the Series
has ceased to qualify or might not qualify as a regulated
investment company under Subchapter M of the Internal Revenue
Code, or (3) upon having a reasonable basis for believing that
the Series has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or
the regulations thereunder. The Portfolio Manager further
agrees to notify the Manager and the Trust promptly of any
material fact known to the Portfolio Manager respecting or
relating to the Portfolio Manager that is not contained in the
Registration Statement or prospectus for the Trust, or any
amendment or supplement thereto, and is required to be stated
therein or necessary to make the statements therein not
misleading, or of any statement contained therein that becomes
untrue in any material respect.
(b)The Manager agrees that it shall immediately notify the
Portfolio Manager (1) in the event that the SEC has censured
the Manager or the Trust; placed limitations upon either of
their activities, functions, or operations; suspended or
revoked the Manager's registration as an investment adviser;
or has commenced proceedings or an investigation that may
result in any of these actions, (2) upon having a reasonable
basis for believing that the Series has ceased to qualify or
might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, or (3) upon having
a reasonable basis for believing that the Series has ceased to
comply with the diversification provisions of Section 817(h)
of the Internal Revenue Code or the Regulations thereunder.
9. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Portfolio Manager hereby agrees that all
records which it maintains for the Series are the property of the Trust
and further agrees to surrender promptly to the Trust any of such records
upon the Trust's or the Manager's request, although the Portfolio Manager
may, at its own expense, make and retain a copy of such records. The
Portfolio Manager further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by
Rule 31a-l under the 1940 Act and to preserve the records required by
Rule 204-2 under the Advisers Act for the period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees to cooperate
with each other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC
and state insurance regulators) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
11. Representations Respecting Portfolio Manager.
(a)During the term of this Agreement, the Trust and the
Manager agree to furnish to the Portfolio Manager at its
principal offices prior to use thereof copies of all
Registration Statements and amendments thereto, prospectuses,
proxy statements, reports to shareholders, sales literature or
other material prepared for distribution to shareholders
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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
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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
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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
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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
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the day and year first above written.
THE GCG TRUST
Attest: By:
---------------------- ------------------------
Title: Title:
---------------------- ------------------------
DIRECTED SERVICES, INC.
Attest: By:
---------------------- ------------------------
Title: Title:
---------------------- ------------------------
PRUDENTIAL INVESTMENT
CORPORATION
Attest: By:
---------------------- ------------------------
Title: Title:
---------------------- ------------------------
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 is as follows:
Real Estate Series
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SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Prudential Investment Corporation
("Portfolio Manager") to the Real Estate 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.
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VOTING INSTRUCTION/PROXY
THE GCG TRUST
This voting instruction is solicited on behalf of the Board of Trustees
of The GCG Trust (the "Trust"). The Board of Trustees of the Trust recommends
that you vote FOR 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)
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