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 Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
GMO TRUST
(Name of Registrant as Specified in its Charter)
_________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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GMO TRUST
GMO ALPHA ONLY FUND
40 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
May 18, 2006
Dear Shareholder:
A Special Meeting of the Shareholders of GMO Alpha Only Fund (the "Fund"),
a series of GMO Trust (the "Trust"), will be held on June 19, 2006, at 9:00
a.m., Boston time, on the 6th floor of 40 Rowes Wharf, Boston, Massachusetts.
As described in the attached Notice and Proxy Statement, you are being
asked to approve the elimination of the Fund's fundamental investment
restriction with respect to the short sale of securities.
We urge you to complete, sign and return the enclosed proxy card promptly.
A postage-paid envelope is enclosed for this purpose. Whether or not you plan to
be present at the meeting, we need your vote. To have your vote count, you must
return a proxy card.
We look forward to receiving your proxy so that your shares may be voted at
the meeting.
Sincerely,
/s/ Scott Eston
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Scott Eston
President of the Trust
GMO TRUST
GMO ALPHA ONLY FUND
40 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Shareholders of GMO Alpha Only Fund (the "Fund"):
Notice is hereby given that a special meeting of the shareholders of the
Fund, a series of GMO Trust (the "Special Meeting") will be held on June 19,
2006, on the 6th Floor of 40 Rowes Wharf, Boston, Massachusetts, at 9:00 a.m.,
Boston time, for the following purpose, which is more fully described in the
accompanying Proxy Statement dated May 18, 2006:
1. To approve the elimination of the Fund's fundamental investment
restriction with respect to the short sale of securities.
2. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
The Board of Trustees of the Trust has fixed the close of business on May
1, 2006, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Special Meeting or any adjournment(s) thereof.
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED AS SOON AS POSSIBLE SO THAT YOU WILL BE
REPRESENTED AT THE MEETING.
By order of the Board of Trustees,
Jason B. Harrison
Clerk
May 18, 2006
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PROXY STATEMENT
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GMO TRUST
GMO ALPHA ONLY FUND
40 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
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INTRODUCTION
The enclosed proxy is solicited by the Trustees of GMO Trust (the "Trust")
for use at the Special Meeting of Shareholders (the "Special Meeting") of GMO
Alpha Only Fund, a series of the Trust, to be held on June 19, 2006, at 9:00
a.m., Boston time, and any adjournment(s) thereof, for action upon matters set
forth in the accompanying Notice of the Special Meeting of Shareholders (the
"Notice"). Shareholders of record at the close of business on May 1, 2006, are
entitled to be present and to vote at the Special Meeting or any adjourned
session thereof. The Notice, this Proxy Statement and the enclosed proxy card
are first being mailed to shareholders on or about May 18, 2006.
As described more fully below, it is proposed that the Fund's fundamental
investment restriction with respect to the short sale of securities be
eliminated. The Trustees recommend that you vote to approve this proposal.
Each whole share is entitled to one vote and each fractional share is
entitled to a proportionate fractional vote. Shares represented by your duly
represented proxy will be voted in accordance with your instructions. If no
instructions are made, the proxy will be voted FOR the matter specified in the
proxy.
ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTION
The Investment Company Act of 1940 (the "1940 Act") requires registered
investment companies to have "fundamental" investment restrictions governing
certain of their investment practices. Investment companies may also voluntarily
designate restrictions relating to other investment practices as fundamental.
"Fundamental" investment restrictions may be changed only by shareholder vote.
The Trustees recommend that shareholders approve the elimination of the
Fund's fundamental investment restriction with respect to the short sale of
securities. This restriction provides that the Fund may not "make short sales of
securities or maintain a short position for the Fund's account unless at all
times when a short position is open the Fund owns an equal amount of such
securities or owns securities which,
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without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to, the
securities sold short." As a result, the Fund currently is prohibited from
making short sales of securities except that the Fund may make short sales
"against the box," meaning the Fund may make short sales where the Fund owns or
has the right to acquire at no added cost, securities identical to those sold
short.
This restriction is not required to be fundamental under the 1940 Act. It
was originally adopted by the Fund in response to certain state law requirements
that have not applied to the Fund since 1996. Consequently, for several years,
new funds of the Trust have not adopted this restriction.
If shareholders approve this proposal, the Fund will be permitted to engage
in short sales - including those that are not "against the box" -- in accordance
with the provisions of the 1940 Act. In a typical short sale, the Fund borrows
from a broker a security in order to sell the security to a third party. The
Fund is then obligated to return a security of the same issue and quantity at
some future date, and it realizes a loss to the extent that the security
increases in value or a profit to the extent the security declines in value
(after taking into account any associated costs). If the Fund engages in short
sales, it may have to pay a premium to borrow the securities and must pay to the
lender any dividends or interest paid on the securities while they are borrowed.
Short sales "against the box" may protect the Fund against the risk of losses in
the value of a portfolio security because any decline in value of the security
should be wholly or partially offset by a corresponding gain in the short
position. However, any potential gains in the security would be wholly or
partially offset by a corresponding loss in the short position. Short sales that
are not "against the box" involve a form of investment leverage, and the amount
of the Fund's loss on a short sale is potentially unlimited. Consequently, the
elimination of the Fund's current investment restriction with respect to short
sales could increase the Fund's exposure to leverage and other investment risks.
Grantham, Mayo, Van Otterloo & Co. LLC (the "Manager") has advised the
Board that it believes that the ability to engage in short sales will enhance
investment flexibility and could assist the Fund in achieving its investment
objective. The Fund's investment objective is high total return. The Fund seeks
to achieve its investment objective by investing in various sub-asset classes
that the Manager expects to outperform their relevant broader asset classes, and
seeks to hedge out some or all of the expected return of these broader asset
classes through the use of financial futures contracts, swap contracts and
currency contracts (which are all permitted by the Fund's fundamental investment
restrictions). With respect to certain asset classes, the Manager believes it
may be more effective and/or more efficient to hedge out some or all of the
expected return by taking short positions in exchange-traded funds ("ETFs") or
other securities that represent these asset classes in lieu of (or in addition
to) using financial futures contracts, swap contracts, or currency contracts. If
the proposal is approved, the Fund would be permitted to (and the Manager
expects the Fund to) engage in short sales of ETFs and other securities as part
of the Fund's investment strategies.
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REQUIRED VOTE. Pursuant to the 1940 Act, more than 50% of the shares entitled to
vote, present in person or represented by proxy, shall constitute a quorum.
Approval of this proposal requires the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund, or (2) 67% or more of the
shares of the Fund present at the meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
FURTHER INFORMATION ABOUT VOTING AND THE SPECIAL MEETING
QUORUM AND METHODS OF TABULATION. Pursuant to the Amended and Restated Agreement
and Declaration of Trust, 40% of the shares entitled to vote, present in person
or represented by proxy, constitutes a quorum for the transaction of business at
the Special Meeting. However, approval of the Proposal will require the presence
of more than 50% of the Fund's shares at the Special Meeting in person or by
proxy. Votes cast by proxy or in person at the Special Meeting will be counted
by persons appointed by the Trust as tellers (the "Tellers") for the Special
Meeting.
The Tellers will count the total number of votes cast "for" approval of the
proposal for purposes of determining whether sufficient affirmative votes have
been cast. The Tellers will count shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
the persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) as shares that are present on
the matter for purposes of determining the presence of a quorum. Abstentions and
broker non-votes will have the effect of negative votes on the proposal.
OTHER BUSINESS. The Trustees know of no other business to be brought before the
Special Meeting. However, if any other matters properly come before the Special
Meeting, it is their intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
REVOCATION OF PROXIES. Proxies may be revoked at any time before they are voted
either (i) by a written revocation received by the Clerk of the Trust, (ii) by
properly executing a later-dated proxy, or (iii) by attending the Special
Meeting and voting in person.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. The Amended and Restated Agreement and Declaration of Trust does
not provide for annual meetings of shareholders, but the Trustees may from time
to time schedule special meetings. Shareholder proposals for inclusion in the
Trust's proxy statement for any subsequent meeting must be received by the Trust
a reasonable period of time prior to any such meeting.
ADJOURNMENT. In the event that a quorum is not present and/or sufficient votes
in favor of the proposal set forth in the Notice of Special Meeting are not
received by the time scheduled for the Special Meeting, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to the proposal. 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 Special Meeting to
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be adjourned, as required by the Amended and Restated Agreement and Declaration
of Trust and the Amended and Restated 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. The Fund pays the costs of
any additional solicitation and of any adjourned session.
FINANCIAL INFORMATION. A copy of the Fund's Annual Report for the most recent
fiscal year, including financial statements, has previously been mailed to
shareholders. Upon request, the Fund will furnish, without charge, to any of its
shareholders, a copy of the Fund's Annual Report for its most recent fiscal
year, and a copy of its semiannual report for any subsequent semiannual period.
Such requests may be directed to GMO Shareholder Services, 40 Rowes Wharf,
Boston, Massachusetts 02110, or by calling collect (617) 346-7646.
ADDITIONAL INFORMATION. The costs of solicitation of proxies will be borne by
the Fund. In addition to soliciting proxies by mail, the Trustees of your Fund
and employees of the Trust may solicit proxies in person or by telephone.
FUND INFORMATION
INVESTMENT ADVISER AND DISTRIBUTOR. Grantham, Mayo, Van Otterloo & Co. LLC
serves as the Trust's investment adviser. Funds Distributor, Inc. ("FDI"), 100
Summer Street, 15th Floor, Boston, Massachusetts 02110, serves as the Trust's
distributor on behalf of the Fund.
LIMITATION OF TRUSTEE LIABILITY. The Amended and Restated By-laws of the Trust
provide that the Trustees shall not be responsible or liable in any event for
any neglect or wrongdoing of any officer, agent, employee, Manager, or principal
underwriter of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee; provided, however, that no Trustee shall be
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
OTHER INFORMATION. Please refer to attached Exhibits A and B for information
about shares outstanding in the classes offered by the Fund and a list of
beneficial owners known by the Trust to own beneficially 5% or more of the
outstanding shares of any class of the Fund as of May 1, 2006.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS
PRESENT AT THE MEETING. A SELF-ADDRESSED, POSTAGE PREPAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
May 18, 2006
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EXHIBIT A--SHARES OUTSTANDING
The table below lists the shares outstanding of the Fund as of May 1, 2006.
SHARE CLASS SHARES OUTSTANDING
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Class III 29,108,152.062
Class IV 149,732,201.332
A-1
EXHIBIT B--BENEFICIAL OWNERSHIP
The table below sets forth the names, addresses and percentage ownership of
those shareholders known by the Trust to own beneficially 5% or more of the
outstanding shares of any class of the Fund as of May 1, 2006.
NUMBER OF PERCENTAGE
NAME OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER SHARES HELD OF CLASS
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Class III Lockheed Martin Investment Mgmt. Co. 9,321,956.106 32.03
6550 Rockspring Drive, Suite 400
Bethesda, MD 20817
Class III United Technologies Investment Management Co. 4,203,066.323 14.44
One Financial Plaza
Hartford, CT 06101
Class III The Edna McConnell Clark Foundation 3,547,080.947 12.19
International Strategy & Investment, Inc.
40 W. 57th Street, 18th Floor
New York, NY 10019
Class III Maine State Retirement System 2,152,856.214 7.40
46 State House Station
Augusta, ME 04333
Class IV Asset Allocation Trust 77,043,151.559 51.45
Evergreen Investments
200 Berkeley Street, 19th Floor
Boston, MA 02116
Class IV GMO Benchmark-Free Allocation Fund 32,939,221.323 22.00
GMO LLC
40 Rowes Wharf
Boston, MA 02110
Class IV GMO Global Balanced Asset Allocation Fund 31,521,578.570 21.05
GMO LLC
40 Rowes Wharf
Boston, MA 02110
B-1
PLEASE RECORD YOUR VOTING INSTRUCTIONS ON THIS CARD, SIGN IT BELOW, AND RETURN
IT PROMPTLY IN THE ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF GMO TRUST.
GMO Alpha Only Fund Proxy for a meeting of shareholders to be held on
June 19, 2006
The undersigned, revoking all Proxies heretofore given, hereby appoints David
Bohan, Jason Harrison, and Scott Hogan, and each of them separately, as Proxies
of the undersigned, with full power of substitution, and hereby authorizes each
of them to vote on behalf of the undersigned all shares of the GMO Alpha Only
Fund (the "Fund") that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Fund to be held at 9:00 a.m., Eastern Time, on
June 19, 2006 at the offices of Grantham, Mayo, Van Otterloo & Co. LLC, 40 Rowes
Wharf, Boston, MA 02110 and at any adjournments thereof, as fully as the
undersigned would be entitled to vote if personally present. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. This proxy may be revoked
at any time prior to the exercise of the powers conferred thereby.
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PLEASE BE SURE TO SIGN AND DATE THIS
PROXY.
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ACCOUNT REGISTRATION NAME
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ACCOUNT NUMBER
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SIGNATURE
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NAME AND TITLE, IF APPLICABLE
DATE
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Please sign and date your name and title
(if applicable), and date the proxy card.
PLEASE FILL IN A BOX AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
YOUR VOTE IS IMPORTANT. PLEASE HELP US TO ELIMINATE THE EXPENSE OF FOLLOW-UP
MAILINGS BY SIGNING AND RETURNING THIS PROXY CARD. A POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
1. To approve the elimination of the Fund's FOR AGAINST ABSTAIN
fundamental investment restriction with respect to the [ ] [ ] [ ]
short sale of securities.
PLEASE SIGN AND DATE ABOVE.