Rule 497(b) File No. 333-2399
GRANTHAM, MAYO, VAN OTTERLOO & CO.
A MESSAGE FROM THE INVESTMENT MANAGER
May 17, 1996
Dear Member:
Enclosed you will find several documents relating to the Special
Meeting of Members of The Common Fund for Nonprofit Organizations ("The Common
Fund") that own units in The Common Fund's GMO International Equities Pool (the
"GMO Pool") to be held May 29, 1996 at 450 Post Road East, Westport, Connecticut
06881 at 10:00 a.m. I hope you will give this material your immediate attention
and that, if you cannot attend the meeting in person, you will vote your proxy
promptly.
Based on the recommendation of the International Equity Committee of
the Board of Trustees of The Common Fund (the "Committee"), the Board of
Trustees of The Common Fund has recommended that the member institutions that
own units of the GMO Pool (the "Unitholders") vote to discontinue the GMO Pool.
Discontinuance of the GMO Pool is part of a transaction proposed by Grantham,
Mayo, Van Otterloo & Co. ("GMO"), the investment manager of the GMO Pool,
scheduled to take place on June 28, 1996 which involves, in essence, the
reorganization of the GMO Pool as GMO Foreign Fund (the "Mutual Fund"), a newly
formed series of GMO Trust, a registered, open-end management investment
company, through (i) the discontinuation of the GMO Pool and the distribution of
all the assets and liabilities of the GMO Pool to Unitholders and (ii) the
exchange, immediately thereafter, of the assets and liabilities distributed for
shares of the Mutual Fund.
After the distribution to Unitholders, the assets and liabilities
formerly held in the GMO Pool will remain in the custody of The Common Fund's
custodian, Mellon Bank, although title to such assets and liabilities will, at
that time, be in the hands of the respective Unitholders. At the time of the
exchange of such assets and liabilities for shares of the Mutual Fund, Mellon
Bank will transfer custody of such assets and liabilities to Brown Brothers
Harriman & Co., as custodian for the Mutual Fund. At the close of the
transaction the assets and liabilities of the Mutual Fund will consist entirely
of the assets and liabilities formerly held in the GMO Pool and the shareholders
of the Mutual Fund will consist entirely of the former Unitholders of the GMO
Pool. GMO will be the investment manager to the Mutual Fund, and will manage the
Mutual Fund in a manner substantially identical to the manner in which it
currently manages the GMO Pool.
GMO has informed the Committee that it intends to resign as manager of
the GMO Pool. GMO has, however, organized the Mutual Fund in order to conduct an
investment program substantially similar to that conducted by the GMO Pool. GMO
recommends that Unitholders wishing to continue their investment program with
GMO vote to approve the transaction described in the accompanying proxy
statement. The Board of Trustees of The
Common Fund has decided that the GMO Pool should be discontinued because they
would not be able to make GMO's services available after GMO resigns as the
manager. The Common Fund will accept redemption requests of those Unitholders
that do not wish to participate in the transaction.
A Notice of Special Meeting of Unitholders, a Prospectus/Proxy
Statement relating to the proposed reorganization, the current Prospectus of GMO
Trust, an application form for the Mutual Fund, and a form of proxy are
enclosed. Please read them carefully. Whether or not you plan to attend the
meeting in person, we urge you to complete, sign, date and return both the proxy
card and the application form for the Mutual Fund so that your units may be
voted in accordance with your instructions.
Your vote is important to us. We appreciate the time and consideration
I am sure you will give this important matter. If you have questions about the
proposal, please call 1-800- 447-3167.
Sincerely yours,
Eyk H.A. Van Otterloo
THE COMMON FUND FOR NONPROFIT ORGANIZATIONS
NOTICE OF SPECIAL MEETING OF UNITHOLDERS
OF THE
GMO INTERNATIONAL EQUITIES POOL
To the Unitholders of the GMO International Equities Pool of The Common Fund for
Nonprofit Organizations:
NOTICE IS HEREBY GIVEN that a Special Meeting of Unitholders of the GMO
International Equities Pool of The Common Fund for Non-Profit Organizations (the
"GMO Pool") will be held on Wednesday, May 29, 1996 at 10:00 a.m. at 450 Post
Road East, Westport, Connecticut 06881 to consider the following:
1. To vote upon the approval of a transaction involving, in essence, the
reorganization of the GMO Pool as GMO Foreign Fund, a newly formed series
of GMO Trust, a registered, open-end management investment company (the
"Mutual Fund"), pursuant to an Agreement and Plan of Reorganization which
provides that (i) the GMO Pool will be discontinued and its assets and
liabilities will be distributed pro rata to the Unitholders as a
liquidating distribution, and (ii) such assets and liabilities will
immediately thereafter be transferred by the Unitholders to the Mutual Fund
in exchange for shares of the Mutual Fund.
2. To transact such other business as may properly come before the meeting.
The Board of Trustees of The Common Fund for Non-Profit Organizations has fixed
the close of business on May 10, 1996 as the record date for determination of
Unitholders entitled to notice of, and to vote at, the Special Meeting.
By order of the Trustees
Marita K. Wein
Secretary
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID
ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE SPECIAL MEETING.
May 17, 1996
PROSPECTUS/PROXY STATEMENT
May 17, 1996
TABLE OF CONTENTS
Synopsis......................................................................3
Expense Summary...............................................................4
Risk Factors..................................................................6
Approval or Disapproval of the Transaction....................................7
Additional Information about the Mutual Fund and the GMO Pool................10
Other........................................................................13
Agreement and Plan of Reorganization .................................Exhibit A
This document will give you the information you need to vote on the
proposed transaction involving the GMO International Equities Pool of The Common
Fund for Nonprofit Organizations (the "GMO Pool"), located at 450 Post Road
East, Westport, Connecticut 06881, having a phone number of 1-203-341-2000, and
GMO Foreign Fund, a series of GMO Trust (the "Mutual Fund"), located at 40 Rowes
Wharf, Boston, Massachusetts 02110, having a phone number of 1-800-447-3167.
Much of the information is required under rules of the Securities and Exchange
Commission (the "SEC"); some of it is technical. If there is anything you do not
understand, please contact Grantham, Mayo, Van Otterloo & Co. ("GMO") at 1-
800-447-3167.
This Prospectus/Proxy Statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of Trustees of The Common
Fund for Nonprofit Organizations ("The Common Fund") for use at the Special
Meeting (the "Meeting") of the Members of The Common Fund that own units in the
GMO Pool (the "Unitholders") to be held on May 29, 1996 at 10:00 a.m. at 450
Post Road East, Westport, Connecticut 06881, and at any adjournment or
adjournments thereof. This Prospectus/Proxy Statement and the enclosed form of
proxy are being mailed to Unitholders on or about May 17, 1996.
At the Meeting, Unitholders will vote to approve or disapprove the
reorganization of the GMO Pool as the Mutual Fund through the discontinuation of
the GMO Pool and the distribution of all its assets and liabilities to the
Unitholders, and the transfer immediately thereafter by Unitholders of the
assets and liabilities distributed in exchange for shares of the Mutual Fund.
Only Unitholders of record on May 10, 1996 (the "Record Date") will be entitled
to notice of and to vote at the Meeting. As of the Record Date, there were
outstanding 91,346 units of beneficial interest of the GMO Pool held by fifteen
Unitholders.
This Prospectus/Proxy Statement explains concisely what you should know
before investing in the Mutual Fund. Please read it and keep it for future
reference. This Prospectus/Proxy Statement is accompanied by the Prospectus of
GMO Trust dated February 29, 1996 (the "GMO Prospectus"). The GMO Prospectus
contains information about the Mutual Fund and is incorporated into this
Prospectus/Proxy Statement by reference.
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The following documents have been filed with the Securities and
Exchange Commission and are also incorporated into this Prospectus/Proxy
Statement by reference: (i) the Statement of Additional Information of GMO Trust
dated February 29, 1996 (the "GMO Statement of Additional Information"), and
(ii) a Statement of Additional Information dated May 17, 1996 relating to the
transactions described in this Prospectus/Proxy Statement (the "Reorganization
Statement of Additional Information").
For a free copy of the GMO Prospectus, the GMO Statement of Additional
Information and/or the Reorganization Statement of Additional Information,
please contact GMO at 1-800- 447-3167.
The Trustees know of no matters other than those set forth herein to be
brought before the Meeting. If, however, any other matters properly come before
the Meeting, it is the Trustees' intention that proxies will be voted on such
matters in accordance with the judgment of the persons named in the enclosed
form of proxy.
Proxy materials, reports and proxy and information statements and other
information filed by GMO Trust can be inspected and copied at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates.
THE SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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I. SYNOPSIS
PROPOSED TRANSACTION. The GMO Pool is a fund of The Common Fund, a
nonprofit membership corporation operated by and for its member colleges,
universities, and independent schools. The Mutual Fund is a newly formed series
of GMO Trust, an open-end management investment company which is, unlike the GMO
Pool, registered under the Investment Company Act of 1940. The GMO Pool is
managed, and the Mutual Fund will be managed, by GMO.
The Board of Trustees of The Common Fund, acting upon the
recommendation of its International Equity Committee (the "Committee"), has
decided that the GMO Pool should be discontinued under Rule 17.3 of the Rules of
The Common Fund. This discontinuance is a step in a transaction (the
"Transaction") involving, in essence, the reorganization of the GMO Pool as the
Mutual Fund, whereby (i) the GMO Pool will be discontinued and its assets and
liabilities will be distributed pro rata to the Unitholders as a liquidating
distribution, and (ii) such assets and liabilities will immediately thereafter
be transferred by the Unitholders to the Mutual Fund in exchange for shares of
the Mutual Fund. At the completion of the Transaction the assets and liabilities
of the Mutual Fund will consist entirely of the assets and liabilities held in
the GMO Pool immediately prior to the Transaction, and the shareholders of the
Mutual Fund will consist entirely of the Unitholders of the GMO Pool immediately
prior to the Transaction, with identical respective ownership interests. GMO
intends to manage the Mutual Fund in a manner substantially identical to the way
in which it currently manages the GMO Pool.
THE BOARD OF TRUSTEES OF THE COMMON FUND RECOMMENDS THAT UNITHOLDERS
VOTE TO DISCONTINUE THE GMO POOL BECAUSE GMO HAS INFORMED THE COMMITTEE THAT IT
INTENDS TO RESIGN AS INVESTMENT MANAGER OF THE GMO POOL. GMO RECOMMENDS THAT
UNITHOLDERS APPROVE THE TRANSACTION BECAUSE IT OFFERS UNITHOLDERS THE
OPPORTUNITY TO CONTINUE TO BENEFIT FROM GMO'S MANAGEMENT IN A SUBSTANTIALLY
SIMILAR INVESTMENT PROGRAM. SEE "APPROVAL OR DISAPPROVAL OF THE TRANSACTION."
CERTAIN TAX CONSEQUENCES OF THE REORGANIZATION. None of the Unitholders
will incur any federal income tax liability in connection with the Transaction,
provided that neither their investment in The Common Fund nor the assets
received by the Unitholders in liquidation of the GMO Pool were debt-financed.
See "Federal Income Tax Consequences."
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The
investment objectives, policies and restrictions of the GMO Pool and the Mutual
Fund are virtually identical. The GMO Pool invests, and the Mutual Fund will
invest, largely in a portfolio of common stocks and securities convertible into
stocks of companies domiciled outside the United States. The GMO Pool utilizes,
and the Mutual Fund will utilize, a fundamental analysis of companies and
countries to select securities in which to invest. See "Additional
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Information about the Mutual Fund and the GMO Pool -- Comparison of Investment
Objectives, Policies and Restrictions."
COMPARISON OF DISTRIBUTION, PURCHASE, REDEMPTION AND EXCHANGE
PROCEDURES. Shares of the Mutual Fund may be purchased or redeemed on any day
when the New York Stock Exchange is open for business (a "business day"), while
units of the GMO Pool may only be purchased or redeemed one day per month. See
"Additional Information about the Mutual Fund and the GMO Pool -- Comparison of
Distribution, Purchase, Redemption and Exchange Procedures."
II. EXPENSE SUMMARY
The following tables summarize expenses (i) that the GMO Pool has
incurred in its past fiscal year, and (ii) that the Mutual Fund expects to incur
in its current fiscal year after giving effect to the Transaction on a pro forma
combined basis as if the Transaction had occurred as of April 1, 1996. The
Examples show the estimated cumulative expenses attributable to a hypothetical
$1,000 investment over specified periods.
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<TABLE>
<CAPTION>
Current Expenses Pro Forma Expenses
GMO Pool Mutual Fund
-------- -----------
<S> <C> <C>
UNITHOLDER/SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed on Purchases None None
Maximum Deferred Sales Charge None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees
(after fee waiver and expense reduction
in the case of the Mutual Fund) .70% .57%1
Other Expenses .13% .18%
Total Fund Operating Expenses .83% .75%1
</TABLE>
The tables are provided to help you understand an investor's share of
the operating expenses which each fund incurs.
EXAMPLES
An investment of $1,000 would incur the following expenses, assuming
(1) 5% annual return and (2) no redemption at the end of each period:
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1 GMO has voluntarily undertaken to reduce its management fees and to
bear certain expenses with respect to the Mutual Fund until further notice to
the extent that the Mutual Fund's total annual operating expenses (excluding
brokerage commissions, extraordinary expenses (including taxes), securities
lending fees and expenses and transfer taxes) would otherwise exceed .75% of the
Mutual Fund's daily net assets. Therefore, so long as GMO agrees so to reduce
its fee and bear certain expenses, total annual operating expenses (subject to
such exclusions) of the Mutual Fund will not exceed .75% of the Mutual Fund's
daily net assets. Absent the waiver of fees, pro forma Management Fees for the
Mutual Fund would be .75% and pro forma Total Fund Operating Expenses for the
Mutual Fund would be .93%.
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1 3 5 10
year years years years
GMO POOL $8 $26 $46 $103
MUTUAL FUND $8 $24
(PRO FORMA COMBINED)
The Examples do not represent past or future expense levels. Actual
expenses may be greater or less than those shown. Federal regulations require
the Examples to assume a 5% annual return, but actual annual return will vary.
Federal regulations require that the Mutual Fund, as a newly formed fund,
display examples of expenses for one and three years only.
III. RISK FACTORS
Because the GMO Pool and the Mutual Fund share similar investment
objectives and policies, the risks of an investment in the Mutual Fund as
described below are similar to the risks of an investment in the GMO Pool. A
more detailed description of certain of the risks associated with an investment
in the Mutual Fund is contained in the GMO Prospectus.
FOREIGN INVESTMENTS--GENERAL. Investment in foreign issues or
securities principally traded overseas involves certain special risks due to the
economic, political and legal developments in foreign countries. These risks
include unfavorable changes in currency exchange rates, lack of information
about the issuer, and lack of liquidity of the securities of the issuer. Foreign
brokerage commissions and other fees are also generally higher than in the
United States. Investors should also be aware that, under certain circumstances,
markets which are perceived to have similar characteristics to troubled markets
may be adversely affected whether or not similarities actually exist. A complete
description of the risks associated with foreign securities is included in the
GMO Prospectus on page 31.
FOREIGN INVESTMENTS--EMERGING MARKETS. The risks described above apply
to an even greater extent to investments in emerging markets. The securities
markets of emerging countries are generally smaller, less developed, less
liquid, and more volatile than the securities markets of the United States and
developed foreign markets. Many emerging markets have experienced substantial
rates of inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative effects on the securities
markets of certain emerging countries. The economies of emerging markets are
particularly susceptible to downturns because of (i) the risk of trade barriers
and other protectionist measures, (ii) their reliance on only a few industries
or commodities, and (iii) their dependence on the economic conditions of the
countries with which they trade. In addition, custodial services and other costs
relating to investment in foreign markets may be more expensive in emerging
markets than in many developed foreign markets. A complete
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description of the risks associated with emerging markets is included in the GMO
Prospectus on page 31.
OPTIONS AND FUTURES TRANSACTIONS. The Mutual Fund's use of options and
futures transactions involves certain risks, including the risks that the Mutual
Fund will be unable at times to close out such positions, that such transactions
may not accomplish their purpose because of imperfect market correlations, or
that GMO may not forecast market movements correctly. A complete description of
the risks associated with options and futures transactions is included in the
GMO Prospectus on pages 32-36.
OTHER INVESTMENT PRACTICES. To the extent that the Mutual Fund
exercises its ability to engage in certain investment practices, such as
repurchase agreements and securities lending, it may be delayed in recovering or
unable to recover its collateral in the event of default by the other party. In
the case of securities purchased for future delivery, the Mutual Fund runs the
risk of a decline in the value of such securities before the settlement date and
the risk that the other party should default on its obligation. A complete
description of the risks associated with other investment practices is included
in the GMO Prospectus on pages 31-42.
IV. APPROVAL OR DISAPPROVAL OF THE TRANSACTION
The Unitholders of the GMO Pool are being asked to approve or
disapprove the Transaction, which involves, in essence, the reorganization of
the GMO Pool as the Mutual Fund. The Transaction is proposed to be effected
pursuant to an Agreement and Plan of Reorganization between The Common Fund, on
behalf of the GMO Pool, and GMO Trust, on behalf of the Mutual Fund, dated as of
May 15, 1996 (the "Agreement"), a copy of which is attached to this
Prospectus/Proxy Statement as Exhibit A. A vote by Unitholders is required under
Rule 17.3 of the Rules of The Common Fund, which authorizes the Board of
Trustees of The Common Fund to discontinue a fund with the consent of two-thirds
of the unitholders of the fund including unitholders representing two-thirds of
the units of participation in the fund.
AGREEMENT AND PLAN OF REORGANIZATION. The Agreement provides that the
GMO Pool will be discontinued and its assets and liabilities will be distributed
to Unitholders. Each Unitholder will receive a portion of such assets and
liabilities proportional to such Unitholder's ownership share of the GMO Pool.
Immediately following the distribution, each Unitholder will transfer the assets
and liabilities distributed to it to the Mutual Fund for shares of the Mutual
Fund representing an identical relative ownership interest in the Mutual Fund as
was previously held in the GMO Pool. Prior to this exchange, the Mutual Fund
will not hold any assets or liabilities. Following the exchange, therefore, the
assets and liabilities of the Mutual Fund will consist entirely of those assets
and liabilities formerly held by the GMO Pool.
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The consummation of the Transaction is subject to the conditions set
forth in the Agreement. The Agreement may be terminated and the Transaction
abandoned at any time before its consummation, before or after approval by the
Unitholders, by mutual consent of the GMO Pool and the Mutual Fund or, if any
condition set forth in the Agreement has not been fulfilled and has not been
waived by the party entitled to its benefits, by such party.
All fees and expenses, including legal and accounting expenses,
portfolio transfer taxes (if any) or other similar expenses incurred in
connection with the consummation of the Transactions, will be borne by GMO.
CUSTODY OF ASSETS AND LIABILITIES INVOLVED IN THE TRANSACTION. The
Agreement provides that the Transaction will consists of two steps: (i) the
distribution of the assets and liabilities of the GMO Pool to Unitholders,
followed by (ii) the transfer of such assets and liabilities by the Unitholders
to the Mutual Fund in exchange for shares of the Mutual Fund. At no point
throughout the Transaction, however, will the assets and liabilities be
physically delivered to the Unitholders. Instead, after the distribution to
Unitholders, while title to the assets and liabilities will be in the hands of
the respective Unitholders, the assets and liabilities themselves will remain in
the custody of The Common Fund's custodian, Mellon Bank. At the time the
Unitholders exchange the assets and liabilities for shares of the Mutual Fund,
Mellon Bank will transfer custody of such assets and liabilities to Brown
Brothers Harriman & Co., as custodian for the Mutual Fund, and title to such
assets and liabilities will pass to the Mutual Fund.
DESCRIPTION OF THE SHARES OF THE MUTUAL FUND. Full and fractional
shares of the Mutual Fund will be issued to the Unitholders of the GMO Pool in
accordance with the procedure under the Agreement as described above. Shares of
the Mutual Fund are freely transferrable, are entitled to dividends as declared
by the Trustees of GMO Trust, and, in liquidation of GMO Trust, are entitled to
receive the net assets of the Mutual Fund, but not of any other series of GMO
Trust. Unitholders receiving Mutual Fund shares in the Transaction will not pay
a sales charge on such shares. Shares of the Mutual Fund are not subject to
redemption fees or 12b-1 fees.
GMO Trust was organized in 1985 as a Massachusetts business trust,
pursuant to an Agreement and Declaration of Trust (the "Declaration of Trust"),
and has an unlimited authorized number of shares of beneficial interest which
GMO Trust's trustees may, without shareholder approval, divide into an unlimited
number of series of such shares, and which are presently divided into
twenty-four series of shares. Shares of the Mutual Fund represent one such
series. The shares of GMO Trust are entitled to vote at any meetings of
shareholders. GMO Trust does not generally hold annual meetings of shareholders
and will do so only when required by law. Matters submitted to shareholder vote
must be approved by each series separately except (i) when the Investment
Company Act of 1940 requires that shares shall be voted together as a single
class, and (ii) when the Trustees determine that only shareholders of the series
affected shall be entitled to vote on the matter. Shareholders who hold a
majority
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of the outstanding shares may remove the Trustees of GMO Trust from office by
votes cast in person or by proxy at a meeting of shareholders or by written
consent.
Under Massachusetts law, shareholders of the Mutual Fund could, under
certain circumstances, be held personally liable for the obligations of GMO
Trust. However, the Declaration of Trust disclaims shareholder liability for
acts or obligations of GMO Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
GMO Trust. The Declaration of Trust provides for indemnification out of all the
property of the relevant fund for all loss and expense of any shareholder of
that fund held personally liable for the obligations of GMO Trust. Thus, the
risk of a shareholder of the Mutual Fund incurring financial loss on account of
shareholders' liability is considered remote since it may arise only in the very
limited circumstances in which the disclaimer is inoperative and the Mutual Fund
would be unable to meet its obligations.
FEDERAL INCOME TAX CONSEQUENCES. Membership in The Common Fund is
limited to organizations which are exempt from federal income tax under Section
501(a) or 115(a) of the Internal Revenue Code (the "Code"), and only Members of
The Common Fund may invest in the various funds of The Common Fund, including
the GMO Pool. Consequently, assuming that all of the Unitholders are so exempt,
none of the Unitholders will incur any federal income tax liability in
connection with the Transaction, provided that neither their investment in The
Common Fund nor the assets received by the Unitholders in liquidation of the GMO
Pool constitutes "debt-financed property" within the meaning of the Code. If a
Unitholder's investment in The Common Fund or the assets to be received by such
Unitholder in liquidation of the GMO Pool are debt-financed property, such
Unitholder should consult a tax professional.
TRUSTEES' RECOMMENDATION. GMO has informed the Board of Trustees of The
Common Fund and the Committee that it intends to resign as manager of the GMO
Pool. GMO recommends that Unitholders wishing to continue their investment
program with GMO approve the Transaction. The Trustees, based on the
recommendation of the Committee, concur in that recommendation because The
Common Fund would not be able to offer the GMO Pool after GMO resigns as manager
thereof. The Mutual Fund will allow Unitholders the opportunity to continue to
benefit from GMO's management in a substantially similar investment program.
REQUIRED VOTE. Approval of the proposal requires the affirmative vote
of both (A) two-thirds of the Members that own units in the GMO Pool and (B)
Members holding two-thirds of all the outstanding units in the GMO Pool, in each
case as of the Record Date. Unless revoked, all valid proxies will be voted in
accordance with the specification thereon or, in the absence of specifications,
FOR approval of the Transaction.
A Unitholder of the GMO Pool objecting to the proposed Transaction is
not entitled under New York law or the Constitution, By-laws or Rules of The
Common Fund to demand payment for and an appraisal of its GMO Pool units if the
Transaction is consummated over
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the objection of such Unitholder. The Common Fund, however, will accept
redemption requests of those Unitholders that do not wish to participate in the
Transaction. If the required vote is obtained, the GMO Pool will be discontinued
as of June 28, 1996, and all Unitholders that have not redeemed their units will
receive a pro rata distribution of the GMO Pool's assets and liabilities,
whether or not such Unitholders have voted to approve the Transaction.
In the event that this proposal is not approved by the Unitholders of
the GMO Pool, the GMO Pool will continue to be managed as a separate fund of The
Common Fund--by GMO initially--in accordance with its current investment
objective and policies, and the Trustees and the Committee may consider such
alternatives as may be in the best interests of the Unitholders.
VI. ADDITIONAL INFORMATION ABOUT THE MUTUAL FUND AND THE GMO POOL
INFORMATION ABOUT THE MUTUAL FUND. For information about the Mutual
Fund, please consult the GMO Prospectus, particularly at pages 20-21.
INFORMATION ABOUT THE COMMON FUND. The Common Fund is a non-profit
organization that was organized in 1969 pursuant to a Special Act of the New
York State Legislature in 1955 that authorized the creation of The Common Fund.
The Common Fund began operations in 1971. The Common Fund is governed by a Board
of Trustees who, except for the President, are elected for three-year staggered
terms.
Membership in The Common Fund is limited to educational institutions
and educational support organizations. There were as of December 31, 1995
approximately 1,400 Members, of which approximately 920 were participating in
the long term equity and bond investment funds of The Common Fund and more than
1,100 were participating in the intermediate and short term cash funds.
The Common Fund offers a series of pooled investment funds, each of
which has its own investment objectives, policies and strategies. For each
investment fund, The Common Fund identifies investment strategies, allocates
assets among those strategies, selects investment managers within each strategic
category and allocates fund assets among them. The Common Fund then monitors
manager performance, increasing and decreasing allocations and terminating and
replacing managers as appropriate.
Each Member selects the specific investment funds in which to invest
its money. A Member may invest in more than one fund and may, if it chooses,
have more than one account in any fund. Only after a Member chooses in which
investment funds to invest does the Common Fund allocate the money within each
investment fund as described above.
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The GMO Pool is an investment fund that invests in international
equities. The GMO Pool is distinct from other investment funds of The Common
Fund in that the GMO Pool has only one investment manager, GMO. The Common Fund,
therefore, does not perform its usual function of allocating money between
investment managers for the GMO Pool. The effect of this difference is that each
Member has the option of choosing one investment Manager, GMO, to manage its
investment.
CAPITALIZATION. The following tables show the capitalization of the
Mutual Fund and the GMO Pool as of April 1, 1996 and on a pro forma basis as of
that date, giving effect to the proposed Transaction:
(UNAUDITED)
Mutual
GMO Fund Mutual Fund
Pool (actual) (Pro Forma)*
---- -------- ------------
Net assets $542,706 $ 0 $542,706
(000's omitted)
Shares or units 91,346 0 54,270,637
outstanding
Net asset value $5,941 $ 0 $10
per share or unit
* Pro Forma net assets reflect completion of the Transaction and legal and
accounting costs related to the Transaction.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The
Mutual Fund's investment objectives, policies and restrictions are virtually
identical to those of the GMO Pool. The investment objective of the Mutual Fund
is to maximize total return through investment primarily in equity securities of
non-U.S. issuers. The GMO Pool has no stated investment objective; however, its
stated investment program is to focus on equity investments outside the United
States. The GMO Pool invests, and the Mutual Fund will invest, primarily in a
diversified portfolio of common stocks, securities convertible into common
stocks and warrants to acquire common stocks of companies domiciled outside the
United States. There are no prescribed limits on geographic asset distribution
for either the GMO Pool or the Mutual Fund, and both have the authority to
invest in securities of foreign issuers traded on U.S. exchanges and securities
traded abroad, American Depository Receipts, European Depository Receipts and
other similar securities convertible into securities of foreign issuers. Neither
the GMO Pool nor the Mutual Fund targets its performance against a particular
benchmark.
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Both funds base their investment strategy on a fundamental analysis of
issuers and country economics. Both funds may emphasize capital appreciation or
income depending on the views of the investment manager. In so doing, either
fund may hold various amounts of growth stocks or value stocks.
Both funds may hold cash, short-term obligations, and foreign government
bonds (denominated in U.S. or foreign currencies). Both funds may also invest in
corporate bonds of foreign issuers and in preferred stock of foreign issuers.
The GMO Pool may invest in The Common Fund for Short Term Investments, a money
market type instrument available only to investment funds in The Common Fund.
Both funds may engage in foreign currency, stock index futures and
options strategies for hedging the currency exposure of their portfolio
securities. Neither fund is required to hedge its currency risk.
The GMO Pool may engage in short sales and firm commitment agreements
if it receives the consent of The Common Fund.2 The Mutual Fund may not engage
in short sales and may only engage in firm commitment agreements with banks and
broker-dealers if (i) GMO determines that the particular bank or broker-dealer
presents a minimal credit risk, and (ii) the Mutual Fund maintains in a
segregated account with its custodian cash, U.S. Government securities or other
liquid high grade debt obligations in an amount equal to the Mutual Fund's
obligations under all of its firm commitment agreements. Also, the Mutual Fund
may not concentrate more than 25% of its total assets in any one industry, while
the GMO Pool has no restrictions regarding industry concentration.
COMPARISON OF DISTRIBUTION, PURCHASE, REDEMPTION AND EXCHANGE
PROCEDURES. The Mutual Fund will declare and pay the distributions of its
dividends, interest and foreign currency gains semi-annually. The GMO Pool
distributes all dividends, interest and other ordinary income of the fund
quarterly, on an accrual basis. The Mutual Fund intends to distribute net
short-term capital gains and net long-term gains at least annually. The GMO Pool
does not distribute net short-term and long-term capital gains; instead, this
appreciation or depreciation is reflected in the value of the units of the fund.
For a further description of the distribution policies of the Mutual Fund,
please consult the GMO Prospectus at page 44.
Investments in the GMO Pool may only be made on the first day of each
calendar month and the funds must be received by the GMO Pool not later than the
last business day preceding the respective entry date (or as the Trustees may
otherwise decide). At least six business days' advance notice must be given for
an investment in the GMO Pool. Shares of the Mutual Fund
- --------
2 A firm commitment agreement is an agreement with a bank or
broker-dealer for the purchase of securities at an agreed-upon price on a
specified future date.
-12-
may be purchased directly from GMO Trust on any business day. For a further
description of the procedures for purchasing shares of the Mutual Fund, please
consult the GMO Prospectus at pages 42-43.
A Unitholder in the GMO Pool may withdraw its investment in the fund by
giving six business days' advance written notice of withdrawal to the GMO Pool
or such shorter notice as The Common Fund may permit. Such withdrawal will only
be effected on, or as of, a monthly valuation date (the last business day of the
month). Shares of the Mutual Fund may be redeemed on any business day. The
redemption price is the net asset value per share next determined after receipt
of the redemption request. There is no separate redemption fee. For a further
description of the procedures for redeeming shares of the Mutual Fund, please
consult the GMO Prospectus at pages 43-44.
A Unitholder may transfer the amount it has invested in the GMO Pool to
any other fund of The Common Fund, by giving fourteen days' advance written
notice to The Common Fund. A shareholder of the Mutual Fund wishing to exchange
its shares for shares of another fund of GMO Trust must separately redeem its
Mutual Fund shares and purchase the shares of the other fund. GMO Trust provides
no special exchange procedures between its funds. A complete description of the
distribution, purchase, redemption and exchange procedures of the Mutual Fund is
included in the GMO Prospectus on pages 42-45.
OTHER INFORMATION. Other information relating to the Mutual Fund,
including information in respect of its investment objectives and policies and
financial history, may be found in the enclosed GMO Prospectus and in the GMO
Statement of Additional Information.
VI. OTHER
RECORD DATE, QUORUM AND METHOD OF TABULATION. Unitholders of record of
the GMO Pool at the close of business on the Record Date will be entitled to
vote at the Meeting or any adjournment thereof. The holders of a majority of the
Units of the GMO Pool outstanding at the close of business on the Record Date
present in person or represented by proxy will constitute a quorum for the
Meeting; however, as noted earlier, the affirmative vote of (A) two-thirds of
all Members owning units in the GMO Pool and (B) of Members owning two-thirds of
all the units in the GMO Pool is necessary to approve the Transaction.
Unitholders are entitled to one vote each, in the case of (A), and to one vote
for each unit held, with fractional units voting proportionally, in the case of
(B).
Votes cast by proxy or in person at the meeting will be counted by
persons appointed by The Common Fund as tellers for the Meeting. The tellers
will count the total number of votes cast "for" approval of the Transaction for
purposes of determining whether sufficient affirmative votes have been cast. The
tellers will count units represented by proxies that reflect abstentions as
units that are present and entitled to vote on the matter for purposes of
determining the
-13-
presence of a quorum. Abstentions have the effect of a negative vote on the
proposal.
-14-
OWNERSHIP OF THE GMO POOL AND THE MUTUAL FUND. The Common Fund permits
only Members to own units in the various funds of The Common Fund. The officers
and Trustees of
-15-
The Common Fund, therefore, did not, as of the Record Date, own beneficially any
units of the GMO Pool. As of April 1, 1996, to the best of the knowledge of The
Common Fund, the following institutions owned beneficially 5% or more of the
outstanding units of the GMO Pool:
% of the
GMO Pool (%)
------------
Harvard University Presidents & Fellows 19.65
University of Pennsylvania 14.53
Wellesley College 10.82
University of Minnesota Foundation 9.82
Swarthmore College 8.65
University of Virginia 8.30
Princeton University 7.81
Amherst College Consolidated 5.58
As of May 17, 1996, there were no shares of the Mutual Fund issued or
outstanding.
SOLICITATION OF PROXIES. Solicitation of proxies by personal interview,
mail, telephone, and telegraph may be made by employees and partners of GMO.
REVOCATION OF PROXIES. Proxies may be revoked at any time before they
are voted by a written revocation received by the Secretary of The Common Fund,
by properly executing a later-dated proxy or by attending the Meeting and voting
in person.
ADJOURNMENT. If sufficient votes in favor of the proposal are not
received by the time scheduled for the Meeting, the persons named as proxies may
propose one or more adjournments of the Meeting for a period or periods of not
more than 60 days in the aggregate to permit further solicitation of proxies.
Any adjournment will require the affirmative vote of a majority of the units
cast on the question in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which 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. GMO will pay the costs of any additional solicitation and
of any adjourned session.
-16-
THE GMO INTERNATIONAL EQUITIES POOL OF THE COMMON FUND
FOR NONPROFIT ORGANIZATIONS
PROXY SOLICITED BY THE TRUSTEES
PROXY FOR SPECIAL MEETING OF UNITHOLDERS -- May 29, 1996
The undersigned hereby appoints Curt Tobey and Susan T. Reiley, and each of
them, proxies, with power of substitution to each, and hereby authorizes them to
represent and to vote, as designated below, at the Special Meeting of
Unitholders of the GMO International Equities Pool of The Common Fund for
Nonprofit Organizations (the "GMO Pool"), on Wednesday, May 29, 1996 at 450 Post
Road East, Westport, Connecticut 06881 at 10:00 a.m. Eastern time, and at any
adjournments thereof, all of the units of the GMO Pool which the undersigned
would be entitled to vote if personally present.
THIS PROXY PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED UNITHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A VOTE FOR THE
PROPOSAL BELOW.
1. To approve a transaction involving, in essence, the reorganization of
the GMO Pool as GMO Foreign Fund, a series of GMO Trust, pursuant to
the Agreement and Plan of Reorganization attached as Exhibit A to the
Prospectus/Proxy Statement of the GMO Pool and GMO Foreign Fund dated
May 15, 1996, which provides that (i) the GMO Pool will be discontinued
and its assets and liabilities will be distributed pro rata to the
Members of The Common Fund holding units therein as a liquidating
distribution, and (ii) such assets and liabilities will immediately
thereafter be transferred by such Members to GMO Foreign Fund in
exchange for shares thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
NOTE: Please sign in full corporate name and indicate the signer's office.
Name of Institution ___________________________________________________
Name of Signer ________________________________________________________
Signer's Office _______________________________________________________
Date___________________________________________________________________
-1-
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as
of May 15, 1996 by and between The Common Fund for Nonprofit Organizations, a
New York non-profit corporation ("The Common Fund"), on behalf of its GMO
International Equities Pool (the "GMO Pool"), and GMO Trust, a Massachusetts
business trust, on behalf of its GMO Foreign Fund series (the "Mutual Fund").
The Common Fund and GMO Trust agree as follows:
1. Plan of Reorganization.
(a) The GMO Pool will, in accordance with the Constitution, By-laws and
Rules of The Common Fund, be discontinued and its assets and liabilities
existing on the Exchange Date (as defined in Section 6 hereof) will be
distributed pro rata to the Members of The Common Fund that own units in the GMO
Pool (the "Unitholders") as of the Exchange Date (the "Distribution"). The
discontinuance of the GMO Pool and the Distribution will occur pursuant to Rule
17.3 of the Rules of The Common Fund. It is intended that such Distribution
shall be treated for federal income tax purposes as a sale or exchange pursuant
to Section 302 of the Internal Revenue Code of 1986, as amended (the "Code").
(b) On and as of the Exchange Date, immediately following the
consummation of the Distribution described in the foregoing paragraph (a), each
Unitholder shall sell, assign, convey, transfer and deliver to the Mutual Fund
all of the assets and liabilities received by such Unitholder in the
Distribution. In consideration therefor, the Mutual Fund shall, on and as of the
Exchange Date, deliver to each Unitholder a number of full and fractional shares
of beneficial interest of the Mutual Fund having a net asset value equal to the
fair market value of the assets and liabilities transferred by each Unitholder
to the Mutual Fund on the Exchange Date (the "Exchange").
(c) The GMO Pool will pay or cause to be paid to the Mutual Fund any
interest, cash or such dividends, rights and other payments received by it on or
after the Exchange Date with respect to the assets of the GMO Pool contributed
to the Mutual Fund as contemplated in Section 1(b) hereof, whether accrued or
contingent, received by it on or after the Exchange Date. Any such distribution
shall be deemed included in the assets transferred to the Mutual Fund at the
Exchange Date and shall not be separately valued unless the securities in
respect of which such distribution is made shall have gone "ex" such
distribution prior to the Exchange Date, in which case any such distribution
which remains unpaid at the Exchange Date shall be included in the determination
of the value of the assets of the GMO Pool acquired by the Mutual Fund.
(d) As promptly as practicable after the Exchange Date, the GMO Pool
shall, to the extent not already done, be discontinued pursuant to the
Constitution, By-laws and Rules of The Common Fund, and applicable law, and its
legal existence terminated.
-1-
2. Representations and Warranties of the Mutual Fund. GMO Trust, on
behalf of the Mutual Fund, represents and warrants to and agrees with The Common
Fund that:
(a) The Mutual Fund is a series of shares of the GMO Trust, a
Massachusetts business trust duly established and validly existing under the
laws of The Commonwealth of Massachusetts, and has power to own all of its
properties and assets and to carry out its obligations under this Agreement. GMO
Trust is not required to qualify as a foreign association in any jurisdiction.
Each of GMO Trust and the Mutual Fund has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to carry out
this Agreement.
(b) GMO Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
such registration has not been revoked or rescinded and is in full force and
effect.
(c) The prospectus and statement of additional information of GMO
Trust, each dated February 29, 1996 (collectively the "GMO Prospectus"), did not
as of such date and does not contain, with respect to GMO Trust or the Mutual
Fund, any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Mutual Fund of
the transactions contemplated by this Agreement, except such as may be required
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, or state
securities or blue sky laws (which term as used herein shall include the laws of
the District of Columbia and of Puerto Rico).
(e) The registration statement (the "Registration Statement") filed
with the Securities and Exchange Commission (the "Commission") by GMO Trust on
Form N-14 on behalf of the Mutual Fund and relating to the shares issuable
thereunder, and the proxy statement of the GMO Pool included therein (the "Proxy
Statement"), on the effective date of the Registration Statement, at the time of
the Unitholders' meeting referred to in Section 7 and at the Exchange Date will
not, with respect to GMO Trust or the Mutual Fund, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(f) There are no material contracts outstanding to which the Mutual
Fund is a party, other than as are disclosed in the Registration Statement, the
GMO Prospectus, or the Proxy Statement.
(g) The issuance of shares of the Mutual Fund pursuant to the Exchange
will be in compliance with all applicable federal and state securities laws.
(h) The shares of the Mutual Fund to be transferred to the Unitholders
of the GMO Pool have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued and will be fully
paid and nonassessable by the Mutual Fund,
-2-
and no shareholder of the Mutual Fund will have any preemptive right of
subscription or purchase in respect thereof.
3. Representations and Warranties of the GMO Pool. The Common Fund, on
behalf of the GMO Pool, represents and warrants to and agrees with the Mutual
Fund that:
(a) The GMO Pool is an investment fund of The Common Fund, a non-profit
corporation duly established and validly existing under the laws of the State of
New York, and has power to carry on its business as it is now being conducted
and to carry out its obligations under this Agreement. Neither, The Common Fund
nor the GMO Pool is required to qualify as a foreign association in any
jurisdiction. Each of The Common Fund and the GMO Pool has all necessary
federal, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to carry out this
Agreement.
(b) There are no material contracts outstanding to the knowledge of the
Common Fund to which the GMO Pool is a party, other than as is disclosed in the
Registration Statement, The Common Fund Prospectus, or Proxy Statement.
(c) The Registration Statement and the Proxy Statement, on the
effective date of the Registration Statement, at the time of the Unitholders'
meeting referred to in Section 7 and at the Exchange Date, insofar as they
relate to The Common Fund and the GMO Pool will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
4. Exchange Date. The net asset value of the shares of the Mutual Fund
to be delivered in exchange for assets and liabilities of the GMO Pool and the
value of the assets and liabilities distributed by the GMO Pool and transferred
to the Mutual Fund on the Exchange Date (the "GMO Pool Net Assets") shall in
each case be determined as of the Exchange Date.
(a) The net asset value of the shares of the Mutual Fund shall be
computed in the manner set forth in the GMO Prospectus. The value of the assets
and liabilities in the GMO Pool before this reorganization shall be determined
by the Mutual Fund, in cooperation with the GMO Pool, pursuant to procedures
which the Mutual Fund would use in determining the fair market value of the
Mutual Fund's assets and liabilities.
(b) As the transactions contemplated hereby are intended to result in a
step-up (or stepdown) in the tax basis of the GMO Pool Net Assets, no adjustment
shall be made in the net asset value of either the GMO Pool or the Mutual Fund
to take into account differences in realized and unrealized gains and losses.
5. Expenses, Fees, etc. All fees and expenses, including legal and
accounting expenses or other similar expenses incurred in connection with the
consummation by the GMO Pool and the Mutual Fund of the transactions
contemplated by this Agreement, will be paid by Grantham, Mayo, Van Otterloo and
Co. ("GMO").
(a) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to
-3-
the other party for any damages resulting therefrom, including, without
limitation, consequential damages.
6. Exchange Date. Delivery of the GMO Pool Net Assets and the delivery
of the shares of the Mutual Fund to be issued shall be made at June 28, 1996, or
at such other date agreed to by the Mutual Fund and the GMO Pool, the date upon
which such delivery is to take place being referred to herein as the "Exchange
Date."
7. Meeting of Unitholders; Discontinuance. The Common Fund agrees to
call a meeting of the GMO Pool's Unitholders as soon as is practicable after the
effective date of the Registration Statement for the purpose of considering
authorizing the liquidation and discontinuance of the GMO Pool, the distribution
of all of its assets and liabilities to the Unitholders as contemplated herein,
the subsequent transfer of the GMO Pool Net Assets to the Mutual Fund, and the
adoption of this Agreement.
(a) The Common Fund, on behalf of the GMO Pool, agrees that the
liquidation and discontinuance of the GMO Pool will be effected in the manner
provided in the Rules of The Common Fund in accordance with applicable law, and
that on and after the Exchange Date, the GMO Pool shall not conduct any business
except in connection with its liquidation and discontinuance.
(b) GMO Trust has filed the Registration Statement with the Commission
on behalf of the Mutual Fund. Each of the GMO Pool and the Mutual Fund will
cooperate with the other, and each will furnish to the other the information
relating to itself required by the 1933 Act and the rules and regulations
thereunder to be set forth in the Registration Statement.
8. Conditions to the GMO Pool's and the Mutual Fund's Obligations. The
obligations of the GMO Pool and the Mutual Fund hereunder to consummate the
Distribution and the Exchange shall be subject to the satisfaction of each of
the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of (A)
two-thirds of all Members owning units in the GMO Pool and (B) of Members owning
two-thirds of all the units in the GMO Pool, in each case as of the record date
set for such voting by the board of trustees of The Common Fund.
(b) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge
-4-
of The Common Fund, the GMO Pool, GMO Trust or the Mutual Fund, threatened by
the Commission.
(c) That the GMO Pool and the Mutual Fund shall have received from the
Commission, any relevant state securities administrator or any other
governmental department or agency such order or orders as Ropes & Gray deems
reasonably necessary or desirable under the 1933 Act, the 1934 Act, the 1940
Act, or any applicable state securities or blue sky laws in connection with the
transactions contemplated hereby, and that all such orders shall be in full
force and effect.
9. Conditions to the Mutual Fund's Obligations. The obligations of the
Mutual Fund hereunder to consummate the Distribution and the Exchange shall be
subject to the satisfaction of each of the following conditions:
(a) That all representations and warranties in Section 3 hereof shall
be true and correct in all material respects at the Exchange Date with the same
effect as if made at that time.
(b) That the GMO Pool shall have furnished to the Mutual Fund a
statement, dated the Exchange Date, signed by The Common Fund's President (or
any Vice President) certifying that as of the Exchange Date all representations
and warranties of the GMO Pool made in this Agreement are true and correct in
all material respects as if made at and as of the Exchange Date and the GMO Pool
has complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Exchange Date.
(c) That there shall not be any material litigation pending against the
GMO Pool with respect to the matters contemplated by this Agreement.
(d) That the GMO Pool's custodian shall have delivered to the Mutual
Fund a certificate identifying all of the GMO Pool Net Assets held by such
custodian as of the Exchange Date.
10. Conditions to the GMO Pool's Obligations. The obligations of the
GMO Pool hereunder to consummate the Distribution and the Exchange shall be
subject to the satisfaction of each of the following conditions:
(a) That all representations and warranties in Section 2 hereof shall
be true and correct in all material respects at the Exchange Date with the same
effect as if made at that time.
(b) That the Mutual Fund shall have furnished to the GMO Pool a
statement, dated the Exchange Date, signed by GMO Trust's President (or any Vice
President) certifying that as of the Exchange Date all representations and
warranties of the Mutual Fund made in this Agreement are true and correct in all
material respects as if made at and as of the Exchange Date, and that the Mutual
Fund has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to the Exchange Date.
(c) That there shall not be any material litigation pending against the
Mutual Fund with respect to the matters contemplated by this Agreement.
-5-
11. Indemnification.
(a) The Common Fund agrees, on behalf of the GMO Pool, that the GMO
Pool will indemnify and hold harmless, out of the assets of the GMO Pool but no
other assets, the Mutual Fund and the GMO Trust (and its trustees and its
officers) (for purposes of this subparagraph, the "Indemnified Parties") against
any and all expenses, losses, claims, damages and liabilities (including
reasonable attorneys' fees and expenses) at any time imposed upon or reasonably
incurred by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or proceeding in which
any one or more of the Indemnified Parties may be involved or with which any one
or more of the Indemnified Parties may be threatened by reason of any untrue
statement or alleged untrue statement of a material fact relating to The Common
Fund or the GMO Pool contained in the Registration Statement, or the Proxy
Statement or any amendment or supplement to any of the foregoing, or arising out
of or based upon the omission or alleged omission to state in any of the
foregoing a material fact relating to The Common Fund or the GMO Pool required
to be stated therein or necessary to make the statements relating to The Common
Fund or the GMO Pool therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the consent of The Common
Fund or the GMO Pool. The Indemnified Parties will notify The Common Fund and
the GMO Pool in writing within ten days after the receipt by any one or more of
the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(a). The Common Fund and the GMO Pool shall be entitled to
participate at its own expense in the defense of any claim, action, suit or
proceeding covered by this Section 11(a), or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and if The Common Fund or the GMO Pool
elects to assume such defense, the Indemnified Parties shall be entitled to
participate in the defense of any such claim, action, suit or proceeding at
their expense. The GMO Pool's obligation under this Section 11(a) to indemnify
and hold harmless the Indemnified Parties shall constitute a guarantee of
payment, so that the GMO Pool will pay in the first instance any expenses,
losses, claims, damages and liabilities required to be paid by it under this
Section 11(a) without the necessity of the Indemnified Parties' first paying the
same. In no event will The Common Fund or any other investment fund of The
Common Fund besides the GMO Pool be responsible for any indemnification under
this Section 11(a).
(b) The Mutual Fund will indemnify and hold harmless, out of the assets
of the Mutual Fund but no other assets, the GMO Pool and The Common Fund (and
its trustees and its officers) (for purposes of this subparagraph, the
"Indemnified Parties") against any and all expenses, losses, claims, damages and
liabilities (including reasonable attorneys' fees and expenses) at any time
imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim, action,
suit or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to the Mutual Fund contained in the Registration
Statement or the Proxy Statement, or any amendment or supplement to any of the
foregoing, or arising out of or based upon the omission or alleged omission to
state in any of the foregoing a material fact relating to GMO Trust or the
Mutual Fund required to be
-6-
stated therein or necessary to make the statements relating to GMO Trust or the
Mutual Fund therein not misleading, including without limitation any amounts
paid by any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding, or threatened claim,
action, suit or proceeding made with the consent of GMO Trust or the Mutual
Fund. The Indemnified Parties will notify GMO Trust and the Mutual Fund in
writing within ten days after the receipt by any one or more of the Indemnified
Parties of any notice of legal process or any suit brought against or claim made
against such Indemnified Party as to any matters covered by this Section 11(b).
GMO Trust and the Mutual Fund shall be entitled to participate at its own
expense in the defense of any claim, action, suit or proceeding covered by this
Section 11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and, if the GMO Trust or the Mutual Fund elects to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own expense. The
Mutual Fund's obligation under this Section 11(b) to indemnify and hold harmless
the Indemnified Parties shall constitute a guarantee of payment so that the
Mutual Fund will pay in the first instance any expenses, losses, claims, damages
and liabilities required to be paid by it under this Section 11(b) without the
necessity of the Indemnified Parties' first paying the same.
12. Termination. The Common Fund and GMO Trust may, by mutual consent
of their respective trustees, terminate this Agreement, and The Common Fund or
GMO Trust may waive any condition to the other party's obligations hereunder.
13. Covenants, etc. Deemed Material. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
14. Sole Agreement; Amendments. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
15. Agreement and Declaration of Trust. A copy of the Agreement and
Declaration of Trust of GMO Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of GMO Trust on behalf of the GMO Foreign
Fund series, as trustees and not individually, and that the obligations of this
instrument are not binding upon any of the trustees, officers or shareholders of
GMO Trust individually but are binding only upon the assets and property of the
GMO Foreign Fund.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
-7-
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Reorganization as of the date first above written.
GMO Trust, on behalf of its GMO Foreign Fund
By:___________________________
name:
title:
The Common Fund for Nonprofit Organizations,
on behalf of its GMO International Equities Pool
By:____________________________
name:
title:
-8-
GMO TRUST APPLICATION
PART I: INVESTOR INFORMATION
Please complete and return to: Domestic Phone: 617-330-7500
Grantham, Mayo, Van Otterloo & Co. Domestic Fax: 617-261-0134
40 Rowes Wharf International Phone: 617-346-7610
Boston, Massachusetts 02110 International Fax: 617-439-0457
1. ACCOUNT REGISTRATION
Please provide exact name in which shares are to be owned. Unless
otherwise indicated, Co-Owners will be registered as joint tenants with
right of survivorship.
Owner:
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Co-Owner (if applicable):
---------------------------------------------
Joint Tenants? Yes No
------- --------
Mailing Address:
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Street Address (if different):
----------------------------------------
City/State/Zip:
-------------------------------------------------------
Main Phone:
-----------------------------------------------------------
Fax:
------------------------------------------------------------------
2. SOCIAL SECURITY OR TAXPAYER I.D. NUMBER
If the account is registered in more than one name, please indicate the
name of the individual whose social security number is being provided.
For gift to minor or guardianship accounts, please provide the Social
Security number and name of the minor or person under guardianship.
Social Security or
Taxpayer I.D. Number:
-------------------------------------------------
Name:
-----------------------------------------------------------------
Tax Status (check one): Taxable
----
Tax-Exempt Endowment
----
Tax-Exempt Foundation
----
Tax-Exempt ERISA
----
Tax-Exempt Other (please specify)
----
---------------------------------
Withholding Status (check one): Exempt from back-up withholding.
----
Subject to back-up withholding.
----
GMO Trust Application Investor Information (continued)
3. KEY CONTACT
Please list the individual to whom policy questions regarding the
Account should be directed:
Name Title Phone
---------------------------- ------------------------ -----------------
4. AUTHORIZED PERSONS
Please list the individuals authorized to give the Trust orders,
directions, and instructions with respect to the Account's investment
in the Trust. IF YOUR CUSTODIAN IS AUTHORIZED TO ACT ON BEHALF OF THE
ACCOUNT, PLEASE BE SURE TO INCLUDE SIGNATURE INFORMATION AS WELL,
EITHER BELOW OR AS A SEPARATE ATTACHMENT.
Name Title Phone
---------------------------- ------------------------ -----------------
---------------------------- ------------------------ -----------------
---------------------------- ------------------------ -----------------
5. CERTIFICATION AND SIGNATURE
PLEASE READ CAREFULLY BEFORE SIGNING
Under penalties of perjury, the undersigned Owner(s) certifies that (1)
the social security or taxpayer identification number shown on this
form is the Owner's(s') correct number and (2) the undersigned Owner(s)
is not subject to back-up withholding either because the Owner(s) has
not been notified by the Internal Revenue Service that the Owner(s) is
subject to back-up withholding as a result of failure to report all
interest or dividends, or that Internal Revenue Service has notified
the undersigned Owner(s) that the Owner(s) is no longer subject to
back-up withholding. If you have been notified by the Internal Revenue
Service that you are currently subject to back-up withholding, strike
out phrase (2) above. IF YOU ARE ONE OF THE ENTITIES LISTED BELOW, YOU
ARE EXEMPT FROM BACK-UP WITHHOLDING AND SHOULD CHECK THE SPACE
PROVIDED: corporation, financial institution, 501 (a) exempt
organization or an IRA, HR10, U.S. or foreign government or agency,
state or political subdivision, international organization, U.S.
registered securities or commodities dealer, real estate investment
trust, entity registered under the Investment Company Act of 1940,
middleman (e.g., nominee or custodian, common trust fund, or a trust).
The undersigned Owner(s) has received a copy of the Trust's prospectus
and has selected the investment(s) and options indicated in Part II of
this application. The undersigned Owner(s) understands the investment
objectives of the Trust and that the Owner's(s') account will be
administered in accordance with the terms of the prospectus.
GMO Trust Application Investor Information (continued)
The undersigned Owner(s) understands that in order to add to the list
of authorized persons or authorized accounts set forth in sections (4)
and (5) of Part II of this application or to change either list, the
Owner(s) must submit a written request.
SIGN EXACTLY AS NAME(S) OF REGISTERED OWNER(S) APPEARS ABOVE IN PART I.
(Include legal title if signing for corporation, trust, custodian
account, etc.)
Signed:
-------------------- ------------------------ -------------
Owner Title Date
Signed:
-------------------- ------------------------ -------------
Co-Owner Title Date
GMO TRUST APPLICATION
PART II: GMO FOREIGN FUND SPECIAL ACCOUNT APPLICATION
Please complete and return to: Domestic Phone: 617-330-7500
Grantham, Mayo, Van Otterloo & Co. Domestic Fax: 617-261-0134
40 Rowes Wharf International Phone: 617 346-7610
Boston, Massachusetts 02110 International Fax: 617-439-0457
Owner(s):
1. FUNDS TO BE INCLUDED
Please INITIAL Fund(s) which are to be included in your account. Only
those Funds for which you give express permission (by initialing after the
Fund name) will be used for your account.
<TABLE>
<CAPTION>
U.S. Equities International Equities Fixed Income
<S> <C> <C> <C> <C> <C>
US Core International Core Emerging Country Debt
-------- -------- --------
Growth Allocation Curr Hedged Intl Core International Bond
-------- -------- --------
Value Allocation Intl Small Companies Curr Hedged Intl Bond
-------- -------- --------
Fundamental Value Emerging Markets Domestic Bond
-------- -------- --------
Core II Secondaries Japan Short-Term Income
-------- -------- --------
US Sector Allocation Foreign X Global Bond
-------- -------- --------
Tobacco-Free Core
-------- Global Hedged Equity
--------
</TABLE>
2. INITIAL INVESTMENT
The undersigned Owner, being a unitholder of the GMO International
Equities Pool of The Common Fund for Nonprofit Organizations ("The Common
Fund"), acknowledges receipt of a copy of the Agreement and Plan of
Reorganization dated May 15, 1996 (the "Plan") by and between The Common
Fund and the Trust, and agrees, pursuant to and in accordance with the
terms of the Plan, (i) to accept from the GMO Pool a pro rata share of the
GMO Pool's assets and liabilities as a liquidating distribution upon the
discontinuance of the GMO Pool in accordance with the Plan, and (ii) to
immediately thereafter transfer all such assets and liabilities to GMO
Foreign Fund as its initial investment in GMO Foreign Fund, in exchange
for shares of GMO Foreign Fund representing a pro rata share of the assets
and liabilities contributed by all unitholders to the Fund pursuant to the
Plan. The undersigned Owner hereby appoints Investors Bank & Trust
Company, the Trust's transfer agent, as its true and lawful
attorney-in-fact, with full power to accept delivery and effect the
transfer of the assets and liabilities of the GMO Pool, to execute such
documents or certificates as may be necessary to effect such delivery or
transfer, and generally to do all such things in such Owner's name and
behalf to enable the Plan to be carried out in accordance with its terms,
hereby ratifying and confirming all such actions as may be taken in such
Owner's behalf in carrying out the Plan.
For additional investments, funds should be wired to:
Investors Bank & Trust Please call prior to wiring to confirm
Boston, Massachusetts date and amount of wire.
ABA# 011001438
Attn: Transfer Agent
GMO Deposit Account # 55555-4444
Further Credit: GMO Fund Name, Shareholder Name
GMO Trust Application GMO Fund Account Application
3. DISTRIBUTIONS
All distributions will be reinvested if no item is checked. Please note
below special distribution instructions for individual funds (e.g., For
all funds, reinvest dividends and capital gains except for U.S. Core
Fund, whose dividends should be paid in cash).
Dividends: Reinvested
-----
Paid in Cash
-----
Capital Gains: Reinvested
-----
Paid in Cash
-----
Special instructions:
-------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
4. WIRE INSTRUCTIONS
Please list full wire instructions for the transfer of redemption
proceeds and distributions:
Bank:
-----------------------------------------------
Location:
-------------------------------------------
ABA #:
----------------------------------------------
Attention:
------------------------------------------
Account #:
------------------------------------------
Further Credit:
-------------------------------------
5. TRANSACTION CONFIRMATIONS
A transaction confirmation (typically mailed by the Fund's custodian on
the day following the activity) is sent to the Registration Address
noted in Block 1 of Part I. Please indicate to whom this confirmation
should be addressed.
Attn.:
----------------------------------
If you would like an additional confirmation sent, please indicate the
individual who should receive the confirmation below.
Name: Phone:
-------------------------------------- -------------------
Title: Fax:
------------------------------------- ---------------------
Address:
-----------------------------------
-----------------------------------
-----------------------------------
GMO Trust Application GMO Fund Account Application
6. MONTHLY STATEMENTS AND QUARTERLY QUANTITATIVE COMMENTARIES
Please list the individuals who should receive monthly statements of
shares held and Fund performance and/or quarterly GMO market and Fund
commentaries (attach additional pages if necessary):
Name: Phone:
----------------------------------- -----------------------
Title: Fax:
---------------------------------- -------------------------
Address:
-------------------------------- Send Monthly Statements?
-------------------------------- -----
-------------------------------- Send Quant Commentaries?
-----
Name: Phone:
----------------------------------- -----------------------
Title: Fax:
---------------------------------- -------------------------
Address:
-------------------------------- Send Monthly Statements?
-------------------------------- -----
-------------------------------- Send Quant Commentaries?
-----
Name: Phone:
----------------------------------- -----------------------
Title: Fax:
---------------------------------- -------------------------
Address:
-------------------------------- Send Monthly Statements?
-------------------------------- -----
-------------------------------- Send Quant Commentaries?
-----
Name: Phone:
----------------------------------- -----------------------
Title: Fax:
---------------------------------- -------------------------
Address:
-------------------------------- Send Monthly Statements?
-------------------------------- -----
-------------------------------- Send Quant Commentaries?
-----
Name: Phone:
----------------------------------- -----------------------
Title: Fax:
---------------------------------- -------------------------
Address:
-------------------------------- Send Monthly Statements?
-------------------------------- -----
-------------------------------- Send Quant Commentaries?
-----
7. AUTHORIZED SIGNATURE
Please sign exactly as name of registered individual appears in (1) of
Part I. Include legal title if signing for a corporation, trust,
custodian account, etc.
--------------------------------- ----------------------- -------------
Authorized Signature Title Date
Rule 497(b) File No. 333-2399
GMO TRUST
PART B. STATEMENT OF ADDITIONAL INFORMATION
MAY 17, 1996
This Statement of Additional Information contains material which may be of
interest to investors but which is not included in the Prospectus/Proxy
Statement (the "Prospectus") of GMO Trust's GMO Foreign Fund and The Common Fund
for Nonprofit Organization's GMO International Equities Pool dated May 17, 1996.
The Statement of Additional Information of GMO Trust (the "Trust") dated
February 29, 1996, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference (File No. 2-98772). This Statement of
Additional Information is not a prospectus and is authorized for distribution
only when it accompanies or follows delivery of a prospectus, and should be read
in conjunction with the Prospectus. Investors may obtain a free copy of the
Prospectus or the Statement of Additional Information by writing the Trust, 40
Rowes Wharf, Boston, MA 02110 or by calling 1-800-447-3167.
-1-
FINANCIAL STATEMENTS
The financial statements and schedules of GMO Foreign Fund have been previously
filed electronically with the Securities and Exchange Commission and are
incorporated herein by reference to the registrant's registration statement on
Form N-1A (File No. 2-98772). The financial statements and schedules of the GMO
International Equities Pool of The Common Fund for Nonprofit Organizations are
set forth below.
-2-
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE ($)
<S> <C> <C>
ATS AUSTRIA - 0.4%
36142 BANK AUSTRIA AG AUSH100 PTG CERTS 1,370,693
3230 OST BRAU-BETEILIGU AUSH100 171,747
1096 UNIVERSALE-BAU AG AUSH100 (VAR) 50,662
2937 VA TECHNOLOGY AG AUSH100(BR) 362,218
2090 WIENERBERGER BAUST AUSH100 (VAR) 435,648
--------------
2,390,968
==============
AUD AUSTRALIA - 4.3%
224756 ADELAIDE STEAMSHIP ORD $A0.50 4,040
426000 AUSTRALIAN & NEW ZEALAND BANK GROUP ORD A$1 2,037,334
524000 BORAL ORD STK A$0.50 1,371,757
345000 BURSWOOD PROPERTY TRUST UNITS A$0.50 461,016
69500 CALTEX AUSTRALIA ORD$1 260,692
88800 CSL LIMITED ORD A$1 324,758
418000 DOMINION MINING LIMITED ORD AUD 0.50 218,853
364934 EMAIL LIMITED ORD STK A $0.50 1,000,974
335000 FOODLAND ASSOCIATED LIMITED ORD A$0.50 1,230,393
1062248 GOODMAN FIELDER LTD A$0.50 SYDNEY LISTING 1,112,326
2220912 M.I.M. HOLDINGS ORD A$0.50 3,210,734
294000 OIL SEARCH LTD ORD PGK 0.10 291,778
1657335 PASMINCO LIMITED ORD A$1 2,279,419
426001 PIONEER INTERNATIONAL LIMITED ORD A$0.50 1,271,672
327996 ROTHMANS HOLDINGS LIMITED ORD A$0.50 1,530,185
1446000 SYDNEY HARBOR CASINO HLDGS LIMITED AUDI PREF STK 2,169,555
13200 TABCORP HLDGS LTD SPONSORED ADR 144A 535,828
452735 TNT 8% CUM CNV NON RED PREF SHS A$0.50 640,359
1228200 TNT ORD A$0.50 1,516,447
349000 WESTPAC BANKING CORP A$1 1,641,811
260206 WILLS (WD & HO) ORD A$1 449,377
--------------
23,559,308
==============
BEF BELGIUM - 2.8%
1271 BEKAERT SA NPV 1,044,241
18578 CFE NPV 4,862,277
14729 ELECTRABEL COM NPV 3,282,012
12973 G.I.B.HLDGS NPV 584,132
1260 GENERALE BANQUE NPV 448,554
3145 KREDIETBANK NPV 868,730
1 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
1742 PETROFINA SA ORD NPV(BR)-BRU LISTING 490,373
5949 POWERFIN NPV 766,727
2287 SOLVAY NPV 1,309,819
2873 TRACTABEL INVESTMENT INTER BV CAP NPV 1,108,005
382 UCB CAP NPV 640,916
--------------
15,405,786
==============
CAD CANADA - 1.2%
46981 ABITIBI PRICE INC COM STK NPV 633,341
205528 AIR CANADA COM NPV 731,309
29693 ALLIANCE FOREST PRODUCTS COM 465,638
62249 CAMBRIDGE SHOPPING CENTRES NPV 399,603
15831 CANADIAN OCCIDENTAL PETROLEUM COM NPV - TORONTO LISTING 534,262
22700 CANFOR CORP COM NPV 212,336
58711 ELAN ENERGY INC COM NPV 522,263
76000 IAM GOLD CORP COM NPV 320,605
155100 KAP RESOURCES COM STK NPV 341,367
77600 KAP RESOURCES SPC WTS 3-AUG-2000(1 COM & 1/2 PUR 74,010
307411 MARKBOROUGH PPTYS INC COM NPV 160,128
78100 SEMI-TECH CORP CLASS'A'SUB VTGNPV 415,410
27000 ST LAURENT PAPERBOARD INC COM NPV 354,077
61100 STONE CONSOLIDATED CORP COM NPV 694,802
43000 SUZY SHIER SUB VTG SHS NPV 130,920
42000 TRIZEC CORP COM NPV 273,468
--------------
6,263,539
==============
CHF SWITZERLAND - 2.7%
2306 ADIA I SZF 10(BR) 492,474
406 ASCOM HOLDING AG SZF500 (BR) 454,013
660 BANQUE CANTONALE VAUDOISE CHF 125(BR) 204,212
2100 BELIMO AUTOMATION AGCHF20 (REGD) 418,464
5765 BIBER HLD65 AG SZF20(REGD) 75,131
310 BOBST AG SZF100 (BR) 510,867
2816 CIBA-GEIGY AG SZF20(REGD) 3,525,475
180 COMPAGNIE FINANCIERE RICH AG 'A'SZF100(BR)PAIRED W/PTG 260,310
25330 CS HLDG SZF20(REGD) 2,326,735
2670 ELEKTROWATT AG SZF50 1,050,624
265 FISCHER(GEORG)AG SZF500(BR) 322,853
1504 FORBO HLDGS AG CHF50 (REGD) 614,574
2 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
770 HERO AG SZF40(BR) 326,943
350 HOLDERBANK FINANCIERE GLARIS SZF50(BR) 264,262
520 HURLIMANN HLDG AG PTG CERTS SZF50 194,560
3145 JELMOLI HOLDING AG SZF10(REGD) 356,981
340 LIECHTENSTEIN GLOBAL TRUST AG PTG CERTS SZF100 187,531
260 LINDT & SPRUNGLI AG DTG CERT CHF50(RFD 1-JAN-95) 415,134
1048 MERKUR HLDG AG SZF25(REGD) 207,071
210 NESTLE SA SZF10(REGD)-ZUR LISTING 236,953
66 ROCHE HLDG AG GENUSCHEINE NPV1 548,266
3062 SCHWEIZERISCHER BANKSVEREIN SZF100(BR) 1,125,063
3931 SCHWEIZERISCHER BANKVEREIN SZF50(REGD) 720,526
--------------
14,839,025
==============
CHI CHILE - 0.1%
17821 FIVE ARROWS CHILE INVESTMENT TR WTS TO SUB FOR PTG SHS 8,376
91751 FIVE ARROWS CHILE INVESTMENT TRUST LTD 266,078
--------------
274,454
==============
DEM GERMANY - 5.3%
1085 AACHENER&MUNCH. VER DM50(REGD)VINKULIERT 277,112
303 ASKO DEUTSCHE KAUFHAUS AG DM50 189,260
1300 ASKO DEUTSCHE KAUFHAUS AG NON VTG PRF DM50 FRA LISTING 658,763
5000 BANKGESELLSCHAFT BERLIN AG DM50 1,155,071
3500 BASF AG DM50(VAR) 944,889
2979 BAYER AG DM50 1,014,931
26200 BAYERISCHE HYPOTH-UND WECHSEL-DEM 5 648,743
10300 COMMERZBANK AG DM50 2,372,468
89310 CONTINENTAL AG DEM5 1,576,130
2600 DAIMLER BENZ AG DM50(VAR) 1,414,403
66100 DRESDNER BANK DEM5 1,766,577
2650 DYCKERHOFF AG NON VTG PRF DM50 626,550
3800 HOLZMANN (PHILIPP)AG DM50 1,449,360
2500 KOELNISCHE RUCKVER PREF DEM50 1,473,477
7095 KOLNISCHE RUCKVERSICHERUNGS-G DM50 5,167,079
1200 RHEINMETALL BERLIN DM50 184,540
150160 RWE-AG NON VTG PREF DEM5 4,547,220
5100 THYSSEN AG DM50 924,917
4100 VILLEROY & BOCH AG DM50(NON VTG PRF) 583,294
1600 VOLKSWAGEN AG DM50 560,938
3 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
2600 VOLKSWAGEN AG NON VTG PRF DM50 662,286
3700 VOLKSWAGEN AG WTS 27-OCT-98(TOPURCH PRF) 358,445
--------------
28,556,451
==============
ESP SPAIN - 4.6%
3391 ACERINOX SA SPPT1000(REGD) 382,593
26595 AGUAS DE BARCELONA SPPT500 855,172
68354 BANCO BILBAO VIZCAYA S.A SPPT600(REGD) 2,550,502
2767 BANCO CENTRL HISPANO AMERICANOSPPT500(REGD) 58,424
7820 BANCO INTERCONTINENTAL ESPANOLSPPT1500(REGD) 787,766
8400 BANCO POPULAR ESPANOL SPPT (R) 1,451,392
40000 BANCO SANTANDER SA SPPT750-REG 1,905,146
35476 EMPRESA NACIONAL DE ELEC (ENDESA)SPPT800 2,032,755
35600 HIDROEL CANTABRICO SPPT1000 1,151,904
391526 IBERDROLA SA ORD SPPT500 3,612,824
8103 INMOBILIARIA METROPOLITANA VASCO SA SPPT500 262,514
72200 REPSOL SA SPPT500 2,723,101
218000 SEVILLANA DE ELECTRICIDAD SPPT500 1,572,390
266500 TELEFONICA DE ESPANA ORD SPPT500 4,231,011
210684 UNION ELECTRICA FENOSA SPPT500 1,151,177
23719 VALLEHERMOSO S A SPPT500 426,267
--------------
25,154,938
==============
FRF FRANCE - 6.4%
17034 ALCATEL ALSTHOM CG FF40 1,578,794
5685 ALCATEL CABLE FF10 511,340
25767 BANQUE NATIONALE DE PARIS FF25 1,007,662
16490 BIC FRF50 1,816,764
290 BONGRAIN SA FF50 154,283
7500 BOUYGUES FF50 763,772
4668 C.G.I.P. FF100 1,116,613
20624 C.S.F.(THOMPSON-CSF) FF20 517,903
7860 CASINO GUICH-PERR FF10 280,854
16073 CERUS(CIE EUROPENNE REUNIS FF100 275,355
2958 CHARGEURS FF100 756,896
6028 CHRISTIAN DIOR FF52 802,936
35403 CIE DE SUEZ FF75 1,373,953
8327 CLUB MEDITERRANEE FF25 809,971
3895 COMPAGNIE DE ST-GOBAIN FF100 505,673
4 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
13417 COMPAGNIE FINANCIERE DE PARIBAS 'A' SHS FF50(BR) 815,008
4936 CPR-CIE PAR REESCO N V FF50 426,235
4193 CREDIT LOCAL DE FRANCE FF100 328,282
11402 CREDIT LYON CRT D'INVST FF180 479,846
5208 DANONE (EX BSN) FF10 798,129
5479 DOLLFUS-MEIG & CIE FF75 294,642
1652 ELF GABON XAF5000 282,029
1928 ERIDANIA BEGHIN-SAY FF65 PAR LISTING 327,234
790 FIN IND GAZ & EAUX FF50 342,660
7649 GAN GRP FF10 235,354
2744 GROUPE ANDRE SA FF50 265,712
1035 GUYENNE & GASCOGNE FF100 353,390
3208 LABINAL FF100 459,787
2590 LAFARGE FF25(BR) 171,416
21475 LAGARDERE GROUPE FF40(REGD) 569,114
14876 LYONNAISE DES EAUX FF60 1,390,888
14686 MICHELIN(CIE GLE DES ETABL.) CLASS'B' FF12(REGD) 699,680
11300 PECHINEY ORD 'A' SHS FRF 100 472,189
4510 PERNOD-RICARD FF20 287,297
12645 PEUGEOT SA FF35 1,927,813
3065 PINAULT-PRINTEMPS REDOUTE 845,727
27684 RHONE-POULENC SA ORD 'A'SHS FF25 713,876
47958 SEITA ORD FRF50 1,989,721
5425 SLIGOS FF25 493,231
8810 SOCIETE GENERALE ORD FF30 979,375
67784 SOCIETE NATIONALE ELF EQUITAINE FF50 4,595,183
260 ST LOUIS FF100 72,981
3159 STRAFOR FACOM FRF 25 228,138
20035 TOTAL 'B' SHS FF50 1,352,238
2620 VALLOUREC FF100 (USIN A TUB DE LOR ESCAUT) 124,356
5305 WORMS & CIE FF12 (REGD) 283,179
--------------
34,877,477
==============
FSR FORMER SOVIET REPUBLIC - 0.3%
73378 AAO MOSENERGO SPONORED ADR 144 531,991
117000 FIRST RUSSIAN FRONTIERS TRUST ORD US!1 1,169,680
25400 FIRST RUSSIAN FRONTIERS TRUST WTS TO SUB FOR ORD 91,105
--------------
1,792,775
==============
5 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
GBP UNITED KINGDOM - 15.2%
81552 ALLIED DOMECQ ORD 25P 611,162
391640 ALLIED IRISH BANKS ORD IL0.25 LON LISTING 1,990,541
231030 AMSTRAD ORD 25P 662,928
239936 ANGLIAN WATER I ORD $1 2,197,286
133244 ARGYLL GROUP ORD 25P 624,347
1760531 ASDA GROUP PLC 2,855,042
288469 BAA ORD L1 2,355,553
71614 BARCLAYS ORD STK 1 794,643
734651 BERKELEY GROUP ORD 25P 6,167,138
296953 BPB INDUSTRIES ORD 50P 1,405,042
373564 BRITISH AIRWAYS ORD 25P 3,056,115
391727 BRITISH GAS ORD 25P 1,366,185
770018 BRITISH PETROLEUM CO ORD 25P 6,740,222
760750 BRITISH STEEL ORD 50P 2,206,152
803230 BRITISH TELECOMMUNICATIONS ORD25P 4,529,959
562529 CAPITAL SHOPPING CENTERS ORD 50P 2,343,945
138895 COMMERCIAL UNION ORD 25P 1,206,254
1201990 CORDIANT ORD 25P 2,293,247
281517 COSTAIN GROUP ORD 10P 360,931
104826 DE BEERS CONS/CENTENARY UNITS (1 CONSD DFD & 1 CENT DEP 3,279,916
96964 ENTERPRISE OIL ORD 25P 648,223
74427 FLEXTECH ORD 10P 571,398
67613 GENERAL ACCIDENT ORD 25P 633,634
125267 GLAXO WELLCOME ORD 25P 1,569,711
320800 GRAND METROPOLITAN ORD 25P 2,066,268
129040 GREAT PORTLAND EST ORD 50P 328,913
174279 GREAT UNIVERSAL STORES ORD STK 25P 1,790,194
141515 GUARDIAN ROYAL EXCHANGE 5P 475,188
985933 HANSON ORD 25P 2,889,273
230801 HANSON PLC WT 1991 EXP 9/30/97 14,540
603430 HILLSDOWN HLDGS ORD 10P 1,703,878
63158 HSBC HLDGS ORD 75P 967,836
147539 HYDER CUM RED PRF #1 7.875% 31-JUL-2013 227,441
71601 HYDER ORD #1.20 824,006
107971 IMPERIAL CHEMICAL INDUSTRIES ORD #1 1,521,068
362488 LADBROKE GROUP ORD 10P 1,076,101
2047 LLOYDS TSB GROUP ORD 25P 9,764
6 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
427359 LUCAS INDUSTRIES ORD 25P 1,402,398
674411 MARLEY ORD 25P 1,266,105
338140 MIRROR GROUP NEWSPAPERS ORD 25P 1,125,105
166412 NATIONAL WESTMINSTER BANK ORD L1 (POST CAP) 1,615,406
168246 PENIN&ORIENT STEAM NAV DFD STK 1,376,415
2148935 RAGLAN PROPERTIES PLC ORD 25P 819,980
73378 ROYAL INSURANCE HLDGS 25P 396,469
830747 SEARS ORD 25P 1,261,629
189995 SEVERN TRENT ORD #1 1,722,537
147832 STANDARD CHARTERED 25P 1,374,123
289733 SUN ALLIANCE GROUP 25P 1,596,412
675666 T & N PLC ORD L1 1,784,095
188228 TAKARE ORD 25P 432,375
333598 TAYLOR WOODROW ORD 25P 779,031
150925 THAMES WATER I ORD $1 1,323,400
--------------
82,639,524
==============
GRD GREECE - 0.0%
25760 GREEK PROGRESS FUND SA UNITS (COMPR 10 ORD GKDR2000) 230,621
--------------
230,621
==============
HKD HONG KONG - 3.8%
953400 AMOY PROPERTIES HK $1 1,115,628
649277 CATHAY PACIFIC AIRWAYS HK$0.20 1,141,734
183400 CHEUNG KONG(HLDGS) HK$0.50 1,292,384
539000 DICKSON CONCEPTS INTL HK$0.10 592,384
245300 GREAT EAGLE HLDGS HK0.50 724,736
1056800 HANG LUNG DEVELOPMENT CO HK$1 2,015,490
46128 HANG LUNG DEVELOPMENT CO WTS 31-OCT-97(TO PURCHASE ORD) 12,078
517900 HYSAN DEVELOPMENT HK$5 1,670,753
209000 JARDINE INTL MOTOR HLDGS US$0.025 278,342
271000 LAI-SUN GARMET INTL HK$0.50 310,105
855266 LIU CHONG HING BANK HK$0.50 1,249,613
863000 NATIONAL MUTUAL ASIA LTD HK$0.05 786,676
4896728 REGAL HOTELS(HDS.)HK$1 1,209,303
1046000 SEMI TECH (GLOBAL) HK$1 1,575,627
650000 SINO LD LTD BD CONV 144A 5.000% 02/26/2001 DD 02/26 637,000
138000 SWIRE PACIFIC A HK $0.60 1,213,344
647000 SWIRE PACIFIC 'B'HK$0.12 886,760
7 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
564500 WHARF HOLDINGS HK$1 2,131,290
570000 WHEELOCK & CO LTD HK$.50 1,142,358
169912 WING ON CO HK$2 183,445
683486 WINSOR INDUSTRIAL CORP 640,713
--------------
20,809,763
==============
HUF HUNGARY - 0.0%
133921 FOTEX HUFO100 (REDG) 149,322
--------------
149,322
==============
IA INDIA - 0.2%
21000 ALLIANCE CAPITAL GROWTH INDIA LIBERALISATION'A' 149,100
52400 INDIA FUND 'A' SHARES 241,534
59008.907 MAHINDRA & MAHINDRA LTD GLOBALDEPOSITARY REPT 144A 445,281
11000 MORGAN STANLEY INDIA INVT FD INC 122,375
--------------
958,290
==============
IDR INDONESIA - 0.1%
271485 BANK DAGANG NASNL INDONESIA ORD IDRH1000 (A.MKT) 235,140
190637 DHARMALA INTILAND IDRH1000 (ALIEN MARKET) 124,346
274000 DHARMALA SAKTI SEJAHTENA IDRH1000 (ALIEN MARKET) 146,493
--------------
505,979
==============
ITL ITALY - 2.5%
19393 ASSICURAZIONI GENERALI ITL2000 433,527
307362 BANCA COMMERCIALE ITALIANA-SPAITL1000 642,014
26210 BANCA POPULARE DI BRESCIA ITL5 152,791
170080 BANCA TOSCANA ITL1000 340,074
547521 BCO AMBROS VENETO DI RISP ITL1000 (NON CNV) 796,194
419304 CIR-COMPAGNIE INDUST ITL1000 234,002
163791 COFIDE ITL1000 56,411
157240 COMAU FINANCIERE ITL500 210,603
820790 CREDITO ITALIANO SPA ITL 500 879,477
73064 DANIELI & C DI RISP ITL2000(- NON CV) 288,920
16772 ERICSSON SPA ITL1000 213,943
68711 FALCK,ACC FERR LOMB ITL2500" 201,589
154620 FIAT SPA ORD ITL1000 485,685
242610 FIAT SPA PRIV ITL1000 444,093
105159 FIDIS ORD ITL1000 291,085
93885 I.F.I.L.DI RISP ITL1000(NON CV 158,681
8 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
22660 IFI(ISTIT FIN IND)PRIV ITL1000 213,680
39570 IMI SPA ORD ITL5000 271,053
148330 ITALGAS (SOC ITAL) ITL1000 430,451
104830 MAGNETI MARELLI ITL1000 141,744
269800370 MEDIOBANCA SPA BDS ITL1000-RAS4.000% 31-DEC-97 157,882
594180 MONTEDISON S.P.A. ITL1000 367,598
419304 MONTEFIBRE ITL1000 294,174
465166 OLIVETTI C SPA ORD ITL1000 238,829
30957 R.A.S. WTS 31-DEC-97(TO PURCH DI RIP) 53,211
15669 R.A.S. WTS 31-DEC-97(TO PURCHASE ORD) 57,963
59385 RAS ITL1000 579,497
83770 S A I DI RISP ITL100 NON CNV 318,967
72445 SIRTI SPA ITL 1000 413,537
310368 STET ITL1000 862,081
490983 STET ITL1000 DI RISP(NON CNV) 977,022
1044364 TELECOM ITALIA MOBILE ITL50 DIRISP 1,151,009
85205 TELECOM ITALIA SPA DI RISP ITL1000 (NON CONV) 120,371
18870 TORO ASSICURAZION DI RISP ITL1000 101,999
28998 TORO ASSICURAZIONI SPA ITL1000 361,760
93295 UNICEM(UNION CEM) DI RISP ITL1000 (NON CNV) 268,360
35120 UNICHEM(UNION-CEM-MARCH EMIL) SPA ITL1000 221,755
--------------
13,432,033
==============
JPY JAPAN - 25.8%
7200 ACOM CO Y50 278,036
10000 AIDA ENGINEERING Y50 84,806
39100 AJL PEPS TR PREMIUM EXCHANGEABLE PART SHS 869,975
29300 AKITA BANK Y50 213,689
18500 AMWAY JAPAN NPV 934,081
23000 AOYAMA TRADING Y50 703,226
149000 ASAHI BANK Y50 1,783,263
118000 ASAHI CHEMICAL INDUSTRY 873,829
1900 AUTOBACS SEVEN Y50 165,217
29000 BANYU PHARMACEUTICAL CO Y50 376,905
149000 BRIDGESTONE CO Y50 2,493,782
30000 CALSONIC CORP Y50 235,624
133000 CANON INC Y50 2,536,886
75000 CASIO COMPUTER CO Y50 715,288
59324 CHUBU ELECTRIC PWR Y500 1,364,535
9 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
4000 CHUDENKO CORP Y50 135,390
28858 CHUGOKU ELECTRIC POWER CO INC Y500 647,585
20400 CIRCLE K JAPAN CO JPY 50 816,382
87000 DAI NIPPON PRINTING CO Y50 1,586,255
45000 DAI-TOKYO FIRE & MARINE INS CO 332,398
26000 DAIICHI PHARMACEUTICAL CO Y50 408,415
68000 DAIWA HOUSE INDUSTRY CO Y50 1,068,163
529 EAST JAPAN RAILWAY CO Y50000 2,720,430
12800 EXEDY CORPORATION Y50 204,656
48000 FUJI PHOTO FILM LTD ORD Y50 1,373,352
52000 FUKUOKA BANK OF Y50 432,726
37000 GENERAL SEKIYU KK Y50 339,037
35000 GUMMA BANK Y50 366,526
22000 HIGO BANK Y50 176,905
33000 HITACHI CREDIT CORP Y50 610,940
697000 HITACHI LTD Y50 6,777,747
216000 HITACHI ZOSEN CORP Y50 1,163,310
29612 HOKKAIDO ELE POWER CO INC Y500 672,811
137000 HONDA MOTOR CO Y50 2,984,666
21000 HOUSE FOOD INDUSTRIAL CO 380,926
73000 HOYA CORP Y50 2,511,828
223000 ISUZU MOTORS LTD Y50 1,290,669
20000 ITO-YOKADO CO Y50 1,187,471
400 JGC CORP Y50 4,825
53000 JUSCO CO Y50 1,382,609
67750 KANSAI ELEC POWER Y500 1,571,015
148000 KAO CORP Y50 1,840,486
13000 KIRIN BEVERAGE CORP Y50 166,526
37400 KURITA WATER INDUSTRIES Y50 867,246
16000 KYUDENKO CORP Y50 209,444
52933 KYUSHU ELECTRIC POWER CO INC Y500 1,202,685
5800 MABUCHI MOTOR Y50 330,266
20000 MAEDA ROAD CONSTRUCTION Y50 364,656
43000 MAKINO MILLING MACHINE CO Y50 474,427
276000 MARUBENI CORP Y50 1,545,807
74000 MARUI CO Y50 1,612,155
35000 MARUICHI STEEL TUBE Y50 683,964
305000 MATSUSHITA ELECTRIC INDUSTRIALCO Y50 4,962,132
10 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
97000 MATSUSHITA ELECTRIC WORKS Y50 1,043,011
490000 MBL INTL FIN BER 3.000% 11/30/2002 DD 10/11 542,063
114000 MINEBEA CO Y50 975,316
452000 MITSUBISHI ELECTRIC CORP Y50 3,364,114
459000 MITSUBISHI HEAVY IND Y50 3,965,554
28000 MITSUBISHI OIL CO Y50 235,886
287000 MITSUI & CO Y50 2,600,309
63000 MITSUI PETROCHEMICAL INDS LTD 518,962
101000 MITSUI TRUST & BANKING Y50 1,133,240
12000 MURATA MANUFACTURING CO Y50 412,903
9700 NAMCO Y50 299,299
9000 NATIONAL HOUSE INDUSTRIAL CO Y50 153,156
12000 NICHICON CORP Y50 157,083
28350 NICHIDO FIRE Y50 213,387
17700 NINTENDO CO 1,132,006
37700 NIPPON ELECTRIC GLASS Y50 690,902
132000 NIPPON EXPRESS CO Y50 1,295,933
57000 NIPPON LIGHT METAL CO Y50 346,424
84000 NIPPON MEAT PACKERS Y50 1,240,954
17000 NIPPON SHARYO Y50 166,900
45000 NIPPON SHOKUBAI CO Y50 Y50 458,626
316000 NIPPON STEEL 1,087,312
112 NIPPON TEL & TEL CORP Y50000 818,925
40000 NISHIMATSU CONSTRUCTION CO Y50 456,288
277000 NISSAN MOTOR CO Y50 2,144,516
660000 NKK CORP Y50 1,906,872
137000 OBAYASHI CORP Y50 1,175,933
72000 OKUMURA CORP Y50 665,133
74000 OLYMPUS OPTICAL CO Y50 719,589
77000 OMRON CORP Y50 1,706,311
44000 ONWARD KASHIYAMA CO Y50 666,480
24100 ORIX CORP Y50 912,623
15800 PARIS MIKI INC JPY50 605,704
4900 PROMISE CO Y50 217,625
140000 RICOH Y50 1,505,376
28000 RINNAI CORP Y50 638,803
21000 ROHM CO Y50 1,197,756
159000 SAKURA BANK Y50 1,813,745
11 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
46900 SANKYO CO Y50 1,074,381
75000 SANWA BK Y50 1,507,714
93000 SANYO ELECTRIC CO Y50 556,522
5300 SANYO SHINPAN FINANCE CO Y50 391,491
132000 SEKISUI CHEMICAL Y50 1,727,910
106000 SEKISUI HOUSE Y50 1,328,097
8200 SHIKOKU ELECTRIC POWER CO,INC Y500" 185,545
12000 SHIMACHU CO Y50 384,853
78750 SHIN-ETSU CHEMICALS CO Y50 1,516,830
7875 SHINKAWA Y50 201,017
49000 SHISEIDO Y50 577,279
13900 SHO-BOND CONSTRUCTION CO Y50 505,573
45000 SHOWA CORP 382,889
25000 SMC Y50 1,769,519
38000 SONY CORP Y50 2,270,407
59000 SUMITOMO BAKELITE CO Y50 441,328
141000 SUMITOMO CORP Y50 1,489,762
108000 SUMITOMO MARINE & FIRE 927,013
87000 SUMITOMO TRUST & BANK 1,195,792
44000 TAISHO PHARMACEUTICAL CO Y50 905,096
115000 TAKEDA CHEMICAL INDUSTRIES Y50 1,795,699
29000 TDK CORP 1,494,063
103000 TEIJIN Y50 568,209
27450 TOAGOSEI CO LTD 148,864
54000 TODA CONSTRUCTION CO Y50 492,286
22414 TOHOKU ELEC PWR Y500 519,745
20000 TOKYO BROADCASTING SYS INC Y50 310,425
22860 TOKYO ELECTRIC PWR CO Y500 585,661
13000 TOKYO ELECTRON Y50 443,665
54000 TOPPAN PRINTING Y50 701,823
158000 TORAY INDUSTRIES INC Y50 1,022,310
22000 TOSTEM CORP Y50 687,050
324000 TOYOTA MOTOR CO Y50 7,149,509
9900 TRANS COSMOS INC Y50 520,224
58000 UNY CO Y50 1,057,504
35000 WACOAL CORP Y50 431,978
7300 XEBIO CO Y50 249,135
10000 YAHAGI CONSTRUCTION CO Y50 81,440
12 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
9000 YAKULT HONSHA Y50 122,020
29000 YAMAHA CORP Y50 528,752
85000 YAMANOUCHI PHARMACEUTICAL CO Y50 1,891,538
23000 YAMATAKE HONEYWELL Y50 400,000
20000 YAMAZAKI BAKING CO Y50 362,786
5000 YORK-BENIMARU Y50 179,991
16800 YOSHITOMI PHARM Y50 150,799
--------------
139,455,486
==============
KRW KOREA - 1.2%
390 DAEHAN FLOUR MILL CO KSWN 5000 16,453
58000 DAEWOO CORP KSWN5000 641,355
22000 DAEWOO SECURITIES CO PREF KSWN5000 351,550
127523.33 HAN WHA KSWN5000 2,070,370
35180 HANSHIN SECURITIES CO PREF KSWN5000 385,867
59 KOREA 1990 TRUST IDR 324,500
69000 KOREA FIRST BANK KSWN5000 609,511
9280 KYUNG NAM BANK KSWN5000 118,632
16000 KYUNGKI BANK KSWN5000 156,472
30000 L G SECURITIES PREF KSWN5000 318,696
36050 PUSAN BANK KSWN5000 453,937
21000 SAMSUNG HEAVY KSWN5000 405,369
72000 SEOUL BANK KRW5000 589,070
6300 SSANGYONG INVESTMENT & SECURITIES PFD KSWN5000 65,235
--------------
6,507,018
==============
MXN MEXICO - 0.3%
170000 CIFRA SA DE CV ORD SHS NPV'C' 222,004
2049 GPO FINANCIERO BANCOMER SER'L'NPV 674
10000 GRUPO FINANCIERO BANAMEX ACCIVL SER'B'NPV 21,340
485 GRUPO FINANCIERO BANAMEX ACCIVSER 'L' NPV 927
55562 GRUPO FINANCIERO BANCOMER SA SER'B'NPV 22,417
630000 GRUPO FINANCIERO INVERMEXICO 7.500% 16/JUN/2001 157,500
26000 GRUPO TELEVISA SA DE CV PTG CERTS REPR 1 'A',L,D, SHS" 315,250
52000 MEXICO FD INC 799,500
--------------
1,539,612
==============
NLG NETHERLAND - 6.5%
36378 ABN AMRO HOLDINGS NTFL5 1,809,982
540013 ADVANCED SEMICONDUCTOR MATLS INTL NV 4,995,120
13 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
40647 AEGON NV NLG1 1,919,052
4429 AKZO NOBEL NV NTFL20 -AMS LISTING 492,469
1979284 ASMI NEW LN 12.500% 30-NOV-1999 1,198,041
10735 BAM GROEP NTFL4 597,147
33544 BOLS WESSANEN (KONINKLIJKE) CVA NTFL2 651,754
11531 DE BOER WINKELBEDRIJVEN CVA NTFL 2.50 579,307
11129 DORDTSCHE PETROLEUM INDUSTRIE MIJ NTFL2.5 1,658,471
5032 DSM NV ORD NTFL20 477,585
144660 ELSEVIER NV NLG0.10-AMS LISTING 2,215,301
22515 FUGRO NV 269,837
22998 GIST BROCADES NV 737,785
60733 HAL TRUST 100 CLASS'B'UNITS NPV 687,432
51655 HAL TRUST CERTS(1 UNITS) 581,553
14369 HUNTER DOUGLAS NV NTFL1 974,111
6924 ING GROEP NV CVA NLG2.50 GROEP NV CVA NTFL2.50 502,924
10326 INTERNATIONAL NEDERLANDEN GRP CVA PRF NTFL2.50 53,814
11793 KONDOR WESSELS GROEP NV NTFL5 371,186
15326 KONINKLIJKE NEDLLOYD NV NLG10 320,045
19014 KONINKLIJKE PTT NEDERLAND NLG10 748,084
11721 KONINKLIJKE VAN OMMEREN CETECOCVA (NON-EXCH) NTFL10 405,812
13100 KONINKLINKE KNP BT NTFL2.5-AMSLISTING 328,273
79 MOEARA ENIM PETROL 1-4 PROFIT SHS NPV 1,329,338
7542 NKF HLDGS NV NTFL1 1,451,701
26430 NORIT NV NTFL1 327,955
8858 NUTRICIA(VERINGDE BEDRIJVEN) NV CVA(PART-EXCH)NLG2.50 887,355
6290 OCE-VD GRINTEN NV NTFL4 586,320
17558 PHILIPS ELECTRONICS N.V 638,672
81479 PHILIPS ELECTRONICS NV NTFL10 (DUTCH SHARES) 2,964,038
26207 PIRELLI TYRE HLDGS NV NTFL10 234,770
19917 ROTO SMEETS DG BOER NTFL10 555,762
10273 ROYAL DUTCH PETROLEUM CO NTFL5(BR)-AMS LISTING 1,455,046
15200 VENDEX INTERNATIONAL N.V. BDR-EACH REPR1ORD CVA NLG0.05 435,179
8637 VOLKER STEVIN CVA NTFL20 584,478
21048 WERELDHAVE NV NTFL20 1,131,325
321264 WERELDHAVE NV STK DIV CPNS 171,123
--------------
35,328,148
==============
NOK NORWAY - 1.0%
44500 AKER NORCEM NWKR20 822,397
14 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
7907 BOLIG-OG NAERINGSBANKEN NWKR50 191,754
112700 DEN NORSKE BANK NWKR10 349,768
17700 DYNO INDUSTRY NWKR20 386,460
6400 ELKEM A/S NWKR20 82,844
17800 FOKUS BANK A/S NOK 11 (REGD) 97,716
7070 HAFSLUND NYCOMED AS 'B'NWKR5 192,957
4000 KVAERNER INDUSTRIER NWKR 12.50SER'A' 144,728
10895 LEIF HOEGH & CO NWKR10 156,321
30000 NORSK DATA A S ADR B 8,445
26000 NORSK HYDRO AS NWKR20 1,133,335
4700 NORSKE SKOGSINDUSTRIER NWKR20 'A' 142,934
3900 ORKLA A/S NWKR25 179,428
7900 ORKLA A/S NWKR25'B' 345,592
11200 SAGA PETROLEUM NWKR15 143,230
23700 SCHIBSTED A/S NWKR1 325,263
11500 STORLI NWKR100 186,524
126300 UNI STOREBRAND 'A' NWKR20 600,767
10000 UNITOR AS NWKR12.5 148,159
--------------
5,638,621
==============
NZD NEW ZEALAND - 2.5%
324 AIR NEW ZEALAND LIMITED 'B'ORDNZ$1(NZ RESIDENTS) 1,070
155000 BD GROUP LIMITED 7.000% 30-JUN-96 92,909
1002000 BRIERLEY INVEST LTD ORD NZ .50 955,517
753000 BRIERLEY INVMT CNV UNS SUB NTS9.000% 30-JUN-1998 651,391
712651 CARTER HOLT HARVEY LIMITED ORDNZ$0.50 1,572,768
218000 FISHER & PAYKEL NZ$0.50 697,906
245800 FLETCHER CHALLANGE LIMITED BUILDING SHARES NZD0.40 585,992
245836 FLETCHER CHALLENGE LIMITED ENERGY SHARES NZD0.4 509,774
461672 FLETCHER CHALLENGE LIMITED PAPER SHARES NZD0.40 889,602
1008388 FLETCHER CHALLENGE LTD FORESTSDIV SHS NZ$0.40 (NZ REG) 1,346,252
268000 LION NATHAN LIMITED NZ$0.25 AUC LISTING 660,824
1335285 PROGRESSIVE ENTERPRISES LTD ORD NZ$0.500 973,196
1693000 SOVEREIGN ASSURANCE ORD NZD 1,729,780
4504000 TASMAN PROPERTIES 2,546,357
270051 WRIGHTSON LIMITED ORD NZ$0.07 198,661
--------------
13,412,001
==============
15 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
SHARES DESCRIPTION VALUE ($)
SGD SINGAPORE - 1.5%
805979 DAIRY FARM INTERNATIONAL HLDGSUS$0.05 761,650
1607171 HONG KONG LAND HLDG ORD US$0.1SIN LISTING 3,857,210
277000 JARDINE STRATEGIC HLDGS IDR REPR 1, 7 1/2% CNV PREF SH 309,894
1039000 JARDINE STRATEGIC HLDGS ORD US$0.05 3,283,240
123000 JARDINE STRATEGIC HLDGS WTS TOSUB FOR ORD(SING REG) 2-MA 46,125
--------------
8,258,119
==============
TWN TAIWAN - 0.4%
21638 BARING TAIWAN FUND REG ORD US$0.01 179,163
200000 FORMOSA FUND IDR(REGD) 1,460,000
15700 R O C TAIWAN FD SH BEN INT 162,888
16000 TUNTEX DISTINCT CORP GLOBAL DEPOSITARY RCPT 102,000
--------------
1,904,050
==============
USD UNITED STATES - 0.1%
20500 STILLWATER MINING CO 435,625
--------------
435,625
==============
ZAR SOUTH AFRICA - 0.6%
4562 ANGLO AMERICAN CORP OF S.AFRICORD R0.10 296,007
61000 BARLOW LIMITED R0.05 782,395
71755 MALBAK ORD NPV(144A) 430,889
106900 NSA INVESTMENT LTD OPTIONS 154,587
534200 NSA INVESTMENTS ORD R0.04 1,612,172
--------------
3,276,050
==============
CASH EQUIVALENT - 8.4%
5058979 CGF CLIENT CASH INVT TR ACCOUNT 5,058,979
40341635.6 PHILADELPHIA NATIONAL BANK RESERVE FUND 40,341,636
--------------
45,400,615
==============
TOTAL INVESTMENTS - 98.2% 532,995,599
==============
</TABLE>
16 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
<TABLE>
<S> <C>
TOTAL INVESTMENTS - CONTINUED - 98.2% $532,995,599
--------------------
Other Assets and Liabilities (Net) - 1.0% $9,710,768
--------------------
TOTAL NET ASSETS - 100% (COST $478,915,518) $542,706,367
====================
</TABLE>
17 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
UNAUDITED
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT UNITS OF IN EXCHANGE FOR APPRECIATION
DATE DELIVER CURRENCY (IN U.S. DOLLARS) (DEPRECIATION)
SALES
<S> <C> <C> <C> <C>
1-Jul-96 DEM 22,100,000 15,052,763 $258,449
1-Jul-96 DEM 22,100,000 15,052,763 258,449
1-Jul-96 NLG 16,500,000 10,047,827 172,372
1-Jul-96 CHF 10,200,000 8,656,465 64,838
1-Jul-96 CHF 10,200,000 8,656,465 64,838
-------------------
$818,946
===================
</TABLE>
CURRENCY ABBREVIATIONS
DEM German Deutsche Mark
NLG Netherlands Guilder
CHF Swiss Franc
NOTES TO THE SCHEDULE OF INVESTMENTS
ADR American Depositary Receipt
GDR Global Depositary Receipt
IDR International Depositary Receipt
18 See accompanying notes to the financial statements
GMO COMMON FUND INTERNATIONAL POOL
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1996
UNAUDITED
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $478,915,158) $ 532,995,599
Foreign currency, at value (cost $5,880,852) 5,803,670
Cash 236,750
Receivable for investments sold 4,544,638
Dividends and interest receivable 4,000,790
Receivable for open forward foreign currency contracts 818,946
---------------
Total assets 548,400,393
---------------
LIABILITIES:
Payable for investments purchased 5,694,026
---------------
Total liabilities 5,694,026
---------------
NET ASSETS $ 542,706,367
(equivalent to $5,941.21 per unit based on 91,346 units outstanding) ===============
</TABLE>
19 See accompanying notes to the financial statements.
GMO COMMON FUND INTERNATIONAL POOL
STATEMENT OF OPERATIONS - PERIOD ENDED MARCH 31, 1996
UNAUDITED
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 12,663,932
Interest 3,521,146
--------------------
Total income 16,185,078
--------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 51,996,497
Foreign currency, forward contracts and foreign
currency related transactions 10,125,323
--------------------
Net realized gain 62,121,820
--------------------
Change in net unrealized appreciation (depreciation) on:
Investments 44,597,325
Foreign currency, forward contracts and foreign
currency related transactions (27,692,293)
--------------------
Net unrealized gain 16,905,033
--------------------
Net realized and unrealized gain 79,026,852
--------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 95,211,931
====================
</TABLE>
20 See accompanying notes to the financial statements.
GMO COMMON FUND INTERNATIONAL POOL
STATEMENT OF CHANGES IN NET ASSETS
UNAUDITED
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
MARCH 31, 1996 JUNE 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 16,185,078 $ 19,038,727
Net realized gain 62,121,820 43,330,735
Change in net unrealized appreciation (depreciation) 16,905,033 (57,708,909)
-------------------- --------------------
Net increase (decrease) in net assets resulting from
operations 95,211,931 4,660,552
-------------------- --------------------
Distributions to shareholders from:
Net investment income (18,715,335) (8,936,985)
-------------------- --------------------
Fund share transactions:
Proceeds from sale of shares 116,562,339 3,329,049
Cost of shares repurchased (475,443,209) (10,286,660)
-------------------- --------------------
Net decrease in net assets resulting
from principal transactions (358,880,870) (6,957,612)
-------------------- --------------------
Total decrease in net assets (282,384,274) (11,234,044)
NET ASSETS:
Beginning of period 825,090,641 836,324,685
-------------------- --------------------
End of period $ 542,706,367 $ 825,090,641
==================== ====================
</TABLE>
21 See accompanying notes to the financial statements.
GMO COMMON FUND INTERNATIONAL POOL
FINANCIAL HIGHLIGHTS
(FOR A UNIT OUTSTANDING THROUGHOUT EACH PERIOD)
UNAUDITED
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED JUNE 30,
------------- --------------------------------------------------------------------
3/31/96 1995 1994 1993 1992 1991
------------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $5,362.04 $5,128.96 $4,145.16 $4,047.89 $3,575.10 $4,238.06
------------- ------------ ------------- ------------ ------------- -------------
Income (loss) from investment operations:
Net investment income (a) 105.62 161.11 87.70 140.35 126.74 177.96
Net realized and unrealized gain (loss)
on investments 558.43 225.66 995.43 88.19 475.66 -657.60
------------- ------------ ------------- ------------ ------------- -------------
Total from investment operations 664.05 386.77 1,083.13 228.54 602.40 -479.64
------------- ------------ ------------- ------------ ------------- -------------
Less distributions to unitholders:
From net investment income -84.88 -153.69 -99.33 -131.28 -129.60 -183.32
------------- ------------ ------------- ------------ ------------- -------------
NET ASSET VALUE, END OF PERIOD $5,941.21 $5,362.04 $5,128.96 $4,145.16 $4,047.89 $3,575.10
============= ============ ============= ============ ============= =============
</TABLE>
22 See accompanying notes to the financial statements.
GMO COMMON FUND INTERNATIONAL POOL
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
MARCH 31, 1996
SIGNIFICANT ACCOUNTING POLICIES
The GMO Common Fund International Pool (the "Fund") is a sub-fund of the
International Equity Fund (less hedged) of The Common Fund, which is a
non-profit corporation created by Special Act of the Legislature of the State of
New York. The Fund is advised and managed by Grantham, Mayo, Van Otterloo & Co.
(the "Manager"). The Fund was established on September 1, 1984.
The Fund seeks maximum total return through investment in a portfolio of common
stocks of non-U.S. issuers. The Fund is valued monthly and income is distributed
quarterly to participants. Each participant of the Fund is an endowment fund.
The following is a summary of significant accounting policies which are in
conformity with generally accepted accounting principles. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
PORTFOLIO VALUATION
Equity securities traded on a national securities exchange are valued at a
composite close price or, in the absence of a recorded trade, at a mean of the
current bid and asked prices. Equity securities not listed on the National
Association of Securities Dealers Automatic Quotation System are valued at the
current bid price. If there is no current bid, the current asked price is used.
Fixed income securities are valued at quoted market prices. Short term
investments are valued at cost which approximates market. Securities listed or
admitted to trading on an international securities exchange are valued at the
last sale price at the close of the primary international exchange.
Securities not readily marketable, including certain investments in limited
partnerships, are valued at fair value deemed appropriate by management, with
consideration given to the financial condition and operating results of the
issuer, meaningful third-party transactions in the private market, and other
factors deemed relevant.
23
GMO COMMON FUND INTERNATIONAL POOL
NOTES TO FINANCIAL STATEMENTS - CONTINUED
UNAUDITED
MARCH 31, 1996
FOREIGN CURRENCY TRANSLATION
The net assets of the Fund are maintained in U.S. Dollars. The net assets of the
Fund are translated at prevailing foreign exchange rates in effect at each
monthly valuation date. During the year, transactions in foreign securities are
translated from foreign currencies into dollars at exchange rates in effect at
the transaction date. Income on investments is translated at prevailing exchange
rates in effect on the remittance dates.
FORWARD CURRENCY CONTRACTS
The Fund purchases and sells foreign currency and forward contracts. A forward
contract obligates one party to purchase and the other party to sell a specific
currency at a set price on a future date and entails the risk that the
counterparty may not have the credit to perform. The contracts are valued daily
at current future exchange rates and an unrealized gain or loss is recorded. The
Fund realizes a gain or loss on settlement of the contracts. (See Schedule of
Investments for open positions in forward foreign currency contracts at March
31, 1996).
TAXES
The Fund is exempt from Federal income tax under section 501(c)(3) of the
Internal Revenue Service.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS TO SHAREHOLDERS
Security transactions are accounted for on a trade date basis. Realized gains
and losses on sales of securities are determined on an average cost basis. Long
term capital gains distributions received on investments in mutual funds are
reinvested. Dividend income is recognized on the ex-dividend date and interest
income is recognized on an accrual basis. Distributions of all net investment
income to participants are made quarterly in arrears. Accrued net investment
income on cross fund investments is included in other income.
EXPENSES
Expenses, including a management charge of 0.75% if average monthly net assets
paid to The Common Fund, are paid outside of the Fund in the form of a reduction
in the amount of income distributed to each participant or in the form of a
quarterly invoice sent to participants.
24
GMO COMMON FUND INTERNATIONAL POOL
NOTES TO FINANCIAL STATEMENTS - CONTINUED
UNAUDITED
MARCH 31, 1996
Investment risk
There are certain additional risks involved in investing in foreign securities
that are not inherent in investments of domestic securities. These risks may
involve adverse political and economic development and the possible imposition
of currency exchange blockages or other foreign governmental laws or
restrictions. In addition, the securities of some foreign companies and
securities markets are less liquid and at times more volatile than securities of
comparable U.S. companies and U.S. securities markets.
25
GMO COMMON FUND INTERNATIONAL POOL
NOTES TO FINANCIAL STATEMENTS - CONTINUED
UNAUDITED
MARCH 31, 1996
UNIT TRANSACTIONS
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
MARCH 31, 1996 JUNE 30, 1995
------------------- -----------------
<S> <C> <C>
Units sold 20,651 12,631
Units issued in reinvestment of distributions 112 165
Units repurchased (83,373) (8,955)
------- ------
Net increase (decrease) (62,610) 3,841
Unit shares:
Beginning of period 153,956 150,115
------- -------
End of period 91,346 153,956
====== =======
</TABLE>
26
