GMO TRUST, PRES14A, 1996-03-05

GMO TRUST
PRES14A, 1996-03-05

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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

_________________________________ GMO TRUST ___________________________________
(Name of Registrant as Specified in Its Charter)

_________________________________ GMO TRUST ___________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
|X|$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6
(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
|_| Fee paid previously with preliminary materials.
________________________________________________________________________________
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identifying the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
________________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
(3) Filing Party:
________________________________________________________________________________
(4) Date Filed:
________________________________________________________________________________

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<PAGE>

GMO TRUST

40 ROWES WHARF
BOSTON, MASSACHUSETTS 02110

_________ __, 1996

Dear Shareholder:

You are cordially invited to attend a Special Meeting of Shareholders
of GMO Trust, which will be held on ________ __, 1996 at _____, Boston time, on
the 5th floor of 40 Rowes Wharf, Boston, Massachusetts.

THE MATTERS TO BE ACTED UPON AT THE MEETING WITH RESPECT TO EACH FUND
OF THE TRUST ARE DESCRIBED IN THE ATTACHED NOTICE AND PROXY STATEMENT.

Although we would like very much to have each shareholder attend the
Special Meeting, we realize this is not possible. Whether or not you plan to be
present at the meeting, we need your vote. WE URGE YOU TO COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
THIS PURPOSE.

Proxies may be revoked at any time before they are voted by a written
revocation received by the Clerk of the Trust, by properly executing a
later-dated proxy or by attending the meeting and voting in person. If your
shares are held in street name, only your bank or broker can vote your shares,
and only upon receipt of your specific instructions. Please contact the person
responsible for your account and instruct him or her to execute a proxy card
today.

We look forward to seeing you at the meeting or receiving your proxy so
that your shares may be voted at the meeting.

By order of the Board of Trustees,

William R. Royer
Clerk

<PAGE>

GMO TRUST

GMO CORE FUND
GMO TOBACCO-FREE CORE FUND
GMO VALUE ALLOCATION FUND
GMO GROWTH ALLOCATION FUND
GMO U.S. SECTOR ALLOCATION FUND
GMO CORE II SECONDARIES FUND
GMO FUNDAMENTAL VALUE FUND
GMO INTERNATIONAL CORE FUND
GMO FOREIGN FUND
GMO CURRENCY HEDGED INTERNATIONAL CORE FUND
GMO INTERNATIONAL SMALL COMPANIES FUND
GMO JAPAN FUND
GMO EMERGING MARKETS FUND
GMO GLOBAL HEDGED EQUITY FUND
GMO DOMESTIC BOND FUND
GMO SHORT-TERM INCOME FUND
GMO INTERNATIONAL BOND FUND
GMO CURRENCY HEDGED INTERNATIONAL BOND FUND
GMO GLOBAL BOND FUND
GMO EMERGING COUNTRY DEBT FUND
GMO CORE EMERGING COUNTRY DEBT FUND
THE PELICAN FUND

40 ROWES WHARF
BOSTON, MA 02110

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To The Shareholders of GMO Trust:

A Special Meeting of Shareholders (the "Special Meeting") of GMO Trust
(the "Trust") will be held on _______ __, 1996 at ______, Boston time, on the
5th floor of 40 Rowes Wharf, Boston, Massachusetts, for the following purposes:

1. (WITH RESPECT TO ALL THE FUNDS OF THE TRUST)To elect the Board of
Trustees, as described in Part I of the accompanying Proxy
Statement.

2. (WITH RESPECT TO ALL THE FUNDS OF THE TRUST) To make non-
fundamental the investment restriction with respect to invest-
ment in other investment companies, as described in PartII of the
accompanying Proxy Statement.

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<PAGE>

3. (WITH RESPECT TO ALL THE FUNDS OF THE TRUST, EXCEPT THE GLOBAL
BOND FUND, THE INTERNATIONAL BOND FUND, THE DOMESTIC BOND FUND,
THE CURRENCY HEDGED INTERNATIONAL BOND FUND, THE CURRENCY HEDGED
INTERNATIONAL CORE FUND, THE FOREIGN FUND, THE GLOBAL HEDGED
EQUITY FUND, THE EMERGING COUNTRY DEBT FUND, THE CORE EMERGING
COUNTRY DEBT FUND AND THE PELICAN FUND) To eliminate the
fundamental investment restriction with respect to restricted
securities, illiquid securities and repurchase agreements, as
described in Part III of the accompanying Proxy Statement.

4. (WITH RESPECT TO ALL THE FUNDS OF THE TRUST) To amend the
fundamental investment restriction relating to borrowing money to
increase borrowing limits and to clarify the permissibility of
the use of reverse repurchase agreements, dollar rolls and
similar investment techniques, as described in Part IV of the
accompanying Proxy Statement.

5. (WITH ALL FUNDS OF THE TRUST OTHER THAN THE PELICAN FUND) To make
non- fundamental the investment restriction relating to pledging,
hypothecating, mortgaging or otherwise encumbering assets, as
described in Part V of the accompanying Proxy Statement.

6. (WITH RESPECT TO THE CORE FUND, THE TOBACCO-FREE CORE FUND, THE
CORE II SECONDARIES FUND, THE FUNDAMENTAL VALUE FUND, THE
INTERNATIONAL CORE FUND, THE INTERNATIONAL SMALL COMPANIES FUND,
THE PELICAN FUND, THE JAPAN FUND AND THE CURRENCY HEDGED
INTERNATIONAL CORE FUND) to make non-fundamental the investment
restriction relating to investments in any one issuer, as
described in Part VI of the accompanying Proxy Statement.

7. To consider such other matters as may properly come before the
Special Meeting.

By order of the Board of Trustees

William R. Royer
Clerk

__________ ___, 1996

WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE SO YOU WILL BE REPRESENTED AT THE SPECIAL
MEETING.

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<PAGE>

GMO TRUST

GMO CORE FUND
GMO TOBACCO-FREE CORE FUND
GMO VALUE ALLOCATION FUND
GMO GROWTH ALLOCATION FUND
GMO U.S. SECTOR ALLOCATION FUND
GMO CORE II SECONDARIES FUND
GMO FUNDAMENTAL VALUE FUND
GMO INTERNATIONAL CORE FUND
GMO CURRENCY HEDGED INTERNATIONAL CORE FUND
GMO FOREIGN FUND
GMO INTERNATIONAL SMALL COMPANIES FUND
GMO JAPAN FUND
GMO EMERGING MARKETS FUND
GMO GLOBAL HEDGED EQUITY FUND
GMO DOMESTIC BOND FUND
GMO SHORT-TERM INCOME FUND
GMO INTERNATIONAL BOND FUND
GMO CURRENCY HEDGED INTERNATIONAL BOND FUND
GMO GLOBAL BOND FUND
GMO EMERGING COUNTRY DEBT FUND
GMO CORE EMERGING COUNTRY DEBT FUND
THE PELICAN FUND

40 ROWES WHARF
BOSTON, MASSACHUSETTS 02110

PROXY STATEMENT

THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF GMO TRUST (THE
"TRUST") for use at the Special Meeting of Shareholders (the "Special Meeting")
to be held on _______ ___, 1996, and at any adjournments thereof, for the
purposes set forth in the accompanying Notice of Special Meeting of Shareholders
(the "Notice"). Shareholders of record at the close of business on ______ ___,
1996 are entitled to be present and to vote at the Special Meeting or any
adjourned session thereof. The Notice, proxy and this Proxy Statement have been
mailed to such shareholders of record on or about _______ ___, 1996.

The Trust is currently offering twenty-two series of shares: GMO Core
Fund, GMO Tobacco-Free Core Fund, GMO Value Allocation Fund, GMO Growth
Allocation Fund, GMO

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<PAGE>

U.S. Sector Allocation Fund, GMO Core II Secondaries Fund, GMO Fundamental Value
Fund, GMO International Core Fund, GMO Currency Hedged International Core Fund,
GMO Foreign Fund, GMO International Small Companies Fund, GMO Japan Fund, GMO
Emerging Markets Fund, GMO Global Hedged Equity Fund, GMO Domestic Bond Fund,
GMO Short- Term Income Fund, GMO International Bond Fund, GMO Currency Hedged
International Bond Fund, GMO Global Bond Fund, GMO Emerging Country Debt Fund,
GMO Core Emerging Country Debt Fund and the Pelican Fund (each a "Fund" and,
collectively, the "Funds").

A copy of the Annual Report of the Trust for its most recent fiscal
year, including financial statements, has previously been mailed to
shareholders. THE TRUST WILL FURNISH, WITHOUT CHARGE, TO ANY OF ITS SHAREHOLDERS
UPON REQUEST, A COPY OF THE ANNUAL REPORT OF THE TRUST AND A COPY OF ITS
SEMIANNUAL REPORT FOR THE SIX MONTH PERIOD ENDED AUGUST 31, 1995. SUCH REQUESTS
MAY BE DIRECTED TO GRANTHAM, MAYO, VAN OTTERLOO & CO., 40 ROWES WHARF, BOSTON,
MA 02110, OR 1-800-________.

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<PAGE>

SUMMARY OF PROPOSALS AND FUNDS AFFECTED*
<TABLE>
<CAPTION>

II. Proposal to III. Proposal IV. Proposal V.Proposal to VI.Proposal to
Make Non- to Eliminate to Amend Make Non- Make Non-
Fundamental Fundamental Fundamental Fundamental Fundamental the
I. Proposal to Investment Investment Investment Investment Fundamental
Fund Elect Trustees Restriction on Restriction Restriction Restriction Investment
Investment in on on Borrowing Relating to Restriction on
Investment Investment in Money Pledging or Investments in
Companies Restricted Otherwise any one
Securities Encumbering Issuer
Assets
<S> <C> <C> <C> <C> <C> <C>
GMO Core Fund x x x x x x
GMO Tobacco-Free Core Fund x x x x x x
GMO Value Allocation Fund x x x x x
GMO Growth Allocation Fund x x x x x
GMO U.S. Sector Allocation x x x x x
Fund
GMO Core II Secondaries x x x x x x
Fund
GMO Fundamental Value Fund x x x x x x
GMO International Core Fund x x x x x x
GMO Currency Hedged x x x x x
International Core Fund
GMO Foreign Fund x x x x
GMO International Small x x x x x x
Companies Fund
GMO Japan Fund x x x x x x
GMO Emerging Markets Fund x x x x x
GMO Global Hedged Equity x x x x
Fund
GMO Domestic Bond Fund x x x x
GMO Short-Term Income x x x x x
Fund
GMO International Bond Fund x x x x
GMO Currency Hedged x x x x
International Bond Fund
GMO Global Bond Fund x x x x
GMO Emerging Country Debt x x x x
Fund
GMO Core Emerging Country x x x x
Debt Fund
The Pelican Fund x x x x
</TABLE>

*An"x" denotes that the Fund is affected by the proposal and solicited
with respect to that proposal.

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<PAGE>

All shareholders of record at the close of business on _________ __,
1996 are entitled to one vote for each share of the Trust held. As of that date,
there were issued and outstanding the following shares of the Trust:

Shares Issued
Name of Fund and Outstanding

GMO Core Fund
GMO Tobacco-Free Core Fund
GMO Value Allocation Fund
GMO Growth Allocation Fund
GMO U.S. Sector Allocation Fund
GMO Core II Secondaries Fund
GMO Fundamental Value Fund
GMO International Core Fund
GMO Currency Hedged International Core Fund
GMO Foreign Fund
GMO International Small Companies Fund
GMO Japan Fund
GMO Emerging Markets Fund
GMO Global Hedged Equity Fund
GMO Domestic Bond Fund
GMO Short-Term Income Fund
GMO International Bond Fund
GMO Currency Hedged International Bond Fund
GMO Global Bond Fund
GMO Emerging Country Debt Fund
GMO Core Emerging Country Debt Fund
The Pelican Fund

Shares represented by duly executed proxies will be voted for the
election of the persons named herein as Trustees, unless such authority has been
withheld. With respect to the other matters specified in the proxy, shares will
be voted in accordance with the instructions made. If no instructions are made,
the proxy will be voted FOR the matters specified in the proxy. Proxies may be
revoked at any time before they are voted by a written revocation received by
the Clerk of the Trust, by properly executing a later-dated proxy or by
attending the meeting, requesting return of a proxy and voting in person.

The costs of solicitation will initially be borne by the Trust.
However, Grantham, Mayo, Van Otterloo & Co., the investment adviser for each
Fund ("GMO") has voluntarily undertaken to reduce its management fees and to
bear certain expenses with respect to each

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<PAGE>

Fund until further notice to the extent that a Fund's total annual operating
expenses (excluding brokerage commissions, extraordinary expenses (including
taxes), securities lending fees and expenses and transfer taxes; and, in the
case of the Japan Fund, Emerging Markets Fund, Foreign Fund and Global Hedged
Equity Fund, excluding custodial fees; and, in the case of the Global Hedged
Equity Fund only, also excluding hedging transaction fees) would otherwise
exceed a certain percentage of that Fund's daily net assets. As a result, the
costs may in effect be borne by GMO. Solicitation of proxies by personal
interview, mail, telephone and telegraph may be made by Officers and Trustees of
the Trust and employees of GMO.

As of February 29, 1996, those persons who are known to be the
beneficial owners of more than five percent of the shares of any Fund of the
Trust are:

Amount and Nature
Name and Address of Beneficial
Name of Fund of Beneficial Owner Ownership Percent of Fund

I. ELECTION OF TRUSTEES

The Trustees have fixed the number of Trustees for election at three.
The nominees for Trustees of the Trust who are proposed for election at the
Special Meeting are R. Jeremy Grantham, Harvey R. Margolis and Jay O. Light.
Their ages and a description of their principal occupations are set forth below.
Mr. Light is not presently a Trustee of the Trust. Mr. Grantham and Mr. Margolis
were elected by the shareholders on September 11, 1985. Except as shown, the
principal occupations and business experience for the last five years of the
nominees have been with the employers indicated.

The Trustees recommend the election of Mr. Light who is not an
"interested person" of the Trust under the Investment Company Act of 1940 Act,
as amended, (the "1940 Act"), in order to increase operational flexibility with
respect to the Funds. The 1940 Act generally requires that no more than sixty
percent (60%) of the trustees of a registered investment company may be
interested persons of the investment company or its investment adviser. The
Trust has operated under an exception that allows it to have a single trustee
who is not an "interested person" of the Trust (hereinafter an "Independent
Trustee"). The exception contains a number of requirements including (i) the
requirement that each of the Funds may have only one class of shares, (ii) the
requirement that investment advisory fees may not exceed 1% per annum and (iii)
the requirement that the sum of any purchase premium plus any redemption fee for
a Fund may not exceed 2%. Mr. Margolis is an Independent Trustee. If

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<PAGE>

Mr. Light is also elected, the Trust will have less than 60% interested Trustees
and will no longer have to satisfy these requirements. It is presently
contemplated that the Trust will issue multiple classes of securities. The
Trustees may in the future adopt other changes permitted to an investment
company not bound by the requirements imposed by the single independent trustee
exemption.

Furthermore, the election of Mr. Light will provide the Trust with a
majority of Independent Trustees, a condition which may facilitate an
application for an exemption from the fund-of-fund restrictions of Section 12
(d)(1)(A) of the 1940 Act. See Proposal II "Investment Restrictions Relating to
Investments in Investment Companies". The SEC has issued a notice that indicates
that among the conditions necessary for the granting of such an exemption is a
majority of Independent Trustees.

The term of office of each person elected as a Trustee will be until
the next meeting held for the purpose of electing Trustees and until his
successor is elected and qualified. Each of the nominees has agreed to serve as
a Trustee if elected. If any of the nominees should be unavailable for election
at the time of the meeting (which is not presently anticipated), the persons
named as proxies may vote for other persons in their discretion, or the Trustees
may vote to fix the number of Trustees at fewer than three.

REQUIRED VOTE. Pursuant to the Agreement and Declaration of Trust, 40%
of the shares entitled to vote, present in person or represented by proxy, shall
constitute a quorum. The election of trustees of the Trust will be by a
plurality of the shares of the Trust (all Funds of the Trust voting together as
a single class) present at the Special Meeting in person or by proxy.

TRUSTEES' RECOMMENDATION. The Trustees recommend a vote FOR each nominee.

TRUSTEES AND OFFICERS INFORMATION

In addition to Mr. Grantham, the other officers of the Trust are Eyk
Van Otterloo, Richard Mayo, Kingsley Durant, Susan Randall Harbert and William
R. Royer. Mr. Grantham serves as President-Domestic Quantitative. Mr. Van
Otterloo is presently a Trustee of the Trust and serves as
President-International of the Trust. Mr. Mayo serves as President - Domestic
Active of the Trust. Mr. Durant serves as Vice President, Treasurer and
Secretary of the Trust. Ms. Harbert serves as Secretary and Assistant Treasurer
of the Trust. Mr. Royer serves as Clerk of the Trust. Mr. Grantham, Mr. Van
Otterloo, Mr. Mayo, Mr. Durant and Ms. Harbert are Partners of GMO.

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<PAGE>

Trustee, Nominee Year First Served Experience for
or Officer Age as Trustee or Officer Last Five Years

<S> <C> <C> <C>
R. Jeremy Grantham* President - Domestic Quantitative and Trustee of the
Trust. Chairman of Trustees. Partner, Grantham,
Mayo, Van Otterloo & Co.

Harvey R. Margolis Trustee of the Trust. Mathematics Professor,
Boston College. .

Jay O. Light Professor of Business Administration, Harvard
University. Senior Associate Dean, Harvard
University (1988-1992). Trustee, Executive
Committee, Finance Committee, TIAA/CREF.
Director, Finance Committee, Harvard Management
Company. Trustee, Finance Committee, Investment
Committee (Chairman), Brigham & Women's
Hospital. Director, United Asset Management.
Investment Committee (Chairman), Private School.
Director, Private Family Holding Company.
Consultant to Investment Management Firms,
Endowments and Pension Plan sponsors.

Eyk Van Otterloo* President - International and Trustee of the Trust.
Partner, Grantham, Mayo, Van Otterloo & Co.

Richard Mayo* President - Domestic Active of the Trust. Partner,
Grantham, Mayo, Van Otterloo & Co.

Kingsley Durant* Vice President, Treasurer and Secretary of the
Trust. Clerk of the Trust (until May, 1995).
Partner, Grantham, Mayo, Van Otterloo & Co.

Susan Randall Harbert* 1995 Secretary and Assistant Treasurer of the Trust.
Partner and Manager of Fund Administration,
Grantham, Mayo, Van Otterloo & Co.

William R. Royer* 1995 Clerk of the Trust. General Legal Counsel,
Grantham, Mayo, Van Otterloo & Co. Associate,
Ropes & Gray (September, 1992 - January, 1995).

</TABLE>
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*Deemed to be "Interested persons" (as defined in the 1940 Act)
of the Trust and GMO.

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<PAGE>

SHARE OWNERSHIP BY TRUSTEES, NOMINEES AND OFFICERS*

Amount and Nature
of Beneficial
Name of Fund Beneficial Owner Ownership Percent of Fund

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*As of February 29, 1996. With respect to all of these shares, the Trustees,
nominees, and officers individually have sole investment power and sole voting
power.

- -----------------

MEETINGS OF THE BOARD. The Board of Trustees met three times during the
fiscal year ended February 29, 1996. None of the Trustees attended less than 75%
of the meetings.

The Trust does not have any audit, nominating, or compensation
committees.

COMPENSATION AND INDEMNIFICATION. Each Independent Trustee of the Trust
receives an annual fee of $40,000 for serving as a Trustee. Mr. Margolis is
currently the only Trustee who is an Independent Trustee, and thus the only
Trustee compensated directly by the Trust. No other Trustee receives any direct
compensation from the Trust or any series thereof.

The Amended By-Laws of the Trust provide that the Trust will indemnify
its Trustees and Officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, except if it is determined in the manner specified in
the Agreement and Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the Trust
or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its shareholders arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.

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<PAGE>

MANAGEMENT OF THE TRUST

GRANTHAM, MAYO, VAN OTTERLOO & CO. Each Fund is advised and managed by
GMO, 40 Rowes Wharf, Boston, Massachusetts 02110 which provides investment
advisory services to a substantial number of institutional and other investors.
Each of the following four general partners holds a greater than 5% interest in
GMO: R. Jeremy Grantham, Richard A. Mayo, Eyk Van Otterloo and Kingsley Durant.
As discussed above, each of those individuals serves as an Officer of the Trust.
Mr. Grantham and Mr. Van Otterloo currently serve as Trustees of the Trust, and
Mr. Grantham is a nominee for election as a Trustee.

The Manager has entered into a Consulting Agreement (the "Consulting
Agreement") with Dancing Elephant, Ltd., 1936 University Avenue, Berkeley,
California 94704 (the "Consultant") with respect to the management of the
portfolio of the Emerging Markets Fund. The Consultant is wholly-owned by Mr.
Arjun Divecha. Under the Consulting Agreement, the Manager pays the Consultant a
monthly fee at an annual rate equal to the greater of 0.50% of the Fund's
average daily net assets or $500,000. The Consultant may from time to time waive
all or a portion of its fee. Payments made by the Manger to the Consultant will
not affect the amounts payable by the Fund to the manager or the Fund's expense
ratio.

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts has
been selected by the Trustees as the auditor of the Trust for the current fiscal
year. If requested in writing by any shareholder at least five days prior to the
meeting, a representative of Price Waterhouse will attend the meeting with the
opportunity to make a statement if desired and to respond to appropriate
questions.

II. INVESTMENT RESTRICTION RELATING TO
INVESTMENTS IN INVESTMENT COMPANIES

The Trustees recommend that the fundamental investment restrictions of
the Funds which relate to investment in securities of other registered
investment companies be changed to a uniform non-fundamental investment
restriction which permits greater flexibility with respect to investment in
other investment companies. The Pelican Fund currently has a fundamental
investment restriction that prohibits the Fund from investing in the securities
of other open-end investment companies, except as part of a plan of merger or
consolidation. All of the other Funds of the Trust currently have a fundamental
investment restriction that prohibits investment in securities of other
investment companies (not including foreign banks or their agents or
subsidiaries), except by purchase in the open market involving only customary
brokers' commissions. Shareholder approval is required to amend or eliminate a
fundamental restriction.

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<PAGE>

New investment vehicles sometimes arise that would be attractive
investments for each Fund but that may technically be registered investment
companies (as defined in the 1940 Act) and therefore be prohibited by these
investment restrictions. As a shareholder of an investment company, the Fund may
indirectly bear service fees which are in addition to the fees the Fund pays its
service provider. However, even though these securities may involve the
duplication of some fees and expenses, they can provide attractive investment
opportunities that, except for the restriction noted above, would be consistent
with the Fund's investment objective and policy. To permit maximum flexibility
to take advantage of future investment opportunities, the Trustees recommend
that each Fund's fundamental investment restriction with respect to investments
in investment companies be eliminated.

If shareholders of a Fund approve the elimination of the current
restriction, the Trustees intend to adopt a more flexible non-fundamental
investment restriction for that Fund. The new restriction would prohibit
investment in the securities of other registered open-end investment companies,
except by purchase in the open market including only customary brokers'
commissions, and except as they may be acquired as part of a merger or
consolidation or acquisition of assets. For the purposes of this restriction,
foreign banks or their agents or subsidiaries would not be considered investment
companies. Such a non-fundamental restriction could be amended or eliminated by
the Trustees without a shareholder vote.

If the proposal were approved with respect to a Fund, absent an
exemption, the Fund would still be subject to Section 12(d)(1) of the 1940 Act,
which provides that a registered investment company may not acquire any security
issued by any other investment company if such purchase results in the
registered investment company owning (a) more than three percent (3%) of the
total voting stock of the acquired company; (b) securities of the acquired
company having a value of more than five percent (5%) of the assets of the
acquired company; or (c) securities issued by the acquired company and all other
investment companies having an aggregate value in excess of ten percent (10%) of
the value of the total assets of the acquiring company. The Trust and GMO have
filed an application seeking exemption from Section 12(d)(1)(A) to the extent
necessary to permit GMO "funds-of-funds." There can be no assurance that such
exemptive relief will be granted.

REQUIRED VOTE. A Fund's fundamental investment restriction with respect
to investment in other investment companies will be eliminated and the
non-fundamental restriction will be implemented only if the proposal is approved
by a "majority of the outstanding voting securities" of the Fund, which for this
purpose, as provided by the 1940 Act, means the affirmative vote of the lesser
of (1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more
of the shares of the Fund present at the meeting if more than 50% of the Fund's
outstanding shares are present at the meeting in person or by proxy.

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<PAGE>

TRUSTEES' RECOMMENDATION. The Trustees recommend a vote FOR the
proposal. If shareholders of a Fund do not approve the proposal, the fundamental
investment restriction of that Fund with respect to investments in investment
companies will remain unchanged.

III. INVESTMENT RESTRICTION RELATING TO
ILLIQUID AND RESTRICTED SECURITIES
AND REPURCHASE AGREEMENTS

The Trustees recommend that the Trust's fundamental investment
restriction with respect to restricted and illiquid securities and repurchase
agreements, which currently applies to all Funds other than the Global Bond
Fund, International Bond Fund, the Domestic Bond Fund, the Currency Hedged
International Bond Fund, the Currency Hedged International Core Fund, the
Foreign Fund, the Global Hedged Equity Fund, the Emerging Country Debt Fund, the
Core Emerging Country Debt Fund, and The Pelican Fund, be eliminated to permit
the Trustees greater flexibility to respond to developments in the securities
markets and to recent changes in SEC rules and positions that give mutual funds
greater freedom to invest in restricted and illiquid securities.

The Trust's current fundamental investment restriction prohibits those
Funds to which it applies from investing more than 10% of its total assets in
(a) securities which at the time of such investment are not readily marketable,
(b) securities the disposition of which is restricted under federal securities
laws, and (c) repurchase agreements maturing in more than seven days.

The Securities and Exchange Commission ("SEC") has long taken the
position that an open-end investment company should limit its investments in
illiquid securities because such securities may present problems of accurate
valuation and because it is possible that the investment company would have
difficulty satisfying the redemption of its shares within seven days. The staff
has also stated its view that repurchase agreements maturing in more than seven
days are illiquid. Until recently, it has been the SEC's position that an
open-end investment company should not invest more than 10% of its assets in
illiquid securities. In March 1992 the SEC revised its position to permit an
open-end investment company to invest up to 15% of its assets in illiquid
securities. In general, illiquid securities have included restricted securities
and those securities for which there is no readily available market.

In recognition of the increased size and liquidity of the institutional
markets for unregistered securities and the importance of institutional
investors in the capital formation process, the SEC has also adopted Rule 144A,
which is designed to facilitate efficient trading of restricted securities among
institutional investors. Rule 144A allows for a broad institutional trading
market for restricted securities. In adopting Rule 144A, the SEC specifically
stated that restricted securities traded under Rule 144A may be treated as
liquid for

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purposes of investment limitations of investment companies if the trustees of
the investment company determine that the securities are, in fact, liquid. The
Trustees of the Trust have delegated to GMO the daily function of determining
and monitoring liquidity of restricted securities. The Trustees, however, will
retain general oversight and be ultimately responsible for the determinations.

As the securities markets evolve and new types of instruments are
developed, GMO believes that the Trust's present restriction may become
overbroad and unnecessarily restrictive. The fact that a security may be
restricted will not necessarily adversely affect either the liquidity of such
investment or the ability of the Trust to determine the value of such
investment. As institutional markets develop, the Trust could be unnecessarily
constrained by its current investment restriction if the institutional
restricted securities markets provided both readily ascertainable values for
restricted securities and the ability to reduce an investment to cash in order
to satisfy Fund share redemption orders on a timely basis.

In order to be able to take advantage of these regulatory initiatives
and the increasingly liquid institutional trading markets for restricted
securities, the Trustees recommend that the Trust's fundamental investment
restriction limiting each Fund's investment to 10% of its total assets in
restricted and illiquid securities and repurchase agreements be eliminated. If
shareholders approve the proposed elimination of the fundamental restriction,
the Trust intends to adopt a non-fundamental policy that will enable a Fund to
invest up to 15% of its total assets in illiquid securities, or such lower
percentage permitted by the states in which shares are registered for sale. Such
a non-fundamental investment restriction could be amended or eliminated by the
Trustees without a shareholder vote.

As of this date, most state restrictions limit investment in illiquid
securities to 15% of total assets. Certain state securities laws may limit the
ability of the Trust to invest more than 10% of total assets in restricted
securities, including restricted securities that are readily marketable. On the
date of this proxy statement, the securities thought to be included in the 15%
limit on investment in illiquid securities are restricted securities under the
federal securities laws (including illiquid securities traded under Rule 144A),
repurchase agreements and securities that are not readily marketable. To the
extent the Trustees determine that restricted securities traded under Rule 144A
are in fact liquid, they will not be included in the 15% limit on investment in
illiquid securities. If the proposed amendment is approved, this investment
practice could have the effect of increasing the level of illiquidity of the
Trust's portfolio securities to the extent that institutional investors become
uninterested, for a time, in purchasing these restricted securities.

REQUIRED VOTE. Approval of this proposal with respect to a Fund will
require the affirmative vote of a "majority of the outstanding voting
securities" of such Fund voting separately, which for this purpose, as provided
by the 1940 Act, means the affirmative vote of the lesser of (1) more than 50%
of the outstanding shares of the Fund, or (2) 67% or more of

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the shares of the Fund present at the meeting if more than 50% of the Fund's
outstanding shares are present at the meeting in persons or by proxy.

TRUSTEE'S RECOMMENDATION. The Trustees recommend a vote FOR the
proposal. If shareholders do not approve the proposal, the fundamental
investment restriction of the Trust with respect to investments in restricted
securities will remain unchanged.

IV. INVESTMENT RESTRICTION RELATING TO BORROWING MONEY

The Trustees of the Trust recommend that shareholders of each Fund
approve an amendment to the fundamental investment restriction relating to
borrowing which would provide each of these Funds with greater flexibility in
borrowing money by increasing borrowing limits and clarifying each such Fund's
ability to employ reverse repurchase agreements, dollar rolls, and other similar
leveraging techniques. The current fundamental investment restriction of each of
these Funds with regard to borrowing money prevents each of them from borrowing
in excess of 10% of their respective total asset values, and then only from
banks and only as a temporary measure to meet shareholder redemption requests or
other emergencies.

The proposed amendment would authorize the Funds to borrow money from
banks and allow them to enter such transactions as reverse repurchase
agreements, dollar rolls and other similar investment techniques (which are
deemed to be "borrowings" under current interpretations of the 1940 Act since
they involve the sale of securities coupled with an agreement to repurchase
securities). Any such borrowings from banks would be subject to the asset
coverage requirements of Section 18(f) of the 1940 Act. Section 18(f) of the
1940 Act requires that after the transaction, net assets (including the amount
borrowed) of the Fund would exceed all liabilities and indebtedness by 300%. To
the extent that a Fund enters into reverse repurchase agreements, dollar rolls
and other similar investment techniques, it will be required to establish a
segregated account with its custodian in which it will maintain cash and/or
liquid high grade debt securities equal in value to its obligations in respect
of these transactions. Placing securities rather than cash in the segregated
account may have a leveraging effect on the Fund's net asset value per share.

If the proposal is approved, the new investment restriction will make
it clear that each Fund will be authorized to enter into dollar rolls and
reverse repurchase agreements. A dollar roll is a transaction in which a Fund
sells securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar securities on a specified future date. In
the case of dollar rolls involving mortgaged-related securities, the
mortgage-related securities that are purchased typically will be of the same
type and will have the same or similar interest rate and maturity as those sold,
but will be supported by different pools of mortgages. The Fund would forego
principal and interest paid during the roll period on the securities sold in a
dollar roll, but would be compensated by the difference between the current

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<PAGE>

sales price and the price for the future purchase as well as by any interest
earned on the proceeds of the securities sold. The Fund could also be
compensated through the receipt of fee income.

Reverse repurchase agreements are transactions in which a Fund sells
securities to a bank or dealer and agrees to repurchase them at a mutually
agreed upon date and price. Generally, the effect of such a transaction is that
the fund can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
it will be able to keep the interest income associated with those portfolio
securities. Such transactions are advantageous if the interest cost to the Fund
of the reverse repurchase transaction is less than the cost of otherwise
obtaining cash.

Dollar rolls and reverse repurchase agreements involve the risk that
the market value of the securities that the fund is obligated to repurchase
under the agreement may decline below the repurchase price. In the event the
buyer of securities under a dollar roll or reverse repurchase agreement files
for bankruptcy or becomes insolvent, the Fund's use of the proceeds of the
agreement may be restricted pending a determination by the other party, its
trustee or receiver, whether to enforce the Fund's obligation to repurchase the
securities.

The Funds would also be authorized to borrow an additional 5% of total
assets from a bank or other lender without regard to the foregoing asset
coverage limitation for temporary purposes, such as for the clearance and
settlement of portfolio transactions and to meet shareholder redemption
requests. A Fund would only exercise its borrowing authority when GMO believes
that such borrowings will benefit the Fund, after taking into account
considerations such as interest expense and possible gains or losses to the fund
as a result of the transaction.

Leveraging creates an opportunity for increased net income. To the
extent the income from securities purchased with borrowings exceeds the interest
the Fund will have to pay, the Fund's net income will be greater than if
borrowings were not used. It also provides a Fund greater flexibility in
purchasing securities as borrowing might allow it to purchase additional
portfolio securities without having to immediately liquidate current holdings.

At the same time, leveraging creates special risk considerations. For
example, borrowing that enables a Fund to purchase additional portfolio
securities may exaggerate changes in the value of the Fund's net assets and in
the yield on the Fund's portfolio which would result in greater volatility of
the Fund's net asset value. Although the principal of such borrowings will be
fixed, the Fund's assets may change in value during the time the borrowing is
outstanding. Borrowing will create interest expenses for the borrowing Fund
which could, at times, exceed the income from the assets retained in which event
the net income of the Fund would be less than if borrowings were not used. In
such cases, the amount available for

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<PAGE>

distribution to shareholders as dividends would be reduced. In addition,
borrowing may result in higher volatility of the Fund's net asset value.

Each Fund expects that some of its borrowings may be made on a secured
basis, if GMO believes that the terms of such borrowings, taken as a whole,
would benefit the borrowing Fund. In such situations, either the custodian of
the Fund's assets will segregate the pledged assets for the benefit of the
lender, or arrangements will be made with either (i) the lender to act as a
subcustodian if the lender is a bank or otherwise qualifies as a custodian of
investment company assets or (ii) a suitable custodian.

Although the new fundamental investment restriction proposed for the
Funds would give them the maximum flexibility permitted under the 1940 Act, the
operations of the Funds would still be subject to whatever additional
non-fundamental policies are approved from time to time by the Trustees.

V. INVESTMENT RESTRICTION RELATING TO PLEDGING, HYPOTHECATING,
MORTGAGING, OTHERWISE ENCUMBERING ASSETS

The Trustees recommend that the shareholders of each Fund other than
the Pelican Fund approve a proposal to make non-fundamental the investment
restriction relating to pledging, hypothecating, mortgaging or otherwise
encumbering assets. The current fundamental restriction prohibits each Fund
other than the Pelican Fund from pledging, hypothecating, mortgaging or
otherwise encumbering its assets in excess of 10% of the Fund's total assets,
and then only to secure borrowings. Under the current restriction, collateral
arrangements with respect to the writing of options, stock index, interest rate,
currency or other futures, options on futures contracts and collateral
arrangements with respect to initial and various margin are not included in the
10% limit since they are not deemed to be a pledge or other encumbrance of
assets.

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<PAGE>

This proposal would allow the Trustees to increase the ability of the
Funds to pledge, mortgage, hypothecate or otherwise encumber assets and provide
the Funds with greater flexibility in securing borrowings and entering
collateral arrangements for swap agreements and other transactions. If this
proposal is approved, the Trust intends to adopt a non- fundamental policy which
would limit to 33-1/3% the percentage of assets of each Fund that could be
pledged, hypothecated, mortgaged or otherwise encumbered. In addition to the
collateral arrangements not considered to be a pledge or encumbrance of assets
under the current policy, swap agreement collateral arrangements would not be
deemed to be a pledge or other encumbrance of asset under the new
non-fundamental policy.

VI. INVESTMENT RESTRICTION RELATING TO INVESTMENTS
IN ANY ONE ISSUER

The Trustees recommend that the fundamental investment restrictions of
the Core Fund, the Tobacco-Free Core Fund, the Core II Secondaries Fund, the
Fundamental Value Fund, the International Core Fund, the International Small
Companies Fund, the Pelican Fund, the Japan Fund and the Currency Hedged
International Core Fund (the "Affected Funds") which limit the size of
investment in any single one issuer be made non-fundamental. Under the current
fundamental restrictions, each of the Affected Funds (i) may not invest more
than 5% of the relevant Fund's total assets in the securities of any one issuer,
although 25% of the assets of each of the Affected Funds other than the Pelican
Fund may be invested without regard to this restriction and (ii) with respect to
all of its assets, may not own more than 10% of the outstanding voting
securities of any single issuer.

This proposal would provide the Trustees with the flexibility to allow
an Affected Fund to hold more of each investment should GMO determine that it is
desirable for such Fund to do so. This may be particularly useful in a situation
where GMO feels particularly optimistic about a security and/or when market
conditions are such that it is difficult to identify a large number of
attractive investments. Of course, if the Trustees later change this investment

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<PAGE>

policy to allow for proportionately larger investments in the securities of a
single issuer with respect to any Funds, a Fund net asset value per share would
be more affected by changes in the value of, and market, credit and business
developments with respect to, that issuer. In addition, if a Fund were to own a
substantial percentage of an issuer's voting or other securities, there is a
risk that the liquidity of those securities would be reduced and would possibly
make meeting shareholder redemptions more difficult and/or prevent a Fund from
obtaining fair market value for its securities when disposing of them. Moreover,
the less diversified a Fund's investments, the more volatile its net asset value
is likely to be.

Allowing the Trustees to change this policy will be subject to the
status of each of the Affected Funds, other than the GMO Japan Fund and the GMO
Currency Hedged International Core Fund, as diversified investment companies
under the 1940 Act. Under the 1940 Act, with respect to 75% of total assets of a
diversified investment company, (i) no more than 5% of such assets may be
invested in the securities of any one issuer and (ii) an investment in any
single issuer may not represent more than 10% of that issuer's outstanding
voting securities. Thus, for diversified investment companies, 25% of total
assets would not be subject to either limitation. The GMO Japan Fund and GMO
Currency Hedged International Core Fund are not diversified investment companies
and are not subject to these limitations. However, as regulated investment
companies, all of the Affected Funds, including the Japan Fund and the Currency
Hedged International Core Fund, are subject to the limitations of Section 851(b)
of the Internal Revenue Code. Pursuant to Section 851(b), at the end of each
quarter of the taxable year, no more than 25% of total assets may be invested in
the securities of any one issuer (other than Government securities or securities
of other regulated investment companies) and with respect to 50% of total assets
of a regulated investment company, (i) not more than 5% of such assets may be
invested in the securities of any one issuer and (ii) not more than 10% of the
voting securities of any one issuer may be acquired.

REQUIRED VOTE. Approval of this proposal with respect to a Fund will
require the affirmative vote of a "majority of the outstanding voting
securities" of such Fund voting separately, which for this purpose, as provided
b the 1940 Act, means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund, or (2) 67% or more of the shares of the Fund
present at the meeting if more than 50% of the Fund's outstanding shares are
present at the meeting in persons or by proxy.

TRUSTEE'S RECOMMENDATION. The Trustees recommend a vote FOR the
proposal. If shareholders do not approve the proposal, the fundamental
investment restriction of the Trustee with respect to investments in restricted
securities will remain unchanged.

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<PAGE>

VII. MISCELLANEOUS

OTHER BUSINESS. The Trustees know of no other business to be brought
before the Special Meeting. However, if any other matters properly come before
the Special Meeting, it is their intention that proxies which do not contain
specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named in the enclosed form of proxy.

DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not provide
for annual meetings of shareholders and the Trust does not currently intend to
hold such a meeting in 1996. Shareholder proposals for inclusion in the Trust's
proxy statement for any subsequent meeting must be received by the Trust a
reasonable period of time prior to any such meeting.

QUORUM AND METHODS OF TABULATION. Pursuant to the Agreement and
Declaration of Trust, unless a larger quorum is required by law, 40% of the
shares entitled to vote, present in person or represented by proxy, constitutes
a quorum for the transaction of business at the Meeting. Votes cast by proxy or
in person at the meeting will be counted by persons appointed by the Trust as
tellers (the "Tellers") for the Meeting.

The Tellers will count the total number of votes cast "for" approval of
the proposals for purposes of determining whether sufficient affirmative votes
have been cast. The Tellers will count shares represented by proxies that
reflect abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or nominee does not
have discretionary voting power on a particular matter) as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum. With respect to Proposal I, neither abstentions nor broker
non-votes have any effect on the outcome of the proposal. With respect to the
other proposals, abstentions and broker non-votes have the effect of negative
votes on the proposal.

ADJOURNMENT. In the event that a quorum and/or sufficient votes in
favor of any of the proposals set forth in the Notice of the Special Meeting are
not received by the time scheduled for the Special Meeting, the persons named as
proxies may propose one or more adjournments of the Special Meeting for a period
or periods of not more than 60 days in the aggregate to permit further
solicitation of proxies with respect to any of such proposals. Any such
adjournments will require the affirmative vote of a majority of the votes cast
on the question in person or by proxy at the session of the meeting to be
adjourned, as required by the Agreement and Declaration of Trust. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of such proposals. They will vote against any such
adjournment those proxies required to be voted against any of such proposals.
While the costs of any such additional solicitation and of any adjourned session
will initially be borne by the Trust, because GMO has voluntarily undertaken to
reduce its management fees and to bear certain expenses with respect to each
Fund until further notice to the extent that a Fund's total annual operating
expenses (excluding brokerage commissions, extraordinary expenses (including
taxes), securities lending fees and expenses and transfer

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<PAGE>

taxes; and, in the case of the Japan Fund, Emerging Markets Fund, Foreign Fund
and Global Hedged Equity Fund, excluding custodial fees; and, in the case of the
Global Hedged Equity Fund only, also excluding hedging transaction fees) would
otherwise exceed a certain percentage of that Fund's daily net assets, in effect
such costs may be borne by GMO.

__________ ____, l996

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<PAGE>

GMO TRUST
GMO CORE FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Core Fund which
the undersigned would be entitled to vote if personally present. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS II,
III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

PLEASE SIGN YOUR NAME EXACTLY AS IT
APPEARS ON THIS PROXY. If the shares are
registered in more than one name, each
joint owner or each fiduciary should
sign personally. Only authorized persons
should sign for corporations.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

At 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
electing all of the nominees for Trustees and FOR the other proposals below:

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

THIS PROXY IS SOLICITED ON BEHALF OF THE PLEASE SIGN AND DATE THE
TRUSTEES OF THE TRUST. PLEASE SIGN THE REVERSE SIDE OF THIS CARD.
REVERSE SIDE OF THIS CARD. YOUR SIGNATURE
ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE
MEETING AND THE ACCOMPANYING PROXY STATEMENT.

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<PAGE>

GMO TRUST
GMO TOBACCO-FREE CORE FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Tobacco-Free Core
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN
PROPOSAL I.

Dated:___________________________, 1996

-----------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|
V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

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<PAGE>

GMO TRUST
GMO VALUE ALLOCATION FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Value Allocation
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL
I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

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<PAGE>

GMO TRUST
GMO GROWTH ALLOCATION FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Growth Allocation
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV, AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL
I.

Dated:___________________________, 1996

-----------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

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<PAGE>

GMO TRUST
GMO U.S. SECTOR ALLOCATION FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO U.S. Sector
Allocation Fund which the undersigned would be entitled to vote if personally
present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS II, III, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH
IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

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<PAGE>

GMO TRUST
GMO CORE II SECONDARIES FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Core II
Secondaries Fund which the undersigned would be entitled to vote if personally
present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS II, III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET
FORTH IN PROPOSAL I.

Dated:___________________________, 1996

-----------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-6-

<PAGE>

GMO TRUST
GMO FUNDAMENTAL VALUE FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Fundamental Value
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN
PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-7-

<PAGE>

GMO TRUST
GMO INTERNATIONAL CORE FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO International Core
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN
PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|
PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-8-

<PAGE>

GMO TRUST
GMO CURRENCY HEDGED INTERNATIONAL CORE FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Currency Hedged
International Core Fund which the undersigned would be entitled to vote if
personally present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS II, IV, V AND VI AND FOR ELECTING
TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-9-

<PAGE>

GMO TRUST
GMO FOREIGN FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Foreign Fund which
the undersigned would be entitled to vote if personally present. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS II,
IV, AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-10-

<PAGE>

GMO TRUST
GMO INTERNATIONAL SMALL COMPANIES FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO International
Small Companies Fund which the undersigned would be entitled to vote if
personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS II, III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN
PROPOSAL I.

Dated:___________________________, 1996

-----------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-11-

<PAGE>

GMO TRUST
GMO JAPAN FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Japan Fund which
the undersigned would be entitled to vote if personally present. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS II,
III, IV, V AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I.ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nomineesexcept as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. PLEDGING OR OTHERWISE BORROWING MONEY |_| |_| |_|

V. ENCUMBERING ASSETS |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-12-

<PAGE>

GMO TRUST
GMO EMERGING MARKETS FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Emerging Markets
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV, AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL
I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-13-

<PAGE>

GMO TRUST
GMO GLOBAL HEDGED EQUITY FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Global Hedged
Equity Fund which the undersigned would be entitled to vote if personally
present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN
PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-14-

<PAGE>

GMO TRUST
GMO DOMESTIC BOND FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Domestic Bond Fund
which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

-----------------------------------------
Signature

-----------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-15-

<PAGE>

GMO TRUST
GMO SHORT-TERM INCOME FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Short-Term Income
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, III, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL
I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

III. INVESTMENT IN RESTRICTED SECURITIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-16-

<PAGE>

GMO TRUST
GMO INTERNATIONAL BOND FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO International Bond
Fund which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-17-

<PAGE>

GMO TRUST
GMO CURRENCY HEDGED INTERNATIONAL BOND FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Currency Hedged
Interantional Bond Fund which the undersigned would be entitled to vote if
personally present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS
SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-18-

<PAGE>

GMO TRUST
GMO EMERGING COUNTRY DEBT FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Emerging Country
Debt Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nomineesexcept as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-19-

<PAGE>

GMO TRUST
GMO CORE EMERGING COUNTRY DEBT FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Core Emerging
Country Debt Fund which the undersigned would be entitled to vote if personally
present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-20-

<PAGE>

GMO TRUST
THE PELICAN FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the The Pelican Fund which
the undersigned would be entitled to vote if personally present. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS II,
IV, AND VI AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

VI. INVESTMENT IN A SINGLE ISSUER |_| |_| |_|

-21-

<PAGE>

GMO TRUST
GMO GLOBAL BOND FUND

Proxy for a Meeting of Shareholders, _________ __, 1996

The undersigned hereby appoints William R. Royer and Julie Perniola,
and each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Meeting of Shareholders of GMO Trust on ___________ __, 1996 at [ ] Boston time
and at any adjournments thereof, all of the shares of the GMO Global Bond Fund
which the undersigned would be entitled to vote if personally present. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS II, IV AND V AND FOR ELECTING TRUSTEES AS SET FORTH IN PROPOSAL I.

Dated:___________________________, 1996

------------------------------------------
Signature

------------------------------------------
Signature (if held jointly)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

I. ELECTION OF |_| FOR electing the three |_| WITHHOLD AUTHORITY to
TRUSTEES nominees except as marked vote for all nominees
to the contrary below listed below

TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s),
DRAW A LINE THROUGH THAT NOMINEE'S NAME.

Nominees:
(A) R. Jeremy Grantham (B) Harvey R. Margolis (C) Jay O. Light

PROPOSAL TO AMEND OR MAKE NON-FUNDAMENTAL THE FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT POLICY RELATING TO:

II. INVESTMENT IN INVESTMENT COMPANIES |_| |_| |_|

IV. BORROWING MONEY |_| |_| |_|

V. PLEDGING OR OTHERWISE ENCUMBERING ASSETS |_| |_| |_|

-22-

<PAGE>