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G.T. GREATER EUROPE FUND
50 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-6181
JANUARY 17, 1996
DEAR FELLOW SHAREHOLDER:
I am writing to update you on the status of the Special Meeting of
Shareholders of the G.T. Greater Europe Fund (the "Fund"). The Meeting was
convened on December 13, 1995, and is now scheduled to be reconvened on February
9, 1996. Following the adjournment in December, your Board determined that,
barring unforeseen circumstances, the Fund will offer to repurchase at net asset
value up to 55% of its outstanding shares if the Restructuring Proposal
described in the original proxy materials is adopted. This initial repurchase
offer is intended to provide each shareholder seeking to redeem shares in the
Fund at net asset value the opportunity to do so, subject to a small repurchase
fee.
Your Board continues to recommend that you vote in favor of the
Restructuring Proposal, which we believe will result in the emergence of the
Fund as a unique, long-term investment opportunity focusing on one of the more
attractive emerging market sectors in the world, Eastern Europe. The Fund
currently anticipates that it will commence its repurchase offer for 55% of the
Fund's outstanding shares within 90 days of the effectiveness of the
Restructuring Proposal.
Please refer to the original proxy materials for a description of the
Restructuring Proposal and the Open-Ending Proposal and to the accompanying
supplement to the proxy materials for additional information concerning the
Fund's initial offer to repurchase up to 55% of the Fund's outstanding shares if
the Restructuring Proposal is approved. As more fully described in the
supplement to the proxy materials, your Board currently expects that the Fund's
annual repurchase offers in 1997 and 1998 will be limited to 5% of its then
outstanding shares in light of the substantially increased amount of the initial
repurchase offer and the restructuring of its portfolio as contemplated by the
Restructuring Proposal.
The accompanying supplement to the proxy materials also describes two
lawsuits that have been commenced against the Fund, your Board and LGT Asset
Management, Inc. (formerly "G.T. Capital Management, Inc.") in connection with
this proxy solicitation and the current status of those lawsuits. We believe
these lawsuits to be without merit and are vigorously contesting them.
Enclosed is a new proxy card that you may use in connection with your vote.
If you have not yet voted, or if you have already voted but desire to change
your vote, please complete, sign and return the enclosed proxy card in the
enclosed postage-prepaid envelope even if you plan to attend the adjourned
meeting in person. If you have already voted but return a new proxy card, the
prior proxy card that you submitted will be disregarded in favor of any more
recent proxy card that you return.
Thank you for your participation and prompt attention to these critically
important proposals relating to the future of your Fund. Please call our
toll-free number (1-800-891-9336) if you have any questions or if you have
disposed of your original proxy materials or otherwise require additional copies
of them.
Sincerely,
[SIGNATURE]
DAVID A. MINELLA
CHAIRMAN OF THE BOARD
AND PRESIDENT
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SUPPLEMENT TO THE PROXY STATEMENT
G.T. GREATER EUROPE FUND
50 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-6181
------------------------
RECONVENED SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 9, 1996
------------------------
THIS SUPPLEMENT TO THE PROXY STATEMENT ("SUPPLEMENT") IS TO BE READ IN
CONJUNCTION WITH THE NOTICE OF MEETING AND PROXY STATEMENT DATED OCTOBER 31,
1995 ("ORIGINAL PROXY STATEMENT"). THE ORIGINAL PROXY STATEMENT CONTAINS FULL
INFORMATION ABOUT EACH PROPOSAL SUBMITTED TO THE SHAREHOLDERS. TO THE EXTENT
INFORMATION IN THIS SUPPLEMENT MAY BE INCONSISTENT WITH THE ORIGINAL PROXY
STATEMENT, THIS SUPPLEMENT CONTROLS.
This Supplement is being furnished to Shareholders in connection with the
solicitation of proxies by the Board of Trustees of G.T. Greater Europe Fund
(the "Fund"). These proxies are to be used at the reconvened Special Meeting of
Shareholders (the "Reconvened Meeting") to be held at the offices of the Fund,
50 California Street, 27th Floor, San Francisco, California 94111, on Friday,
February 9, 1996, at 1:00 p.m. (Pacific time) and at any adjournment thereof. At
the Reconvened Meeting, Shareholders will be asked to vote on the proposals set
forth in the Original Proxy Statement, including the Restructuring Proposal and
the Open-Ending Proposal described therein. Copies of this Supplement and the
accompanying materials will first be mailed to Shareholders on or about January
17, 1996.
If the accompanying proxy card is properly executed and returned by a
Shareholder in time to be voted at the Reconvened Meeting, the shares covered
will be voted in accordance with the instructions marked thereon by the
Shareholder, and such instructions will supersede any previously executed proxy
card. Any proxy given pursuant to this solicitation may be revoked at any time
before its exercise by giving written notice to the Secretary of the Fund or by
the issuance of a subsequent proxy. To be effective, such revocation must be
received by the Secretary of the Fund prior to the Reconvened Meeting. In
addition, a Shareholder may revoke a proxy by attending the Meeting and voting
in person.
At the Reconvened Meeting, Shareholders will be asked to vote on, among
other proposals, the Restructuring Proposal and the Open-Ending Proposal.
Implementation of either one of these proposals would preclude implementation of
the other.
-Pursuant to the Restructuring Proposal, the Fund's Agreement and
Declaration of Trust would be amended and restated (1) to change the name
of the Fund to "G.T. Global Eastern Europe Fund," to reflect a focusing of
its investment mandate on Eastern Europe, and (2) to establish a
fundamental policy requiring the Fund to make annual offers to repurchase
at least 5%, and up to 25%, of its outstanding shares at net asset value
(less a small repurchase fee).
-Pursuant to the Open-Ending Proposal, the Fund would be converted to an
"open-end" investment company, and outstanding shares of the Fund would be
redeemable on a daily basis at their net asset value (less a small
redemption fee that the Board expects would be imposed on redemptions
occurring within the first six months after the change of status of the
Fund).
Additional information concerning the Proposals is set forth in the Original
Proxy Statement. The Board of Trustees recommends a vote FOR the Restructuring
Proposal (Proposal No. 1) and AGAINST the Open-Ending Proposal (Proposal No. 2).
At the meeting on December 13, 1995, a quorum was not present. The meeting
was adjourned until January 17, 1996, on which date a quorum was also not
present, and the meeting was further adjourned at that time until February 9,
1996 at 1:00 p.m. (Pacific time). At the December 13, 1995 meeting, it was
announced that 45% of the outstanding shares of beneficial interest were
present, and that of the shares present and voting, slightly over 60% voted in
favor of the Restructuring Proposal and approximately
<PAGE>
40% voted in favor of the Open-Ending Proposal. At the reconvened meeting on
January 17, 1996, it was announced that the percentages of such shares voting in
favor of the Restructuring Proposal and the Open-Ending Proposal, respectively,
had not changed materially from the percentages announced at the December 13,
1995 meeting.
Approval of either the Restructuring Proposal or the Open-Ending Proposal
will require the favorable vote of a majority of the outstanding shares of the
Fund, as defined in the Investment Company Act of 1940, as amended ("1940 Act"),
which means the lesser of the vote of (a) 67% or more of the shares of the Fund
present at a meeting where more than 50% of the outstanding shares are present
in person or by proxy or (b) more than 50% of the outstanding shares of the
Fund. Unless otherwise instructed, the proxies will vote FOR the Restructuring
Proposal and AGAINST the Open-Ending Proposal. If neither the Restructuring
Proposal nor the Open-Ending Proposal is adopted by the favorable vote of a
majority of the outstanding shares of the Fund, the Fund will continue as a
closed-end investment company operating under its current investment policies,
subject to the Board considering such other actions as the Board may determine
to be in the best interests of the Fund and its shareholders.
UPDATE TO PROPOSAL NO. 1 -- THE RESTRUCTURING PROPOSAL
If the Restructuring Proposal is adopted, the Fund will operate as an
"interval" closed-end investment company pursuant to Rule 23c-3 under the 1940
Act. Pursuant to Rule 23c-3, the Fund will make annual repurchase offers at net
asset value (less a small repurchase fee) for at least 5% and up to 25% of its
outstanding shares, pursuant to a fundamental policy and conditions described in
the Original Proxy Statement ("Annual Repurchase Offers"). Pursuant to Rule
23c-3, the Fund will also be permitted (but not required) from time to time to
make additional repurchase offers at net asset value (less a small repurchase
fee) in accordance with and subject to the provisions of the rule ("Rule 23c-3
Discretionary Repurchase Offers"). Any such Rule 23c-3 Discretionary Repurchase
Offers (1) will not require approval by Shareholders, (2) can be made for up to
100% of the Fund's outstanding shares, and (3) can not be made more than once
every two years.
The Original Proxy Statement stated that if the Restructuring Proposal was
adopted, the Board had determined that the first repurchase offer by the Fund
pursuant to the Interval Repurchase Program would occur on or about the end of
the first quarter of 1996, with subsequent repurchase offers to be made annually
thereafter. The Original Proxy Statement also stated that the Board had further
determined that, barring unforeseen circumstances, the Fund would offer, in the
first offer under the Interval Repurchase Program, to repurchase 25% of its
outstanding shares.
Results to date of the proxy solicitation in connection with the Proposals
and communications received by the Fund from Shareholders and other sources,
indicate that Shareholders holding more than 25% of the Fund's outstanding
shares may be interested in liquidating all or a substantial portion of their
Fund holdings, particularly if by doing so they can receive approximately net
asset value for their shares. In order to serve the interests of those
Shareholders, as well as of Shareholders seeking to preserve the Fund as an
investment vehicle seeking long-term capital appreciation, the Board has
determined that if the Restructuring Proposal is adopted, the Fund will make a
Rule 23c-3 Discretionary Repurchase Offer in early 1996 for up to 55% of the
Fund's outstanding shares at net asset value (less a repurchase fee not to
exceed 2% of net asset value to offset expenses associated with the offer) (the
"1996 Repurchase Offer"). The Board currently anticipates that the 1996
Repurchase Offer will commence within 90 days of the effectiveness of the
Restructuring Proposal or as soon thereafter as practical. If and when the 1996
Repurchase Offer proceeds, shareholders will each receive a mailing with tender
information and instructions. If more than 55% of the outstanding shares are
tendered pursuant to the 1996 Repurchase Offer, shares will be accepted for
repurchase on a pro rata basis, subject to the conditions and provisos set forth
in the Original Proxy Statement.
If the Restructuring Proposal is adopted, the Fund's first regular Annual
Repurchase Offer (following the 1996 Repurchase Offer) will be made on or about
the end of the first quarter of 1997. Unless and until the Fund ceases to
operate as an "interval" fund subject to Rule 23c-3 (as the Rule may be revised
from
2
<PAGE>
time to time), the Fund will be obligated in 1997 and annually thereafter to
make Annual Repurchase Offers in accordance with the Fund's fundamental policy
and the conditions described in the Original Proxy Statement. The Board
currently expects that in light of the substantially increased amount of the
1996 Repurchase Offer, the Fund's Annual Repurchase Offers in 1997 and 1998 will
each be for 5% of the Fund's then outstanding shares. However, the Board will
establish the actual percentage of outstanding shares that the Fund will offer
to repurchase in the 1997 and 1998 Annual Repurchase Offers (as well as each
Annual Repurchase Offer thereafter) shortly before the commencement of each such
offer. In making a determination as to the percentage of outstanding shares that
the Fund will offer to repurchase in the 1997 and 1998 Annual Repurchase Offers
(and in each Annual Repurchase Offer thereafter), the Board will take into
account such factors as may be relevant to consider in light of then existing
conditions. Pursuant to Rule 23c-3, however, the percentage of outstanding
shares that the Board may offer to repurchase in an Annual Repurchase Offer may
in no event be less than 5% nor more than 25% of the Fund's then outstanding
shares. If the 1996 Repurchase Offer is effected, the Fund will be precluded
from making any Rule 23c-3 Discretionary Repurchase Offers for two years
thereafter.
The Board considered whether the 1996 Repurchase Offer, if implemented,
would have adverse consequences for the Fund and its shareholders. Such adverse
consequences are similar in kind, if not in degree, to Annual Repurchase Offers
and include the following:
EFFECT ON NET ASSET VALUE AND CONSIDERATION RECEIVED BY TENDERING
SHAREHOLDERS: The Fund will likely be required to sell more portfolio
securities to obtain cash to purchase shares pursuant to the 1996 Repurchase
Offer than it would be required to sell pursuant to an Annual Repurchase Offer.
This will cause increased brokerage and related transaction expenses, and the
Fund may receive proceeds from the sale of those securities less than their
valuations by the Fund. Accordingly, the Fund's net asset value per share may
decline more than it otherwise might with respect to an Annual Repurchase Offer,
reducing the amount of proceeds received by tendering shareholders and the value
per share for non-tendering shareholders.
RECOGNITION OF CAPITAL GAINS: As noted, the Fund will likely be required to
sell more portfolio securities pursuant to the 1996 Repurchase Offer than
pursuant to an Annual Repurchase Offer. If the Fund's tax basis for the
securities sold is less than the sale proceeds, the Fund will recognize a
capital gain. The Fund would expect to distribute any gains to shareholders of
record following the end of the Fund's fiscal year on October 31. This
recognition and distribution of gains, if any, would have two negative
consequences: first, shareholders at the time of a declaration of distributions
would be required to pay taxes on a greater amount of capital gain distributions
than otherwise would be the case; and second, to raise cash to make the
distributions, the Fund might need to sell additional portfolio securities,
thereby possibly being forced to realize and recognize additional capital gains.
It is impossible to predict what the amount of unrealized gains or losses would
be in the Fund's portfolio at the time of the 1996 Repurchase Offer. As of
December 31, 1995, there was net appreciation of over $26 million in the Fund's
portfolio as a whole, and there was approximately $13 million in tax loss
carryforwards that for tax purposes could offset some or all of any gains
actually realized.
HIGHER EXPENSE RATIO AND LESS INVESTMENT FLEXIBILITY: The 1996 Repurchase
Offer may result in the Fund purchasing a greater percentage of its outstanding
shares than it otherwise would purchase pursuant to an Annual Repurchase Offer,
with the result that the net assets of the Fund would be reduced more
significantly than they otherwise might be. Such an increased reduction would
result in a higher expense ratio and possibly less investment flexibility for
the Fund after consummation of the offer than would otherwise be the case in the
event of an Annual Repurchase Offer.
GREATER PERCENTAGE OF ILLIQUID AND RESTRICTED SECURITIES IN
PORTFOLIO: Currently, illiquid and restricted portfolio securities comprise
approximately 13% of the Fund's total assets, with restricted and illiquid
securities of Eastern European issuers comprising approximately 4% of the Fund's
total assets. To meet the cash requirements for the 1996 Repurchase Offer, the
Fund will be liquidating a substantial portion of its liquid portfolio
securities. As a result, illiquid and restricted securities are likely to
comprise a greater percentage of the Fund's portfolio after the 1996 Repurchase
Offer than would otherwise have been the
3
<PAGE>
case in an Annual Repurchase Offer. For example, if 55% of the Fund's
outstanding shares are tendered pursuant to a 1996 Repurchase Offer, the
percentage of the Fund's total assets represented by illiquid and restricted
securities after the conclusion of the 1996 Repurchase Offer could be as high as
approximately 29%.
Finally, the Board also considered that there will be consequences from the
1996 Repurchase Offer that would not be equivalent to those that could be
expected if the Fund were to convert to open-end status. These include:
POSSIBLE PRORATION: If the Fund were to convert to open-end status, any or
all of a shareholder's outstanding shares of the Fund would be redeemable at
their net asset value (less a small redemption fee that the Board expects would
be imposed on redemptions occurring within the first six months following the
Fund's change in status). The Board expects that the 1996 Repurchase Offer
should be sufficient to ensure that all shareholders who wish to liquidate all
or a portion of their Fund shares at approximately net asset value will be in a
position to do so. However, it is possible that the 1996 Repurchase Offer could
be oversubscribed. If more than 55% of the outstanding shares of the Fund are
tendered in response to the 1996 Repurchase Offer, the Fund would be required to
repurchase shares tendered on a pro rata basis, subject to the conditions and
provisos set forth in the Original Proxy Statement. In the event of such an
oversubscription of the 1996 Repurchase Offer, shareholders may be unable to
liquidate, through the 1996 Repurchase Offer, a portion of the shares they
tender.
ONE-TIME REPURCHASE DATE: If the Fund were to convert to open-end status, a
shareholder's shares of the Fund would be redeemable on a daily basis,
commencing with the date the Fund started operations as an "open-end" investment
company. Under the 1996 Repurchase Offer, only those shares tendered as of a
date certain would be repurchased by the Fund. It is not expected that any
further repurchases by the Fund of its outstanding shares (other than possible
open market repurchases) would be made by the Fund until the Annual Repurchase
Offer to be held in 1997. Moreover, whereas redemption requests for an open-end
investment company are based on net asset value next computed after their
receipt in good order by the investment company, under the 1996 Repurchase
Offer, shares tendered will be repurchased based on their net asset value as
computed on the "Repurchase Pricing Date," which could be up to fourteen days
after the date by which repurchase requests must be received by the Fund.
DESCRIPTION OF THE LITIGATION
INTRODUCTION. Subsequent to the mailing of the original proxy materials and
prior to the December 13, 1995 Special Meeting of Shareholders (the "Meeting"),
two shareholders of the Fund filed separate actions against the Fund, G.T.
Capital Management, Inc. (now named LGT Asset Management, Inc.) ("G.T. Capital")
and the Fund's Trustees in the United States District Court for the Northern
District of California. The first action was filed as a purported class action
on November 9, 1995, and is captioned ANTHONY SPILLANE v. G.T. GREATER EUROPE
FUND, G.T. CAPITAL MANAGEMENT, INC., DAVID A. MINELLA, C. DEREK ANDERSON, FRANK
S. BAYLEY, ARTHUR C. PATTERSON AND RUTH H. QUIGLEY, No. C-95-04012 (DLJ) (the
"Spillane Action"). The original complaint in the Spillane Action alleged that
the Fund, G.T. Capital and the Fund's Trustees all violated Section 14(a) of the
Securities Exchange Act of 1934 ("1934 Act"); that G.T. Capital and the Trustees
violated Section 36(a) of the 1940 Act; that G.T. Capital and the Trustees
violated Section 17203 of the California Business and Professions Code and
breached their fiduciary duties and engaged in constructive fraud in violation
of state common law; and that the Trustees violated Section 48(a) of the 1940
Act. As subsequently amended on November 30, 1995, the Spillane Action alleges
further violations of the 1940 Act, state law, and the 1934 Act in connection
with the proxy solicitation. Plaintiff in the Spillane Action sought to enjoin
the shareholder vote to convert the Fund to an "interval" fund and to prevent
such conversion, to enjoin any change in the investment objectives of the Fund,
and damages and restitution in an unspecified amount.
The second action was filed on November 20, 1995, and is captioned MAYNARD
LICHTERMAN, AS TRUSTEE OF THE MAYNARD AND JUDY LICHTERMAN TRUST, DERIVATIVELY ON
BEHALF
4
<PAGE>
OF G.T. GREATER EUROPE FUND v. G.T. CAPITAL MANAGEMENT, INC., DAVID A. MINELLA,
C. DEREK ANDERSON, FRANK S. BAYLEY, ARTHUR C. PATTERSON AND RUTH H. QUIGLEY AND
G.T. GREATER EUROPE FUND, No. C-95-4159 (DLJ) (the "Lichterman Action"). The
complaint in the Lichterman Action alleges that G.T. Capital and the Trustees
violated Section 14(a) of the 1934 Act and Rule 14a-9 promulgated thereunder,
breached their fiduciary duties under state law and breached the Fund's
Declaration of Trust; that G.T. Capital violated Section 36(b) of the 1940 Act;
and that the Trustees violated Section 48(a) of the 1940 Act. According to the
complaint, these claims are asserted derivatively on behalf of the Fund, which
is named as a "nominal defendant," and the complaint seeks, among other things,
to enjoin the Meeting.
The principal allegation advanced in both actions is that G.T. Capital and
the Trustees engaged in an unlawful scheme whereby they sold shares of the Fund
to the public in 1990 on the basis of representations that the Fund's
shareholders would eventually have the opportunity to vote to open-end the Fund,
but in 1995 allegedly sought to prevent the Fund from becoming an open-end fund
through the use of the original proxy materials that included an "interval" fund
proposal and that otherwise allegedly contained materially false representations
and omissions of material information regarding both Proposals, so that G.T.
Capital and the Trustees could continue to obtain investment management and
other fees from the Fund.
In late November 1995, both plaintiffs filed motions to obtain preliminary
injunctions that collectively would have enjoined the holding of the Meeting and
the solicitation of proxies in connection therewith, invalidated all proxies
solicited or obtained pursuant to the original proxy materials, and ordered
revised proxy materials to be submitted to the Fund's shareholders. The Fund,
G.T. Capital and the Trustees opposed both motions on the grounds that the
plaintiffs could not meet, and had not met, the requirements for obtaining a
preliminary injunction because (1) neither the plaintiffs nor any of the Fund's
shareholders would be irreparably harmed if the Meeting were held and the vote
completed; (2) the plaintiffs had not and could not demonstrate a probability of
success on the merits of their claims; and (3) the Fund, G.T. Capital and the
Trustees would voluntarily refrain from taking any action that would prejudice
plaintiffs' positions for 60 days following completion of the shareholders' vote
in order to permit plaintiffs the opportunity to adjudicate fully their claims
on the merits.
CURRENT STATUS OF THE LITIGATION. The Court heard oral argument on the
motions for preliminary injunction and, on December 8, 1995, issued an order in
which the Court concluded that "[b]ecause both the risk of irreparable harm and
plaintiffs' probability of success on their claims are minimal, plaintiffs'
motions for preliminary injunction are DENIED."
The Court found no evidence that the fees received by the independent
Trustees would be affected in any way by the adoption of either proposal, and
thus found no conflict of interest with respect to these fees. The Court also
found that, notwithstanding the plaintiffs' allegations, the Fund was required
to seek shareholder approval for the "interval" repurchase provisions, that the
original proxy materials were correct in stating that the two Proposals were
"fundamentally incompatible" since the Fund would be a closed-end fund under the
Restructuring Proposal and would be an open-end fund under the Open-Ending
Proposal, and that the Trustees' recommendation of the Restructuring Proposal
over the Open-Ending Proposal appeared consistent with their duties under
applicable state law and the Fund's Agreement and Declaration of Trust.
The Court concluded that plaintiffs' assumptions that the Open-Ending
Proposal would be adopted and that large numbers of shareholders would redeem
their shares and thereby lower fees to G.T. Capital were "somewhat speculative"
but "not so far-fetched as to completely rule out the possibility that the
potential decline in fees may have affected the opinions presented by G.T.
Capital in the proxy materials." The Court opined that nondisclosure of the
potential effect on fees, although it did not present a "strong case," might
provide a basis for a preliminary injunction if "combined with a high risk of
irreparable harm." The Court found no such risk.
G.T. Capital's investment management fee (which is paid at the annualized
rate of 1.25% of the average weekly adjusted net assets of the Fund) and the
dollar amount that G.T. Capital receives annually
5
<PAGE>
from the Fund in investment management fees (I.E., approximately $3 million for
fiscal 1995) have been fully disclosed to shareholders in the Fund's initial
Prospectus and in its annual financial statements that are sent to shareholders.
In the Board's view, while the dollar amount of investment management fees to
G.T. Capital would likely decrease over the short term following conversion to
open-end status, whether the dollar amount of such fees would decrease over the
longer term is speculative since the total amount of fees would depend on the
amount of the Fund's net assets, which could increase or decrease depending on
investment performance and on whether there were net sales or net redemptions
after conversion of the Fund to open-end status. Moreover, if the Restructuring
Proposal is adopted with an initial tender for 55% of the Fund's outstanding
shares, the dollar amount of investment management fees paid to G.T. Capital
could be even lower over the short term than if the Open-Ending Proposal were
adopted, although the opposite could also be true. The longer term effects of
the Restructuring Proposal on the investment management fees paid to G.T.
Capital are also speculative since the total amount of fees would depend on
investment performance and on the amount of shares repurchased in the Fund's
annual repurchase offers (which could decrease the net assets of the Fund by at
least 5%, though not in excess of 25%, annually). Accordingly, the longer term
relative effects of the two Proposals on the investment management fees paid to
G.T. Capital cannot be accurately predicted.
The Court found that the original proxy materials contained a detailed
analysis of both Proposals, including a number of advantages of open-end funds.
The Court further found that although, overall, the original proxy materials
presented a more favorable view of the Restructuring Proposal than the
Open-Ending Proposal, "[t]he presentation of a more favorable opinion on one
proposal does not, in and of itself, provide a basis of liability... ." The
Court also found that the "[p]laintiffs provide nothing more than conjecture and
speculation" to support their allegations that the Trustees' and G.T. Capital's
opinions were not based on defendants' true beliefs.
The Court has not yet set a schedule for the resolution on the merits of the
claims asserted in the Spillane and Lichterman Actions. The parties are
currently engaged in the discovery process. Unless the litigation is resolved by
the time of the adjourned meeting, implementation of the Restructuring Proposal,
if it is the choice of shareholders, would be delayed for 60 days and could be
delayed further if the Court so orders. Management would expect to oppose any
such delay and expects to take all appropriate actions to implement the decision
of the Fund's shareholders as soon as practical thereafter.
The Fund, G.T. Capital and the Trustees believe that the claims made in the
Spillane and Lichterman Actions are without merit and intend to defend against
such claims vigorously.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
BY ORDER OF THE BOARD OF TRUSTEES,
HELGE KRIST LEE
SECRETARY
JANUARY 17, 1996
6
