<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 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 identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_
(2) Form, Schedule or Registration Statement No.:
_
(3) Filing Party:
_
(4) Date Filed:
_
<PAGE> 2
G. T. GLOBAL DEVELOPING MARKETS FUND, INC.
50 California Street
27th Floor
San Francisco, CA 94111
DEAR STOCKHOLDER:
Attached is the Notice and Proxy Statement for the Annual Meeting of
Stockholders of G.T. Global Developing Markets Fund, Inc. (the "Fund") to be
held on July 16, 1996. There are three matters on which you, the Stockholder,
are being asked to vote: (i) the election of the Fund's Directors; (ii) the
ratification of the selection of independent accountants; and (iii) a
stockholder proposal recommending that the Board of Directors take action to
convert the Fund to open-end status.
The Fund's Board of Directors unanimously recommends that you vote for
proposal number one and proposal number two and against proposal number three.
To help the Fund avoid the substantial costs of further proxy
solicitations, please complete the proxy and return it as soon as possible in
the enclosed postage paid envelope even if you plan to attend the meeting.
Sincerely yours,
/s/ DAVID A. MINELLA
-----------------------------------
DAVID A. MINELLA
Chairman of the Board
and President
June 4, 1996
<PAGE> 3
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
50 California Street
27th Floor
San Francisco, California 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 16, 1996
To the Stockholders of G.T. Global Developing Markets Fund, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of G.T. Global Developing Markets Fund, Inc. (the "Fund") will be
held at 50 California Street, San Francisco, California on July 16, 1996 at 3:00
p.m., Pacific time. At the Meeting, you and the other stockholders of the Fund
will be asked to consider and vote:
1. To elect the Fund's Board of Directors;
2. To ratify the selection of Coopers & Lybrand L.L.P., independent
accountants, as auditors for the Fund for its fiscal year ending
December 31, 1996;
3. To approve or disapprove a stockholder proposal recommending that
the Board of Directors take action to convert the Fund from a
closed-end investment company to an open-end investment company;
and
4. To transact such other business as may properly come before the
Meeting or at any adjournments thereof.
Stockholders of record at the close of business on April 26, 1996, are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. We sincerely hope you can attend the Meeting.
However, whether or not you will attend, we urge you to COMPLETE, SIGN AND
RETURN PROMPTLY THE ENCLOSED PROXY so that a quorum will be present and a
maximum number of shares may be voted.
By Order of the Board of Directors
/s/ HELGE KRIST LEE
----------------------------------
HELGE KRIST LEE
Vice President and Secretary
San Francisco, California
June 4, 1996
YOUR VOTE IS VERY IMPORTANT. BY PROMPTLY MARKING, SIGNING AND RETURNING THE
ENCLOSED PROXY YOU WILL HELP YOUR FUND AVOID THE SUBSTANTIAL ADDITIONAL EXPENSES
OF MAKING FURTHER SOLICITATIONS.
<PAGE> 4
PROXY STATEMENT
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
50 California Street
27th Floor
San Francisco, California 94111
(415) 392-6181
ANNUAL MEETING OF STOCKHOLDERS
July 16, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of G.T. Global Developing Markets Fund, Inc.
(the "Fund"). These proxies are to be used at the Annual Meeting of Stockholders
and any adjournments thereof (collectively, the "Meeting") to be held at the
offices of the Fund, 50 California Street, 27th Floor, San Francisco, California
94111, on July 16, 1996, at 3:00 p.m. Pacific time. Each stockholder will be
entitled to one non-cumulative vote for each share owned on all matters to come
before the Meeting. Only stockholders of record at the close of business on
April 26, 1996 ("Stockholders") are entitled to notice of and to vote at the
Meeting. Copies of this Proxy Statement and the accompanying proxy were first
sent to such Stockholders on or about June 4, 1996.
If the accompanying form of proxy is properly executed and returned in time
to be voted at the Meeting, the shares covered thereby will be voted in
accordance with the instructions marked thereon by the Stockholder. Executed
proxies that are unmarked will be voted in favor of the five nominees for
directors named herein; in accordance with the recommendation of your Board of
Directors as to all other Proposals; and, at the discretion of the Proxyholders,
on any other matter that may properly have come before the Meeting or any
adjournments thereof. 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 attending the Meeting and voting in person. In
addition, the issuance of a subsequent proxy will automatically revoke any prior
proxy. Solicitation may be made by mail, telephone, telegraph, telecopy and
personal interviews. Authorization to execute proxies may be obtained by
telephonic or electronically transmitted instructions.
The presence in person or by proxy of stockholders entitled to cast a
majority of all the votes entitled to be cast at the Meeting shall constitute a
quorum at the Meeting. If, by the time scheduled for the Meeting, a quorum is
present but sufficient votes in favor of any proposals that may come before the
Meeting are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Meeting to be adjourned. A
stockholder vote may be taken on one or more of the proposals prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as shares present
for purposes of determining whether a quorum is present but will not be voted
for or against any proposal or for or against any adjournment to permit further
solicitation of proxies. Accordingly, abstentions and broker non-votes
effectively will be a vote against such adjournment or against any proposal
where the required vote is a percentage of the shares present. Abstentions and
broker non-votes will not be counted, however, as votes cast for purposes of
determining whether sufficient votes have been received to approve a proposal.
1
<PAGE> 5
At the record date, there were 36,416,667 shares of the Fund's common stock
outstanding. To the knowledge of the Fund's management, there are no owners of
5% or more of the Fund's outstanding common stock except Fidelity Management &
Research Company ("FMR"), 82 Devonshire Street, Boston, MA, which was the
beneficial owner of 5.69% of the Fund's outstanding common stock according to a
Schedule 13F dated March, 1996, which indicated that the number of shares owned
by FMR on behalf of its various investment advisory clients to be 2,073,000
shares, for which FMR has sole voting and dispositive powers.
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's Directors are listed below.
It is the intention of the Proxyholders named in the accompanying form of
proxy to vote such proxy FOR the election of the nominees listed below unless
the Stockholder specifically indicates in his or her proxy desire to withhold
authority to vote for any nominee. A plurality of all the votes cast at the
Meeting is required to elect each nominee. Stockholders of the Fund do not have
cumulative voting rights with respect to the election of the Directors. The
Board of Directors does not contemplate that any of the nominees, who have
consented to being nominated, will be unable to serve as Directors for any
reason, but if that should occur prior to the Meeting, the proxies will be voted
for such other nominee(s) as the Board of Directors may recommend. If elected,
each nominee will hold office until the next annual meeting of Stockholders or
until his/her successor is duly elected and qualified.
Each nominee has served as a Director since the Fund's commencement of
operations on January 11, 1994. Mr. Minella is an "interested person" of the
Fund, as defined in the Investment Company Act of 1940, as amended ("1940 Act"),
by virtue of his employment by LGT Asset Management, Inc. (formerly G.T. Capital
Management, Inc.) ("LGT Asset Management"), the Fund's investment manager and
administrator.
INFORMATION REGARDING NOMINEES FOR ELECTION AT 1996 ANNUAL MEETING
<TABLE>
<CAPTION>
SHARES OF THE
FUND
BENEFICIALLY
OWNED
DIRECTLY OR
INDIRECTLY
NAME, AGE, BUSINESS EXPERIENCE POSITION(S) WITH THE ON APRIL 26,
DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND 1996
- ----------------------------------------------------- ---------------------- ----------------
<S> <C> <C>
C. Derek Anderson, Age 54 Director --
Chairman of Anderson Capital Management, Inc.;
Chairman, Plantagenent Holdings, Ltd. from 1991 to
present; Director, Munsingwear, Inc.; Director,
American Heritage Group, Inc.; and various other
companies. Mr. Anderson also is a director or trustee
of each of the other investment companies registered
under the 1940 Act that is managed or administered by
LGT Asset Management.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OF THE
FUND
BENEFICIALLY
OWNED
DIRECTLY OR
INDIRECTLY
NAME, AGE, BUSINESS EXPERIENCE POSITION(S) WITH THE ON APRIL 26,
DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND 1996
- ----------------------------------------------------- ---------------------- ----------------
<S> <C> <C>
Frank S. Bayley, Age 56 Director 100
A partner of the law firm of Baker & McKenzie, and
serves as Director and Chairman of C.D. Stimson
Company (a private investment company). Mr. Bayley
also is a director or trustee of each of the other
investment companies registered under the 1940 Act
that is managed or administered by LGT Asset
Management.
Arthur C. Patterson, Age 51 Director --
Managing Partner of Accel Partners, a venture capital
firm. Mr. Patterson also serves as a director of
various computing and software companies. Mr.
Patterson also is a director or trustee of each of
the other investment companies registered under the
1940 Act that is managed or administered by LGT Asset
Management.
Ruth H. Quigley, Age 60 Director 100
Private investor. From 1984 to 1986, she was
President of Quigley Friedlander & Co., Inc., a
financial advisory services firm. Miss Quigley also
is a director or trustee of each of the other
investment companies registered under the 1940 Act
that is managed or administered by LGT Asset
Management.
David A. Minella, Age 43 Chairman of the Board, 17,418
Director of Liechtenstein Global Trust (holding Director and President
company of
the various international LGT companies) since 1990;
President of the Asset Management Division,
Liechtenstein Global Trust since 1995; Director and
President of LGT Asset Management Holdings, Inc.
since 1988; Director and President of LGT Asset
Management since 1989; Director of GT Global, Inc.
("GT Global") since 1987 and President of GT Global
from 1987 to 1995; Director of GT Global Investor
Services, Inc. ("GT Services") since 1990; President
of GT Services from 1990 to 1995; Director of G.T.
Global Insurance Agency, Inc. ("G.T. Insurance")
since 1992, and President of G.T. Insurance from 1992
to 1995. Mr. Minella also is a director or trustee of
each of the other investment companies registered
under the 1940 Act that is managed or administered by
LGT Asset Management.
</TABLE>
To the knowledge of the Fund's management, as of the record date, the
officers and Directors of the Fund owned, as a group, 17,618 shares of the
Fund's common stock, representing less than 1% of the Fund's outstanding common
stock. Of these shares, 10,000 shares were individually owned by Mr. Minella and
7,418 shares were owned by LGT Asset Management Holdings, Inc., which Mr.
Minella is presumed to control.
3
<PAGE> 7
The above information is provided with respect to each Director's business
experience during at least the past five years. Corresponding information with
respect to the executive officers of the Fund is provided below. See "Executive
Officers of the Fund."
The Board of Directors has an Audit Committee comprised of Miss Quigley and
Messrs. Anderson, Bayley and Patterson. The purpose of the Audit Committee is to
oversee the annual audit of the Fund and review the performance of the Fund's
independent accountants. During the Fund's fiscal year ended December 31, 1995,
the Audit Committee met once.
There were seven meetings of the Board of Directors held during the Fund's
fiscal year ended December 31, 1995. Each of the Directors attended all such
meetings other than Mr. Patterson, who attended five such meetings. The Fund
pays each Director who is not a director, officer or employee of LGT Asset
Management or any affiliated company an annual fee of $5,000, plus $300 for each
meeting of the Board or any committee of the Board attended by such Director and
reimburses travel and other out-of-pocket expenses incurred in connection with
attending Board meetings. For the Fund's fiscal year ended December 31, 1995,
the Directors who are not "interested persons" (as defined in the 1940 Act) of
the Fund, in the aggregate received fees and expense reimbursements totalling
$31,780. Mr. Minella received no compensation from the Fund.
The table below summarizes the compensation of the Fund's Directors for the
fiscal year ended December 31, 1995.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
AGGREGATE BENEFITS ESTIMATED COMPENSATION
COMPENSATION ACCRUED AS ANNUAL FROM THE
FROM PART OF THE BENEFITS UPON FUND AND THE
NAME OF PERSON, POSITION THE FUND FUND'S EXPENSES RETIREMENT FUND COMPLEX
- ------------------------------------- ------------ --------------- -------------- ------------
<S> <C> <C> <C> <C>
C. Derek Anderson.................... $8,121 N/A N/A $ 92,177
Frank S. Bayley...................... $7,939 N/A N/A $ 87,869
David A. Minella..................... N/A N/A N/A N/A
Arthur C. Patterson.................. $7,819 N/A N/A $ 92,261
Ruth H. Quigley...................... $7,901 N/A N/A $ 86,958
</TABLE>
Recommendation and Required Vote
A plurality of all the votes cast at the Meeting is required for the
election of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE DIRECTORS LISTED
IN PROPOSAL NO. 1.
PROPOSAL 2: RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting called for the purpose of such selection, the firm of Coopers
& Lybrand L.L.P. was selected by the Fund's Board of Directors, including the
Directors who are not "interested persons" (as defined in the 1940 Act), as the
independent accountants to audit the books and the accounts of the Fund for the
fiscal year ending December 31, 1996, and to include its opinion in financial
statements filed with the Securities and
4
<PAGE> 8
Exchange Commission. The Board of Directors has directed the submission of this
selection to the Fund's Stockholders for ratification. Coopers & Lybrand L.L.P.
has advised the Board of Directors that it has no financial interest in the
Fund. For the Fund's fiscal year ended December 31, 1995, the professional
services rendered by Coopers & Lybrand L.L.P. included the issuance of an
opinion on the financial statements of the Fund and an opinion on other reports
of the Fund filed with the Securities and Exchange Commission. Representatives
of Coopers & Lybrand L.L.P. are not expected to be present at the Meeting, but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence. Ratification of
this Proposal requires the affirmative vote of a majority of the votes cast
thereon at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P.
PROPOSAL 3: STOCKHOLDER PROPOSAL RECOMMENDING THAT THE BOARD OF DIRECTORS TAKE
ACTION TO CONVERT THE FUND FROM CLOSED-END TO OPEN-END STATUS.
Stockholder Proposal
The Board of Directors has been informed by Newgate Management Associates
which beneficially owned 1,933,175 shares on April 26, 1996, that it intends to
submit the following proposal at the Meeting:
RESOLVED, that the holders of the Common Stock of G.T. Global Developing
Markets Fund, Inc. (the "Fund"), assembled at an annual meeting in person and by
proxy, hereby recommend that the Fund's Board of Directors take all necessary
legal and other actions to convert the Fund from closed-end to open-end status.
The proponent has requested that the following statement be included in the
proxy statement in support of its proposal.
The prospectus, dated January 11, 1994, through which the Fund offered its
Common Stock to the public states, that "In recognition of the possibility that
the Common Stock might trade at a discount to net asset value and that any such
discount may not be in the interest of stockholders, the Fund's Board of
Directors may consider taking action to attempt to reduce or eliminate any
discount."
Although the Fund has traded at an average weekly discount (from inception
through February 9, 1996) of 14.1%, with a discount as high as 22.9% on June 23,
1995, the Board has not attempted to reduce this discount either through share
repurchases or conversion to open-end status.
5
<PAGE> 9
<TABLE>
<CAPTION>
DATE NAV PRICE
<S> <C> <C>
1/14/94 14.960 15.250
1/21/94 14.930 15.000
1/28/94 14.960 14.875
2/4/94 15.340 14.875
2/11/94 15.530 15.125
2/18/94 15.070 15.125
2/25/94 14.430 14.625
3/4/94 14.190 14.125
3/11/94 14.140 13.500
3/18/94 13.880 12.750
3/25/94 13.710 13.250
4/1/94 13.160 11.875
4/8/94 13.030 12.125
4/15/94 12.620 11.750
4/22/94 12.170 11.375
4/29/94 11.860 11.375
5/6/94 12.170 11.125
5/13/94 12.430 11.000
5/20/94 12.890 11.750
5/27/94 13.000 11.625
6/3/94 13.070 12.250
6/10/94 13.160 12.000
6/17/94 12.900 11.875
6/24/94 12.450 11.125
7/1/94 12.530 10.750
7/8/94 13.020 11.000
7/15/94 13.020 11.625
7/22/94 12.830 11.500
7/29/94 13.030 11.500
8/5/94 13.520 11.625
8/12/94 13.680 11.625
8/19/94 14.230 12.875
8/26/94 14.420 13.000
9/2/94 14.450 12.750
9/9/94 14.430 12.625
9/16/94 14.610 12.375
9/23/94 14.710 12.250
9/30/94 14.670 12.250
10/7/94 14.480 12.000
10/14/94 14.780 12.250
10/21/94 14.080 11.875
10/28/94 14.420 12.125
11/4/94 14.310 12.000
11/11/94 14.260 11.375
11/18/94 14.060 11.375
11/25/94 13.680 11.250
12/2/94 13.990 11.375
12/9/94 14.040 10.875
12/16/94 13.880 11.125
12/23/94 12.480 10.000
12/30/94 12.440 9.750
1/6/95 11.730 9.625
1/13/95 11.570 10.000
1/20/95 11.150 9.875
1/27/95 11.000 9.500
2/3/95 11.360 9.500
2/10/95 10.950 9.625
2/17/95 10.540 8.875
2/24/95 10.460 8.750
3/3/95 9.960 8.500
3/10/95 9.410 7.875
3/17/95 9.570 8.125
3/24/95 9.850 8.000
3/31/95 10.080 8.500
4/7/95 10.580 8.875
4/14/95 10.280 8.625
4/21/95 10.910 9.125
4/28/95 11.020 9.625
5/5/95 11.370 9.625
5/12/95 11.590 9.875
5/19/95 11.690 9.500
5/26/95 11.720 9.500
6/2/95 11.840 9.750
6/9/95 11.380 9.375
6/16/95 11.550 9.000
6/23/95 11.430 8.813
6/30/95 11.630 9.125
7/7/95 12.030 10.000
7/14/95 12.230 9.875
7/21/95 11.940 9.250
7/28/95 11.980 9.500
8/4/95 12.080 9.625
8/11/95 12.080 9.375
8/18/95 11.970 9.375
8/25/95 11.950 9.500
9/1/95 12.020 9.500
9/8/95 12.100 9.750
9/15/95 12.290 10.000
9/22/95 12.140 9.875
9/29/95 12.090 9.875
10/6/95 12.070 9.625
10/13/95 11.980 9.750
10/20/95 11.980 9.750
10/27/95 11.620 9.375
11/3/95 11.700 9.375
11/10/95 11.380 9.250
11/17/95 11.400 9.125
11/24/95 11.480 9.375
12/1/95 11.820 9.375
12/8/95 11.980 9.875
12/15/95 11.970 9.625
12/22/95 11.530 9.375
12/29/95 11.600 9.625
1/5/96 12.010 11.000
1/12/96 12.140 11.000
1/19/96 12.260 11.750
1/26/96 12.490 11.375
2/2/96 12.710 11.375
2/9/96 12.910 11.375
2/16/96 12.890 11.375
2/23/96 12.720 11.375
3/1/96 12.500 11.000
3/8/96 12.150 10.250
3/15/96 12.230 10.500
3/22/96 12.500 10.625
3/29/96 12.490 10.625
4/5/96 12.560 10.125
4/12/96 12.540 10.750
4/19/96 12.700 10.500
4/26/96 12.870 10.375
5/3/96 12.960 10.375
</TABLE>
There are several precedents for open-end conversions. In 1995, the Boards
of Global Privatization Fund and Global Total Return Fund proposed open-ending
votes to their stockholders. In each case, the result was an immediate gain in
the respective funds' share prices, to the obvious benefit of their
stockholders.
Conversion of the Fund to open-end status would:
- If effected as of today, permit stockholders desiring to dispose of
their investments to do so at a price substantially higher than the
trading price of the Fund's shares on The New York Stock Exchange.
- Immediately increase the market value of the Fund's shares.
- Allow stockholders to increase their investments in the Fund without
incurring any brokerage commissions, although stockholders might be
subject to sales charges.
- Eliminate any future possibility of the Fund's shares trading at a
discount to net asset value.
The Fund is currently a closed-end investment company. Accordingly, its
stockholders may not require the Fund to redeem their shares. Instead, in order
to dispose of their shares, stockholders must sell them through broker-dealers,
with the attendant costs. Moreover, such shares must be sold at prevailing
market prices, which have typically been at significant discounts to their net
asset value.
6
<PAGE> 10
Conversely, an open-end fund sells its shares to the public on a continuing
basis and permits its stockholders to redeem shares on a continuing basis at
their net asset value at the time of redemption (less any redemption charges).
If this proposal were approved, Fund stockholders would be able to dispose of
their shares at a price equal to the net asset value thereof (net of any
redemption or conversion charges and expenses). The proponent strongly
recommends that no such charges be imposed. Also, the Fund could obtain
additional capital infusions from new investors. Adoption of this proposal would
increase the value of stockholders' shares, immediately and significantly.
Required Vote
Approval of this stockholder proposal requires the affirmative vote of a
majority of the votes cast thereon at the Meeting. Even if the stockholder
proposal is approved, the Board is not required to proceed to convert the Fund
to open-end status or to present such an option to stockholders. However, if the
stockholder proposal is approved and the Board of Directors determines to
proceed with converting the Fund to open-end status, it will be necessary to
call another meeting of stockholders at which stockholders will be asked to vote
whether or not to convert the Fund to an open-end fund. Approval of that
proposal would also require stockholder approval.
Recommendation of the Board of Directors
FOR THE REASONS SET FORTH BELOW, THE BOARD OF DIRECTORS
UNANIMOUSLY BELIEVES THAT THE CLOSED-END STRUCTURE CONTINUES TO BE
THE STRUCTURE BEST SUITED FOR CARRYING OUT THE FUND'S INVESTMENT
OBJECTIVES AND POLICIES, AND THEREFORE RECOMMENDS THAT YOU VOTE
AGAINST THE RESOLUTION CONTAINED IN THE STOCKHOLDER PROPOSAL
RELATING TO CONVERTING THE FUND TO AN OPEN-END INVESTMENT COMPANY.
The Board of Directors unanimously believes that a closed-end structure
continues to be the appropriate format for the Fund, which is designed primarily
as a long-term vehicle for investment in the developing (or "emerging") markets
of Asia, Europe, Latin America and elsewhere. LGT Asset Management and the Board
believe that investments in emerging markets provide the Fund with an excellent
opportunity to seek its primary investment objective (long-term capital
appreciation) and its secondary investment objective (income, to the extent
consistent with seeking capital appreciation). However, LGT Asset Management and
the Board do not believe that an open-end structure is the most suitable format
to allow LGT Asset Management and the Fund to best achieve these investment
objectives.
If the Fund adopts an open-end structure, it would have the following
impact on the portfolio: currently, the Fund may invest up to 33 1/3% of its
assets in illiquid securities. By contrast, an open-end investment company may
not invest more that 15% of its net assets in illiquid securities. In the view
of the Board and LGT Asset Management, some of the more attractive investment
opportunities in emerging markets are in securities that are illiquid and
require a long-term investment horizon. If the Fund adopts an open-end
structure, it would no longer be able to invest as great a percentage of its
assets in such securities.
In addition, the Fund, as a closed-end investment company, does not redeem
shares. By contrast, an open-end investment company is required to redeem its
shares on a continuous basis. Emerging markets are volatile and subject to rapid
changes in investor sentiment. Economic or political upheavals in one emerging
market can have repercussions not only in that particular market but in other
developing markets. If the Fund were to adopt an open-end structure, the Fund
could be forced to sell securities at depressed prices or at times
7
<PAGE> 11
that it would not otherwise choose to do so, in order to meet anticipated or
unanticipated redemptions. The Fund's closed-end structure permits the portfolio
manager to allocate investments among emerging markets (and companies within
such markets) as the manager deems suitable under the circumstances without
regard to the pressures of potentially volatile cash outflows. Under a
closed-end structure, the portfolio manager may therefore be in a better
position to take advantage of short-term market disruptions by initiating,
holding or increasing investments in countries, regions, or industries that are
currently weak but attractive long-term.
To summarize, the Board and LGT Asset Management believe that the Fund's
current closed-end structure:
- permits the Fund to invest a greater percentage of its assets in
long-term situations that may have limited liquidity;
- protects the Fund from having to liquidate portfolio positions at
inopportune times or prices; and
- places the Fund's portfolio manager in a better position to take
advantage of short-term market disruptions.
The stockholder proposal on which you are voting focuses on eliminating the
discount at which the Fund sells. The Board recognizes that since the Fund
commenced operations in January, 1994, shares of the Fund, like shares of many
other closed-end funds, have traded at a discount to net asset value. The Board
also recognizes that stockholders are concerned about not being able to obtain
net asset value for their shares. The Board shares these concerns and has
considered and will continue to consider methods of reducing the discount and
increasing share value while at the same time preserving the Fund as an
attractive investment for its long-term stockholders.
The Fund was designed and marketed as a long-term investment vehicle. The
Board believes that a majority of the Fund's initial and subsequent stockholders
purchased their shares with a long-term investment perspective and with
recognition of the special advantages of closed-end structure. If the Fund were
converted to an open-end fund, most stockholders would find that their money was
invested in an entity with characteristics different from, and less attractive
than, the one in which they had purchased shares. The Board believes that
conversion would be detrimental to those stockholders who continue to view the
Fund as a long-term investment vehicle focused on investing in markets that are
among the most volatile in the world.
For these and the other reasons discussed herein, your Board unanimously
recommends that stockholders vote AGAINST the resolutions contained in the
stockholder proposal.
LEGAL AND OPERATIONAL ISSUES CONSIDERED IN ASSESSING WHETHER TO CONVERT THE FUND
TO OPEN-END STATUS.
In assessing whether to support or oppose the stockholder proposal to
convert the Fund to open-end status, in addition to the investment objectives
and policies of the Fund and the nature of emerging markets, the Board
considered various legal and operational issues, including the following:
FLUCTUATION OF CAPITAL. As indicated above, the Fund, as a closed-end
investment company, operates with a relatively fixed capitalization; the Fund
neither redeems its outstanding shares nor does it engage in the continuous sale
of new shares. By contrast, if the Fund were to convert to open-end status, its
outstanding shares and any others that it issued, would be redeemable. Holders
of such redeemable securities would have the right to surrender those securities
to the Fund and to obtain in return their proportionate share of the value of
the Fund's net assets (less any redemption fee charged by the Fund).
Accordingly, if the Fund were to
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<PAGE> 12
convert to open-end status, the Fund could experience continuing outflows (or
inflows) of cash depending on whether it experienced net redemptions (or net
sales) of its shares, and would in any event be required to maintain sufficient
cash flow reserves to provide for stockholder redemptions in uncertain amounts.
The flow of money into or out of the Fund would be affected by investor
psychology and sentiment and could be extremely volatile and unpredictable,
particularly given the Fund's investment focus on emerging markets, about which
investor sentiment can change quickly and can have a great impact on the
markets.
PORTFOLIO MANAGEMENT. Most open-end funds maintain reserves of cash or
cash equivalents in order to meet net redemptions as they may arise. As a
closed-end investment company, the Fund need not sell portfolio securities to
satisfy redemptions. This allows the Fund to be more fully invested, which means
that a larger portion of the Fund's portfolio is generating the potential gains
and income to be used by the Fund to pay periodic distributions and dividends to
its stockholders. Similarly, because closed-end funds generally do not engage in
the continuous sale of new securities, and thus operate with a relatively fixed
amount of capital, the Fund is not faced with the options of either holding a
large cash position or purchasing securities at disadvantageous prices or at
inopportune times due to new capital being invested in the Fund. The investment
of new capital into an open-end fund may result in the dilution of the existing
stockholders' share of the Fund's portfolio.
Another advantage of not having to meet redemptions is that the Fund's cash
reserves can be managed substantially, if not exclusively, on LGT Asset
Management's perception of investment opportunity. If the Fund were to convert
to open-end status, the larger reserves of cash or cash equivalents required to
operate prudently as an open-end fund when net redemptions are anticipated could
reduce the Fund's investment flexibility, the scope of its investment
opportunities and the income earning potential of its investment portfolio.
Maintaining investment flexibility against the possibility of continuing
redemptions means the portion of the Fund's assets that it could invest in
smaller companies or even in entire markets of developing countries with
excellent prospects but with limited marketability would be limited. Moreover,
under Securities and Exchange Commission interpretations, an open-end investment
company may not invest more than 15% of its total assets in illiquid securities.
During the 12-month period ended March 31, 1996, the Fund's investments in
illiquid securities at each month end during the period, stated as a percentage
of the Fund's total assets, ranged from approximately 10% to 25%. Were the Fund
to convert to an open-end investment company, the amount of assets that it could
invest in illiquid securities would become subject to the 15% limitation.
FUND OPERATIONS AND EXPENSES. Conversion to open-end status could lead to
consequences undesirable from the viewpoint of the long-term investor.
Significantly, conversion could trigger immediate cash redemptions in volume
causing a reduction in Fund size. Significant net redemptions could render the
Fund an uneconomical venture by virtue of its diminished size. Also, in the
event temporary investments and borrowings were exhausted, the result of meeting
net redemptions could be that the more liquid securities in the Fund's portfolio
would be sold, leaving the converted Fund with the less liquid, lower grade
securities in its portfolio and, accordingly (in the absence of new net sales),
less able to accommodate subsequent redemptions. Such redemptions could also
lead to forced realization of capital gains, with resulting unfavorable tax
consequences to a great number of stockholders.
By the same token, it may be that redemptions triggered by conversion to
open-end status could be fully offset, or more than offset, by new sales of the
Fund's shares and by reinvestment of dividends and other distributions in shares
of the converted Fund. An increase in the size of the Fund could lead to greater
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<PAGE> 13
economies of scale. Because the dollar amount of the investment management and
administration fees that LGT Asset Management receives annually from the Fund
(which is 1.65% of the average weekly net assets on an annualized basis) depends
on the total amount of the Fund's net assets (LGT Asset Management also receives
a fee for services it performs in its role as the Fund's pricing and accounting
agent in an amount not to exceed 0.03% annually of the Fund's average daily net
assets), an increase in the size of the Fund could lead to an increase in such
fees received by LGT Asset Management. Conversely, any decrease in the size of
the Fund by virtue of net redemptions or otherwise could lead to a decrease in
such fees received by LGT Asset Management.
The process of converting to an open-end investment company could be
costly, as conversion would involve legal, accounting, registration, printing
and other expenses associated with establishing the new open-end structure. Such
expenses would be borne by the Fund's stockholders. Although the Board of
Directors at this time is unable to determine the precise costs that would be
involved, it has been advised that the cost of conversion to the Fund would be
at least $175,000.
In addition to the costs of conversion, operating as an open-end investment
company would entail additional costs not presently incurred by the Fund. For
instance, it is likely that the change would result in an increase in the Fund's
operating costs and operating costs per share as continuous sales and
redemptions most likely would result in increased transaction costs associated
with investing new money and satisfying redemption requests. This has been the
experience of a number of funds, which have experienced increased expense ratios
after their conversion to open-end status, even when their assets have increased
rather than decreased. If the Fund were to convert to open-end status, all
stockholders would indirectly bear brokerage and other transactional costs
associated with purchases and sales of portfolio securities in response to the
sale or redemption of shares.
Moreover, since the Fund, as an open-end fund, would likely provide more
services to stockholders than do closed-end funds, the Fund would be likely to
incur correspondingly higher stockholder servicing expenses. Typically, such
personal services relating to stockholder accounts include answering stockholder
inquiries regarding the Fund's daily net asset value and providing reports and
other information, and services related to the maintenance of stockholder
accounts. Other services generally offered by a family of open-end funds include
enabling stockholders to exchange their investment from one fund into another
fund that is part of the same family of open-end funds. The costs of these
services are normally borne by the open-end fund rather than the individual
stockholders and should be weighed against the anticipated benefit of the
particular service. Because a portion of the Fund's operating expenses remains
relatively constant as the Fund's assets increase or decrease, the Fund's
expense ratio would increase if the Fund experienced net redemptions.
Stockholders who do not redeem will be impacted by these additional costs and
higher expense ratios.
Although conversion to open-end status would allow stockholders to increase
their investments in the Fund without incurring any brokerage commission, it is
likely that stockholders would be subject to sales charges, as open-end funds
advised by LGT Asset Management are typically sold with some form of "load."
Shares of "load" open-end investment companies are normally offered and sold
through a principal underwriter, which deducts a sales charge from the purchase
price at the time of purchase or from the redemption proceeds at the time of
redemption, or receives a distribution fee from the fund, or both, to compensate
it and securities dealers for sales and marketing services. Shares of "no-load"
open-end investment companies are sold at net asset value, without a sales
charge, with the fund's investment adviser or an affiliate normally bearing the
cost of sales and marketing from its own resources.
10
<PAGE> 14
After conversion, the Fund would also likely find it necessary to impose a
"Rule 12b-1 plan," which would permit the Fund to pay annual distribution and
service fees of up to 1.00% of the Fund's net assets. If such distribution plan
were approved, the Board would expect to authorize the payment of such fees at
the annual rate of 0.50% of average net assets, consistent with the rates of
similar GT Global Mutual Funds. Moreover, if the Fund were to convert to
open-end status, the Board would also reserve the right to impose a redemption
fee of up to 2.00% of the net asset value of redeemed shares to be imposed on
redemptions following the Fund's conversion. Such a fee, which would be similar
to that imposed by other funds that have converted to open-end status, would be
designed to offset the effect on remaining stockholders of costs of liquidating
portfolio securities, and to reimburse the Fund for administering the redemption
program.
NEW YORK STOCK EXCHANGE DE-LISTING AND BLUE SKY REGISTRATION. Unlike
shares of open-end funds, shares of closed-end funds such as the Fund are
available primarily through an exchange. The Fund is currently listed on the New
York Stock Exchange ("NYSE"). Were the Fund to convert to open-end status, it
would automatically lose its NYSE listing. Certain investors, such as pension
funds, have internal restrictions on the amount of their portfolio that can be
invested in non-listed securities. Such de-listing could force the redemption of
shares by stockholders subject to such restrictions.
Although the Fund would save the annual NYSE fee of approximately $32,600
if it were to convert to open-end status, the Fund would incur additional
registration fees under state laws that potentially could more than offset such
savings. The Fund would have to bear the cost of registration, which could be
estimated to range from approximately $20,000 to $100,000 annually, depending on
the projected sales of shares of the Fund and the number of classes of shares
offered.
* * *
The Board does not believe that at this point in time the existence of the
discount alone should lead to a decision to convert the Fund thereby depriving
stockholders with a long-term investment horizon of the advantages of its
closed-end fund structure. The Board believes that any potential benefits of
conversion would not outweigh the associated costs, the likely increase in
post-conversion operating expenses, and the potentially negative impact on the
Fund's portfolio management and investment performance.
FOR ALL OF THE FOREGOING REASONS, THE BOARD UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
* * *
OTHER INFORMATION
Information Regarding LGT Asset Management
LGT Asset Management and its worldwide asset management affiliates have
provided investment management and/or administration services to institutional,
corporate and individual clients around the world since 1969. The U.S. offices
of LGT Asset Management are located at 50 California Street, 27th Floor, San
Francisco, California 94111.
11
<PAGE> 15
LGT Asset Management and its worldwide affiliates, including LGT Bank in
Liechtenstein, formerly Bank in Liechtenstein, comprise Liechtenstein Global
Trust. Liechtenstein Global Trust is a provider of global asset management and
private banking products and services to individual and institutional investors.
Liechtenstein Global Trust is controlled by the Prince of Liechtenstein
Foundation, which serves as the parent organization for the various business
enterprises of the Princely Family of Liechtenstein. The principal business
address of the Prince of Liechtenstein Foundation is Herrengasse 12, FL-9490,
Vaduz, Liechtenstein.
As of April 1, 1996, LGT Asset Management and its worldwide asset
management affiliates managed or administered approximately $25 billion, of
which approximately $15 billion consist of GT Global retail funds worldwide. In
the U.S., as of April 1, 1996, LGT Asset Management managed or administered
approximately $10 billion in GT Global Mutual Funds. As of April 1, 1996, assets
under advice by LGT Bank in Liechtenstein exceeded approximately $21 billion. As
of April 1, 1996, assets entrusted to Liechtenstein Global Trust totaled
approximately $46 billion.
In addition to the resources of its San Francisco office, LGT Asset
Management uses the expertise, personnel, data and systems of other offices of
Liechtenstein Global Trust, including investment offices in London, Hong Kong,
Tokyo, Singapore, Toronto, Sydney and Frankfurt.
12
<PAGE> 16
Executive Officers of the Fund
The executive officers of the Fund are listed below. The business address
of each officer is 50 California Street, San Francisco, California 94111.
David A. Minella, age 43, is President of the Fund. Mr. Minella is a Director
and Chairman of the Board and President of LGT Asset Management.
Helge K. Lee, age 50, is Vice President and Secretary of the Fund. Mr. Lee has
been Senior Vice President and General Counsel of LGT Asset Management Holdings,
LGT Asset Management, GT Global, GT Services and G.T. Insurance since February
1996. He served as Senior Vice President, General Counsel and Secretary of LGT
Asset Management Holdings, Inc., LGT Asset Management, GT Global and GT Services
from May 1994, to February, 1996. Mr. Lee was the Senior Vice President, General
Counsel and Secretary of Strong/Corneliuson Management, Inc. and Secretary of
each of the Strong Funds from October, 1991 through May, 1994. For more than
five years prior to October, 1991, he was a shareholder in the law firm of
Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
F. Christian Wignall, age 39, is Vice President and Chief Investment
Officer--Global Equity Investments of the Fund. Mr. Christian Wignall has been
Director of LGT Asset Management Holdings since 1989, Senior Vice President,
Chief Investment Officer--Global Equities and a Director of LGT Asset Management
since 1987, and Chairman of the Investment Policy Committee of the affiliated
international LGT companies since 1990.
James R. Tufts, age 38, is Vice President, Treasurer and Chief Financial Officer
of the Fund. Mr. Tufts has been President of GT Services since 1995; from 1994
to 1995, Senior Vice President--Finance and Administration of GT Global, GT
Services and G.T. Insurance. Senior Vice President--Finance and Administration
of LGT Asset Management Holdings and LGT Asset Management since 1994. From 1990
to 1994, Mr. Tufts was Vice President--Finance of LGT Asset Management Holdings,
LGT Asset Management and GT Services. He was Vice President--Finance of G.T.
Insurance from 1992 to 1994; and a Director of LGT Asset Management, GT Global
and GT Services since 1991.
Kenneth R. Chancey, age 50, is Vice President and Chief Accounting Officer of
the Fund. Vice President--Mutual Fund Accounting of LGT Asset Management since
1992. Mr. Chancey was Vice President of Putnam Fiduciary Trust Company from 1989
to 1992.
Peter R. Guarino, age 37, is Assistant Secretary of the Fund. Mr. Guarino has
been Secretary of LGT Asset Management Holdings, LGT Asset Management, GT
Global, GT Services and G.T. Insurance since February, 1996. Mr. Guarino has
been Assistant General Counsel of LGT Asset Management, GT Global and GT
Services since 1991, and Assistant General Counsel of G.T. Insurance since 1992.
From 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation.
13
<PAGE> 17
David J. Thelander, age 40, is Assistant Secretary of the Fund. Mr. Thelander
has been Vice President of LGT Asset Management Holdings, LGT Asset Management,
GT Global, GT Services and G.T. Insurance since February, 1996. He has been an
Assistant General Counsel of LGT Asset Management since January 1995. Mr.
Thelander was an associate at the law firm of Kirkpatrick & Lockhart LLP from
1993 to 1994. Prior thereto, he was an attorney with the U.S. Securities and
Exchange Commission.
GENERAL INFORMATION
Stockholder Proposals
The Meeting is an annual meeting of Stockholders. Any Stockholder who
wishes to submit a proposal for consideration at the Fund's next annual
Stockholder meeting should submit such proposal to the Fund no later than
February 4, 1997.
Solicitation of Proxies
The Fund will request broker/dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
held of record by such persons. The Fund may reimburse such broker/dealer firms,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to the solicitation of
proxies by mail, officers of the Fund and employees of LGT Asset Management,
without additional compensation, may solicit proxies in person or by telephone.
The costs associated with such solicitation and the Meeting will be borne by the
Fund.
The Fund has retained a professional proxy solicitation firm, to assist in
the solicitation of Proxies. If the Fund does not receive your Proxy within the
next month, you may receive a telephone call from this firm requesting you to
vote. The Fund estimates that Shareholder Communications Corporation will be
paid fees ranging from approximately $50,000 to $80,000 in connection with the
solicitation, depending on the nature and extent of the services provided.
Other Matters to Come Before the Meeting
The Fund's Board of Directors does not know of any matters to be presented
at the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the Proxyholders will vote
thereon in accordance with their best judgment.
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<PAGE> 18
Reports to Stockholders
THE FUND WILL FURNISH TO STOCKHOLDERS, WITHOUT CHARGE, A COPY OF THE MOST
RECENT ANNUAL REPORT AND A COPY OF THE MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING
SUCH ANNUAL REPORT, IF ANY, ON REQUEST. REQUESTS FOR SUCH REPORTS MAY BE MADE BY
WRITING TO THE FUND AT 50 CALIFORNIA STREET, 27TH FLOOR, SAN FRANCISCO,
CALIFORNIA 94111, OR BY CALLING (800) 824-1580.
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 Directors
/s/ HELGE KRIST LEE
----------------------------------
HELGE KRIST LEE
Vice President and Secretary
June 4, 1996
15
<PAGE> 19
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
Proxy for the Annual Meeting of Stockholders on July 16, 1996
This Proxy is solicited on behalf of the Directors of the Fund
The undersigned hereby appoints David A. Minella, Helge K. Lee and David J.
Thelander, and each of them separately, as Proxies, each with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
below, at the Annual Meeting of Stockholders of G.T. Global Developing Markets
Fund, Inc. (the "Fund") on July 16, 1996 at 3:00 p.m., San Francisco time, and
at any adjournment thereof, all of the shares of the Fund's Common Stock, held
of record by the undersigned on April 26, 1996.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AS SET FORTH IN PROPOSAL 1,
FOR PROPOSAL 2 AND AGAINST PROPOSAL 3.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
If shares are held jointly, each Stockholder named should sign. If only one
signs, his or her signature will be binding. If the Stockholder is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the Stockholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner."
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________________ ______________________________________
_____________________________________ ______________________________________
_____________________________________ _________________________________GTGDM
<PAGE> 20
/x/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1. Election of Directors / / / / / /
C. DEREK ANDERSON, FRANK S. BAYLEY, DAVID A. MINELLA, ARTHUR C. PATTERSON,
AND RUTH H. QUIGLEY
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
the "For All Except" box and strike a line through the nominee's name.
For Against Abstain
2. Proposal to ratify the selection of Coopers & Lybrand / / / / / /
L.L.P. as Independent Public Accountants for the
fiscal year ending December 31, 1996.
For Against Abstain
3. Stockholder proposal recommending that the Board of / / / / / /
Directors take action to convert the Fund from a
closed-end to an open-end investment company.
4. In their discretion, the Proxies are authorized to vote on such other
matters as may properly come before the Meeting or any adjournments thereof.
THE DIRECTORS RECOMMEND THAT YOU VOTE FOR THE NOMINEES FOR ELECTION AS
DIRECTORS, FOR PROPOSAL 2 LISTED ABOVE AND AGAINST PROPOSAL 3 LISTED ABOVE.
Please be sure to sign and date this Proxy. Date______________________
______________________________________ _____________________________________
Stockholder sign here Co-owner sign here
Mark box at right if you plan to attend the Meeting. / /
Mark box at right if comments or address change have been noted on the / /
reverse side of this card.
RECORD DATE SHARES:
